{"id":401,"date":"2010-11-25T00:17:13","date_gmt":"2010-11-24T22:17:13","guid":{"rendered":"http:\/\/ourblog.greenwoods.org\/?p=401"},"modified":"2010-11-25T00:17:13","modified_gmt":"2010-11-24T22:17:13","slug":"institute-cargo-clauses-inherent-vice","status":"publish","type":"post","link":"https:\/\/greenwoods.org\/institute-cargo-clauses-inherent-vice\/","title":{"rendered":"Institute Cargo Clauses – \u201cinherent vice\u201d"},"content":{"rendered":"

\"\"<\/a>Marine insurance is an inevitable part of the import and export of cargo. Whilst we have all seen the wording of the various policies on many occasions, it may be worthwhile to review the consequences of the policies on the transport of particular types of cargoes.<\/p>\n

There are many \u201ccommon\u201d<\/em><\/strong> phrases in marine insurance policies; however, if the ramifications of these \u201ccommon\u201d<\/em><\/strong> phrases are not completely considered, there is the risk of an insured not being covered.<\/p>\n

Every now and then, a court is committed to deciding a dispute which requires interpretation of phrases from standard marine insurance policies such as the Institute Cargo Clauses (\u201cICC\u201d). One such phrase is the exclusion of an insurer\u2019s liability where loss or damage is caused by \u201cinherent vice or the nature of the cargo\u201d<\/em>.<\/strong><\/p>\n

Over the years, there have been relatively few cases in the international jurisdictions dealing with inherent vice. A recent case in the English and Welsh Court of Appeal dealt with the issue.<\/p>\n

The lengthy case of the oil rig named highlighted the interpretation debate around the exclusion of \u201cinherent vice\u201d<\/em><\/strong> in the ICC (A) policy (otherwise known as an \u201call risks\u201d policy)<\/em><\/strong> According to this policy, all risks or loss or damage to the subject-matter insured were covered with the exclusion that \u201cin no case shall this insurance cover loss or damage or expense caused by inherent vice or nature of the subject matter\u201d.<\/em><\/strong><\/p>\n

The claimants decided to claim against their all-risks policy for a cargo of machinery which suffered damages due to heavy weather during the voyage, \u00a0but the insurers refused to pay, alleging that the proximate cause of the loss was the \u201cinherent vice\u201d<\/em><\/strong> i.e. it was known beforehand from marine surveys that the machine would take metal fatigue and possibly break off.<\/p>\n

The question for the court was whether the proximate cause of the damage to the machinery was from the rough weather (\u201cperils of the sea\u201d)<\/em><\/strong> or the \u201cinherent vice\u201d<\/em><\/strong> of the subject matter insured.<\/p>\n

The appeal court clarified that something internal did not need to be the sole cause for the \u201cinherent vice\u201d<\/em><\/strong> exclusion to apply in any given situation. However, the phrase \u201cinherent vice\u201d<\/em><\/strong> could be described as:<\/p>\n

\u2026the risk of deterioration of the goods shipped as a result of their natural behavior in the ordinary course of the contemplated voyage without the intervention of any fortuitous external accident or casualty.<\/strong><\/em><\/strong><\/p>\n

In other words, if it could be established that there was an unexpected external accident or anomaly, the exclusion may not apply. On the facts of this situation, it could be established that there were extraordinary, not ordinary, weather conditions and wave actions, for the voyage, which amounted to \u201cbreaking wave[s]\u201d<\/em><\/strong>. Furthermore, that because of this wave action breaking off the machinery. None of the breaking was bound to occur and it was therefore a risk against which the claimants were insured, caused by the \u201cperils of the sea\u201d<\/em><\/strong> as opposed to the \u201cinherent vice\u201d<\/em><\/strong> of the machinery.<\/p>\n

In this context, there has not been much debate around the definition or interpretation of \u201cinherent vice\u201d<\/em><\/strong> in exclusionary clauses of marine insurance policies.<\/p>\n

One of the few cases on this issue was heard in the Supreme Court of Appeal. It was a fairly simple case about a printing machine, damaged during shipment from Norway to South Africa. Unsurprisingly, the policy provided that loss proximately caused by \u201cinherent vice\u201d<\/em><\/strong>, in this case, defective packaging, would not be covered.<\/p>\n","protected":false},"excerpt":{"rendered":"

Marine insurance is an inevitable part of the import and export of cargo. Whilst we have all seen the wording of the various policies on many occasions, it may be worthwhile to review the consequences of the policies on the transport of particular types of cargoes. There are many \u201ccommon\u201d phrases in marine insurance policies; […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[],"_links":{"self":[{"href":"https:\/\/greenwoods.org\/wp-json\/wp\/v2\/posts\/401"}],"collection":[{"href":"https:\/\/greenwoods.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/greenwoods.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/greenwoods.org\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/greenwoods.org\/wp-json\/wp\/v2\/comments?post=401"}],"version-history":[{"count":0,"href":"https:\/\/greenwoods.org\/wp-json\/wp\/v2\/posts\/401\/revisions"}],"wp:attachment":[{"href":"https:\/\/greenwoods.org\/wp-json\/wp\/v2\/media?parent=401"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/greenwoods.org\/wp-json\/wp\/v2\/categories?post=401"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/greenwoods.org\/wp-json\/wp\/v2\/tags?post=401"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}