DCN April 2019 Edition

MARITIME INSURANCE
SALMON STORIES
The types of damages recoverable can include clean-up costs,
damage to property, economic loss consequential on property
damage, pure economic loss, such as from a tourist hotel
operator and the reasonable costs of restoring the damage to
property. Some jurisdictions that take a narrow approach as
to what can be compensated under the CLC 92 have adopted
a narrow interpretation of such losses. In Landcatch Ltd v.
International Oil Pollution Compensation Fund the Scottish Courts
considered whether Landcatch Ltd, whose business involved
the rearing of juvenile salmon for sale to salmon farmers
in Shetland suffered compensable loss. An oil spill from the
The Great Barrier Reef was listed as a
UNESCO World Heritage Area in 1981
and in 1990 the IMO declared the Great
Barrier Reef as a Particularly Sensitive
Sea Area.
tanker Braer caused by the vessel running aground of the coast
of the Shetland Islands resulted in the prohibition of the sale
of Shetland salmon by the United Kingdom government. This
had an effect on Landcatch’s business in that the market for
juvenile salmon was severely reduced due to the ban. However,
the Scottish Court ruled that the claims were not compensable
under the CLC 92 in that “secondary” or “relational” damage
was not compensable for “reasons similar to those that have
led to the development of a rule against such claims under the
common law”.
Ultimately the number of funds held to apply in relation to
the Sheng Neng I incident was never judicially determined as the
claim was settled when the Commonwealth accepted a payment
of A$35m for the remediation costs claimed and an additional
A$4.3m to cover costs incurred in dealing with the incident
immediately after it occurred. Nor did it become necessary to
consider the fact that damage was not solely caused by the release
of bunker oil, but also by noxious chemicals from the vessel’s hull,
together with the action of the vessel on the reef. For insurers,
this situation potentially creates a situation where damages for
environmental damage may not be caught by the existing pollution
limitation mechanisms.
IMPACT OF LIMITATIONS IN MARINE INSURANCE
There are other instances where limitations can apply in the
maritime adventure. For example, the Amended Hague Rules as
enacted in Australia by the Commonwealth Sea Carriage of Goods
Act 1991 (Cth) imposes package and weight limitations in the
event of damage for goods carried under a bill of lading or sea
carriage document. This is not to say, however, that there is always
certainty as to how such package limitations might apply, is it per
container or do the words “said to contain” (STC) record the true
number of goods, packages or units for the purpose of calculating
the package limitation?
The leading decision in Australia, El Greco (Australia) Pty
Ltd v Mediterranean Shipping Co SA had to determine which was
the relevant unit when assessing the limits to apply where
“200,945 pieces posters and prints” were damaged without any
salvage value. They were packed in one container and were made up
of 2000 packages and shipped from Melbourne bound ultimately
for Greece. The lack of sufficient enumeration of the packages in
the bill of lading meant that the container was the applicable unit
for the purpose of calculating the package limitation. The case does
serve to illustrate, however, that uncertainties can still arise when
trying to calculate the relevant package limitation.
FINAL WORDS
Insurers also look outside the limitations which apply by reason of
statute to those which may contractually apply, take for example,
commonly seen NVOCC’s standard terms and conditions. The
importance of such limitations successfully responding to cargo
claims is an important consideration for marine insurers in their
assessment and characterisation of risk and as a result in the
calculation of insurance premiums bearing in mind that premium
reflects risk. An understanding of the circumstances in which
liability can be limited either by way of legislation or contract is as
important for the insurer as it is for the consumer of the marine
insurance product in assessing the overall costs and risks of the
maritime adventure.
INSURANCE AND A SHIPPING LINE’S PERSPECTIVE
Making the international shipment of
goods “simple, seamless and efficient” is
the aim of an insurance product recently
launched by French liner company CMA
CGM. CMA CGM CARGO INSURANCE
was announced as part of company
chairman and chief executive Rodolphe
Saadé’s Shipping the Future strategy in
2017 and introduced to the Australian
market in October 2018.
A CMA CGM spokesperson said this
product was realised in partnership with
“one of the largest marine insurance
companies in the world”.
Features include covering damage
and loss due to almost all kind of
risks from door-to-door even in case
of merchant haulage and up to the
full insured value with no excess/
deductible.
“Shipments in transit are subject
to many perils that could impact our
customer’s business operation, and
this is often beyond anyone’s will,” the
spokesperson said.
“Should loss or damage occur to
customer’s cargo, they will have to
go through a difficult and lengthy
administrative process with no
guarantee of the final outcome.
“Many of our customers are looking
for solutions to run their business
operation more effectively with reliable
partners. As their global shipping
partner, we know best their shipments
and how to secure it.”
According to CMA CGM, freight
forwarders would gain an advantage
partnering with a carrier that offered
more than just freight services because
they could propose different services
to customers.
50 April 2019
thedcn.com.au