INSTITUTE CARGO CLAUSES (A)
General
There has been some updating of the language used in the clauses. In particular:
- The terms ‘goods’ and ‘cargo’ have been replaced by ‘subject matter insured’.
- The term ‘underwriters’ has been replaced by ‘insurers’.
- The marginal side headings in the 1982 Clauses have been replaced by sub-headings.
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1982
RISKS COVERED
This insurance covers all risks of loss of or damage to the subject-matter insured except as provided in Clauses 4, 5 6 and 7 below. (Risk Clause)
2009
RISKS COVERED
This insurance covers all risks of loss of or damage to the subject-matter insured except as excluded by the provisions of Clauses 4, 5 6 and 7 below.
“Except as provided” is replaced by “except as excluded” which gives a clearer indication that the clauses referred to are exclusions. Otherwise, the well tried and tested formula setting out coverage remains intact. The classic exposition of how this type of policy works remains the House of Lords judgment in British and Foreign Marine Insurance Co. Ltd. v. Gaunt, [1912] 2 A.C. 41. The case concerned bales of wool insured against all risks in transit from sheep back in Patagonia to Punta Arenas en route to Europe. Some bales were damaged by water prior to loading on the ocean vessel and the question arose as to whether the insured could show that there had been a loss by a casualty. There was little evidence of the manner in which wetting had occurred, but that did not prevent the insured from succeeding. Lord Birkenhead concluded…
”The damage proved was such as did not occur and could not be expected to occur in the course of a normal transit. The inference remains, that it was due to some gila circumstance, some accident or casualty. We are, of course, to give effect to the rule that the plaintiff must establish his case that he must show that the loss comes within the terms of his policies; but where all risks are covered by the policy and not merely risks of a specified class or classes, the plaintiff discharges his special onus when he has proved that the loss was caused by some event covered by the general expression and he is not bound to go further and prove the exact nature of the accident or casualty which, in fact, occasioned his loss.”
Although the standard ‘A’ Clauses cover is very wide, certain trades may require additional wording to suit the particular circumstances or the nature of the cargo. Any such additional wording needs to be carefully phrased if it is to achieve the desired result. In Coven SPA v Hong Kong Chinese Insurance Co. the Court of Appeal dealt with a cargo of beans insured from China to Italy under Institute Commodity Trades Clauses (A), which have the same ‘All Risks’ wording as ICC (A) but including the additional words “shortage in weight but subject to an excess of 1% in the whole shipment”. It was agreed that there was no physical loss on the voyage but there was nonetheless a short delivery of some 14% for one parcel of the cargo. It was accepted that the difference was due to a warehouse measurement error and that the loss would not be recoverable under the standard ‘A’ Clauses wording. However, cargo interests argued that the shortage in excess of 1% was recoverable as a “shortage in weight” mentioned in the special additional wording.
In the Court of Appeal, Lord Justice Clarke rejected this argument, supporting the lower Court. As a matter of construction, he considered that the relevant insuring words meant there must be loss of or damage to the goods. On broader terms, he failed to see that the parties could have intended to insure goods that never existed or that the Assured would demonstrate an insurable interest in cargo that had never left the warehouse, the point at which the policy attached. The Court did not rule out the possibility of insuring this kind of “paper loss”, given a willing insurer, but the clearest wording would be needed to give effect to this intention.
TO BE CONTINUED
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