Nima v. Deves Insurnance
The Court of Appeal ruled in this case that, in the context of cargo insurance under a voyage policy, the risk did not attach under s.44 of the Marine Insurance Act, where the ship sailed for a destination other than that specified in the policy, even where the Institute Cargo Clauses warehouse-to-warehouse clause was incorporated in the policy.
DMC Category Rating: Confirmed
This case note is based on an Article in the August 2002 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers,DLA. DLA is an International Contributor to this website.
Nima purchased a cargo of rice that was to be shipped on the "Prestrioka" from a port in Thailand for carriage to Dakar, Senegal under a CIF contract. The vessel was chartered by the sellers of the cargo on an amended Gencon voyage charter. Shipment of the cargo was acknowledged by two Congen bills of lading. The vessel left Thailand, but never arrived in Dakar.
Nima claimed against insurers for the loss of the cargo but insurers (who were based in Thailand) denied liability, so Nima issued proceedings and obtained permission to serve a claim form in Thailand. Insurers applied to set aside the order but were unsuccessful in the first instance and now appealed to the Court of Appeal on the grounds that there was no serious issue to be tried between the parties; alternatively, that Thailand was the more appropriate forum.
The cargo had been insured under an all risks Marine Cargo
Policy incorporating Institute Cargo Clauses (A). These provided:
Insurers' principal defence was that the "Prestrioka"
had all the hallmarks of a phantom vessel (a vessel which has no valid
classification, is not registered with any recognised ship registry and is used
as a vehicle for fraud on cargo owners). Under section 44 of the UK Marine
Insurance Act of 1906 (‘MIA’):
Nima argued that clause 8 (the warehouse-to-warehouse clause) of the Institute Clauses took precedence over section 44, so that cover had attached when the goods left the warehouse and could not subsequently become "unattached" because the vessel sailed for another destination.
At first instance, the judge decided that the understandable suspicions raised by the disappearance of the vessel were not sufficient to conclude that this was a phantom vessel case. Insurers had not, therefore, proved that the claim stood no reasonable prospect of success.
Since that hearing, insurers had come up with more evidence to support their contention that this was a phantom vessel. In light of this, the Court of Appeal was prepared to conclude, even at this preliminary stage, that the shipowners had had criminal intent from the outset not to follow the specified route.
Did the incorporation of the warehouse-to-warehouse clause displace this rule? The Court of Appeal held it did not.
A contract of marine insurance may be extended to protect against losses on any land risk that may be incidental to any sea voyage (section 2(1) MIA). The modern warehouse-to-warehouse clause is an example of this. But the extension does not alter the fundamental nature of a marine insurance policy, which is a policy covering interests of the insured in a marine adventure which, in the case of a voyage policy, is from port A to port B.
In construing the policy, the starting point is the definition of the insured voyage. If, as here the insured voyage never began, the risk never attached (Simon Israel  62 LTMS 352, Kallis Manufacturers -v- Success Insurance  2 Lloyd's Rep 8).
When an insurer invokes section 44, the court has to determine, retrospectively, not just the contractual but the actual destination of the ship at the time of sailing, taking into account the actions and intentions of the owners and/or master at the time of departure. If it finds that the vessel was not bound for the specified destination, section 44 applies, so that where, as here, there was a warehouse-to-warehouse clause, the risk which prima facie attached when the goods left the warehouse will be found not to have attached.
The Court of Appeal was satisfied, therefore, that insurers had shown that Nima's case had no real chance of success and the order granting leave to serve proceedings in Thailand was overturned.
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