E.L.A.Z. Int'l v. HK & Shanghai Insurance
Where goods in transit from China to Mexico, via Los Angeles, had been stolen at an inland container yard, at which they had been delayed for over five weeks, during which they had been transshipped from the ocean container to a road trailer, the judge held that they were still "in the ordinary course of transit" and therefore remained insured under a policy subject to Institute Cargo Clauses (A) – the ‘All Risks’ clauses. Further, the transshipment did not amount to a breach of the "subject to full container load" warranty in the policy, since that simply meant that the consignment should not be intermingled with other goods and that only the same shipment should be in the container – as was the case here.
DMC Category Rating: Confirmed
This case note is contributed byCrump & Co, the International Contributors to the website for Hong Kong
The Defendant declined the Plaintiff’s claim on the marine policy.
It was the Plaintiff’s case that the goods had been lost/stolen at Laredo whilst in the ordinary course of transit. Therefore, cover remained in place.
The Defendant contended that the cover had been terminated under Clause 188.8.131.52 of ICC(A) before the time of the alleged theft, as the goods had been stored in Laredo for an unusually long period and were no longer in the ordinary course of transit. The Defendant argued that the Plaintiff had failed to establish that the goods were "in the ordinary course of transit". No explanation had been given and no evidence was called to explain the delay of five weeks after the cargo had arrived in Laredo. The court could not therefore, the Defendant argued, conclude that the goods were in the "ordinary course of transit" throughout the time they had remained in Laredo.
The Defendant also claimed that the Plaintiff had breached an express warranty. The policy, it said, had been issued on a "subject to full container load" basis; that meant that cover was subject to a warranty that the goods would be in a container at all times. As the goods had been removed from the container and put into a trailer, there was a clear breach of warranty and cover had terminated as a result.
As to the container warranty point, the court held that there was no authority for the proposition that the term "subject to full container load" means that there can be no transshipment between containers. The literal meaning of this term is simply that there can be no intermingling with other shipments and that only the same shipment of goods would be in a container. Accordingly, there was no breach of warranty.
18.1 This insurance attaches from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either
8.1.1 on delivery to the Consignees’ or other final warehouse or place of storage at the destination named herein,
8.1.2 on delivery to any other warehouse or place of storage, whether prior to or at the destination named herein, which the Assured elect to use either
184.108.40.206 for storage other than in the ordinary course of transit or
220.127.116.11 for allocation or distribution, or
8.1.3 on the expiry of 60days after completion of discharge overside of the good hereby insured frorm the oversea vessel at the final port of discharge,
whichever shall first occur.
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