Seashore Marine

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Case No. DMC/INS/03/01

Seashore Marine SA v. The Phoenix Assurance Plc and Others
English High Court, Queen’s Bench Division, Commercial Court: Aikens J.
May 2001: Unreported

Where a ship was insured under the Institute Time Clauses (Hulls), clause 11 of those terms – which entitled the insured to the recovery of salvage - required that the insured prove that the "loss" for which an indemnity for salvage was sought was proximately linked to the avoidance of one of the "perils" covered by the policy wording in clause 6 – in this case ‘perils of the seas’ and ‘negligence of Master Officers Crew or Pilots’.

DMC Rating Category: Confirmed


The Facts
This case concerned a claim by the owners of the ro-ro ship ‘Vergina’ to recover from hull underwriters certain sums paid to salvors in respect of salvage services rendered to the ship when she was abandoned by her crew after sustaining a list to starboard of 23 degrees in the course of a laden voyage from Abidjan to Europe in February 1994. The ship was insured under a policy subject to the Institute Time Clauses (Hull) (‘ITC’) dated 1 October 1993. Clause 11 of the ITC read:
"11.1 This insurance covers the Vessel’s proportion of salvage, salvage charges and/or general average…..
11.4 No claim under this Clause 11 shall in any case be allowed where the loss was not incurred to avoid or in connection with the avoidance of a peril insured against."
Clause 6 of the ITC read:
6.1 This insurance covers loss of or damage to the subject-matter insured caused by
6.1.1 perils of the seas….
6.2 This insurance covers loss of or damage to the subject–matter insured caused by
6.2.3. negligence of Master Officers Crew and Pilots"

The Issues
The owners claimed that once they had proved that the ship had incurred salvage then they were entitled under clause 11.1 to recover the sums paid. It was then up to the insurers to prove that ‘the loss’ was ‘not incurred to avoid or in connection with the avoidance of a peril insured against’ under clause 11.4. The insurers contended that, in addition to proving that the ship had incurred salvage under clause 11.1, the claimants must go on to prove that the salvage was incurred for the purposes set out in clause 11.4.

The Judgment
The judge held that the contention of the insurers was correct. In order to recover under clause 11.1 and 11.4 of the ITC wording, the claimants had to prove the following:
"(i) payment (of) or the liability to pay salvage, salvage charges or general average; and
(ii) that such liability or payment was incurred to avoid loss or damage to the vessel by one of the of the matters set out in the sub-clauses of clause 6.1 and 6.2 of the ITC; or
(iii) that such liability or payment was incurred ‘in connection with’ the avoidance of loss or damage to the vessel by one of the matters set out in those sub-clauses."

After an exhaustive examination of the evidence, he held that the claimants had established, on the balance of probabilities, that the liability to pay salvage was incurred to avoid the loss of the Vergina and that the loss of the ship, had it occurred, would have been proximately caused by insured perils. The relevant perils were
(a) the negligence of the Chief Engineering Officer in operating the ship’s ballast system, which had seriously exacerbated the list; and
(b) perils of the sea, in that the extent of the list to starboard permitted seawater to enter hold 3 of the ship through a scupper valve, which was either defective or had been left open accidentally, with the result that, had the salvage operations not been undertaken, the ship would have eventually capsized and sunk.


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