Abstract
Abstract Whereas the Marine Insurance Act 1906 provides substantial detail about total losses, very little is provided in relation to piracy in the said statute. The recent judgments in Masefield v Amlin by Steel J ([2010] 1Lloyd's Rep. IR 345) and then by the English Court of Appeal ([2011] EWCA Civ 24) have highlighted the difficulties associated with determining whether a seizure of the subject-matter of insurance, in this case cargo, by pirates, demanding a ransom, can give rise to a claim for a total loss. This is a very important matter which also raises issues of legality and public policy. This article examines the implications of this judgment against the backdrop of the English marine insurance definition of piracy and the intricacies of the law relating to constructive and actual total losses. The article concludes with the suggestion that possibly the marine insurance definition of piracy should tally with that in the domain of public international law, and further, that legislative intervention should be considered for the purpose of ascertaining the point in time whether and when seizure by pirates can constitute a total loss.
Highlights
The Marine Insurance Act 19061 goes into quite some detail in relation to the meaning and requirements for a claim for a total loss
The article concludes with the suggestion that possibly the marine insurance definition of piracy should tally with that in the domain of public international law, and further, that legislative intervention should be considered for the purpose of ascertaining the point in time whether and when seizure by pirates can constitute a total loss
Mumford,3 where the litigation related to a non-marine policy on goods, Bailhache J stated that in considering whether there had been a loss in terms of the contract, one would be right in taking note of those matters eligible for being taken into consideration if one were dealing with a question relating to constructive total losses in marine insurance
Summary
The Marine Insurance Act 19061 goes into quite some detail in relation to the meaning and requirements for a claim for a total loss. Mumford, where the litigation related to a non-marine policy on goods, Bailhache J stated that in considering whether there had been a loss in terms of the contract, one would be right in taking note of those matters eligible for being taken into consideration if one were dealing with a question relating to constructive total losses in marine insurance.. The notion of a constructive total loss can be fitted to traditional subject-matters of marine insurance like hulls and cargo, the same cannot be said with regard to liability insurance to which there is scant reference in the Marine Insurance Act 1906.6 A constructive total loss claim is dependent, in most instances on the giving of a notice of abandonment by the assured to the insurer; in the case of liability insurance, one cannot envisage the insurer accepting the abandoning of the subject-matter, which can hardly be anything other than a damnosa hereditas. In very plain terms lacking definitional characteristics, that the term “pirates” includes passengers who mutiny and rioters who attack the ship from the shore
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