When I switched from my other activities to shipping in 1968 and studied Shipping Practice and Marine Insurance in London, I was very lucky to meet and acquire the friendship of several very knowledgeable and important figures in law and in the Insurance business. I was also privileged, in the office that I was working parallel to my studies, to work under Mr. Alex Kazantzis and in the university to have as tutor in law and Marine Insurance Mr. Donald Davis. Both of above two gentlemen where two of the top Arbitrators at the time and alternative Chairmen of the Arbitration Committee.
Both of them, every time we were discussing submissions for a case were telling me that all submissions have to be structural with a consistent line of thought, have to be precise, truthful and address the defence points in “Utmost Good Faith” which is also one of the Fundamental Principals of Marine Insurance. Unfortunately, the majority of the people I met 54 years ago and I became good friend with them have passed away and I have no audience to exchange my views with one or two exceptions.
For the Marine Insurance Business there are following leading centers, not that there are no other places that they have some marine capacity: London, Italy, Norway, France, Germany etc.
Most of the Marine Insurances are placed on ITC Hulls terms which is subject to Marine Insurance Act 1906 / Insurance Act 2015.
As said before the Act provides that the Insurance Contract is subject to the Fundamental Principal of “Utmost Good Faith”.
Regarding solicitors when they obtain their qualification to act as solicitors they give an oath that they will serve the law, meaning that their job is not to twist the terms of a contract but to treat a case along the provisions, the terms, and the intention of the cover sold as per the structure of the contract.
Underwriters frequently decline claims with the assistance if not the suggestion of their solicitors, alleging that the Assured has not acted in “Utmost Good Faith” claiming scuttling by want of due diligence of the Assured to avoid payment of a claim. In other cases that there is not even a hint of Owners involvement, they claim that the Assured has not discharged the onus of proof for the cause of damage (The Marel case) and decline the claim on this basis. The rejection was based on the inability of the crew to specify what was the object that the vessel hit at 23:00 hours and force 11 on the Beaufort scale. The fact that the underwriters proved themselves that around the vessel at 1000 meters depth were numerous containers, and a submarine, a week later, was pictured in Daily Telegraph with her bridge tower damaged in a yard in the area of the casualty, did not matter. Very handy cunning excuse and sick on behalf of the entire system. The findings in the judgement, per Lloyd’s Law Report 1992 reads in brief :
Page 416 right column top paragraph:
“Counsel for the underwriters was similarly precluded for contending that (…the Owner) was giving false evidence and that the court should accept him as truthful witness as indeed I do”.
Page 423 right column third paragraph.
“Third, the Owners case is supported by the consideration that the acceptance by underwriters and the court of the bona fides of the ship’s witnesses and by the court of the bona fides of (the Owners) is inconsistent with the ship having been deliberately sunk”.
Conclusion: However, we requested the Assured to give us an example of what was the floating object the ship collided with, but we are not convinced by the example the Owners gave as a probable cause.
From this, transpires that for several cases the allegation declining a case is not based on proofs as the Insurance Terms burdens the underwriters to put on the table, but on unsolicited and totally unsubstantiated excuses.
In another cases, the decline is based only on rumors as it was the case some 4-5 years ago and the subsequent theatrical show, arresting the Owner outside the London Court on completion of the hearing and the substantial publication of the relevant pictures in the Media. However, no one bothered to write that the Owner whose claim was declined on alleged and not proved scuttling was released after arrival in the police station because there was no charge for the arrest, meaning that the underwriters had not discharged the burden of proof of their allegation as the law provides.
Can one prove, and not say that I heard, I suspect … etc what it was the action of the Owner justifying underwriters not to pay a legitimate CTL? Obviously not, otherwise the court decision should have said so, and the theatrical arrest of the Owners would have been effective with consequences against the Owner.
If an Owner is not eligible to collect his claim based on allegations, what an underwriter must suffer if on proven willful actions, organize distortion of the facts on purpose to have an excuse and not a cause to escape the payment of a claim?
To understand from where I am coming from, recently an Owner having his vessel trapped and detained in Ukraine was told by his underwriters that he has no claim because his vessel is not trapped, and he keeps his vessel in Ukraine purposely, alleging detention by an insured peril, in order to establish and collect a CTL. Underwriters base their argument giving as a fact that the vessel next to his vessel m/v…….. had left without any problem and is now in France as per the signal of the AIS system. The Owner was alarmed, and he called his master requesting him to look for the vessel and confirms to him that she is not there anymore. The answer was clear. The m/v…. is still here next to our ship and here is the picture. If an Owner loses his CTL claim based on unfounded allegations and rumors can a responsible professional explain what the underwriter who used purposely false information to avoid payment of a claim should suffer?
Another set of underwriters’ policy contain following clauses:
-In the policy only Agreed insured amounts are entered
-An Owner can purchase any other cover that the underwriter will approve. Emphasis is given in the word “approve” which in effect means “agreed”.
-In the policy under the heading Hull & Machinery and Increased Value following sums
Insured are mentioned:
Hull & Machinery Agreed Value US$......
Increased Value US$......
Total insured under this section US$......
-Underwriters claim that because in the definition section of the policy only the Hull & Machinery value is mentioned as Agreed Value, the Increased Value sum insured is not payable. They Ignore though the fact that in the policy only agreed amounts are entered, that Increased Value policies are Hull & Machinery policies. In the policy under the heading “Hull & Machinery and Increase Value” both Hull & Machinery and Increased Value sums insured are entered and it states “Total Insured under this Section” is the total of the two different types of insurance. Also, they do not consider at all that in the policy there is a clause reading “An Owner can purchase any other cover that the underwriter will “approve”. Furthermore, they ignore the fact that the Increased Value policy is a Hull & Machinery cover. Therefore, it does not have to be mentioned separately in the definition section to be considered “agreed value”.
- Additionally, the policy has benefits for the hull section and a separate section for P&I covering the Owners’ third party’s liability including crew as well. When an Assured claimed from the carrier of his insurances his liability to the crew he was told that that the crew is not covered by the P&I section but from the benefits given by the Hull section. However, the benefits under the Hull section are not linked to any type of costs, meaning that they are paid as pain and suffering. Furthermore, said benefits under the Hull section have be paid by the very carriers in full without any reduction depending and corresponding to the removal of the crew, enforcing the view that the intension of the clause is for pain and suffering.
- The policy contains a clause which states that if the insured vessel is detained for more than 183 days, she is considered CTL, unless the underwriter on their own discretion decides otherwise for a lesser number of days. The underwriters’ discretion cannot increase the number of days because this will be an unfair term of the policy and will not stand in any court of law. The discretion can only decrease the number of days as the clause provides. The discretion alternative is inserted in the policy only for the reason of improving the policy. When the Assured claimed CTL, the claim was declined and in addition the underwriter announced that payments under the detention clause are payable on a without prejudice basis from 1st of August onwards because the Assured has not proved that his vessel is detained by an insured peril, (although till now has paid some crew evacuation expenses and four months detention benefits) which is a proof that the detention of the vessel is due to a peril insured against. We remind the underwriters that the Greek shipowners are very good and clever ship operators, unlike the British, and this is the reason the Greek fleet is one of the biggest if not the bigger fleet in the word. Greeks know very well that they will be better off by trading their ships making more than US$ 25,000 per day and running costs US$ 7,500 than having their vessel stuck in Ukraine in to collect from their underwriters US$ 7,700 per day and daily costs above US$ 15,000. Most probably British shipowners acted the way underwriters believe Greek shipowners act. They better consider if this was the way British shipowners used to work and they disappear.
- We remind underwriters and their solicitors that honorable underwriters like the Scandinavians, that they have a time limit after which a trapped vessel is considered a CTL have already paid. We kindly request and suggest insurance providers as well as Assureds have to operate in utmost good faith as the Marine Insurance Act 1906 requires.
Of course, the system will not bother because the wrongdoings of underwriters are legitimate actions but the unsubstantiated allegations against an Owner constitute criminal act committed by the Owner entitling the underwriter to refuse payment of a claim for no reason and without any proofs. What a gentlemen’s environment we are living in. Where is the doctrine.” My word is My Bon?”.
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