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It is over 100 years since maritime lawyers last made a concerted and international attempt to agree the harmonisation of certain basic issues of marine insurance law. That attempt took the form of the Buffalo Conference of the International Law Association in 1899, which in turn led to the adoption of The Glasgow Marine Insurance Rules in 1901. Even the Glasgow Rules, however, appear to have been abrogated by disuse, their significance no doubt dimmed by the appearance of Sir MacKenzie Chalmers’ masterly 1906 UK Marine Insurance Act.
Throughout the 19th century, marine insurance was practised in most parts of the world under the influence of the 1906 UK Act. Regional initiatives such as those in Scandinavia have made their mark in seeking both certainty and reform. But for many countries that inherited the 1906 Act directly or indirectly, marine insurance law has remained static and relatively stable, and that stability has been reflected in the comparative paucity of reported marine insurance cases in most maritime jurisdictions.
Unfortunately, however, the stability of the law of marine insurance has not been mirrored in a like stability in marine insurance practice. Many sectors of the industry now face survival challenges. Perhaps it was these same hard times that in turn prompted an evaluation of the national legal regimes in which marine insurance operates. In the 1990’s, initiatives were started in the USA, Australia, New Zealand, China, and South Africa (to name but a few) to examine domestic marine insurance laws. And in those countries which are closely influenced by the 1906 Act, the evaluation began with a re-examination of whether or not the 1906 Act continued to serve the industry in the changed times and market circumstances of the approaching 21st century.
In the knowledge that such national review processes were building momentum, the CMI in 1998 agreed to co-host a Marine Insurance Symposium with the Scandinavian Institute of Maritime Law in Oslo. The symposium took the form of an exploration of common ground and diversity in issues of ship insurance. It did not deal with cargo insurance, nor did it seek answers. It was primarily an academic discussion forum. But it served to identify a number of issues of marine insurance as deserving of further research. These were summed up by CMI President Patrick Griggs at the end of the symposium as:
1. Insurable interest
2. Insured value
3. Ordinary wear & tear and inherent vice
4. Inadequate maintenance, fault in design, construction or material
5. Duty of disclosure, before and during currency of cover
6. Consequence of loss of class, unseaworthiness and breach of safety regulations
7. Warranties - express and implied, consequences of breach and alteration of risk
8. Change of flag, ownership or management
9. Misconduct of the assured during the period of cover
10. Responsibility for conduct of others - identification
11. The duty of good faith
12. Management issues, especially the ISM Code
The upshot of the Oslo Symposium was a decision by the CMI that there was sufficient indication of an emerging national diversity on these and other issues of marine insurance to warrant an international review of the law of marine insurance. An International Working Group [“IWG”] was set up under the chair of Dr Thomas Remé and comprising
Dr Thomas Remé, Germany, Chair info@roehreke.de
Prof. Trine-Lise Wilhelmsen, Norway, Rapporteur
t.l.wilhelmsen@jus.uio.no
Patrick Griggs Esq, CMI President patrick.griggs@ince.co.uk
Prof Malcolm Clarke, Cambridge, UK mac10@cus.cam.ac.uk
Mr Simon Beale, London, UK simon.beale@amlin.co.uk
Prof John Hare, South Africa jehare@law.uct.ac.za
Mr Jan-Fredrik Rafen, Norway Jan-Fredrik.Rafen@ba-hr.no
Mr Graydon Staring, USA gstaring@lillick.com
Mr Andrew Tulloch, Australia tullocha@melb.phillipsfox.com.au
The composition of the International Working Group was designed to represent both underwriters and lawyers, the latter having a good mix of academics and practitioners, drawn from both common law and civilian roots.
At an early stage, the IWG decided to expand its purview from examining only ship (H&M) insurance as had been done in Oslo, and to look also at cargo insurance. Under the guidance of Dr Remé, a CMI Questionnaire was sent out to member associations in 1999. A copy of the questionnaire follows. The daunting task of evaluating the replies was undertaken by Prof Trine-Lise Wilhelmsen. To ensure focus, the IWG resolved to concentrate initially on four items which were identified as the most in need of attention:
– The duty of disclosure
– The duty of good faith
– Alteration of risk, and
– Warranties
Prof Wilhelmsen’s report dealing with these issues and analysing the questionnaire replies in relation to them, is published after this short introduction as part of the CMI’s source materials for Singapore. The Questionnaire, the replies received, Prof Wilhelmsen’s report and the Discussion Paper to be prepared for Singapore will be put on the CMI’s website at <www.comitemaritime.org> in the near future, under the section of the site dealing with work in progress.
The review process has benefited enormously from the full replies received from those national associations who have replied, and of course by the comprehensive analysis of Prof Wilhelmsen. It received an unexpected boost from the attendance of delegates from 34 countries at a very worthwhile conference entitled “Marine Insurance at the Turn of the Millennium”, convened by the European Institute of Maritime and Transport Law at the University of Antwerp in November 1999. Prof Marc Huybrechts, the organiser extraordinaire of that conference, had the conference papers published by Intersentia <www.intersentia.be>. The two Antwerp conference volumes contain a wealth of research material on marine insurance.
The Australian Law Reform Commission has also added significantly to international scholarship with a comprehensive report on the Australian review of the 1906 UK Act (enacted in Australia in 1909). This report is available on the internet at <www.alrc.gov.au>. The ALRC will be represented at Singapore to share their research experience. They are hoping that the CMI will continue the review process toward the goal of at least providing the fabric for international uniformity in the reform now contemplated by many nations.
The IWG is also very concerned that its efforts should take into account the important role which the marine insurance industry has to play in improving levels of safety at sea. Harmonisation of marine insurance laws would need to ensure that the new law of marine insurance develops close synergy with international safety measures such as the ISM Code and the STCW and other safety conventions.
Any harmonisation process will also have to take into account concerns relating to competition and anti-monopolistic provisions, especially in the arena of the European Community.
The way forward - To Singapore and beyond
The CMI Singapore 2001 Conference will devote two full sessions to marine insurance. The aims of the conference in relation to marine insurance are as follows:
(a) To present to delegates the results of the investigations of the IWG, focussing initially on the four topics dealt with by Prof Wilhelmsen’s report - Disclosure, Good Faith, Alteration of Risk and Warranties.
(b) To invite discussion on these issues, with input from the appointed speakers representing national associations, and, where possible and appropriate, from the floor.
(c) To present to delegates goals identified by the IWG as worthwhile and meaningful ends for the process of review now underway.
(d) To seek guidance from the discussions as to whether there is broad support within the practices of maritime law and underwriting, for the harmonisation of the laws of marine insurance by means of an appropriate international instrument.
Two factors are crucial to this process:
– The IWG is conscious that for any attempt at harmonisation to have even the slightest chance of success, it will need the broad acceptance of maritime lawyers, underwriters and the shipping industry generally.
– It is highly unlikely that harmonisation will be attempted or is even desirable in relation to all issues of marine insurance.
(e) To put to the delegates for discussion and approval the mode which the IWG considers appropriate for achieving harmonisation of certain laws relating to marine insurance.
The present view of the IWG is that the way forward may be found not in a convention, but rather in a set of contractual Model Laws on Certain Issues of Marine Insurance, which can be supplemented and or altered far more flexibly than can a convention.
(f) To submit the expressed wishes of the delegates to the Assembly at the conclusion of the Singapore conference, and there to seek a mandate for the IWG:
– either to shelve further CMI initiatives to achieve harmonisation in the laws of marine insurance; or
– to continue the CMI’s marine insurance review in a manner which will identify issues of marine insurance that are worthy of harmonisation and those that ought best to be left to national interpretation, and where appropriate, divergence; and
– to proceed toward such harmonisation by the preparation of draft clauses for CMI Model Laws on Certain Issues of Marine Insurance; and thereafter
– to circulate such Model Laws to national associations and all interested parties for comment before being taken forward to consideration for adoption by the Assembly of the CMI at its next conference.
The IWG believes that the debate should be fuelled by having a paper on the table for delegates to consider and debate (albeit a paper with very tentative proposals). The group is thus in the process of preparing a discussion paper with proposals relating to the way forward, to the specific content of the issues presently under review, and (very tentative, and early) suggested alternate drafts for Model Law clauses. This discussion paper will be sent out to national associations and to interested persons during December 2000, and will be included with preparatory papers sent to each registering delegate.
All are invited to join the CMI’s marine insurance review process by contacting any member of the IWG. The chair of the Singapore sessions, Prof John Hare, can be contacted at <jehare@law.uct.ac.za> or by fax to +27(21)761 4953. If any national associations who have not yet replied to the marine insurance questionnaire would still care to do so, they are welcome to send their replies, preferably by e-mail, to Prof Hare who will then ensure that late replies are nevertheless posted on the CMI website.
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