CHPATER I INTRODUCTION TO THE FOURTH EDITION
Chapter I
INTRODUCTION TO THE FOURTH EDITION
1. WHATEVER HAPPENED TO THE QUIET REVOLUTION?
In the first edition of this work the authors celebrated the introduction in January 1982 of a new set of marine insurance policy forms
to cover cargoes world-wide. They were designed to stand on their own, without the panoply of Lloyd's SG form of policy to
encumber their wording and bewilder the minds of their readers.
These were the Institute Cargo Clauses, demurely titled (A), (B) and (C), to which was added, as customary, the date of origin
(1/1/82).1 They were followed, in short order, by Institute Clauses for particular commodities2 and a new version of the standard form
for the insurance of ships, the Institute Time Clauses, Hulls, 1/10/83.3
The trigger for this intellectual activity on the part of the London insurance market was a document published in November 1978
by the Secretariat of the United Nations Conference on Trade and Development (UNCTAD) with the title Marine Insurance—Legal
and Documentary Aspects of the Marine Insurance Contract.4 As stated in the Introduction to the first edition of this book, the
UNCTAD report recognised the ascendency of the United Kingdom as “the international market centre of marine insurance” and
subsequently concentrated the major part of its investigatory activity on an analysis of the English marine insurance regime,
bestowing in the process bouquets and brickbats with even-handed largesse.
In consequence of this groundswell for reform, Lloyd's Underwriters' Association and members of the Institute of London
Underwriters, working through a system of joint committees,5 instituted a review of the important policy forms in daily use. Thus
began the process which the then authors of this book dubbed “The Quiet Revolution”.
Now, over twenty years later, we have to record another milepost. The Institute of London Underwriters is no more. In its place we
have a new body, with a different constitution—the International Underwriting Association of London — and it is under the aegis of
this organisation that we have received, and now haveto comment upon, a new set of standard insurance conditions for ships, the
International Hull Clauses. Hence, also a change in the title of this book from The Institute Clauses to Marine Insurance Clauses.
The changes accomplished in the revolution of 1982, including the banishment of Lloyd's SG form to the archives, the rephrasing
of the Perils Clause, the abolition of the Memorandum and the renaming of the old Sue and Labour Clause as the “Duty of Assured
Clause” have now all become commonplace but, it might be asked, how have these changes been received in the market-place?
Well, it would seem that the new cargo forms have been welcomed, but the same cannot be said for the succession of so-called
standard hull forms, with which shipowners and their advisers have had to contend since 1983. First came the Institute Time Clauses,
Hulls, 1/10/83, which was considered a praiseworthy advance on the forms of 1969 and 1970 (the forms which introduced the “each
accident” deductible). This was followed by the Institute Time Clauses, Hulls, 1/11/95, which was universally condemned for its
attempts to introduce excessively hard and restrictive conditions. Both these forms were commented upon and discussed in the third
edition of this book.
Now in a new millennium, and after a great deal of research and rethinking, the Joint Hull Committee has launched the
International Hull Clauses. This form was first issued on 1/11/02, but was not intended to be taken up and put into immediate effect.
On the contrary, it was intended to be considered as a consultative document, and accordingly, after an unprecedented orgy of
inter-organisational discussion, involving shipowners, managers, brokers and average adjusters, the new form was re-presented to
clients a year later to the day. The International Hull Clauses of 1/11/03, extensively analysed and examined herein,6 have yet to
receive that degree of acceptance which, in the authors' opinion, they undoubtedly deserve. Shipowners, as the authors have found in
their professional experience, are commendably cautious and conservative in their approach to such matters as marine insurance, and
even today they prefer the ITC of 1/10/83 or even the American Institute Hull Clauses of 2 June 1977. The reasons for this will
hopefully become apparent from a reading of Part III of this book, which deals with marine hull forms.
2. THE FORMAL POLICY DOCUMENTS
With the abolition of Lloyd's SG form of policy, it was necessary to create a new formal document of contract. It was decided to do
this in the simplest possible form of words consistent with the need to validate the existence of the contract and comply with the
provisions of the Marine Insurance Act 1906.
Section 22 of the Marine Insurance Act provides:
“Subject to the provisions of any statute, a contract of marine insurance is inadmissible in evidence unless it is embodied in a marine policy in
accordance with this Act. Thepolicy may be executed and issued either at the time when the contract is concluded or afterwards.”
Section 23 used to set out a number of matters which the policy must specify by law, but now requires merely that the policy
should specify the name of the assured, or of some person who effects the insurance on his behalf.7
Section 24(1) of the Act provides:
“A marine policy must be signed by or on behalf of the insurer, provided that in the case of a corporation the corporate seal may be sufficient, but
CHPATER I INTRODUCTION TO THE FOURTH EDITION
nothing in this section shall be construed as requiring the subscription of a corporation to be under seal.”
The new form of document was issued concurrently by both Lloyd's and the Institute of London Underwriters in terms which were
practically identical. The wording of this document in the Companies' Marine Policy form was:
“We, the Companies, hereby agree, in consideration of the payment to us by or on behalf of the Assured of the premium specified in the Schedule, to
insure against loss damage liability or expense in the proportions and manner hereinafter provided. Each Company shall be liable only for its own
respective proportion. This insurance shall be subject to the exclusive jurisdiction of the English Courts, except as may be expressly provided herein to
the contrary.
In Witness whereof the General Manager and Secretary of the Institute of London Underwriters has subscribed his name on behalf of each Company.”
There then followed a space for the formal signature and stamping of the policy, together with the caveat that the policy would not be
valid unless it bore the embossment of the Policy Department of the ILU.
Both this form and the Lloyd's form in similar terms were known as the MAR forms, and from 1991 they were so indicated by the
logo MAR 91. On the reverse, or attached to the MAR form, there is a Schedule in printed form which enables the document to
record the main details of the insurance contract, as shown on page 5. Indeed, since its inception the MAR form has been used as a
kind of standard marine insurance policy “in blank”, to which the parties may attach such special conditions as suit the circumstances.
For example, in Shell UK Ltd v. CLM Engineering Ltd,8 a substantial insurance contract relating to a multi-million pound
construction project in the North Sea had been set out in the framework of the MAR form. The learned judge pointed out that the
MAR form now effectively replaced the SG form, and that this therefore enabled him to approach the policy as one being primarily
designed to cover physical losses to insurable property caused by insured perils. Thus all the elements were present to enable him to
solve what was basically a marine insurance problem, notwithstanding that the problem concerned the success or failure of an
underwater engineering project.
“This insurance shall be subject to the exclusive jurisdiction of the English Courts …”
This paragraph was inserted in the MAR form 1991 with the object of requiring an assured who wishes to sue on the policy to
institute legal proceedings in England. The previous form of words—“This insurance is subject to English jurisdiction” — had been
held not to constitute an exclusive jurisdiction clause, and to be merely declaratory, for the benefit of an assured, who might be
foreign, that the rights which he had under the policy were capable of enforcement in the English courts.9
The inclusion of this clause in the MAR form may be contrasted with the provision contained in each of the various London market
Clauses which we shall examine later in this book, to the effect that the insurance is “subject to English law and practice”. The reason
for this is that, whereas the MAR forms will only be used when the contract is concluded in the United Kingdom, the Institute
Clauses may also be used in conjunction with a policy of insurance issued abroad specifically providing for jurisdiction, exclusive or
otherwise, in the country of issue.
On the back page of each MAR form is the Schedule to which we have already referred.
As revealed in Chapter 1, the London insurance market went through a number of organisational changes, beginning in 1998 with
the dissolution of the Institute of London Underwriters and its replacement by a new body, the International Underwriting
Association of London, which thereupon became responsible for the issuance of companies' policies of insurance under a new form
of cover. Some time after this, in 2001, and looking even further forward to the future, another new entity was formed, in which was
to be consolidated all the policy-issuing functions of the London market. The policy issuing authority of the International
Underwriting Association of London was accordingly closed in favour of ins-sure Services Limited (no—this is not a mis-print) on
1st March 2003. Its standard Marine Policy form is set out on page 6.
Another, perhaps more significant change has recently taken place, and that consists in the practice of issuing “slip policies” rather
than following an older and distinctly slower procedure. A pro-forma Companies Slip Policy is set out on page 7.
SCHEDULE
POLICY NUMBER
NAME OF ASSURED
VESSEL
VOYAGE OR PERIOD OF INSURANCE
SUBJECT-MATTER INSURED
AGREED VALUE (if any)
AMOUNT INSURED HEREUNDER
PREMIUM
CLAUSES, ENDORSEMENTS, SPECIAL CONDITIONS AND WARRANTIES
CHPATER I INTRODUCTION TO THE FOURTH EDITION
THE ATTACHED CLAUSES AND ENDORSEMENTS FORM PART OF THIS POLICY
Companies Slip Policy (Direct)
We, the Insurers, hereby severally agree, in consideration of the payment to us by or on behalf of the Insured of the specified
premium to insure against loss, damage, liability or expense in the proportions and manner provided in the slip. Each Insurer shall be
liable only for its own respective proportion.
The subscribing Insurers' obligations under this contract are several and not joint and are limited to the extent of their individual
signed subscriptions. The subscribing Insurers are not responsible for the subscription of any co-subscribing Insurer who for any
reason does not satisfy all or part of its obligations.
This insurance shall be subject to the exclusive jurisdiction of the English Courts except as may be expressly provided herein.
In witness whereof the name of the Managing Director of Ins-sure Services Limited is subscribed on behalf of each of the Insurers in
accordance with the provisions of the Services Agreement that each of the Insurers has with London Processing Centre Limited (a
wholly owned subsidiary of Ins-sure Services Limited).
Managing Director
This Slip Policy is not valid unless it bears the signature of the Managing Director of Ins-sure Services Limited.
Note: A Formal Policy in substitution for this Slip Policy or any declaration hereunder may be issued at any time at the request of the
Insured or any Insurer hereon.
Companies Marine Policy
We, the Insurers, hereby severally agree, in consideration of the payment to us by or on behalf of the Insured of the premium
specified in the Schedule, to insure against loss, damage, liability or expense in the proportions and manner hereinafter provided.
Each Insurer shall be liable only for its own respective proportion.
In witness whereof the name of the Managing Director of Ins-sure Services Limited is subscribed on behalf of each of the Insurers in
accordance with the provisions of the Services Agreement that each of the Insurers has with London Processing Centre Limited (a
wholly owned subsidiary of Ins-sure Services Limited).
Managing Director
This policy is not valid unless it bears the signature of the Managing Director of Ins-sure Services Limited.
3. CONSTRUCTION OF THE POLICY FORMS
It might be thought that the terms of Lloyd's SG form, having been entirely set aside, were now totally irrelevant to the construction
of a policy of marine insurance comprising the MAR form with one of the new Institute Clauses attached. But this is not so.
Section 30 of the Marine Insurance Act 1906 provides:
“(1) A policy may be in the form in the First Schedule to this Act.
(2) Subject to the provisions of this Act, and unless the context of the policy otherwise requires, the terms and expressions mentioned in the First
Schedule to this Act shall be construed as having the scope and meaning in that schedule assigned to them.”
The “form in the First Schedule to this Act” is in fact Lloyd's SG form with certain (relatively minor) additions made up to 1906.
Several of the more important words and expressions used in Lloyd's form are explained in the First Schedule to the Act in
accordance with the Rules for Construction of Policy set out in that Schedule. Thus when the same expressions appear in the Institute
Clauses, such as, for example “perils of the seas”, they must likewise be interpreted in accordance with those Rules.10
Section 91(2) of the Act provides:
“The rules of the common law including the law merchant, save in so far as they are inconsistent with the express provisions of this Act, shall continue
to apply to contracts of marine insurance.”
As we shall see hereafter, all the major forms of the Institute Clauses expressly provide:
“This insurance is subject to English law and practice”
Where this is the case, or in any case where the proper law of the contract is English law,11 then the rights and obligations of the
parties have to be construed in accordance with the provisions of the Marine Insurance Act 1906, and by section 91(2) this brings in
(save when inconsistent) all the English law precedents and authorities which make up the corpus of English mercantile and
insurance law.
The above continues to apply irrespective of the terms of any jurisdiction clause, or the selection by the parties of the court or other
tribunal having jurisdiction.
1 For the commentary on these clauses, see pp. 12–47.
CHPATER I INTRODUCTION TO THE FOURTH EDITION
2 Commentary on pp. 47–75.
3 Commentary on pp. 81–82.
4 UNCTAD document TD/B/C14/ISL/27.
5 In particular the Joint Cargo Committee, the Joint Hull Committee, and the Technical & Clauses Committee.
6 See commentary on pp. 89–169.
7 The remainder of section 23, setting out other matters previously required to be specified, was repealed in 1959 when stamp duty on marine insurance policies
was aMARished by the Finance Act 1959.
8 Shell UK Ltd. v. CLM Engineering Ltd [2000] 1 Lloyd's Rep. 612.
9 Berisford v. New Hampshire Insurance Co. [1990] 1 Lloyd's Rep. 454.
10 For “perils of the seas” see the commentary on Clause 2.1.1 of IHC 1/11/03, on p. 90.
11 See The “Al Wahab” [1983] 2 Lloyd's Rep. 365, discussed on p. 85.
