Research on Marine Cargo Insurance related to Container Transport
Author of article: Kevin Lawyer of Shandong Win & Win Co. Law Firm
Summary of case:
At present, container transportation in the international shipping industry is developing rapidly. Container transportation of goods can realize door-to-door transportation services, which is a very popular transportation method. Due to the particularity of container transportation, especially the transportation of grain goods by sea is extremely prone to cargo damage. The resulting maritime cargo insurance issues related to container transportation, how to grasp the particularity of container transportation insurance.
Keywords: container; insurance; packaging
In this case, Chinese grain company imported soybean meal from India in the form of container shipping. The soybean meal was packed in woven bags, 50 kilograms per bag, and then stacked neatly in the container, insuring the People’s Insurance Company of China against all risks of shipping. When goods are shipped in India, after SGS inspection, the moisture content is less than 14%, which is lower than the national “Soybean Meal Storage Standard” and can be transported safely. When unpacking and unloading at the destination, it was found that the appearance of the container was intact, but the woven bag inside the container was wet, and the soybean meal inside the bag was rotten and smelly. The insurer believes that this is improper packaging of the soybean meal in the container, and it is a defect of the goods itself, which falls within the scope of insurance exclusions.
1. Is the container a cargo package?
According to the second paragraph of Article 243 of Maritime Law, the insurer shall not be liable for damages caused by the natural wear and tear of the goods, their own defects and natural characteristics. Similarly, Section 55(2)(c) of the British Marine Insurance Act of 1906 states that unless the policy provides otherwise, the insurer does not cover the inherent defects of the goods or the essential risks of the goods. In Article 243, Item 3 of the Maritime Law, the insurer shall not be liable for compensation if the goods are damaged due to improper packaging. Therefore, we must first determine whether the container is the packaging of goods. If the container is the packaging of goods, the insurer shall not be liable for losses caused by improper packing of the container. However, in the relevant insurance law, there is no regulation on whether a container is a packaging. In addition, the “Marine Cargo Insurance Clauses” of the People’s Insurance Company of China (revised on January 1, 1981) does not stipulate whether a container is a packaging.
(1) Refer to the terms of the London Insurance Association.
The Insurance Association of London formulated Article 4.3 of the “Cargo Insurance Clauses” (revised on January 1, 1982): Loss or expenses caused by insufficient or improper packaging or preparation of the insured subject (“Packaging” in this article includes the use of containers or large If the sea container is loaded,…) is a general exclusion, and the insurer is not responsible for compensation. It is clearly pointed out here that containers and large sea containers are packaging. In Mayban General Assurance Bhd v. Alstom Power Plants Ltd (2004) 2 Lloy’s Rep 609, Justice Moor-Bick stated that “This matter is clearly covered in Article 4.3 of the Association. The packaging must be able to withstand the usual marine accidents. It is not appropriate. The packaging should be considered as inherent defects. The insurer has the right to require the packaging of the goods delivered by sea to withstand the usual transportation accidents, unless he expressly agrees, the insurer does not bear the risks caused by improper packaging. For some goods, packaging It should extend to the necessities to prevent the movement of internal items.” From the explanation of the packaging by Justice Moor-Bick, it can be seen that the packaging should bear the usual maritime risks and should include containers.
(2) Detailed regulations of the Insurance Association in 2009.
The Insurance Association of London formulated the “Association of Cargo Transportation Insurance Clauses” version clause 4.3. It has more detailed regulations on the packaging of insured objects that are not solid or improperly packed or stowage. First of all, it is clarified that the exclusion clause is only applicable to the following two situations: one is that the packaging or stowage of the insured object is completed by the insured or its employees; the other is that the packaging or stowage of the insured object is before the beginning of the policy liability carry out. Compared with the 1982 version, the 1982 version stipulates that as long as the loss is caused by the improper cargo stowage in the container, the insurer will not compensate the liability. Therefore, the 1982 version was strongly opposed. In the 2009 version, the regulations clearly limit the exclusions on packaging: it is clear that the standard of “not solid” or “improper” is “cannot withstand the usual accidents that occur during transportation.” Therefore, if the container is loaded by the insured or its employees before the commencement of the insurance liability and cannot withstand the usual accidents during transportation, the insurer shall not be liable.
(3) Specific case guidelines.
In the case of TM Noten BV v. Harding (1990) 2 Lloyd’s Rep 283, the case involved cargo (industrial leather gloves), which was stacked in a container and transported from India to Rotterdam, the Netherlands, but the cargo was found to be severely damp and moldy when it was unloaded. In the first instance, it was determined that the moisture came from the glove itself, and then it condensed on the container wall and fell on the glove to cause damage. Therefore, Justice Philips in the first instance ruled based on precedent that the damage was caused by external reasons, not by inherent defects. But this was overturned in the Court of Appeal. The judgment to a large extent regards the container as the packaging of the goods, so the sweating of the container is an inherent internal defect, which is different from the previous reason that sweating in the cabin was regarded as an external cause.
2. The container shall be regarded as the packaging of goods.
Packaging is to add another layer to the goods to prevent damage to the goods due to handling, collision or wear during transportation.
The Australian precedent Helicopter Resource Pty Ltd. V. Sun Alliance Australia Ltd. (The Icebird) (1991) 312 MLN Chief Justice Ormiston stated: “Packaging, the term should be limited to an external covering of the packaged goods, or placing the goods in In a box or similar container to facilitate the transportation of goods.” Packaging obviously does not include loading or stacking in the cabin. But after container transportation, is the container the packaging of goods?
(1) The container shall be regarded as cargo packaging.
The author believes that in a general sense, containers are not the packaging of goods. “Packaging” according to the “Modern Chinese Dictionary” compiled by the Dictionary Editor of the Chinese Academy of Social Sciences refers to wrapping goods in paper or packing them into cartons, bottles, etc.; for transporting goods such as grain and other bulk goods, woven bags are package. The wooden boxes outside the transportation equipment belong to the packaging, and these are no objections to the packaging. However, after the above-mentioned packaging is completed, it is then placed in a container and placed on a transportation vehicle such as a container car or train. At this time, the container becomes a part of the means of transportation, so it is not the packaging of the goods. However, from the perspective of fairness and reasonableness, if the insured party still bears the losses caused by the improper loading of the container, it is obviously unfair. Therefore, in order to ensure that the insured can reasonably and carefully choose the special tool of the container, the container should be regarded as the packaging of the goods.
(2) Distribution of container insurance responsibilities.
The container is regarded as cargo packaging. Therefore, in insurance activities, if the insurer has evidence that the container does not meet the requirements of cargo transportation, that is, the container is loaded with too much, too little, improper stowage, or container damage, etc., the resulting risks Should not be borne by the insurer. In addition, you should also pay attention to whether the goods are stacked in the container before or after the insurance contract takes effect. If the cargo party packs and distributes the goods in its own warehouse before the insurance contract takes effect, insurance will be carried out afterwards. In this case, the insurer should obviously not compensate for the damage caused by the improper container packaging. However, after the insurance contract takes effect, the carrier or freight forwarder will receive the goods from the cargo owner and load them at the container yard. In this case, because the insurance contract has come into effect and the insured is not packing by himself, the insurer should compensate for the damage to the goods.
In the international container shipping business, there is a new type of insurance accident for container transportation. Since domestic insurance laws and regulations do not stipulate whether a container is a cargo packaging or not, we can learn from the current more reasonable practice of the London Insurance Association to determine that the container is a cargo packaging , And assign insurance responsibilities accordingly, so as to ensure fairness and reasonableness and safeguard the legitimate rights and interests of both parties to the insurance contract.