FACULTY OF LAW

Lund University

Amir Tayari

The Concept of Sue and Labour

in the Law of Marine InsuranceMaster thesis

(30 Credits)Supervisor: Abhinayan Basu Bal Ph.D.

Master’s Programme in Maritime Law

Spring 2013

Table of Contents

Summary 5

Preface 6

Abbreviations 7

1. Introduction 8

1.1. Background 8

1.1.1. History of Sue and Labour Clause 10

1.1.2. Purpose of Sue and Labour Clause 11

1.1.3. Sue and Labour Clause as a Supplementary Cover 12

1.2. Scope and Purpose of the Thesis 13

1.3. Research Methodology and Material 14

1.4. Delimitation 15

2. Assured’s Duties and Liabilities Under the Clause 16

2.1. Existence of The Duty 16

2.2. Nature of The Duty 18

2.3. Authorized Actors 20

2.4. Breach of The Duty 23

2.5. Anomaly in Section 55 of MIA 25

2.5.1. The Inchmaree Clause 25

2.5.2. Leading Cases of the Conflict 26

3. Insurer’s Liability 30

3.1. Existence of Liability 30

3.2. The Necessity of an Express Clause 30

3.3. Extent of Liability 33

3.4. The Bailee Clause 33

4. The cessation of Sue and Labour 36

4.1. Total Loss 36

4.1.1. Actual Total Loss 36

4.1.1.1. A Total Destruction 36

4.1.1.2. Loss of Character 37

2

4.1.1.3. Irretrievably Deprivation 37

4.1.2. Constructive Total Loss 37

4.3. Abandonment 38

4.4. The Cessation of the Duty of Sue and Labour 39

4.5. Payment of Claims and Recoveries 43

4.6. Limitation and Exclusion of Liability 44

4.7. Abandonment 45

5. Particular Expenses Recoverable Under Sue and Labour Clause 46

5.1. Hull Policy 46

5.1.1. Wages of crew 46

5.1.2. Salvage expenses 47

5.1.3. Litigation Expenses 49

5.1.4. Interest 49

5.2. Cargo Policy 50

5.2.1. Preserving the cargo 50

5.2.2. Repacking cargo 51

5.2.3. Resending the cargo to its original destination 52

5.2.4. Litigation Expenses 54

5.3. Freight Policy 54

6. Conclusion 57

Supplement A 61

Supplement B 62

Institute Cargo Clauses 2009 62

Supplement C 63

Institute Time Clauses (Hulls) 1995 63

Supplement D 65

Institute Voyage Clauses (Hulls) 1995 65

Bibliography 67

3

Books 67

Articles 68

Table of Cases 69

4

Summary

The concept of sue and labour had existed in marine insurance from almost 400 years

ago. Although this concept is a venerable concept but it is still alive and flourishing in the

field of marine insurance law.

The principles of sue and labour embodied in the statute and contemporary forms of

marine insurance policies and according to these principles the assured must take

reasonable measures to avert or minimise a loss that is recoverable under his policy, and

consequently the assured has the right to collect the reasonable expenses that he incurred

for taking those steps from the underwriters. This thesis is an inquiry about different

aspects of the concept of sue and labour in marine insurance law. The sources for such

inquiry include statute, common marine insurance policies, court and other authorities

decisions related to the subject and common practice in the realm of marine insurance

industry.

5

Preface

I want to take this opportunity to thank my kind and patient supervisor Associate

Professor Abhinayan Basu Bal for his support and his valuable guidance. Also I would

like to express my gratitude to Professor Proshnato K. Mukhrejee, the director of

Maritime Law program in Lund University that we had the privilege to learn from him

during this program.

Finally I want to thank all the lecturers and professors in Lund and World Maritime

University that have shared their knowledge with us during these years.

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Abbreviations

Marine Insurance Act 1906 MIA 1906

International Hull Clauses 2003 IHC 2003

Institute Cargo Clauses A, B, C ICC

Institute Time Clauses (Hulls) 1995 ITCH 95

Institute Voyage Clauses (Hulls) 1995 IVCH 95

Institute Clauses Freight (Time and Voyage) 1995 ICF 95

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1. Introduction

1.1. Background

We can almost certainly say that there are few business activities like marine activities

that are subject of insurance so frequently because of their inherent nature. The marine

insurance contract is a contract of indemnity and although most of the times the assured

and the insurer have unequal interests but it is reasonable to assume that is in the benefit

of both parties of the contract to minimise or avert a loss where the loss is covered by the

policy by taking extra ordinary measures. The expenses that assured may incur in order to

avert or minimise a loss in occurrence of a casualty can be divided to three categories,

general average, salvage charges and particular charges.

General average is an ancient concept in marine insurance, which means any loss that

caused by an extraordinary sacrifice voluntarily and reasonably made after a casualty

must be shared between the persons who benefitted from such a sacrifice according to

their shares in the adventure.1 All parties whom contribute to general average can recover

their loss from their insurer but only their net loss after contribution. 2

Second, is the liability of the assured to pay for salvage charges. And finally the last

category of expenses that assured incur to avert or minimise a loss that is the subject of

this thesis is particular charges. Sue and labour is the act of the assured in taking

reasonable measures to avert or minimise a loss arising from an insured peril and the

expenses he incur in doing so can be categorized as particular charges or more precisely,

sue and labour expenses. A distinction can be made between particular charges and

general average and common law salvage charges. General average losses and common

law salvage charges are recoverable under the main body of the policy and as ordinary

insured losses but sue and labour expenses are recoverable in addition to general liability

1 MIA 1906, s 66(2).2 Howard Bennett, The Law of Marine Insurance (Oxford University Press, 1996) 384.

8

of the insurer or can be described as a supplementary cover. We will discuss sue and

labour as a supplementary cover in a separate section.3

The old and now outdated S.G. (Ship and Goods) Lloyd’s marine insurance policy

contained a sue and labour clause stating:

“And in case of any loss or misfortune, it shall be lawful to the insured, their factors,

servants and assigns, to sue, labour and travel for, in and about the defense, safeguard,

and recovery of the said goods and merchandises and ship, etc., or any part thereof,

without prejudice to this insurance; to the charges whereof, we, the assurers, will

contribute, each according to the rate and quantity of his sum herein assured.”

And sue and labour charges as defined by section 78(3) of the Marine Insurance Act 1906

C.41 6 Edw 7 (hereinafter MIA, 1906) is “Expenses incurred for the purpose of averting

or diminishing any loss...”

Sue and labour clause is a major provision of the usual marine insurance policies. These

principles do not generally apply outside the marine insurance context, and it is rare to

find a sue and labour clause in a non-marine policy.

International Hull Clauses 2003 (hereinafter IHC 2003)4 contains a provision in respect

of sue and labour stating:

“In case of any loss or misfortune it is the duty of the Assured and their servants and

agents to take such measures as may be reasonable for the purpose of averting or

minimising a loss which would be recoverable under this insurance.”

Almost the same language and the same clause was adopted in clause 16 of the Institute

Cargo Clauses (A), (B) and (C) (hereinafter ICC) by the title of ‘Minimising Losses’.5

1.1.1. History of Sue and Labour Clause3 F. D. Rose, Marine Insurance; Law and Practice (Informa 2004) 377.4 The International Hull Clauses was adopted by the Joint Hull and the Joint Cargo Committees of Lloyd's

Market Association and the International Underwriting Association in 2002 and revised in 2003 to replace

the Institute Time Clauses. 5 The Institute Cargo Clauses 1982 and 2009 in respect of sue and labour are exactly the same.

9

It is not known when exactly the sue and labour clause inserted in a marine insurance

policy but an early version of it did appear in the London policy of 1613, known as

“Tiger” policy.6

The contemporary sue and labour clause of marine insurance policies, developed in three

phase, the Florentine policy of 1523 and 1527 that is said to be the oldest marine

insurance policy did not have a sue and labour clause thus the first phase of development

of the clause began sometime after 1527 and before 1613 that the clause appeared in the

London policy of 1613. The second stage began sometime after 1623 and the third began

around 1822 and before 1855.7

For centuries maritime voyages were of long duration and communication between ports

and cities were slow, so it was essential that the insured and the underwriters agreed upon

measures that shall be taken by the assured in the event of misfortune and catastrophe.8

The contemporary concept of sue and labour clause is that the assured or his

representative is obliged to use every means within his power to protect the property and

save it from further damage after a loss had occurred. In return, it is the duty of

underwriters to indemnify the assured for expenses incurred in respect of averting and

minimizing the loss. But the original purpose of the sue and labour clause, is resting in

the last sentence of clause, known as the “waiver clause”. The waiver clause has two

effects; first, in the case when notice of abandonment is given by the assured and

declined by the insurer any steps taken by him in recovering, saving or preserving the

subject matter insured will not constitute a waiver or withdrawal of the notice of

abandonment. Second, no acts of the underwriters shall be regarded as acceptance of

abandonment, which, the underwriters previously declined. To permit the insured to take

every measure to preserve the insured property without waiving his right later to give

notice of abandonment and claim a total loss is from the origin of the clause and it said to

6 William D. Winter, Marine Insurance; Its Principles and Practice (McGraw-Hill Book Company, 2d edn,

1929) 172.7 Ibid, 178.8 Brendan P. O'Sullivan, ‘The Scope of the Sue & Labor Clause’ (1990) 21 J. Mar. L. & Com. 545, 551.

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have been adopted after the decision in Peele v Merchants Insurance Co.9 In that case the

insurer took possession and repaired a stranded vessel without the consent of the owner.

The court held that the underwriter accepted a tendered abandonment of the vessel by

taking possession of the ship without the consent of the ship's owners and repairing it on

their account. The object of the waiver provision is to foreclose the possibility that if an

insured abandons the insured property, the insurer's conduct, in interfering to recover or

preserve the property, will be deemed an acceptance of the abandonment.

The insurer liability to indemnify the assured for the expenditure reasonably incurred by

him for preserving subject-matter insured from the perils insured against latter added to

the sue and labour clause.10

1.1.2. Purpose of Sue and Labour Clause

Apart from the origin and history of the clause, we can determine at least two purposes

for the clause, firstly to encourage and to obliged the insured to take reasonable steps to

prevent a threatened loss that if it occurred the underwriter would be liable, and when a

loss does occur, to take steps to recover the subject matter insured and minimise the

amount of the loss. Secondly, to bind the insurer to pay any expenses reasonably incurred

for the purpose of safeguarding and recovering the imperiled goods or ship by the assured

or his agents.

The clause comes to the effect only after a loss or misfortune has occurred or commenced

to operate.11 Although for the purpose of claiming the sue and labour charges it is not

necessary to have been any actual loss or damage to the subject matter insured. If the

charges properly incurred for the sake of preventing a loss at a time when the subject

matter insured was immediately and actively threatened by an insured peril.

9 Peele v Merchants' Ins. Co. (1822) 3 Mason 27.10 Axel L. Parks, ‘Marine Insurance: The Sue and Labor Clause’ (1978) 9 J. Mar. L. & Com. 415.11 Supra note 3.

11

1.1.3. Sue and Labour Clause as a Supplementary

Cover

Section 78(1) of MIA 1906 states that:

“Where the policy contains a suing and labouring clause, the engagement thereby

entered into is deemed to be supplementary to the contract of insurance, and the assured

may recover from the insurer any expenses properly incurred pursuant to the clause,

notwithstanding that the insurer may have paid for a total loss, or that the subject-matter

may have been warranted free from particular average either wholly or under a certain

percentage.”12

So the sue and labour clause is an additional and supplementary to normal insurance

cover. Therefore an assured may recover for a total loss of subject-matter insured and

also for the expenses incurred to avert or minimise the loss. In a case where the policy is

a total loss policy and there is no total loss, sue and labours are still recoverable.13 Also

Clause 16 of ICC (A), (B) and (C) and clause 11.6 of the Institute Time Clauses (Hulls)

1995 (hereinafter ITCH 95) by stating “in addition to any loss recoverable hereunder”

emphasized the supplementary nature of the clause.

For the purpose of ascertaining whether the specified percentage reached or not in a

particular average policy, the sue and labour expenses must be excluded.

Finally the amount recoverable under sue and labour clause is depend on reasonableness

of the efforts to sue and labour and logically this amount cannot go further than the

insured value of the property. The ITCH 95 in this regard provide that:

“The sum recoverable under this Clause 13 shall be in addition to the loss otherwise

recoverable under this insurance but shall in no circumstances exceed the amount

insured under this insurance in respect of the vessel.”

1.2. Scope and Purpose of the Thesis 12 MIA 1906, s 78(1).13 Rose, ‘Marine Insurance’ 392.

12

This thesis aims to answer major questions and problems in respect of sue and labour and

try to solve an anomaly related to sue and labour duty within MIA 1906. The thesis

begins with history and original purpose of the sue and labour clause. Then we will try to

find out whether there is a duty to sue and labour upon the assured or not and if there is,

what is the nature and character of the assured’s duties and liabilities. Furthermore in the

same chapter there will be a discussion about authorized actors for suing and labouring or

more precisely the duty is imposed on which actors in the adventure. One of the most

important questions that this thesis will deal with is the breach of duty to sue and labour

by the assured and its consequence. For answering this question we will face an anomaly

between two sections of MIA 1906 and we will discuss this anomaly with case study and

analyzing different opinions of prominent authors and judges in respect to that. Although,

the Inchmaree clause is a major clause in marine insurance policies and somebody can

write a separate thesis about it but I found it necessary to discuss the Inchmaree clause

briefly for better understanding the conflict between the two sections of MIA 1906 so

there is a section dedicated to Inchamree clause in this chapter.

The next chapter is about Insurer’s liability. First we will discuss briefly the existence of

liability then we answer if its necessary to have an express clause in the policy for

liability of the insurer to reimburse the assured for suing and labouring expenses. The

Bailee clause that can be find in cargo policies in addition to sue and labour clause will

be discussed in this chapter.

‘Particular Expenses Recoverable Under Sue and Labour Clause’ is the title of 4th chapter

of this thesis. In this chapter that is mainly case study the expenses that assured may or

may not recover under sue and labour clause of the policy will be enlisted. The expenses

categorized in three subsections of Hull, Cargo and Freight policy.

The final chapter before the conclusion will try to answer the important question of, when

does the duty of sue and labour cease? Whenever the duty to sue and labour ends

correlatively the insurer’s liability also will cease. We will discuss the cessation of duty

to sue and labour by studying the famous case of Kuwait Airways Corporation v. Kuwait

Insurance Co SAK. Further in this chapter the way that assured usually recover its claim

13

and measures that assured is obliged to take after the casualty and finally general

limitation and exclusion of liability will be discussed.

1.3. Research Methodology and Material

In this paper the traditional legal dogmatic approach that is a research method peculiar to

law has been adopted. In this method the author uses statutes, case law, textbooks and

journal articles to achieve the aims of this thesis, mentioned in the previous section. For

analyzing the different opinions of judges and scholars in respect of each question that

this thesis will discuss, the linguistic analysing method or soft-shoe analysis will be used.

In this method the language and logic of the text will be considered as the source for

comparing and analyzing different opinions.14

Although the aim of this thesis is to discuss sue and labour clause under English law but

since there is similarity between American and English law in this matter and to broaden

the horizon of discussion on subject matter, inclusion of American case law into the

discussion will be useful. So especially in chapter four of this paper the author used some

American case law for the purpose of enlisting ‘the expenses recoverable under sue and

labour clause’.

The MIA 1906 is our only statutory source under English law in respect of subject of the

thesis. IHC 2003, ITCH 1995, Institute Voyage Clauses (Hulls) 1995 (Hereinafter IVCH

95), ICC (A) (B) and (C) and Institute Clauses Freight (Time and Voyage) 1995, has

been used as the reference for standard marine insurance policies since they are widely

accepted around the world and has the most share in marine insurance industry in United

Kingdom and in the world.

1.4. Delimitation

14 Jerzy Stelmach and Bartosz Brozek, Methods of Legal Reasoning (Springer, 2006) 69.

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The focus of this thesis is sue and labour clause in marine insurance policy under English

law. This paper will not explore and study all the aspects of sue and labour but it try to

study all the main legal issues in respect of sue and labour. The sue and labour clause in

P&I club policies have their own similarities and differences with sue and labour in

marine insurance policies but they are out of the scope of this thesis. There exist some

broad concepts in marine insurance law that they are outside of the scope of this thesis

but discussing them briefly seemed necessary to give a better understanding to the reader.

In chapter three there is a section dedicated to Inchmaree clause solely for the purpose of

better understanding the cases that brought forward later on in the same chapter. Also in

chapter five there are some sections for discussing in a nutshell, actual total loss,

constructive loss and abandonment.

2. Assured’s Duties and Liabilities Under

the Clause

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2.1. Existence of The Duty

One of the purposes of the sue and labour clause in the marine insurance policies and

under MIA 1906 is to obliged the assured to take reasonable steps to prevent a threatened

loss for which the underwriter would be liable if it occurred, and when a loss does occur,

to take steps to preserve and protect the subject matter insured so the amount of the loss

would be minimized.

Sue and labour was originally a right rather than a duty, in Lloyd’s SG policy the

draftsman first adopted a permissive terms rather than mandatory:15

“And in case of any loss or misfortune it shall be lawful to the assured, their factors,

servants and assigns, to sue, labour and travel for in and about the defence, safeguards,

and recovery of the said goods and merchandise, and ship, etc, or any part thereof,

without prejudice to this insurance; to the charges whereof we, the assurers, will

contribute each one according to the rate and quantity of his sum herein assured.”

Then in the MIA 1906 that is dealing with contractual sue and labour clauses, we can find

a mandatory approach towards suing and labouring. Section 78(4) of the MIA 1906

provided that: “It is the duty of the assured and his agents, in all cases, to take such

measures as may be reasonable for the purpose of averting or minimising a loss.”

The current ICC and IHC 2003 adopted even more mandatory approach by taking the

subheading of “Duty of the Assured (Sue and Labour)”. IHC 2003, in section 9.1

provides:

“In case of any loss or misfortune it is the duty of the assured and their servants and

agents to take such measures as may be reasonable for the purpose of averting or

minimising a loss which would be recoverable under this insurance.”

It has been said that, this duty bind the assured to take reasonable steps in order to avert

or minimise a loss and if he fails to do so, he might not be able to recover for a loss that

15 Rose, ’Marine Insurance’, 390.

16

was not proximately caused by the insured peril but by his failure to avert or minimise

loss or his omission.16

A few words about proximate cause might be useful here; the proximate cause is the real

and efficient cause leading naturally and reasonably to the loss. It must be, dominant and

efficient, regardless of weather the cause is the last cause in time or whether other causes

compete or intervene. This interpretation does not disqualify a cause that is immediate; an

immediate cause may be proximate, as long as it is dominant and efficient.17 So according

to the meaning of proximate cause whether the loss caused by an insured peril or the

omission and failure of the assured to sue and labour in the event of a peril, is a question

of fact that differs in every case and must be determined by the court.

If sue and labour clause only provides “it shall be lawful” for the insured to sue, labour

and travel for the recovery of the insured property, still the assured can not refuse to sue

and labour. It is the case whether the clause states “it shall be lawful” or “it shall be

lawful and necessary” or “it is the duty of the assured”.

It has been said that even in the absence of a sue and labour clause the duty of the

assured still exist and the clause place no greater burden on the assured to preserve and

protect the subject matter insured. We will further discuss non-existence of the clause in

section 3.2 of this paper.

2.2. Nature of The Duty

We can assume that the nature of all contractual sue and labour clauses are the same or

identical with the statutory duty. The nature and the content of any duty mostly depend

on the terms of the contract. But the modern marine insurance standard clauses that are

16 Howard Bennett, The Law of Marine Insurance (Oxford University Press, 1996) 388.17 Howard N. Bennett, ‘Causation in the Law of Marine Insurance: Evolution and Codification of the

Proximate Cause Doctrine, The Modern Law of Marine Insurance’ (D. Rhidian Thomas, LLP, 1996) 173.

17

commonly in use in the practice area are reflecting the nature of duty stated in section

78(4) of MIA 1906:

“(4) It is the duty of the assured and his agents, in all cases, to take such measures as

may be reasonable for the purpose of averting and minimising a loss.”

Generally speaking, the duty of the assured to sue and labour stated in MIA and under

modern standard clauses is to use all reasonable and proper means for the security,

preservation, relief, and recovery of the insured property and he must ensure rights

arising from the peril in respect of the subject-matter insured are properly preserved and

exercised.18 The assured must act reasonably but no more than reasonably, it means to do

all the necessary measures that a prudent uninsured owner would be expected to do under

like circumstances. While it is the duty of the assured to labour for the recovery of the

insured property, however, he is not bound to do impossibilities, and his conduct will not

be measured by a more knowledgeable person but with regard to an ordinary competent

insured and if it appears to practical men that the property cannot be saved, the insured is

justified in abandoning the property, and is not bound to await the decision of the insurer

on an offer to abandon.19

There is another aspect to reasonableness; the cost of the actions of the assured must be

economically reasonable. For instance the assured can not recover charges of the

warehousing the goods after the time when the goods could have been reshipped. Or the

charges of freight or repair of the ship that cost the assured more than standard practice.20

It is necessary to mention that measures taken by the assured to avert or minimise loss

shall be legal and according to the public policy of the law of the contract or law of the

court (lex fori).

The issue of reasonableness well discussed in Integrated Container Service Inc. v. British

Traders Insurance Co. Ltd.21

In this case the plaintiffs leased 1016 containers to Oyama Shipping Ltd in 1972, Oyama

18 MIA 1906, s.78(4); ITCH 83, cl. 13.1; IVCH 83, cl. 11.1; IHC 03, cl. 9.1; ICC, cl. 16.1. 19 Rose, ‘Marine Insurance’ 397.20 Bennett, ‘The Law of Marine Insurance’ 394.21 Integrated Container Service Inc. v. British Traders Insurance Co. Ltd. (1984) 1 Lloyd’s Rep, 154, CA.

18

went bankrupt in 1975 while the containers were scattered around the world. The

plaintiffs spent USD 133,943 for recovering the containers, incurring travel, legal and

storage costs. The plaintiffs had an all risk policy with the defendants, claimed by virtue

of a sue and labour clause in the policy for expenses he incurred in recovering the

containers and also for lost and damaged containers. The defendants refused the claim for

sue and labour expenses and just agreed to pay for the containers that actually lost or

damaged. The defendants in the Court of Appeal argued that, in order to recover under a

sue and labour clause, the plaintiffs had to show: (1) that they took extraordinary

measures in order to (2) prevent a loss which would very probably have occurred (3)

within the currency of the policy so that underwriters would have been liable to pay for it.

The court held that, there was no doubt that the plaintiffs had taken extraordinary means

to recover their containers, but the questions were, to what extent was it necessary to

show the probability of loss? And, did it have to be proved that the loss was one, which

would have occurred during the currency of the policy? The Court of Appeal decided that

the assured should be entitled to recover all extraordinary expenses reasonably incurred

by him where he could demonstrate that a prudent assured person mindful of an

obligation to prevent a loss would incur expense of an unusual kind. It would be wholly

unreasonable to penalise an assured on the basis that while he had shown that a

reasonable man would have done as he did yet in the light of all that had transpired the

loss would not, as the Court now knew, have been probable.

2.3. Authorized Actors

There are different terms in respect of authorized actors in performing a sue and labour

act in different sources. The MIA 1906, imposed the duty to sue and labour upon “the

assureds and his agents”.22 Under Lloyd’s SG policy, the duty is upon “ the assured, their

factors, servants and assigns”. The Institute Hull and Cargo clauses stated: “the assured,

22 MIA 1906, s 78(4).

19

his servants and agents” are obliged to do sue and labour.23 We can presume that the

purpose of adding the word “servants” was to include the employees of the assured like

the master to authorized actors.

It has been accepted that the sue and labour expenses are only recoverable if they

incurred by the assured, his agents and servants. So all third parties actions and expenses

are not capable of seeking indemnity by the assured as sue and labour charges.24

The issue of authorized actors and who is included in the words “agents” and “servants”

and who is not, has been raised in number of cases that we will discus them chronically in

this section.

In Aitchison v. Lohre (1879)25 the court ruled that, salvage charges are not recoverable

under sue and labour clause within the policy, since salvors acting independently and can

not be consider as agents of the assured. We have to consider that this case was before

drafting MIA 1906. Section 78(2) of MIA clearly stated that: “General average losses and

contributions and salvage charges as defined by this Act, are not recoverable under the

suing and labouring clause.”

In Uzielli v. Boston Marine Insurance Co (1884)26 a ship insured by her owner with a

policy that contained a sue and labour clause with a provision that included “ the assured,

their factors, servants and assigns” as authorized actors. The insurer, reinsured himself

with a French company and the French company took out a reinsurance policy with

Boston Marine Insurance Co (the defendants). The insured vessel stranded and the owner

abandoned her to the first underwriter then the underwriter in order to sell the vessel,

refloated her. Afterwards he claimed the refloating expenses from the French company

under sue and labour clause. French company paid those expenses and consequently

sought reimbursement from Boston Marine Insurance Co. The issue was to determine

23 International Hull Clauses 2003, cl 9.1 and Institute Cargo Clauses 2009, cl 16. 24 Bennett, ‘The Law of Marine Insurance’ 390.25 Aitchison v. Lohre (1879) 4 App Cas 755, HL.26 Uzielli v. Boston Marine Insurance Co (1884) 15 QBD 11, CA.

20

whether the original insurer is a “factor, servant and assigns of the assured” that their

actions to refloat the ship consider as sue and labour or not.

The court of appeal ruled that, however the defendants are liable for a constructive total

loss under their reinsurance policy but, the plaintiff can not recover the expenses incurred

by the original underwriter in order to safeguard the ship and minimise the loss, for the

reason that the original underwriter was not a factor, servant or assign of the assured.

Lord Brett MR in this case stated:

“I myself should be inclined to give to that clause (the sue and labour clause) all the

width that I could: I should be inclined to hold that it gave the assured in this policy

power to sue and labour for the benefit of the adventure; I think that the assured would

have sufficient interest in the ship to entitle them to do so. But in this case the sueing

and labouring for the safeguard and preservation of the ship was not by the assured

under this policy, but by other underwriters. Those other underwriters were not either

the “factors”, the “servants”, or the “assigns” of the re-assured.”

In Astrovlanis Compania Naviera S.A. v. Linarrd (the Gold Sky, 1972)27, salvors

intentionally kept away from a sinking vessel by master and crew of that vessel, Mocatta

J in a controversy opinion, stated that the master and crew are not included in the word

“agents” hence their actions shall not be take to the account of suing and labouring.

“... In s 78(4), the words used are: “it is the duty of the assured and his agents.” The

word "agents" is capable of a wide range of different meanings depending upon the

context and circumstances in which it is used. The master of a ship is primarily the

servant of her owner; this authority as master is strictly limited and in general he only

has wide powers as an agent to bind his principal and employer in case where he has to

act as agent of necessity. Whilst the master of Gold Sky, had he entered into a Lloyd’s

salvage agreement with Captain Emblem of Hercules, would no doubt by so doing have

bound the plaintiffs, I do not think, that it necessarily follows that, in the absence of

instructions from his owners, the master of a vessel must be taken to be included within

the words “ the assured and his agents” in s78 (4), so that a failure by the master to take

such measures as may be reasonable will militate against his owners’ claim against

insurers. I think the words ‘his agents’ should in the context and to avoid an acute

27 Astrovlanis Compania Naviera S.A. v. Linarrd (the Gold Sky, 1972) 2 Lloyd’s Rep 187.

21

conflict between two sub sections of the Act be read as inapplicable to the master and

crew, unless expressly instructed by the assured in relation to what to do or not to do in

respect of suing and labouring.”

The argument of Mocatta J failed to get approval in future cases and maritime law. The

duty of sue and labour is delegated by the owner of the ship to the master and it seems

repugnant to accept that the master is not included in the word “agents” in section 78(4)

of the MIA.

The issue of agency and interpretation of section 78(4) of the Act, well discussed in the

leading case of State of Netherlands v. Youell and Hayward and Others (1998).28 In this

case the Dutch navy-the plaintiffs- bought two submarines from RDM and insured them

with the defendants. When the two submarines were still in the shipyard of RDM and

during sea trials, the Navy officers found out that the submarines had serious cracks and

debonding in their paintworks of the Hulls. Therefore they claimed damages under their

policy from the defendants. But the underwriters rejected the claim, arguing that, firstly

the damages had not occurred as the consequence of an insured perils, secondly the

builders were agents of the assured and by their misconduct to apply an excessive amount

of primer, They failed to do their duty of sue and labour under section 78(4) of the Act.

The Court of Appeal approved the decision of the trial judge and stated that, there was no

misconduct from the part of builders within the meaning of the MIA. Because according

to MIA 1906, misconduct is a state of mind coupled with a more direct physical cause of

loss. Also the court ruled that the builders were not agents of the assured and they didn’t

have any duty to sue and labour under section 78(4) of the Act. Philips LJ in this respect

deliberated:

“The duty of agents to sue and labour referred to in section 78(4) is a duty that arises in

relation to a maritime adventure by reason of the delegation to master, crew and other

agents of the conduct of that adventure. I can see no scope for the application of such a

duty in relation to an assured who insures as the purchaser of ships under a shipbuilding

contract.”

28 State of Netherlands v. Youell and Hayward and Others (1998) 1 Lloyd’s Rep 236, CA.

22

We can conclude that the words ‘agents’ and ‘servants’ in MIA 1906 and Institute Hull

and Cargo clauses have a broad meaning but they generally mean employees of the

assured in the marine adventure like masters and other crew of the ship.

2.4. Breach of The Duty

The effect of the breach of the duty to sue and labour is uncertain. Some scholars and

courts take the view that a breach bars all recovery under the policy but the majority of

them agree that sue and labour clause is not a warranty which failure to comply with it

leads to avoidance of the contract by the insurer. The assured could be guilty of

negligence or even willful misconduct or his agents and servants fail to sue and labour

but still can recover for a loss proximately caused by an insured peril.29

In Currie and Co v. Bombay Native Insurance Co (1869)30 a cargo of timber aboard the

vessel Northland, insured by the plaintiffs against total loss. The vessel grounded in her

way to Madras and the master whom was in charge also for the cargo tried to save the

ship but did not make any effort to save the cargo. Eventually the assured claimed for a

total loss under his policy but the insurers rejected the claim, on the basis that there was

no total loss of the cargo. The court accepted the argument of the underwriters and ruled

that the cargo could not be considered as a total loss. The Privy Council also considered

the situation where the cargo had become a total loss by the omission of the master to sue

and labour. Lord Chelmsford in this respect stated in his Lordship:

“It was the duty of the assured, or of the captain of Northland, to take some steps in

accordance with the recommendation of the Surveyors to try and save the cargo. But

towards this object, the captain literally did nothing.

...If previously a portion of it, at least, might have been saved by the exertions of the

Captain acting for the assured, and he chose not to make the slightest attempt to save it,

how can the assured recover from the Underwriters a loss which was made total by their

own negligence... In this case his tenderness to the ship might have arisen from his

29 Rose, ‘Marine Insurance’ 403.30 Currie and Co v. Bombay Native Insurance Co (1869) LR 3 PC 72.

23

being a part owner uninsured; but, at all events, there was no reason why she should

have been spared if her sacrifice were necessary to the safety of the cargo. She was a

hopeless wreck, and was sold at the auction in that character and by that description.

... This omission of the Captain to take any steps towards saving the cargo, at a time

when it was probable that his endeavors would be successful, in their Lordships’

judgment, precludes the Assured from claiming for a total loss of the cargo into

whatever condition it might have been brought afterwards.”

In Rousse v. Home Insurance Co. (1955)31 the insurer alleged that the owner failed to

make all reasonable exertions to prevent the loss of the vessel when its engines stopped

while it was in the Mississippi River. Water had entered the hull too rapidly for the bilge

pumps to operate effectively, and the pilot, unable to start the engine, paddled to shore,

moored the boat to a tree, and reported the difficulty to the owner. Later that afternoon

the owner attempted but failed to bail out the boat, rent air tanks to raise the boat, and

borrow money to meet the cost of salvaging operations. It was not until after these

undertakings had failed that the owner informed the insurer that he was unable to have

the salvage performed. In this case the court held that the owner can recover for a total

loss of the boat and rejected the argument of the insurer that the breach of the

performance of the duty of sue and labour by the assured can lead to denying liability.

2.5. Anomaly in Section 55 of MIA

Although that there is a duty to sue and labour imposed by both section 78(4) of the Act

and standard marine insurance clauses and failure to do this duty by the assured and his

agents and servants constitute a negligence but section 55(2)(a) of the MIA, 1906

provides that the assured can not be denied recovery even though the loss would have not

happened but for the negligence of the master or crew. Hence the underwriters will

remain liable in the event of negligence of master and crew.

Section 55 (2)(a): “The insurer is not liable for any loss attributable to the willful

misconduct of the assured, but, unless the policy otherwise provides, he is liable for any

31 Rousse v. Home Insurance Co. (1955), 78 So.2d 522.

24

loss proximately caused by a peril insured against, even though the loss would not have

happened but for the misconduct or negligence of the master and crew.”

The conflict between section 55(2)(a) of the Act and the obligation of the assured to sue

and labour that we discussed in previous section, addressed in number of cases. Here we

look through some of most prominent of them and solutions suggested by the courts, to

come to an understanding of this conflict but before that a few words about Inchmaree

clause seems to be necessary.

2.5.1. The Inchmaree Clause

The Inchmaree clause takes its name from the vessel involved in the case of Thames and

Marsey Marine Insurance Co. Ltd. v. Hamilton, Fraser and Co. (1887) Inchmaree was a

steamship insured under a time policy against perils of the seas “and all other like perils,

losses, misfortunes, that have or shall come to the hurt, detriment, or damage of the said

vessel or any part thereof.”32 Because of the apparent negligence of the crew the donkey

engine of the vessel became over-pressured and consequently damaged. The assured

claimed under his policy for cost of replacing the engine. The House of Lords ruled that

the loss was not occurred by perils of the seas or ‘all other perils’ under the policy and

therefore the underwriters are not liable.

After this decision, the Inchmaree clause or Negligence clause was introduced into

marine insurance policies to protect assureds from negligence of master, mariners,

engineers or pilots. The clause is now contained within clause 6.2 of the ITCH (95) and

clause 4.2 of the IVCH (95).

The principles articulated in the inchmaree have been discussed and established in

number of English law cases.

2.5.2. Leading Cases of the Conflict

32 Thames and Marsey Marine Insurance Co. Ltd. v. Hamilton, Fraser and Co. (1887) 12 App Cas 484.

25

In the case of Lind v. Mitchell (1928)33 the vessel contacted by an ice and holed, the

master unreasonably and negligently abandoned the vessel. Underwriters refused

payment to the assured based on a defence that the abandonment of the vessel was

deliberately, they failed to prove it but the judges considered the effect of negligent

abandonment by the master and crew in their statement although that negligence of the

master and crew was an insured peril in the policy under Inchmaree clause.

Scrutton L.J. in his statement agreed with the opinion of Lord Sumner in British &

Foreign Marine Insurance Co. v. Gaunt (1921) 34 that stated:

“There remains an argument based on a reading of section 78(4) of the Act which is

very novel. It is one of the disadvantages of codification that new terms used or even

unfamiliar sequences of propositions suggest that the law has been changed, where

those familiar with the old decisions would not have suspected it. The arguments afford

a striking instance of this. The section obviously refers to suing and labouring. It cannot

possibly be read as meaning that if the agents of the assured are not reasonably careful

throughout the transit he cannot recover for anything to which their want of care

contributes. The point therefore fails.”

Scrutton L.J. held that even in the absence of Inchmaree clause or cover against

negligence of the master and crew, section 55(2)(a) prevail over section 78(4) of the Act

therefore the assured can recover notwithstanding the negligent abandonment.

There exist several suggestions by different judges and scholars in respect of resolving

the conflict between section 55(2)(a) and 78(4) of the Act that we discus in this part and

then we analysis each of them.

Mocatta J. in Astrovlanis Compania Naviera S.A. v. Linarrd (the Gold Sky)35 where the

master and crew of the sinking vessel, negligently refused help of salvors, suggested that

33 Lind v. Mitchell (1928) 34 Com Cas 81.34 British & Foreign Marine Insurance Co. v. Gaunt (1921) 2 AC 41.35 Astrovlanis Compania Naviera S.A. v. Linarrd (1972) 2 QB 611.

26

section 78(4) covered the act of the assured and his agents and the master and crew are

not ‘agents’ of the assured.36

“On my construction of s 78(4), the master here was not the agent of the plaintiffs (the

assured), since there is no evidence that he was instructed by them to refuse salvage

assistance, and I do not feel able to draw the inference that he was so instructed.”

Another suggestion for reconciling section 55(2)(a) and section 78(4) is that the

interpretation of the contract must be in accordance with its commercial purpose.

According to this rule, where there is a negligence cover in the policy and also a sue and

labour clause, taking reasonable steps in the clause must be read and interpreted as

avoiding recklessness. And in a case where negligence is not a covered peril in the

policy, because the language of section 78(4) of the act is not clear enough to give a right

of denying liability in a case of non compliance to the underwriters, thus “the measure of

indemnity will be reduced only by a reckless or willful failure to take reasonable steps to

avert or minimize a recognized danger.”37

The third approach to resolve this conflict is to distinct between prior and after the

casualty. Arnould suggested that section 55(2)(a) prevails prior to a casualty and

throughout the period when the insured property is in the grip of the peril, whereas the

duty of the assured to sue and labour takes over after the casualty. According to this

opinion section 78(4) comes to its effect only after the peril has struck, under this

approach there is “a positive obligation that is owed by the assured to the underwriters,

breach of which sounds in damages.”38

A more satisfactory approach to resolve this conflict is through causation reasoning. In

this approach the underwriters are not liable for losses proximately caused by the

negligence of the assured or his agents where the policy does not cover such negligence.

Thus in the cases where the assured or his agents and servants negligently fails to sue and

labour to the extent that they failure becomes the proximate cause of the loss the

36 Bennett, ‘The Law of Marine Insurance’ 395.37 Ibid 393.38 Arnould J, Law of Marine Insurance and Average (Sweet & Maxwell, 16th edn, 1997) Vol 3, para 770.

27

underwriters can deny liability because the loss was not covered by the policy and caused

by the omission of the assured to sue and labour.39 But the problem with this approach is

that is not related to the section 78(4) and the underwriter could have rely on this

argument even in the absence of a sue and labour clause in the policy or section 78(4) of

the Act, because he can argue that there is no covered peril and therefore there is no

indemnity against negligence of the assured.

The problem with the first suggestion, where master and crew are not included in the

word ‘agents and servants’ and so if they negligently fail to sue and labour, the assured

still can recover from his policy, is that it fails to take account of the fact that a master act

as an agent of the assured and so is an agent of the assured. Therefore we can not rely on

this suggestion for resolving the conflict between sections 55(2)(a) and section 78(4).

The second suggestion was to read the contract according to its commercial purposes,

thus sue and labour clauses and section 78(4) of the Act must interpret in a way that does

not deny commercial purposes of the policy. According to this approach when barratry is

a covered peril in the policy, the underwriters shall not deny liability on the basis of

negligent or for the barratrous conduct of the master and crew, but he has a defence and

can deny liability in the event of reckless conduct of the master and crew. When we

compare the nature of barratry and recklessness it seems impossible to draw a conclusion

like that.

The third approach that suggested the effect of section 55(2)(a) comes to existence only

after the casualty has a practical problem. It can leads to prolongation of a recoverable

loss by the assured rather than taking steps to avoid it. In this case the assured can wait

and do nothing in the grip of peril so he may recover from the underwriter.40

It has been held in Noble Resources Ltd v. George Albert Greenwood (The Vasso)41 that

breach of duty to sue and labour entitles the underwriter to a claim for damages against

39 Supra note 35.40 Susan Hodges, Cases and Materials on Marine Insurance Law (Cavendish Publishing Limited, 2004)

785.41 Noble Resources Ltd v. Greenwood (1993) 2 Lloyd’s Rep 309.

28

the assured as to extend that breach causes him the loss. These damages could be given to

the insurer specially where the assured failed to exercise or preserve some rights against a

third party that the underwriter is entitled and could have had benefit from subrogation of

those rights. The subrogation is designed to prevent the assured from unjust enrichment

but not to provide the insurer with a profit.

When we analyses the aforementioned solutions, we can say unfortunately, there is no

concrete and convincible solution to the anomaly between section 55(2)(a) and section

78(4) of the MIA 1906. Thus, although it is certain that MIA, 1906 impose a statutory

duty to sue and labour on the assured, the consequence of failing to do so by negligent or

even willful misconduct of the assured is not clear. It has been said the assured might be

unable to recover under his policy, because the loss was proximately caused by his

omission to sue and labour and not the insured peril. And it seems this is the most logical

solution to this anomaly till today.

3. Insurer’s Liability

In this chapter we discuss the liability of the assured in respect of sue and labour clause.

When there is a duty there will be a liability on the other side so basically in the first

section about existence of liability there is not much to discuss specially considering that

the liability of the insurer for reimbursing the assured in respect of suing and labouring

expenses when there is a sue and labour clause has been stated in MIA 1906. But the

question about liability of the insurer will arise when there is no sue and labour clause in

the policy.

3.1. Existence of Liability

MIA 1906 clearly impose a duty on the underwriter to reimburse the assured in case of

29

any sue and labour expenses incurred by him where there is a sue and labour clause

within the policy.

While the titles of the contemporary Institute clauses that is “Duty of the Assured”

emphasis on the assureds’ duty but still the underwriter duty to reimburse the assured

exist in this clause.

The section 78(1) of the Act stated that: “where the policy contains a suing and labouring

clause, ... the assured may recover from the insurer any expenses properly incurred

pursuant to the clause.” Even though it is unlikely nowadays that a policy doesn’t have a

sue and labour clause but we will consider this situation in the next section.

3.2. The Necessity of an Express Clause

Despite the fact that section 78(4) of the Act clearly impose a statutory duty on the

assured to take reasonable measures to avert and minimize the loss “in all cases” and by

stating “in all cases” we can conclude that even in the absence of an express sue and

labour clause in the policy, the assured still shall exercise his duty to sue and labour, but

the MIA 1906 is silent about the reimbursement right of assured in the event of absence

of an express clause in a policy.

A question arise here, where a policy does not contain a sue and labour clause or even has

one but does not provide the right of reimbursement for the assured, can assured still

recover those expenses incurred for averting and minimizing a loss that covered by the

policy to the subject-matter insured?

The language of section 78(1) of the Act seems supporting the idea that the underwriter is

only obliged to reimburse the assured where there is an express sue and labour clause but

it is unlikely, because it is contrary to one of the well-established principles of law,

namely, unjust enrichment.

In Emperor Gold mining Co Ltd v. Switzerland General Insurance Co Ltd (1964)42 cargo

of explosives and general goods insured for a voyage from Sydney to Fiji under a policy

that did not contain a sue and labour clause. The vessel after deporting from Sydney

started leaking and had to return to the port. The assured unload the cargo and forwarded

42 Emperor Gold mining Co Ltd v. Switzerland General Insurance Co Ltd (1964) 1 Lloyd’s Rep 348.

30

it to Fiji by another vessel, then he claimed for this expenses as sue and labour. The

underwriter denied payment based on that sue and labour expenses were not included in

the policy. The supreme court ruled that, even though the policy did not have an express

sue and labour clause it is absurd to impose a statutory duty (according to section 78(4) of

the Act) to sue and labour on the assured but do not reimburse him for the expenses, so

the assured could recover those expenditure as sue and labour.

“... Section 78(4) plainly imposes on the assured a duty to take such measures as are

reasonable for the purpose of averting or minimising a loss. I am unable to read this

provision as a duty to be carried out by the assured at his own expense, in the absence

of a suing and labouring clause in the policy ... Having regard to the conclusion at

which I have arrived, substantially, the whole of the plaintiff’s claim succeeds.”

There is a leading case in respect of absence of a sue and labour clause in the policy that

almost determined the law in this matter.

In Netherlands Insurance Co. Ltd v. Karl Ljungberg and Co A/B (1986)43 a cargo of

plywood was insured with the appellants of the case by the respondents whom were the

consignee of the shipment. In their all risk policy included both a sue and labour clause

and a bailee clause. The bailee clause obliged the assured to preserve the rights against

third parties for the sake of underwriters. After discharging the cargo the consignee found

that some of the cargo were missing or damaged, so in order to preserve the underwriter’s

right against the carrier they started proceeding against the carrier in Japan. The assured

claimed the cost of proceedings from the underwriters under the bailee clause, but the

insured rejected the claim, arguing that they will reimburse the assured for the sue and

labour costs as there is an express clause in the policy about that but they shall not

reimburse for the duty imposed on the assured under bailee clause since there is no

express provision about the right of reimbursement of the assured within the bailee clause

of the policy.

The Privy Council ruled that, there is an implied duty of reimbursement on the

underwriters for both the sue and labour clause and the bailee clause, consequently the

insurer must indemnify the assured for the cost incurred by him in order to preserve the

rights of the underwriter against third parties. Lord Goff in this respect with an excellent

choice of words stated: 43 Netherlands Insurance Co. Ltd v. Karl Ljungberg and Co A/B (1986) 2 Lloyd’s Rep 19, PC.

31

It can, of course, be said, as indeed it was said on behalf the appellants, that the fact that

the sue and labour clause makes express provision for reimbursement of the assured by

the insurers, whereas the bailee clause does not do so, militates against the implication

of a term in the bailee caluse to the same effect...

The respondents (assured) placed in the forefront of their submissions the proposition

that the obligation of the assured under the bailee clause properly to preserve and

exercise all rights against carriers was an obligation imposed upon them for the benefit

of the insurers. Their Lordships do not feel able to accept that, as a general proposition,

the mere fact that an obligation imposed upon one part to a contract for the benefit of

the other carried with it an implied term that the latter shall reimburse the former for his

costs incurred in the performance of the obligation. But the fact that, in the present case,

the relevant obligation is, their lordship, a material factor which may be taken into

account; and when that fact is considered together with all the other facts which their

Lordships have set out, they consider that a term must be implied in the contract in

order to give business efficacy to it, that expenses incurred by the an assured in

performing his obligations under the second limb of the bailee clause (in the form now

under consideration) shall be recoverable by him from the insurer in so far as they relate

to the preservation or exercise of rights in respect of loss or damage for which the

insurers are liable under the policy.”

According to those above mentioned cases, we can conclude that although there is no

implication in maritime law that assured will be reimbursed by the insurer any expenses

that he incurred for averting and minimising a loss without an express sue and labour

clause, but it seems, where an assured discharge his duty to sue and labour or preserved

the rights of the underwriter against a third party, a correlative duty to reimburse him

might be enforceable as an implied term.

In practice, the Institute Hulls Clauses and ICC (a)(b) and (c), all of them have an express

sue and labour clause with a provision to reimburse the assured. But it is necessary to

mention that there is no sue and labour clause in Institute Freight Clauses (Time and

Voyage) so the issue still remains alive, since there is a statutory duty for suing and

labouring imposed by section 78(4) of the Act that affects all marine insurance policies

including Freight policies but the reimbursement obligation of the insurer has not been

imposed by the Act.

32

3.3. Extent of Liability

Sue and labour clauses in marine insurance policies constitute a separate insurance in the

sense that liability for sue and labour expenses is supplementary to the insurer's contract

to pay a particular sum in respect to damage sustained by the subject matter of the

insurance. In other words, liability to the insured for sue and labour expenses is in

addition to, and over and beyond, the amount payable under the limits of the named perils

coverage, so that an insurer is not relieved of liability for sue and labour expenses by

reason of his already having paid the full amount of insurance under the policy, as for a

total loss.44

3.4. The Bailee Clause

There is a duty upon the assured of a cargo policy in addition to duty of sue and labour,

that originally introduced in a clause in the ICC known as Bailee Clause.45 In the event of

loss caused by an insured peril the assured can abandon the subject-matter insured to the

insurer so the insurer himself will look after the remaining interests in the subject-matter

and exercise his rights against third parties. The problem with this right of subrogation is

that in most of the cases the investigation and payment of the assureds’ claim on the

policy takes a long time but in order to preserve rights against third parties a prompt

action is necessary. Thus clause 16.2 of the ICC (A), (B) and (C) known as the Bailee

Clause impose a duty upon the assured “ to ensure that all rights against carriers, bailees

or other third parties are properly preserved and exercised.”

The other reason behind Bailee clause except the necessity of prompt action by the

assured, is that in the event of losses of cargo when the carriers or bailees are liable for

the loss, they or their insurer must borne the liability and not the cargo-owner insurer.46

The Bailee clause as a part of sue and labour clause, entitles the assured to seek

reimbursement from the insurer the expenditure he incurred in order to preserve and

44 Rose, ‘Marine Insurance’ 391.45 Ibid, 39546 Hodges, ‘Cases and Materials on Marine Insurance Law’ 779.

33

exercise the rights against third parties. As we mentioned in the section of “The Necessity

of an Express Clause” in Goldmining and Netherlands Insurance Co. Ltd v. Karl

Ljungberg and Co A/B the absence of a reimbursement clause did not prevent the assured

to claim for the expenditure he properly incurred for preserving and exercising the rights

against third parties, in the other words when the assured discharge his duty that imposed

by the Bailee clause, automatically he will entitle a right of reimbursement as an implied

term.

In addition to the Bailee clause, cargo underwriters usually include an Important Notice

or Red Line clause in insurance policies to emphasis and state the measures that should

be taken by the assured in the event of a casualty in order to preserve and exercise rights

against third parties and to collect evidence.47

A similar provision to the Bailee clause is incorporated in IHC 2003, which provide

whether or not the insurers agreed to pay the claim or already have paid the claim, the

assured is bound to take one or all of these following steps with reasonable approach:

“1. Asses as soon as possible whether there are any prospects of a recovery from

third parties in respect of matters giving rise to a claim or to a potential claim

under this insurance.

2. Protect any claims against such third parties if necessary by the commencement

of proceedings and the taking of appropriate steps to obtain security for the claim

from third parties.

3. Keep the Leading underwriter(s) and the appointed average adjuster (if any)

advised of the recovery prospects and any action taken against third parties.

4. Co-operate with the leading underwriter(s) in the taking of such steps as may

be reasonably required to pursue any claims against third parties.”

In the course of taking those above mentioned steps, any reasonable expenses incurred by

the assured will be indemnify by the underwriters even where the assured has incurred

reasonable expenses for preserving the rights against third parties but his main claim on

his policy refused by the insurers.

47 Rose, ‘Marine Insurance’ 386.

34

4. The cessation of Sue and Labour

In this chapter we discuss one of the main questions of this work that have been raised in

the introduction. We know that After a loss has occurred or even when the subject-matter

insured is in the grip of a peril the duty of the assured to take reasonable steps to avert or

minimise the loss or the duty to sue and labour will arise. But the question is, when does

the duty to sue and labour end. First we briefly discuss the concepts of actual total loss,

constructive total loss and abandonment that is necessary to understand them for

answering the main question then in the end we discuss limitation and exclusion of

liability and payment of claims.

4.1. Total Loss

A total loss can be actual or constructive.

4.1.1. Actual Total Loss

MIA 1906 defined actual total loss as: “Where the subject-matter insured is destroyed, or

so damaged as to cease to be a thing of the kind insured, or where the assured is

35

irretrievably deprived thereof, there is an actual total loss.”48 Actual total loss as it

construed by the MIA can be divided to three categories:

4.1.1.1. A Total Destruction

When the damage to the subject matter is such as to make it obviously an actual total

loss. In a case of a ship when “reduced to the condition of a mere congeries of wooden

planks or of pieces of iron which could not without reconstruction be restored to the form

of a ship”49 we can call it a total destruction of a vessel.

In case of cargo, when the ship carrying the goods is lost or sank, consequently we can

assume that the goods are totally destroyed.

4.1.1.2. Loss of Character

There is a principle in insurance law that a subject matter may still exist in specie but

shall be regarded as an actual total loss. This category of total loss usually does not apply

to ships but it is applicable to cargo. Where a cargo becomes unmerchantable, it actually

loss its character. The test for determining that the goods lost its merchantable character

is to ask whether an honest businessman would buy or sell it or not.50

4.1.1.3. Irretrievably Deprivation

The final category of actual total loss is where the assured is irretrievably deprived of his

property but the subject matter still exists. Seizure, piracy, capture by hostile forces and

the actions of barratrous crew are the forms of deprivation of possession. There is usually

uncertainty about when the owner of a captured vessel is irretrievably deprived from his

property.51

4.1.2. Constructive Total Loss

48 MIA 1906, s 57.49 Sailing Ship "Blairmore" Company, Limited v. Macredie (1898) AC 593 (HL).50 Hodges, ‘Cases and Materials on Marine Insurance Law’ 609.51 Ibid, 613.

36

Constructive total loss is a situation peculiar to marine insurance where an insured

property has been so damaged that the cost of repairing it would be higher than its value

or the assured is deprived from the possession of subject matter and recovery is unlikely.

Section 60(1) of MIA defined constructive total loss: "where the subject-matter insured is

reasonably abandoned on account of its actual total loss appearing to be unavoidable, or

because it could not be preserved from actual total loss without an expenditure which

would exceed its value when the expenditure had been incurred".52

4.3. Abandonment

Generally abandonment means give up completely. But in maritime law in the context of

a ship means leaving the ship physically when the safety of those onboard is in danger or

more specifically when the ship is in an extreme casualty that master and crew have not

any hope to recover it or intend to return (animo dereliquendi sine animo revertendi et

sine sperecuperandi).53 This may happen when the ship is a subject matter of an insurance

contract and there is a situation of constructive or actual total loss, in this situation an

assured may indicate his willing to abandon his interest in the subject matter for an

absolute indemnity from the insurer.

However, sometimes abandonment and notice of abandonment are used interchangeably

but there is a distinction between them. The act of abandonment is handing over the

remaining of the insured subject matter to insurer by the assured whenever an incident of

total loss has been took place in return for payment for a total loss. The notice of

abandonment is an offer by the assured that allows the assured to treat a constructive total

loss as an actual total loss. The main purpose of notice of abandonment is if the assured

does not serve this notice in case of constructive total loss he is only entitled for a partial

loss indemnity. Thus abandonment may take place in all incidents of total loss-

constructive or actual- but notice of abandonment is only served in the constructive total

loss incidents.52 MIA 1906, s 60(1).53 Rose, ‘Marine Insurance’ 457.

37

Section 63(1) of MIA 1906 provides:

“Where there is a valid abandonment the insurer is entitled to take over the interest of the

assured in whatever remains of the subject-matter insured, and all proprietary rights

incidental thereto.”

Thus a notice of abandonment and abandonment itself must transfer the whole interest of

the assured to underwriters absolutely and unconditionally. The extent of interest that

should be abandoned is limited only by the extent of assured ‘s interest in the subject

matter.54

An important question that may arise in this regard is: does abandonment automatically

pass the assureds’ proprietary interest to the underwriters or not? And when it would be

passed? In some cases judges held that when a claim is made or when it is paid per se

vest the property in underwriters.55 But what we can realise from contents of section 63(1)

is, that a valid abandonment does not necessarily and automatically transfer the

proprietary rights in the subject matter to the insurers but entitle them to take over the

assureds’ right in the subject matter.

4.4. The Cessation of the Duty of Sue and

Labour

We have to keep in mind that the duty to sue and labour correlatively is linked to the right

of the assured to collect the sue and labour expenses that he incurred reasonably, thus the

cessation date of the duty is the same as the ending date of the right of the assured for

recovery.

Although that there are few cases that addressed this issue but this question is important,

especially in the event of a total loss. Obviously the duty ends its operation as soon as the

subject matter is free from the peril or is actually totally loss but in the event, where the

owner is deprived of the possession of the subject-matter insured in situations like piracy,

54 Arnould , ‘Arnould's Law of Marine Insurance and Average’ 1048.55 See Vaccum Oil Co. v. Union Ins Soc of Canton Ltd (1926) 32 Com Cas 53, 55 and Simpson v.

Thomson (1877) 3 App Cas 279.

38

hijacking or war, and recovery is less likely, the cut off date of suing and labouring

becomes a major question. And the answer of this question needs consideration of

different aspects of the situation including the state of the loss of subject-matter.

In constructive total loss in order to determine the date of cessation of sue and labour

duty and correlatively the right of the assured we shall first determine when the subject

matter became a constructive total loss. In English law it is indisputable that the date of

commencement of the action is the governing date for deciding the validity of a

constructive total los claim.56 Although there is not so many cases for determining the

cessation date of sue and labour in a constructive total loss situation but this matter

brought to life and well discussed in well-known case of Kuwait Airways Corporation v.

Kuwait Insurance Co SAK (1996).57In this case Kuwait Airways Corporation lost 15

aircraft and spares after invasion of Iraq to Kuwait. The aircraft were captured by Iraqi

army so they were not actual total loss. The assured claimed under his policy that

contained a “maximum ground limit” of USD 300 million for aircraft and USD 150

million limit for seizure of spare parts and also a sue and labour clause. After evaluation

by the underwriters, they determined the value of the aircrafts as USD 692 millions and

spares as USD 300 millions totally USD 992 millions, way beyond the USD 300 millions

limit. The underwriters paid the whole maximum ground limit (USD 300m) to the

assured in September 1990. After cessation of hostilities, the assured recovered eight of

his aircrafts and some spares between May 1991 and August 1992. Then claimed for sue

and labour costs incurred in attempts to recover its aircraft. The court held that the sue

and labour expenses were outside the ground limit and also the right to sue and labour

exist till the date of issuing the writ for commencement of proceedings thus there is no

reason for rejecting the claim of the assured. Rix J in this respect stated:

“I do not see why the making of a total loss claim should bring the right to sue and

labour to an end. It does not in the marine context. The date of payment ushers in the

right of subrogation. It might be said that at that date, if the right to sue and labour were

still extant, it made way for the insurer's right of subrogation: but that point has not

been pressed. The date of issue of a writ for a constructive total loss, however, is a

56 See the judgment of Kennedy LJ in Polurrian Steamship Company, Limited v Young [1915] 1 KB 922

(CA) ("Polurrian Steamship"). 57 Kuwait Airways Corporation v. Kuwait Insurance Co SAK, (1996) 1 Lloyd's Rep 664.

39

familiar date in the case of marine insurance. Up to that date any recovery by an assured

goes to reduce his claim, even though notice of abandonment has already been given;

after that date any recovery does not reduce the claim: Polurrian Steamship Co. Ltd. V

Young, [1915] 1 K.B. 922 at pp. 927 928, Rickards v. Forestal Land, Timber and

Railways Co. Ltd., [1942] A.C. 50 at pp. 84-85. That suggests that the date of issue of

writ is a watershed in respect to not only the effect of recovery but also the right to sue

and labour.”

Rix J went on and stated that in his view, the time of issue of proceedings is the date that

the right of the parties must be viewed as crystallized. Another claim by the assured was

that the USD 300 million ground limit was only for aircraft loss therefore he is entitled to

a further USD 150 million for seizure of spare parts under his policy. The Court of

Appeal and House of Lords both agreed upon entitlement of the assured for USD 150

million. In respect of sue and labour expenditures the Court of Appeal agreed with Rix J

that sue and labour expenses were outside these limits but the House of Lords did not

express its position about the duration of sue and labour and held that the sue and labour

expenses were subsumed within the limits for the primary losses. Because the limits had

been exhausted thus, the duration of sue and labour was irrelevant.

In respect of the cessation date of sue and labour in the Court of Appeal, Staughton LJ

held that the right and duty to sue and labour will expire with admission or payment on

the policy even before the commencement of action, so in this case in September 1990

that the claim admitted by the underwriters the sue and labour had expired.

“It follows that in the absence of express agreement no recovery efforts made after the

admission of the claim could properly be made at the expense of the insurers.”

In his opinion after the payment of USD 300 million limit under the policy by the

insurers, consequently the insurers were not interested in any attempts to recover the

excesses loss over USD 300 million by the assured and his attempts will be solely for his

own benefit. And the assured had no right to recover such expenses that he incurred

without consent of underwriters.

Although maybe it seems obvious that, in actual total loss situation there is no continuing

duty to sue and labour on the assured since the subject matter is destroyed or irretrievably

40

lost but in the case of actual total loss by deprivation of possession for instance when a

vessel is being hijacked the issue of determining the date of ending of sue and labour still

exist. In the case of deprivation of possession assessing whether a vessel is constructively

or actually totally lost is difficult and there is always uncertainty about when a

constructive total loss turns into an actual total loss. In constructive total loss the recovery

of subject matter is unlikely but in actual total loss according to section 57 of MIA the

assured is “irretrievably deprived” of the possession of subject matter and not merely an

unlikelihood of recovery. It has been said that if no news has been received of a missing

vessel after the lapse of a reasonable time it can be assumed as an actual total loss. But

what is the reasonable time and when a constructive total loss becomes an actual total

loss both are questions of facts so there is no concrete answer or formula to answer these

questions.

In a situation where a vessel hijacked, assessing if it is constructive or actual total loss

will be done by the date of issueing the writ. Although that the assured must continue his

duty to search for the vessel till he decides to commence action against the insurer but if

he commences action too early there might be no constructive total loss yet because the

court find that it is too early to say its unlikely that the vessel could recover. And also in

an actual total loss case if the assured commence the action too early the court might find

that he is not yet irretrievably deprived of possession of his vessel so as to rule that the

vessel is an actual total loss.58 We can reach to this conclusion that the assured can not

commence a writ prematurely to avoid to do his sue and labour duty when there is still

hope for recovering the vessel.

It must be mentioned that in the case of resolving the dispute by the arbitration instead of

litigation it seems that the date of commencement of the arbitration must be take as equal

as the date of the writ in litigation. Thus when the notice or request for arbitration is

received either by the respondent or the arbitrator the right and duty of sue and labour

would be ceased.59

In a Partial loss situation, the right and duty of sue and labour will not crystallized even

after issuing the writ and commencing the procedure but the assured has a continuing

58 Chang Leng Sun, ‘The Cessation of Sue and Labour’ (2006) 18 SAcLJ, 796.59 Ibid, 709.

41

duty to reduce the amount of his claim if he is able to do so. Thus any incident can affect

the amount payable under the policy to the assured even that those incidents occur after

commencing the procedure.

4.5. Payment of Claims and Recoveries

The assured by a written notice inform the leading underwriter about his claim and

provide all relevant documents and information that might be require to handle any

claim.60 The assured also may assist the lead underwriter in the process of investigation of

the claim.61 In order to assist the assured for preparation and making his claim an

independent average adjuster will be appointed.62 After conducting surveys and

investigations the surveyor report the extent of damage, liability and expenses to the

appointed average adjuster, assured and the leading underwriter. Upon the release of the

surveyor’s report or the recommendation of the appointed average adjuster, The London

Market Principle (2001)63 and IHC instruct the underwriters an early and direct payment

to the loss payee or when there is no loss payee has been agreed, to the assured. After the

underwriter has made the payment, he is discharged completely from his obligations

under the insurance in respect of the amount that has been paid.

Apart from the statutory and contractual duties of the assured, the IHC obliged the

assured to take some reasonable steps after the occurrence of casualty whether the

underwriter have paid the claim, agreed to pay the claim or it’s a potential claim. The

assured shall:

1. Assess as soon as possible whether there are any prospects of a recovery from third

parties in respect of matters giving rise to a claim or to a potential claim under this

insurance.

2. Protect any claims against such third parties if necessary by the commencement of

proceedings and the taking of appropriate steps to obtain security for the claim from third 60 IHC 03, clause 45.1.61 IHC 03, clause 45.2.62 IHC 03, clause 46.1.1.63 The London Market Principles(LMP) is a set of proposals for market reform produced by International

Underwriting Association and Lloyd’s forum to simplify and expedite the claims process and make them

more efficient and transparent.

42

parties.

3. Keep the Leading Underwriter and appointed average adjuster (if any) advised of the

recovery prospects and any action taken against third parties.

4. Co-operate with the leading underwriter in the taking of such steps as maybe

reasonably required to pursue any claims against third parties. 64

And the insurer shall pay all the expenses reasonably incurred in order to perform the

above-mentioned duties of the assured.

4.6. Limitation and Exclusion of Liability

The underwriter is liable for indemnification of the assured to the extent provided in the

policy and the precise extent of this liability depends on the wording of sue and labour

clause. According to the ITCH 95 and IVCH 95 the amount payable to the assured except

in a total loss situation is subject to the deductibles.65 There is also a time limitation for

action brought by the assured against underwriter. According to the Limitation Act 1980,

“an action founded on a simple contract shall not be brought after the expiration of six

years from the date on which the cause of action accrued.” The cause of action here

means the date, which the primary obligation of the contract has been breached, and the

primary obligation of an insurance contract is indemnity, thus where the assured brought

an action against the insurer in fact he is seeking for damages for breach of contract.

After a reasonable time for investigating the assured’s claim has been passed and the

underwriter rejected the claim the six years period would have start. The six years

limitation period can be shortened by the insurance contract.66

As we discussed in the chapter three, the insurer may still be liable for sue and labour

expenses even when there is no sue and labour clause in the policy but when there is an

express exclusion of sue and labour it should be interpreted according to the principle of

freedom of contract.

64 IHC 03, clause 49.65 ITCH, clause 12.1, IVCH clauses 9.2, 10.1. 66 ITCH obliged the assured to give a notice promptly after a casualty happened to the underwriter. If the

assured did not give a notice within twelve months the underwriter will be discharged from his liability

automatically.

43

In Western Assurance Company of Toronto v. Poole (1903)67 the printed policy was

contained a usual sue and labour clause but in the slip it was written “No s/c” (No salvage

charges) and also “ No claim to attach to this policy for salvage charges”. It was the

intention of the assured and insurer to exclude both sue and labour and salvage charges.

The assured claimed for sue and labour expenses but it was rejected by the court. Bigham

J in this respect stated: “... I am quite satisfied that if I were to allow the plaintiffs to

recover under the suing an labouring clause I should be inventing and giving effect to a

contract which the parties never intended to make.”

4.7. Abandonment

As we mentioned before in chapter one, one of the original purpose of sue and labour

clause was to enable the assured to take every measure to preserve the subject-matter

insured without waiving his right for abandonment and also to enable the underwriter to

intervene for saving the subject-matter insured without regarding his acts as an

acceptance of abandonment.

After a notice of abandonment has been given to the underwriter and he accepted the

notice all the interests and proprietary rights of the assured will be transferred to the

insurer but the sue and labour charges incurred by the assured before the abandonment

will remain intact and he can recover them from the insurer. Even the charges for

measures taken by the assured after the abandonment can be recovered from the insurer

on the basis that they are services performed on behalf of the insurer with his consent.68

67 Western Assurance Company of Toronto v. Poole (1903), 1 KB 376.

68 Arnould , ‘Arnould's Law of Marine Insurance and Average’ 1067.

44

5. Particular Expenses Recoverable Under

Sue and Labour Clause

In this section we discuss the expenses incurred in preserving and protecting subject-

matter insured that are recoverable under the sue and labour clause by case study. First

we discuss position of the court in respect of these expenses then we go through some

cases briefly. This section is divided to three sub sections of Hulls, Cargo and freight

according to the nature of different marine insurance policies.

5.1. Hull Policy

5.1.1. Wages of crew

In all cases, judges ruled that if a ship’s crew are engaged in sue and labour to preserve

and protect the vessel from an insured peril, their wages and subsistence are not

recoverable under sue and labour clause.

First case about the wages of crew is McBride v Marine Insurance Co (1811) in this case;

a vessel detained in North Carolina by authorities, the assured tendered a notice of

abandonment on January 1808 that was not accepted by the underwriter. On August 1808

the crew of the ship be discharged and finally the ship was sold on May 1809 by

underwriters’ consent. The assured claimed for wages of the crew from January 1808 till

August 1809 and for expenses of the sale of the ship. The court held that the insurer is

liable for sales expenses but not for wages and subsistence of the crew after notice of

abandonment.

In Perry v. Ohio Insurance Co. (1832)69, a steamboat broke her shaft and was towed to

the nearest port for repair. The assured claimed under his policy that contained a sue and

labour clause for cost of towage, the wages and subsistence of the crew during her repair

period and during towage and the cost of repairing the shaft. The underwriters rejected all

of his claims except the claim for repairing the shaft. The court held that the towage

69 Perry v. Ohio Ins. Co.(1832),5 Ohio, 305.

45

expenses can be treated as a sue and labour expenditure because it was necessary for

preservation of the insured vessel but the wages of the crew were not accepted as sue and

labour expenses.

Also in May v Delaware Insurance Co. (1852)70, a steamboat sprang a leak in Ohio River

and then struck by a rock and consequently sank. Her officer and crew by their

tremendous efforts and help of extra hands with constant pumping of water kept her

afloat till she reached the dock at Pittsburgh harbor. The court held that the insurer is not

liable for wages of the crew and those extra hands from the moment that she sank in Ohio

River till she reached the dock in Pittsburgh.

5.1.2. Salvage expenses

There are two different kind of salvage in respect of sue and labour expenses, first is that

the assured hires salvors in his efforts to preserve the vessel or the cargo from an insured

peril. The second one is when a salvor acts without any agreement with the owner. It has

been held that the expenses incurred where an assured hires salvors in order to preserve

the vessel from an insured peril can be recovered as sue and labour expenses. But in the

second circumstances where the salvor acts by himself and voluntarily, the assured may

not recover the salvage award granted to salvors, under the sue and labour clause.

In the leading case of Aitchison v Lohre (1879)71 a vessel named Crimea was insured by

the plaintiffs with a policy contained sue and labour clause. The value of the vessel was

GBP 2600 but the policy was limited to GBP 1200. After encountering a stormy weather,

the vessel leaked and finally being towed into a port and rescued by a steamship named

Texas. There was no salvage agreement so The Irish Court of Admiralty granted GBP

800 to the steamship Texas as a salvage award. As the cost of repair was exceeded the

insured value of the vessel, the owner sought for reimbursement of the salvage award

under sue and labour clause that is recoverable over and above the insured value.

The House of Lords held that the full amount of policy (GBP 1200) was recoverable for

the cost of repairs but the GBP 800 award was salvage and not sue and labour, thus the

insurer were not liable under the sue and labour clause for the cost of salvage.

70 May v Delaware Ins. Co. (1852) 19 Pa 312.71 Aitchison v. Lohre (1879) 4 App Cas 755.

46

Lord Blackburn in this respect said: “I think that general average and salvage do not

come within either the words or the object of suing and labouring clause, and that there is

no authority for saying that they do.”72 He also added, although salvage awards are not

within sue and labour clause but where the assured hires salvors to save the vessel may

“come within the suing and labouring clause but that is not this case.”73

In White Star S. S. Co. v. North British & Mercantile Insurance Co. (1943)74, The owner

of Tashmoo a steamboat ship took a hull insurance with the defendants in sum of USD

20,000 that was a part of USD 100,000 valued policy. On June 18th of 1936 the steamer

Tashamoo struck an object concealed under the water and holed her bottom then it has

been taken to the nearest dock on Canadian shore where she disembarked her passengers.

Despite all the efforts, she sank at the dock with her main deck under water and upper

decks above water. Before that the salvage operation were begun some furniture and

equipments on the upper decks of the ship were removed and stored in a warehouse for

the sake of preserving them from damages that might occur during the operation for

raising up the ship. The company responsible for salvage operation declined to proceed

further after additional serious damaged developed in the hull of Tashamoo. Also the

port’s officials have ordered an immediate removal of the wreck from the dock by the

owner. The assured after receiving the full amount of his policy claimed for sue and

labour expenses from the hull underwriters. The defendants of the case refused to pay sue

and labour expenses. The court held that, despite the fact that all the proceeds of the sale

of the furniture and equipments went to the Protection and Indemnity underwriters, the

respondents is still liable for sue and labour expenses including the service rendered by a

tug for preventing the Tashamoo from sinking, services of watchmen maintained abroad

the vessel during salvage operation and materials furnished by the owners during that

time.

5.1.3. Litigation Expenses

Because of lack of cases related to litigation expenses under the sue and labour clause, its

72 Ibid, P. 764.73 Ibid74 White Star S. S. Co. v. North British & M. Ins. Co. (1943, DC, Michigan).

47

difficult to make a general rule in respect of recovery of litigation expenses.

In Xenos v. Fox (1869)75, a steamship collided with a tug and sank her. The steamship

had a policy containing both a running-down clause and a sue and labour clause. The

owner of the tug sued the steamship for sinking his vessel. The insurers of the steamship

gave the consent to the owner for defending the suit. The primary court and the court of

appeal dismissed the case by holding that the steamship is not responsible for sinking the

tug. The owner of steamship claimed for expenses incurred for successfully defending the

collision case. The court rejected the claim and said that the sue and labour clause was

inapplicable because it applies only to a loss or misfortune happening to the thing

insured.

5.1.4. Interest

The assured may borrow money to preserve the vessel from a peril insured against and it

has been held that the interest of this sum is recoverable under sue and labour clause of

the policy. For recovering the sum that assured has borrowed and its interest, he must

show that he borrowed the money in desperate need and the interest that has been paid is

not more than the common practice.

In Jumel v. Marine Ins. Co. (1811)76, a brig was captured by a British privateer77 then

libeled and condemned. The master after obtaining money on the bottomry bond at

bottomry interest purchased the vessel from the privateers. The court held that the

underwriters are liable for total loss and for expenses that master incurred to recover the

captured vessel, under sue and labour clause of the policy.

The court also held that just the ordinary legal interest on the sums advanced can be

recovered and not the marine interest, because the sum might have been raised by other

means than by a bottomry bond, "and that step ought not to be resorted to until all other

means have failed."78

75 Xenos v Fox (1869) LR 4 CP 665.76 Jumel v Marine Ins. Co. (1811, NY) 7 Johns 412, 5 Am Dec 283.77 An armed ship owned and officered by private individuals holding a government commission and

authorized for use in war, esp. in the capture of enemy merchant shipping.78 Supra note 43.

48

5.2. Cargo Policy

5.2.1. Preserving the cargo

The rule is that the expenditures that an assured of a cargo policy incur to save a

threatened cargo from an insured peril is recoverable under the sue and labour clause of

the policy.

In Indianapolis Ins. Co. v. Mason (1858) 79, 187 tons of hay was insured with a policy

that insurer was not liable for any loss less than twenty percent of the aggregate value

thereof. The cargo was shipped on a vessel from Lawrenceburgh to New Orleans. The

vessel ran aground and sank. A portion of hay that was less than twenty percent of the

whole shipment became wet and damaged. The assured incurred some expenses to

recover the cargo. The court held although, the insurer is not liable for actual damage the

hay since it was less than twenty percent of the value of the cargo but he is liable for

suing and labouring expenditures by virtue of sue and labour clause.

In Shultz v. Ohio Ins. Co. (1841)80, the court held that the expenses insured in order to

remove the cargo from the vessel when she hit a log and “overhauling the damaged

articles, average and port warden charges” can be recovered under the sue and labour

clause.

In Francis v. Boulton (1895)81, a lighter while transporting 630 bags of rice to the harbor

sank. The rice got wet but then was kiln dried at a cost of GBP 6311 and sold for GBP

111. It was held that the partial loss amounted to the difference between the value of the

rice and GBP 111and not the difference between the sound value of the rice and GBP

6811, since under the sue and labour clause of the police which insured the goods, “ the

underwriter is liable for costs reasonably incurred in conditioning the damaged goods."

5.2.2. Repacking cargo

79 Indianapolis Ins. Co. v Mason (1858) 11 Ind 171.80 Shultz v. Ohio Ins. Co. (1841) 40 Ky (1 B Mon) 336.81 Francis v. Boulton (1895) 65 LJQB NS 153.

49

Usual expenses for repacking cargo can be recovered under sue and labour clause, but it

seems that the expenses for fixing the containers which were damaged by a peril insured

against is not recoverable under the sue and labour clause. Although if the containers are

the subject matter of the policy, the expenses is recoverable.

In J. Lysaght, Ltd. v. Coleman (1895)82, a cargo of galvanized iron which was packed in

497 wooden cases was insured with a policy containing a sue and labour clause, during

the voyage sea water got into the hold of the vessel which damaged some of the wooden

cases. After opening all the cases they found out that 106 cases was damaged and the rest

remained undamaged. The court held that the underwriters were not liable for the

expenses of landing, examining, repacking and delivering the 391 undamaged cases

under sue and labour clause of the policy. The judges were of the view that the

insurance was on the iron alone, and not on the iron in cases, and that the sums expended

on the 391 cases were not incurred for the purpose of minimizing or mitigating any loss

brought about by perils of the sea.

In F. W. Berk & Co. v. Style (1956)83, 100 tons of kieselguhr was shipped in paper bags

from Mostaganem in North Africa to London. The assured sought to recover the expenses

of rebagging the kieselguhr and the incidental delay of the lighter used for landing the

kieselguhr at a wharf in London under the sue and labour clause of his policy. The court

held that the underwriters were not liable, since, (1) if the subject matter of the insurance

was kieselguhr in bags, the expense was caused by an "inherent vice" in the insured

goods, that is, faulty bags, which risk the insurers did not assume, (2) if the subject matter

of the insurance was kieselguhr only, and not kieselguhr in bags, the expense incurred in

rebagging was not to avert any loss of or damage to the goods, or in and about the

defense, safeguard, or recovery of any part of the kieselguhr from any insured peril which

beset it, since the kieselguhr might have been unloaded without loss or damage without

rebagging it, and (3) there can be no recovery for sue and labour expenses unless one

proves that the expenses were due to an accident or casualty, and there was no actual

accident or casualty shown in the case.

82 J. Lysaght, Ltd. v. Coleman (1895) 1 QB 49 (CA).83 F. W. Berk & Co. v. Style (1956) 1 QB 180.

50

5.2.3. Resending the cargo to its original destination

In marine insurance it’s a well established rule that under a policy of marine cargo

insurance, when a voyage interrupt by a peril insured against, the cost of forwarding the

cargo to its original destination is recoverable under the sue and labour clause from the

underwriters.

In Wilson Bros. Bobbin Co. v. Green (1917)84, a cargo of 600 squares birch woods

shipped on board a Norwegian vessel from Raumo in Baltic to Garston in England, on

November 1914 with a cargo policy insuring the goods against war risks and containing a

sue and labour clause. A German war vessel before the outbreak of the World War one

stopped the vessel. The Germans did not allow the vessel to pass the Oresund so the

vessel went to a Norwegian port and discharged the cargo. After some months the cargo

being in a storage facility finally the goods forwarded to England by another vessel. The

cargo owner claimed the expenses of storing the cargo in the Norwegian port and

forwarding it to England under the sue and labour clause of his policy. The underwriters

rejected the claim, stating, firstly the policy excluded all claims arising from delay and in

his opinion storing the goods in the Norwegian port caused the delay, and secondly, there

was no need for suing and labouring since the cargo was safe when it was stored at the

Norwegian port. The court ruled in favor of the assured, holding that all the expenses

incurred for storing and forwarding the cargo to its original destination is recoverable

under sue and labour clause. The court argued that, first, excluding claims arising from

delay does not affect the sue and labour clause. Second, since war risks was included in

the perils insured against in the policy and the reason for storing the goods at the

Norwegian port was because of a hostile situation although the war was not declared yet,

therefore the expenditure incurred for storage and forwarding the goods to its original

destination is recoverable under the sue and labour clause.

Also in St. Paul F. & M. Ins. Co. v. Pacific Cold Storage Co. (1907)85, a cargo of

refrigerated products insured by a marine insurance policy was sent by a refrigerated

vessel to a port in Alaska then the vessel stranded and they had to send the cargo to a

84 Wilson Bros. Bobbin Co. v. Green (1917) 1 KB 860.85 St. Paul F. & M. Ins. Co. v. Pacific Cold Storage Co. (1907) 157 F 625,14 LRA NS 1161.

51

nearby port for sake of preserving it. The court held that the expenditure made by the

assured to forward the refrigerated goods overland from the stranded vessel was

recoverable under the sue and labour clause of the policy.

In Firemen's Fund Ins. Co. v Trojan Powder Co. (1918) 253 F 30586, a cargo of

explosives was sent by a steamer vessel that stranded but subsequently floated. The

assured sent the cargo with another ship to its original destination. The court ruled that

the underwriters are not liable for extra expenditure incurred by the assured to resend the

cargo to its original destination by another vessel, since the reshipment of the cargo was

not due to preserve the insured explosives from being lost or damaged by reason of any

insured peril.

Also in Great Indian Peninsula Railway Co. v. Saunders (1862)87, a cargo of iron rails

was insured by the plaintiffs under a policy with a ‘free from particular average’ clause

and containing a usual sue and labour clause with the defendants. The carrier vessel on

her way to its destination damaged and became a constructive total loss and consequently

was taken to another port. Since the cargo was undamaged the plaintiffs incurred some

expenses in order to forward the cargo to its designated destination and sought those

expenses from the underwriters under the sue and labour clause of the policy. It was held

that the plaintiffs can not recover the freight expenses under the sue and labour clause

since the policy contained a ‘free from particular average’ clause and the goods landed

safely thus the forwarding expenses was not incurred for averting a total loss.

5.2.4. Litigation Expenses

There are situations that a ship with its cargo is seized or captured, if the cargo is insured

with a policy containing a clause against seizure or capture, the litigation expenses

incurred for obtaining the release of the cargo are recoverable under the sue and labour

clause of the policy.

In Bordes v. Hallet (1803)88, an action on a policy of insurance on a cargo which was

bound from New York to St. Jago de Cuba, and which was seized along with the vessel

86 Firemen's Fund Ins. Co. v Trojan Powder Co. (1918) 253 F 305.87 Great Indian Peninsula Railway Co. v. Saunders (1862) 2 Best & S 266.88 Bordes v. Hallet (1803) 1 Caines 444.

52

brought by the assured. The court held that the underwriter was liable for a total loss of

the goods and for expenses in prosecuting his claim for the goods in Vice Admiralty

Court under the sue and labour clause.

In Smith v. Switzerland General Insurance Co. (1933)89, The assured took out a policy of

insurance on a cargo. After a damage to cargo the assured claimed under his policy but

the insurer rejected the claim, stating that the assured shall take the claim to the steamship

company and press the claim against them. The assured did so but it was held that the

insurer was liable for the assured’s counsel fees in that suit “because there was no valid

ground for the insurer’s declining liability until the insured should sue the steamship

company, and, the insurer having therefore erroneously interpreted the sue and labour

clause, it was bound by that interpretation and hence was liable for the insured's counsel

fees.”90

5.3. Freight Policy

In marine fright insurance policy, where a catastrophe cause a delay that might lead to not

earning the freight by the assured, any reasonable expenses he incur for forwarding the

cargo to its destination is the liability of the insurer and will be recoverable under the sue

and labour clause of the policy.

In Kidston v. Empire Marine Insurance Co. (1867)91, a ship with cargo of guano92 was

sent from Chincha Islands close to the southwest of Peru to Cork in Ireland with a policy

insuring charter freight that contained a sue and labour clause and a warranty against

particular average. The vessel during its voyage damaged and sent to the nearest port, Rio

de Janeiro. Its cargo was landed and warehoused in the port and then shipped to Bristol

by another vessel. The underwriters rejected the claim of the assured for recovering the

warehousing and reshipping expenses but the court ruled that the insurers were liable for

89 Smith v. Switzerland General Insurance Co. (1933) 147 Misc 388, 263 NYS 190.90 Ibid91 Kidston v. Empire Marine Ins. Co. (1867) LR 2 CP 357, 14 ERC 247.92 A substance composed chiefly of the dung of sea birds or bats, accumulated along certain coastal areas or

in caves and used as fertilizer.

53

forwarding expenses to England under the sue and labour clause since no freight could be

claimed if the assured wouldn’t sent the cargo by another vessel.

In well known case of Lee and Another v. Southern Insurance Co. (1870)93, a vessel

named Charles with a cargo of 500 casks of palm oil was headed to Liverpool from

Cameroons that encountered severe weather in Irish sea and stranded on the welsh coast

near Pwlleheli. The insurance brokers (the plaintiffs of the case) on behalf of the assured

off-loaded the cargo of palm oil and forwarded it to Liverpool by rail at a cost of GBP

212. The plaintiffs claimed GBP 15215, the estimated cost of forwarding the cargo to

Liverpool by sea and the insurers refused to indemnify the assured for any expenses he

incurred for forwarding the cargo. Arguing that since the vessel later repaired and could

have carried the cargo to its destination, there was no reasonable cause for suing and

labouring. The court ruled, in favor of the defendants, stating the underwriters were not

liable under the sue and labour clause for the expenses incurred in forwarding the cargo

to Liverpool by rail. But the insurance broker was entitled to recover GBP 70, the

estimated cost of taking the cargo in lighters to an anchorage ground near Pwllheli, and

there putting it on board the original vessel after she was repaired, that was necessary for

not loosing the freight.

It has been held that where freight is payable only on each animal in a cargo delivered

alive at the port of destination, expenses incurred in keeping the cargo alive are

recoverable from the insurer under the sue and labour clause of the policy.

In Tweedie Trading Co. v. Western Assurance Co. (1910)94, in which the owner of a time-

chartered vessel transporting livestock from New Orleans to Capetown, South Africa, at a

fixed rate on each animal delivered at Capetown, took out insurance to protect against the

freight which would be lost on each animal dying during the voyage, and hence not

deliverable at Capetown, it was held that the owner was entitled to recover under the sue

and labour clause for the expense incurred in deviating to Barbados to discharge

cattlemen who refused to work on account of the fare furnished them, and to secure

others in their place, because the expense was incurred solely to prevent the mortality of

93 Lee and Another v. Southern Insurance Co. (1870) LR 5 CP 397.94 Tweedie Trading Co. v. Western Assurance Co. (1910) 179 F 103.

54

the livestock. The court said that although the deviation was even more for the benefit of

the owners and insurers of the lifestock, the freight insurer would, upon paying the

vessel's owner, be subrogated to his right to recover contribution in general average.

6. Conclusion

The sue and labour clause was invented in a time that communication between different

ports was difficult and very slow. Therefore underwriters in order to preserve their

interests, obliged the assured to use every measures in the event of an insured peril to

protect and recover the subject matter insured. With regard to this original reason behind

the existence of the clause one maybe thinks with this instantaneous worldwide

communications there is no more reason for existence of the clause but the sue and labour

clause is an important adjunct of marine insurance contracts and although we can trace

back the clause to at least 400 years ago, it is still alive and flourishing.

The main purpose of the clause transformed overtime from allowing the insured to take

every measure to preserve the insured property without waiving his right to give notice of

abandonment, to oblige the assured to take reasonable and necessary measures for

55

preserving and recovering the subject matter insured. Also the language of sue and labour

clause transformed from being permissive to more mandatory and binding the assured to

take measures in response to an insured peril. And we can see in current ICC and IHC the

title of sue and labour clause has changed to the ‘Duty of the Assured’.

The measures that shall be taken by the assured for averting and minimising the loss are

subject to test of reasonableness. The issue of reasonableness has been discussed in

number of cases including the leading case of Integrated Container Service Inc v. British

Traders Insurance Co Ltd (1984). The test that must be applied for determining the

reasonableness of the conduct of the assured or his employees is an objective test. The

judge will try to find out how an ordinary competent person would have acted in the

similar circumstances. The interpretation of the word ‘ordinary’ and ‘competent’ is

wholly depends on the opinion of the judge and the situation. Another aspect of

reasonableness is the cost of the actions of the assured that must be economically

sensible.

Having accepted the existence of duty to sue and labour, we shall determine when the

duty rises. The duty will rise when an actual and imminent peril that is also an insured

peril take place. Since the duty and right are correlated, when the duty to sue and labour

rises thus the liability of the insurer to compensate the assured for the expenses he

incurred also comes into existence.

The duty of the assured must be performed by authorized actors to be collectable.

Therefore third parties may not seek indemnity from the insurer for their endeavors in

averting or minimising a loss. Authorized actors according to MIA 1906 and Institute

Hull and Cargo clauses are ‘agents and servants’ of the assured that includes the master

of the ship and all the crew.

As we have seen the law and sue and labour clauses in standard marine insurance policies

indubitably imposed a duty to sue and labour upon the assured but the effect of breaching

this duty is not certain. On one hand some scholars are in favor of the view that breaching

the sue and labour duty leads to make the assured impotent to recover under the policy

and on the other hand most of the scholars and judges take the view that despite the

56

failure of the assured to do his sue and labour duty he still can recover under his policy

for a loss proximately caused by an insured peril.

With analyzing different views on the issue of anomaly between section 55(2)(a) and

78(4) of MIA we can conclude that as long as failure of the assured itself is not the

proximate cause of the loss, the assured can recover to full extent under his policy and the

underwriter shall not deny liability based on negligent of the master and crew in the event

of peril. It seems to me the only remedy available for the insurer in case of failure of the

assured to do the sue and labour duty is damages. Specially where the assured failed to

exercise or preserve some rights against a third party that the underwriter is entitled and

could have had benefit from subrogation of those rights he is entitle for damages to

compensate some of his loss.

The cessation date of sue and labour duty and correlatively the cut of date of

reimbursement right of the assured in constructive and total loss situation is very

important. Determining these dates are dependent on establishing the true state of subject

matter insured. Thus the questions of fact are, whether the subject matter is a constructive

total loss or actual total loss and settle on when the subject matter turns to an actual total

loss from being a constructive total loss. Clearly when the subject matter is an actual total

loss the duty of the assured to sue and labour has ended but in the case of deprivation of

possession we can not say definitely when a constructive total loss became an actual total

loss and finding out whether there is a possibility that the assured could get his hands on

the subject matter insured or he is ‘irretrievably’ deprived from the possession is

important and must be answered with considering the facts of the case.

There are two dates that can be considered as the cessation date of right and duty to sue

and labour in constructive total loss. First is the date of issuing the writ or commencing

the action against the insurer by the assured or commencement of arbitration and second

is the date of payment or admission of duty to pay by the assured. Some judges including

Rix J believe that the date of issuing the writ in constructive total loss situation shall be

regarded as the date of cessation of sue and labour duty and all the rights of the parties

will be crystallized on that date. But in my opinion it is more reasonable to consider the

date of payment or admission of payment as the expiration date of right and duty to sue

57

and labour. The reason behind this, is that once the insurer accept to pay the sum under

the policy or already paid it, perspicuously does not have any interest on recovering effort

by the assured to save the subject matter otherwise expressly state his will. Therefore any

expenses made by the assured in recovering a constructive total loss after the admission

of payment or the payment itself must have the underwriter’s endorsement.

In partial loss situations, the cessation date of sue and labour takes another path. Since

there is no permanent loss even after issuing the writ the assured can recover any

expenses he incurred in order to avert or minimise the loss. We have to consider that, this

aversion must be beneficial for the underwriter and it cause reduction of the original

claim. And as we seen in clause 49 of IHC the assured has some continuing duty, even

after the payment of claim like assessing any recovery prospects from third parties and

protecting the claim against third parties even by commencement of proceedings. These

kinds of measures shall be regarded as sue and labour efforts.

Finally considering the list of expenses we discussed in chapter four that ship owners and

cargo owners have attempted to recover under the sue and labour clause it shows us that

almost every kind of marine adventure expenses can be regard as sue and labour

expenses. It seems in the future more categories of expenses maybe added to the

contemporary list of expenses recoverable under the sue and labour clause. And we can

conclude that the clause will be in operation for a long time and broader usage can be

seen in its future.

58

Supplement A

International Hull Clauses 2003

[...] 9. Duty of The Assured (Sue and Labour)

9.1 In case of any loss or misfortune it is the duty of the Assured and their servants and

agents to take such measures as may be reasonable for the purpose of averting or

minimising a loss which would be recoverable under this insurance.

9.2 Subject to the provisions below and to Clause 15, the Underwriters shall contribute to

charges properly and reasonably incurred by the Assured their servants or agents for such

measures. General average, salvage charges (except as provided for in Clause 9.4),

special compensation and expenses as referred to in Clause 8.5 and collision defence or

attack costs are not recoverable under this Clause 9.

59

9.3 Measures taken by the Assured or the Underwriters with the object of saving,

protecting or recovering the subject-matter insured shall not be considered as a waiver or

acceptance of abandonment or otherwise prejudice the rights of either party.

9.4 When the Underwriters have admitted a claim for total loss of the vessel under this

insurance and expenses have been reasonably incurred in saving or attempting to save the

vessel and other property and there are no proceeds, or the expenses exceed the proceeds,

then this insurance shall bear its pro rata share of such proportion of the expenses, or of

the expenses in excess of the proceeds, as the case may be, as may reasonably be

regarded as having been incurred in respect of the vessel, excluding all special

compensation and expenses as referred to in Clause 8.5.

9.5 The sum recoverable under this Clause 9 shall be in addition to the loss otherwise

recoverable under this insurance but shall in no circumstances exceed the insured value

of the vessel. [...]

Supplement B

Institute Cargo Clauses 2009

MINIMISING LOSSES

Duty of Assured16. It is the duty of the Assured and their employees and agents in respect of loss

recoverable hereunder

16.1 to take such measures as may be reasonable for the purpose of averting or

minimising such loss, and

16.2 to ensure that all rights against carriers, bailees or other third parties are properly

preserved and exercised and the Insurers will, in addition to any loss recoverable

hereunder, reimburse the Assured for any charges properly and reasonably incurred in

60

pursuance of these duties.

Waiver

17. Measures taken by the Assured or the Insurers with the object of saving, protecting or

recovering the subject matter insured shall not be considered as a waiver or acceptance of

abandonment or otherwise prejudice the rights of either party.

Supplement C

Institute Time Clauses (Hulls) 1995

[…] Duties of Assured (Sue & Labour)11.1. In case of any loss or misfortune it is the duty of the Assured and their servants and

agents to take such measures as may be reasonable for the purpose of averting or

minimising a loss which would be recoverable under this insurance.

11.2. Subject to the provisions below and to Clause 12 the Underwriters will contribute to

charges properly and reasonably incurred by the Assured their servants or agents for such

measures. General average, salvage charges (except as provided for in Clause 11.5.),

special compensation and expenses as referred to in Clause 10.5. and collision defence

and attack costs are not recoverable under this Clause 11.

11.3. Measures taken by the Assured or the Underwriters with the object of saving,

61

protecting or recovering the subject-matter insured shall not be considered as a waiver or

acceptance of abandonment or otherwise prejudice the rights of either party.

11.4. When expenses are incurred pursuant to this Clause 11 the liability under this

insurance shall not exceed the proportion of such expenses that the amount insured

hereunder bears to the value of the Vessel as stated herein, or to the sound value of the

Vessel at the time of the occurrence giving rise to the expenditure if the sound value

exceeds that value. Where the Underwriters have admitted a claim for total loss and

property insured by this insurance is saved, the foregoing provisions shall not apply

unless the expenses of suing and labouring exceed the value of such property saved and

then shall apply only to the amount of the expenses which is in excess of such value.

11.5. When a claim for total loss of the Vessel is admitted under this insurance and

expenses have been reasonably incurred in saving or attempting to save the Vessel and

other property and there are no proceeds, or the expenses exceed the proceeds, then this

insurance shall bear its pro rata share of such proportion of the expenses, or of the

expenses in the excess of the proceeds. As the case may be, as may reasonably be

regarded as having been incurred in respect of the Vessel, excluding all special

compensation and expenses as referred to in Clause 10.5.; but if the Vessel be insured for

less than its sound value at the time of the occurrence giving rise to the expenditure, the

amount recoverable under this clause shall be reduced in the proportion to the

underinsurance.

11.6. The sum recoverable under this Clause 11 shall be in addition to the loss otherwise

recoverable under this insurance but shall in no circumstances exceed the amount insured

under this insurance in respect of the Vessel. [...]

62

Supplement D

Institute Voyage Clauses (Hulls) 1995

[...] 9. DUTY OF ASSURED (SUE AND LABOUR)9.1 In case of any loss or misfortune it is the duty of the Assured and their servants and

agents to take such measures as may be reasonable for the purpose of averting or

minimising a loss which would be recoverable under this insurance.

9.2 Subject to the provisions below and to Clause 10 the Underwriters will contribute to

charges properly and reasonably incurred by the Assured their servants or agents for such

measures. General average, salvage charges (except as provided for in Clause 9.5),

special compensation and under this Clause 9.

9.3 Measures taken by the Assured or the Underwriters with the object of saving,

protecting or recovering the subject-matter insured shall not be considered as a waiver or

63

acceptance of abandonment or otherwise prejudice the rights of either party.

9.4 When expenses are incurred pursuant to this Clause 9 the liability under this

insurance shall not exceed the proportion of such expenses that the amount insured

hereunder bears to the value of the vessel as stated herein, or to the sound value of the

vessel at the time of the occurrence giving rise to the expenditure if the sound value

exceeds that value. Where the Underwriters have admitted a claim for total loss and

property insured by this insurance is saved, the foregoing provisions shall not apply

unless the expenses of suing and labouring exceed the value of such property saved and

then shall apply only to the amount of the expenses which is in excess of such value.

9.5 When a claim for total loss of the vessel is admitted under this insurance and

expenses have been reasonably incurred in saving or attempting to save the vessel and

other property and there are no proceeds, or the expenses exceed the proceeds, then this

insurance shall bear its pro rata share of such proportion of the expenses, or of the

expenses in excess of the proceeds, as the case may be, as may reasonably be regarded as

having been incurred in respect of the vessel, excluding all special compensation and

expenses referred to in Clause 8.5; but if the vessel be insured for less than its sound

value at the time of the occurrence giving rise to the expenditure, the amount recoverable

under this clause shall be reduced in proportion to the under-insurance.

9.6 The sum recoverable under this Clause 9 shall be in addition to the loss otherwise

recoverable under this insurance but shall in no circumstances exceed the amount insured

under this insurance in respect of the vessel. [...]

64

Bibliography

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Bennett, Howard, The Law of Marine Insurance (Oxford University Press, 1996).

Hodges, Susan, Cases and Materials on Marine Insurance Law (Cavendish Publishing

Limited, 2004).

65

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Company, 2d edn, 1929).

Articles

Bennett, Howard N., ‘Causation in the Law of Marine Insurance: Evolution and

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(D. Rhidian Thomas, LLP, 1996)

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(1906)

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Loss’, L.M.C.L.Q., 4 (Nov), 525 (2003).

Gauci, ‘Gotthard The obligation to sue and labour in the law of marine insurance – time

to amend the statutory provisions?’ Part 1, I.J.O.S.L., 1(Mar) 2-10 (2000)

Martin, Stephan, ‘Marine Protection and Indemnity Insurance:

66

Conduct, Intent, and Punitive Damages’, 28 Tul. Mar. L.J. 45 (2003-2004).

O'Sullivan, Brendan P., ‘The Scope of the Sue & Labor Clause’, 21 J. Mar. L. & Com.

545, 551, (1990).

Parks, Axel L., ‘Marine Insurance: The Sue and Labor Clause’, 1978, 9 J. Mar. L. &

Com. 415.

Ray, Lucian Y., ‘The Sue And Labor Clause Rights And Obligations Of The Insured And

The Insurer’, 30 Ins. Counsel J. 225 (1963).

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Table of Cases

Aitchison v. Lohre (1879) 4 App Cas 755, HL.

Astrovlanis Compania Naviera S.A. v. Linarrd (the Gold Sky, 1972) 2 Lloyd’s Rep 187.

Bordes v. Hallet (1803) 1 Caines 444.

British & Foreign Marine Insurance Co. v. Gaunt (1921) 2 AC 41.

Currie and Co v. Bombay Native Insurance Co (1869) LR 3 PC 72.

Emperor Gold mining Co Ltd v. Switzerland General Insurance Co Ltd (1964) 1 Lloyd’s

Rep 348.

67

Great Indian Peninsula Railway Co. v. Saunders (1862) 2 Best & S 266.

Firemen's Fund Ins. Co. v Trojan Powder Co. (1918) 253 F 305.

Francis v. Boulton (1895) 65 LJQB NS 153.

F. W. Berk & Co. v. Style (1956) 1 QB 180.

Indianapolis Ins. Co. v. Mason (1858) 11 Ind 171.

Integrated Container Service Inc. v. British Traders Insurance Co. Ltd. (1984) 1 Lloyd’s

Rep, 154, CA.

J. Lysaght, Ltd. v. Coleman (1895) 1 QB 49 (CA).

Jumel v Marine Ins. Co. (1811, NY) 7 Johns 412, 5 Am Dec 283.

Kidston v. Empire Marine Ins. Co. (1867) LR 2 CP 357, 14 ERC 247.

Kuwait Airways Corporation v. Kuwait Insurance Co SAK, (1996) 1 Lloyd's Rep 664.

Lee and Another v. Southern Insurance Co. (1870) LR 5 CP 397.

Lind v. Mitchell (1928) 34 Com Cas 81.

May v. Delaware Ins. Co. (1852) 19 Pa 312.

Netherlands Insurance Co. Ltd v. Karl Ljungberg and Co A/B (1986) 2 Lloyd’s Rep 19,

PC.

Noble Resources Ltd v. Greenwood (1993) 2 Lloyd’s Rep 309.

68

Peele v Merchants' Ins. Co. (1822) 3 Mason 27.

Perry v. Ohio Ins. Co.(1832),5 Ohio, 305.

Polurrian Steamship Company, Limited v. Young (1915) 1 KB 922 (CA) ("Polurrian

Steamship").

Rousse v. Home Insurance Co. (1955), 78 So.2d 522.

Sailing Ship "Blairmore" Company, Limited v. Macredie (1898) AC 593 (HL).

State of Netherlands v. Youell and Hayward and Others (1998) 1 Lloyd’s Rep 236, CA.

St. Paul F. & M. Ins. Co. v. Pacific Cold Storage Co. (1907) 157 F 625,14 LRA NS

1161.

Shultz v. Ohio Ins. Co. (1841) 40 Ky (1 B Mon) 336.

Smith v. Switzerland General Insurance Co. (1933) 147 Misc 388, 263 NYS 190.

Thames and Marsey Marine Insurance Co. Ltd. v. Hamilton, Fraser and Co. (1887) 12

App Cas 484

Simpson v.Thomson (1877) 3 App Cas 279.

Tweedie Trading Co. v. Western Assurance Co. (1910) 179 F 103.

Uzielli v. Boston Marine Insurance Co (1884) 15 QBD 11, CA.

Vaccum Oil Co. v. Union Ins Soc of Canton Ltd (1926) 32 Com Cas 53, 55

69

Western Assurance Company of Toronto v. Poole (1903), 1 KB 376.

White Star S. S. Co. v. North British & M. Ins. Co. (1943, DC, Michigan).

Wilson Bros. Bobbin Co. v. Green (1917) 1 KB 860.

Xenos v Fox (1869) LR 4 CP 665.

70