Drilling Oil Rig Cendor Mopu, Marine Insurance-Inherent Vice A Boon or Loss - Historical Maritime Fraud

Causation is a very important part in marine insurance law. The general principle in English Law is that the insurer will only be liable for any loss, which is proximately caused by a peril insured against. (Marine Insurance Act, 1906, section 55). At the beginning of last century, the determination of the proximate cause in common law was considered to be the nearest in time.

Dr. Soumi Mukherjee M.A., PH.D

It is not uncommon for hull and cargo underwriters to reject claims by relying on excluded perils in their standard forms.

Causation is a very important part in marine insurance law. The general principle in English Law is that the insurer will only be liable for any loss, which is proximately caused by a peril insured against. (Marine Insurance Act, 1906, section 55). At the beginning of last century, the determination of the proximate cause in common law was considered to be the nearest in time. ‘Inherent vice’ excluded the ordinary wear and tear that could be expected to occur as a result of the ordinary action of wind and waves.

This case is concerned with a marine insurance policy on cargo dated 5 July 2005, which incorporated the Institute Cargo Clauses (A) of 1 January 1982. In 2005, Global Process Systems (the assured) purchased the oil rig, Cendor Mopu, and arranged for her to be transported from Texas to Malaysia on a barge with her three massive tubular legs in place above the platform so that they extended some 300 feet into the air. Global placed insurance with Syarikat Takaful Malaysia Berhad (‘the Insurer’), on terms which incorporated the Institute Cargo Clauses, and, in particular, clause 4.4 which excludes “loss, damage or expense caused by inherent vice or nature of the subject matter insured” Clause 4.4 excluded “loss, damage or expense caused by inherent vice or nature of the subject matter insured” from the cover provided by the policy.