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MARINE | Dispute mitigation In association with C Solutions
“The sea, the great unifier, is man’s only hope. Now, as never before, the old phrase has a literal meaning: we are all in the same boat.” Jacques Yves Cousteau
We are fortunate to work in a business where no two days are the same. It is known for its drive for innovation – be it technology, operations, the use of data, education – underpinned by a thriving multi-disciplinary industry of shipowners, charterers, builders, crew, insurers, lawyers, salvors, banks, surveyors, adjusters…the list goes on. All rely on an industry that is responsible for the transportation of 90% of world trade. There is no doubt that shipping and marine insurance are changing. The regulatory aspects of the business are becoming more onerous. We have seen the development and implementation of a raft of policies over the past few years including the Insurance Act 2015, the Maritime Labour Convention, IMO 2020, international sanctions and more. Now we are looking forward to the IMO’s GHG (greenhouse gas) strategy, not to mention the impact of the global pandemic. These have all affected the way our industry does business and impacted finances. They have probably made things harder, but, also spurred innovation.
INNOVATION SPARK The legal and claims team at C Solutions enjoys a varied workload, from advising on charterparty wordings and disputes, to investigating and managing the legal and insurance aspects of maritime casualties, pursuing recoveries to defending cargo or insurance claims; we act as TPAs for Lloyd’s and other insurers, offer innovative products to the market through our joint venture company Qwest Maritime – forensic investigation, asset tracing, financial due diligence, receivables financing to name but a few. What we know from these roles over the years is there will always be a new problem to solve – something we have not seen before – even for the grey haired amongst us!” So, what have we learned from the recent unprecedented period of change? The Insurance Act 2015 sought to achieve a fair balance between assureds and insurers and mitigate the risks of disputes. But, disputes inevitably occur. For example, we regularly deal with disputes relating to the duty of fair presentation. Under this obligation, the insured must ensure fair The Marine Insurer Nordic & Asia Special Edition | April 2021
All in the same boat Chris Telford, Claims Director at C Solutions, argues for collaboration, transparency and partnership to avoid dispute in an increasingly complex and challenging maritime world presentation of a risk to the insurer before the contract of insurance is entered into. They must inform the insurer of every circumstance relevant to the risk that the insured is aware of, or ought to be aware of. This provides sufficient information to put a prudent insurer on notice that it needs to make further enquiries if necessary. Absent such further enquiries, the insured is not required to disclose a circumstance if the insurer knows it, ought to know it or is presumed to know it, or if it is something as to which the insurer waives information. So far so good. This part of the act is intended to ensure fairness for all parties and provides an opportunity for the insurer to conduct further enquiries if it deems them necessary.
MODIFICATION QUANDRY But what happens when owners modify a vessel post-inception and those modifications lead to a claim under the policy? One might expect that an insured would inform their insurer about such modifications. But, in English law the duty of fair presentation applies before an insurance contract is entered into. With that in mind, and to mitigate the risk of disputes, thought might be given to how a policy should deal with such issues post-inception. Has sufficient research into the risk been conducted and has the information been presented clearly and in a fair manner prior to inception? Coverage issues relating to policy warranties also cross the desk from time to time. A vessel was insured for H&M and everything connected therewith, Total Loss Only and the policy contained the express warranty “Warranted Class and Class Maintained”. It was reinsured into Lloyd’s and the reinsurance policy contained no express warranties. This means there was no
