Clauses 'Defining the Risk as a Whole' and 'Risk Mitigation' Clauses under Section 11 of the Insurance Act 2015: The Shifting Tide of Crewing Warranties in Marine Insurance

AuthorPanagiotis Adamos
(2022) Vol. 12
Clauses ‘Defining the Risk as a Whole’ and ‘Risk Mitigation’ Clauses under
Section 11 of the Insurance Act 2015: The Shifting Tide of Crewing
Warranties in Marine Insurance
Pana giotis Adamos*
As I was investigating the complexities and ambiguities arising out of Section 11 of the Insurance Act 2015, I did
realize that the challenge of identifying which term qualifies as a term “defining the risk as a whole” and as a “risk-
mitigation” term, calls for an intensive assessme nt of the purpose of a clause. I did spot such an intensive
assessment also in the construction of crewing warranties. The question then arose itself: What if we could construe
a warranty, like the one in The Resolute, under Section 11 of the Insurance Act 2015?
This paper tries to envisage a possible answer to this interesting question. After the introduction to the topic under
discussion, Chapter 2 refers to the basic characteristics of warranties generally, up to the point of the shift towards
the functionality of Section 10 of the Insurance Act 2015. Chapter 3 deals with the construction of crewing
warranties prior to the new regime of Section 11, pointing out the rise of the factual matrix as a tool of construction.
Chapter 4 is then dedicated to the analysis of the scope and the ambiguities arising out of Section 11. Finally, in
Chapter 5 we attempt to dive into the challenging quest of finding the future yardstick of interpretation, which will
possibly be applied in construing crewing warranties under Section 11 of the Insurance Act 2015.
ow long do we ha ve?”. This was the response of David Hertzell, the lead
Law Commissioner on the project which led to the Insurance Act 2015 (in
the H.L. Paper 81), when the Chairman of the SPBC1 asked, how should we
identify whether a provision is a warranty.2 A similar response could be appropriate with
another kind of question: How should we construe crewing warranties under Section 11 of the
Insurance Act 2015? This is because there is no one-way response, especially in the absence of
any qualifications on the Section by the Law Commission and in the absence of case law about
the range of Section 11. This paper is an ambitious attempt to envisage a more specific answer
to this question. We will dive into constant research for the interpretative tools, which could
possibly be applied in the construction process. The many ambiguities arising out of the poorly
drafted Section 11 along with the strange nature of crewing warranties turn this research into a
process with an uncertain result. But undoubtedly, this is the exact reason why such a decision
to undertake this challenging task had to be made. Besides, the inspiring words of the Roman
1 Special Public Bill Committee.
2 House of Lords Paper 81, 11 < >,
last accessed on 1 September 2020.
(2022) Vol. 12
sceptic Marcus Tullius Cicero underpin this syllogism: “More is lost by indecision than wrong
decision. Indecision is the thief of opportunity. It will steal you blind”. Let us see then where
this “opportunity” could lead us.
(2022) Vol. 12
Chapter 2
Warranties in a nutshell: Moving from form to functionality
When it comes to crewing warranties under the Insurance Act 2015 one thing has to be clear:
the reform did not affect how a promissory warranty is defined nor the rule of strict compliance
with it.3 Section 33(1) of the Marine Insurance Act 1906 still provides the definition of a
promissory warranty, as a promise undertaken by the assured that some particular thing shall
or shall not be done, or that some condition shall be fulfilled, or whereby the assured affirms or
negatives the existence of a particular state of facts.
2.1 The draconian nature of warranties
The key nature of a warranty has been long codified through several cases by the judiciary.4 In
the old case of Bean v Stupart5 Lord Mansfield’s well-known dictum, which still echoes after
so many years, points out that a warranty is “a condition on which the contract is founded”. It
was one of the starting points which gave the draconian nature to the warranties in English
insurance law. The reason why is that in the long history of common law, as far as the assured’s
contractual duties were concerned, the emphasis had been put on form instead of functionality.
The most offensive feature of warranties has always been the remedial response in the event of
non-compliance, meaning the automatic discharge of the insurer’s liability, precluding recovery
for any future loss. The consequences of the assured’s failure to comply with a warranty rested
“not upon its significance or its nature but on its legal classification, in turn dictating the
consequences of breach”.6 As Lord Goff supported in the famous case of The Good Luck
“discharge of the insurer from liability is automatic…and (if) a promissory warranty is not
complied with, the insurer is discharged from liability as from the date of the breach of
warranty, for the simple reason that fulfilment of the warranty is a condition precedent to the
liability of the insurer”.7
2.2 The shift towards functionality
A warranty was meant to be a tool which puts limits on conduct. Over time insurers tried to use
it for things unrelated to the risk.8 In order to ameliorate the harshness of the warranties, the
courts tried to take a different road away from the automatic prospective discharge model of
The Good Luck.9 A series of cases emerged surrounding two classes of warranties:10 those
3 See Gurses O, Marine Insur ance Law (2nd edn, Routledge 2017) chapter 5.
4 See HIH Casua lty & General Insur ance Co Ltd v New Hampshire Insura nce Co [2001] EWCA Civ 735.; The
Good Luck [1992] 1 AC 233.
5 [1778] 1 Doug 11, at 14.
6 Merkin R and Gurses O, ‘Insurance contracts after the Insurance Act 2015’ [2016] LRQ, p. 1.
7 Bank of Nova Scotia v Hellenic Mutual War Risk Association (Bermuda) Ltd (The Good Luck) [1992] 1 AC
233, 262-263.
8 See Thomson v. Weems (1884) 9 App.Cas. 671, where it is supported that "in policies of marine insurance any
statement of fact bearing upon the risk introduced into the written policy is to be construed as a warranty".
9 [1992] 1 AC 233.
10 De Maurier (Jewels) Ltd v Bastion Insura nce Co Ltd [1967] 2 Lloyd’s Rep. 550, 558-559.

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