Comment on the Decision of the Supreme Court in The Cendor MOPU
| Author | Hari Narayan |
| Position | LL.B, Advocate, High Court of Kerala, India |
| Pages | 23-24 |
SSLR Comments on the decision of the Supreme Court Vol 1(2)
23
Comment on the Decision of the Supreme Court
in The Cendor MOPU
Hari Narayan1
Introduction
he recent decision of the Supreme Court in The Cendor MOPU has
somewhat settled the controversy regarding the application of the
doctrine of proximate cause in respect of claims falling under s 55(2)(c)
of the Marine Insurance Act 1906. Under the 1906 Act, the insurer is not liable
for any loss caused by inherent vice. Similarly, under Institute Cargo Clauses A,
cl 4.4 specifically excludes from insurance cover any loss caused by inherent
vice or nature of the subject matter insured. Thus disputes often arise as to
what is the proximate cause of the loss; whether it is the perils of the sea or the
excluded peril of inherent vice. The Supreme Court has given a quietus to the
above issue by holding that the defence of inherent vice cannot be applied if
the proximate cause of the loss is due to an external fortuitous act. In other
words the defence of inherent vice can be raised only if the cause of loss
emerges from within the subject matter.
Factual matrix
The subject matter of the insurance, a jack-up rig was covered under the ICC
(A) for ‘all risks’, excluding loss caused by inherent vice or nature of the
subject matter insured. The rig had three legs extending 312 feet into the air.
Halfway through the voyage, the legs were inspected and certain repairs were
effected for fatigue cracking. Thereafter the voyage was resumed. When the
vessel was being thus towed on its voyage to Malaysia the starboard leg
fractured initially and the other two legs also cracked subsequently and fell
into the sea. The loss resulted from metal fatigue, a progressive cracking
mechanism resulting from fluctuated stresses at each level. The stress was
generated from the height and direction of the waves and it was common
ground that the weather was as reasonably contemplated for the voyage. The
loss of the legs is the subject the claim under the policy. The insurance
company rejected the claim on various grounds contending inter alia that the
loss was caused by inherent vice and therefore excluded from liability.
Legal issues and reasoning
The trial Court, applying the principle laid down in Mayban General
Insurance v Alstom Power Plants Ltd [2004] 2 Lloyd’s Rep 609 held that the
cause of loss was the inability of the legs to withstand the normal incidence of
the voyage which constituted an inherent vice and thus the insurers were held
1 LL.B, Advocate, High Court of Kerala, India
T
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