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Chapter One

Introduction

1.1 Introduction

A marine insurance agreement is a contract in which the insurer covers the assured, in the
event of losses incurred during transit. No specific marine insurance law in Bangladesh.
But presently Bangladesh and Pakistan does not have a law to deal with marine insurance.
The marine insurance business in Pakistan AND Bangladesh carried out on the basis of
British marine insurance Act, 1906. This has long been hold as the international industry
standard and the marine insurance Act of many countries are based on this Act. A contract
of marine insurance is a contract whereby the insurer undertakes to indemnify the assured,
in manner and to the extent thereby agreed, against marine losses, that is to say, the losses
incident to marine adventure.1

1.2 Statement of the Research

The dissertation paper contains a comparative study amongst Bangladesh and Pakistan to
find out the loopholes and drawbacks of the laws and regulations regarding marine
insurance process in Bangladesh and to develop the maritime system in our country so that
no lacuna is existed in our marine systems. This dissertation paper critically illustrates the
provisions regarding marine insurance. In this case, Bangladesh follows the Marine
Insurance Act, 1906 which is passed by the parliament of United Kingdom. The paper
outlines definition of marine insurance, insurable interest, insurable value, disclosure and
representation, voyage, assignment policy, warranties, double insurance. Premium loss
and abandonment supplemental and schedule of rules for construction of policy. The
committee met there with Syed SibliFeroz in the chair on Wednesday to discuss the bill to
regulate the business fo marine insurance. Pakistan crop loan insurance initial highlighted

1
Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition, Shams Publication,
Dhaka, 2016, p. 289.

1
by AGRIFIN.MrAzharArshad, Evp head of operations and MrKhasifThanvi GM, HBL
invited by AGRIFIN present their views on the particular subject to the world.
International insurance conference on catastrophe events a challenge. The PIL held its
second international insurance conference at Sheraton hotel Karachi from 10th April 2012.
Marine insurance Act, 1906. Section 3 maritime perils defined Maritime perils means the
perils consequent on or incidental to the navigation of the sea, that is to say, perils of the
sea, fire, war perils, wreaks, recovers, thieves, captures, seizures, restrains and detentions
of prices and people , jettisons, barratry and other perils, either of the will kind or which
may be designed by the policy. Marine insurance plays an important role in domestic trade
as well a in international trade.

1.3 Object of Research

 To investigate and examine laws and regulations amongst United Kingdom, United
State and Bangladesh.
 To find out the drawbacks of laws of marine insurance in Bangladesh.
 To show the recommendation to the concerned authority to update to laws regarding it.

1.4 Research Questions

1. Whether the law of marine insurance is properly implemented in our country or not?
2. Whether the existing laws are adequate or not?
3. Are there any loopholes of the existing laws regarding marine insurance in
Bangladesh?

1.5 Significance of the Research

The paper illustrates the basic principle and policy of the marine insurance on Bangladesh
perspective. This dissertation paper will play a vital role to upgrade the laws and easily
find out the problems which is hiding in our legislation regarding marine insurance. This
paper contributes to critically analysis the existing laws on marine insurance comparing

2
with other developed country. So, the concerned authority can easily find out the problems
of the Act and then the act can be upgraded easily considering our social, economic and
business status. It significance is to in showing recommendation to the government to take
help from this paper for developing the laws relating to maritime.

1.6 Scope of the Research

This paper focuses on the controversial issues regarding marine insurances’ laws amongst
Bangladesh and Pakistan. The present controversial issues may be political, economic and
commercial relations with other country on marine insurance. Besides these, the thesis
paper outlines the nature of marine insurance. The nature of marine insurance includes
sharing of risk, co-operative device, value of risk, payment at Contingency, amount of
payment, large number of insured person, and charity of insurance, gambling of insurance
as well as primary function of insurance and secondary function of insurance.2

1.7 Limitation of the Research

This research paper contains a critical study on existing laws including national and
international laws and convention as well as judicial precedent on laws of marine
insurance. To conduct this research it collects lots of data and information from famous
books, newspapers, stander article and internet law based journal but information of this
dissertation papers is not sufficient. Because of time limitation which is fixed by the
supervisor to complete this dissertation paper. This research paper is made for the
fulfillment of the requirements of LL.B Degree.

1.8 Literature Review

2
Saha, TanoyKumer and Mondal, Tithi Rani, A Study on Insurance: Its Development & Legal Aspects in
Bangladesh, 1st Edition, University Publication, 2014, pp. 12-13.

3
The dissertation papers reviewed various books, journal article, research paper, newspaper
and case laws regarding maritime laws in Bangladesh and Pakistan.

Alam (2016) provided that Bangladesh can neither afford to jeopardize its international
trade nor its shipping industry. After all shipping happens to be a derived demand and
there cannot be any demand for shipping in the absence of and demand for trade.
Bangladesh needs to protect its fleet without jeopardizing the trade. Protection to the
national flag vessel is not the only way to protect them. There a number of ways to protect
them through innovative approach and pragmatic way. The ordinance should be reviewed
and amended on priority basis to tune it to requirements of sea-borne foreign trade. The
Ordinance should be modified in such a way as to bring the Bangladesh fleet in more
competent, efficient and seaworthy for launching across the Europe and America.3

Hasan (2016) divided the volume of the book into many parts, chapters, appendixes and
each part contains different laws and each chapter contains different key headings of laws.
In this book any explanation or case base study or any personal observation was not
drawn. The author only highlighted on accommodation of maritime laws. At the closing of
the books the author attached some enactments regarding maritime laws without making
any Chapterization.4

Julfikar (2005) drew a statute arrangement shape in his book arranging the inland
shipping Acts, Ordinances, and Marine Insurance rules in Bangla. In this book any
personal opinion or expert opinion or case reference or explanation was not brought. This
book helps to find the domestic shipping laws and rules in a volume.

3
Alam, Md. Asraful,Flag Vessel Protection Law in Bangladesh: A Critical Analysis,International Journal of
Innovative Research & Development, 2016 [viewed at Mar1, 2018] Available from:
http://www.ijird.com/index.php/ijird/article/download/100019/72169

4
Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition, Shams Publication,
Dhaka, 2016, p. 289.

4
Sheppard (Volume-1) divided his total writings into three volumes. In this first volume, it
was provided a cohesive overall view of aspects of maritime with a fairly detailed account
of important decisions, jurisdiction of the admiralty court and the risks of litigation. He
framed his first volume making 8 chapters i.e; the jurisdiction of the admiralty court
(chaprter-1), enforcement of maritime claims including marine insurance (chapter-2),
conditions of arrest (chapter-4), dismissal or stay of proceedings (chapter-6), anti-suit
injunctions(chapter-8).

Baughen (1998) showed in his book a commentary on judicial decisions and well
balanced coverage and analysis of recent and key cases. In this book it was also provided
the comprehensive overview of topics dividing into different parts & chapters. Each
chapter regards similar facts i.e; bills of lading contract regarding marine insurance
(chapter-4&5) combined transport (chapter-7), charter parties (chapter-9), voyage charters
(chapter-11), time chapter (chapter-12) salvage (chapter-15), marine pollution(chapter-17),
arbitration(chapter-18), accidents and collisions(chapter-14).

Hasan (2011) described in an article that due to the complexity of maritime operations
and the various legal issues involved therewith, the legal system of a country needs to
equip itself to the challenges of the sector. In this writing it has been pointed that though
there are many laws regarding maritime but these laws are however, inadequate to meet
the ever-rising demand of Bangladesh's fast expanding economic and trade relations with
foreign countries and developments in the shipping industry. There is no law on maritime
priority, marine insurance, marine pollution, collision, salvage, towage etc. Due to the
absence of legislation on many issues, Bangladesh tends to follow English enactments by
judicial reference.

1.9 Research Methodology

This dissertation paper contains the doctrinal and qualitative research. Doctrinal research
includes the library based research. This is a critical study on case law, journal report, and
article and existing research pertaining to the issue of maritime laws amongst United

5
Kingdom, Bangladesh and United State of America, report as primary source. This
dissertation paper analyzes text books, journals and information from internet as
secondary sources in order to completion of the dissertation paper. Data has been
accumulated for this study from both primary as well as secondary sources to finds out the
gap or drawback of the laws which is made for maritime laws in present world. Besides
these the theses finds out the gap of information pertaining to the topic studying on various
famous writers’ books.

1.10 Data Analysis

To complete the research paper it takes help of Microsoft MS Word, Excel, and Graphics
tools like as Adobe Photoshop.

1.11 Chapterization

This thesis paper includes six chapters namely;


Chapter One : Introduction
Chapter Two : Historical Development of the Policy of Marine Insurance in Bangladesh.
Chapter Three : Theoretical Discussion of Maritime Laws of Bangladesh.
Chapter Four : Existing Laws and Regulations Laws of regarding Marine Insurance in
Bangladesh.
Chapter Five : Comparative Study between Bangladesh and Pakistan.
Chapter Six : Conclusion

1.12 Conclusion

This theses paper have showed the object and purpose of making this paper in objective
clause under chapter one. On the basis of a comparative study a critical analysis on any
topic is inflicted. So on the comparative study of maritime laws a critical review and
existing problems or drawbacks can be found. Not only that but also the solution can be

6
drawn easily. So a comparative study heavily contributes to develop the existing law in
social, economic and commercial cases.

Reference:

Book

Saha, TanoyKumer and Mondal, Tithi Rani, A Study on Insurance: Its Development &
Legal Aspects in Bangladesh, 1st Edition, University Publication, 2014, pp. 12-13.

Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition, Shams
Publication, Dhaka, 2016, p. 289.

Journal (Online)

Alam, Md. Asraful,Flag Vessel Protection Law in Bangladesh: A Critical


Analysis,International Journal of Innovative Research & Development, 2016 [viewed at
Mar1, 2018] Available from:
http://www.ijird.com/index.php/ijird/article/download/100019/72169

7
Chapter Two

Historical Background of Marine Insurance in Bangladesh and Pakistan

2.1 Introduction

Insurance service contributes in business sector to speed it all over the world. Its origin is
not unknown by the international community. Though it is one kind of business but it aid
peoples to start a business. Because it provides security of insured property in lieu of
installment which may be monthly or yearly or a period which is mentioned in an
agreement or contract. Marine Insurance basically protect the ship, goods and property due
to the loss caused by the perils of the sea. The service stated from 17th century with the
merchant business holder in United Kingdom.

2.2 Early Historical Background of Marine Insurance

Marine Insurance, the oldest of the many forms of protection against losses, has a long
history of great interest. The ancient Phoenicians, the Greeks, the Romans were in the
habit of guarding themselves against some of the risks of maritime enterprise by various
systems of insurance, whether in the shapes of loans or mutual guarantee.5

It is believed that, the loan form known under the name of ‘Bottomry’ is one of the oldest.
It may be defined as the mortgage of a ship, i.e. her bottom or hull, in such a manner that
if the ship be lost, the lender likewise loses the money advanced on her; but, if she arrives
safely at the port of destination, he, not only gets back the loan but in addition, receives
ascertain premium previously agreed upon. It is probable that the system of insurance
arising out of Bottomry came to be not only the oldest but also the most wide-spread form
of marine insurance, principally for two reasons i.e. the extreme simplicity of the
transaction and the desire to escape the penalties of the laws against usury. The form of

5
Dr. Kyriaki, The History, Evolution and Legislative Framework of Marine Insurance, Link available at
https://www.scribd.com/doc/20000408/History-of-Marine-Insurance

8
marine insurance, known as Bottomry, soon grew out and developed into the modern
system of insurance.

2.2.1 The Lombards

Over the centuries, various forms of marine insurance have flourished in Europe. The
Hanseatic merchants of northern Europe had an insurance centre based at Bruges, best
known as the first ‘Chamber of Insurance’ and in 1432, the city of Barcelona also laid
down the first recorded statute for insuring ships. Meanwhile, the first form of marine
insurance in Britain had been started by a group of Hanseatic merchants and was later
carried on by some German colonists who were the first. Although it was probably the
Greeks and the Phoenicians who were among the very first to have insured against
maritime loss, however, the first existing record of marine insurance appears to have
originated from a Roman edict of AD533, in the reign of Emperor Justinian known
London underwriters to have exercised marine insurance almost exclusively with no
apparent sign of competition for many years. It was only until the late years of
their existence that they were faced with competition from another group of foreign
immigrants, ‘the Lombards’ - who took their name from the name of the street where their
businesses and trading firms were established i.e. Lombard Street – who begun marine
insurance by advancing sums on Bottomry loans. The activity of the Lombards came to an
end when England’s foreign trade came to the hands of Englishmen. Although gone, they
are memorable for they are the ones who brought marine insurance practice into general
use, making it acceptable to the trading community at large by the introduction of proper
rules and regulations.6

2.2.2 Early English Marine Insurance

The commencement of the 17th century formed the starting point of a new period in the
history of marine insurance in Great Britain. During the first period, dating back to
the beginnings of foreign commerce and ending within the 16th century, marine insurance
was carried on chiefly, if not entirely, by foreigners; while during the second and

6
Dr. Kyriaki, The History, Evolution and Legislative Framework of Marine Insurance, Link available at
https://www.scribd.com/doc/20000408/History-of-Marine-Insurance

9
subsequent period it fell into native enterprise. A distinct line and division between the
two periods was formed by the Elizabethan Act of 1601 which is the first statute prepared
by the English Government and passed by the Parliament. It was titled ‘An Act Concerning
Matters of Assurances Amongst Merchants’ and it is highly memorable as the first in the
statute-book regarding marine insurance.7 The Act of 1601 also established the Court of
Insurance. The Court was unfavourably looked upon both by the mercantile community
and the courts of common law and as a result had very little function.

2.2.3 The Founder of Lloyd’s and the Rise of Lloyd’s Coffee House.

Until 1666, the business of underwriting is not known to have been carried in any
other specific fixed localities other than at the private offices of bankers, money-lenders
and others who also pursued their own avocations besides. After this period, numerous
coffeehouses were gradually established in the City of London for the purpose of
underwriting. Within a few years they sprung all over London, and merchants visited them
chiefly, if not entirely, for business purposes.The first London coffee house was opened in
1652, by a Mr. Bowman, in St. Michael’s Alley, Cornhill, London. The ‘Lloyd’s Coffee
House’ originally located in Tower Street, moved to Lombard Street around 1691 or 1692.
This, together with the fact that its owner was responsible for the issuing of the weekly
newspaper ‘Lloyds News’ - furnishing commercial and shipping news - made it the place
of resort for persons connected with the shipping business. In 1771, a Committee was
elected to represent the underwriters and payment of a subscription, the first significant
movement of underwriters themselves towards assumption of responsibility for the
organisation of the market and in 1871 - via the first Lloyd’s Act – it became a structured
organisation regulated by a constitution.8

2.2.4 The Growth and Evolution of the System and the Law of Marine Insurance.

Over a hundred years passed after the enactment of the 1601 Act, before any other statute
related to marine insurance was adopted. The Marine Insurance Act of 1745 was a

7
Ibid
8
Dr. Kyriaki, The History, Evolution and Legislative Framework of Marine Insurance, Link available at
https://www.scribd.com/doc/20000408/History-of-Marine-Insurance

10
breakthrough Act in that it prohibited the making of policies of marine insurance in the
subject matter of which the assured had no interest. This was the first attempt to put an end
to the practice of wagering disguised by marine policies whereby persons without interest
in a vessel or its cargo would insure using a marine policy form. The 1745 Act required
those procuring marine policies to be interested in the subject-matter, and similarly
prohibited the practice of insuring on the basis of “policy proof of interest”.9

The Act of 1788 laid down that all policies made out in blank, were void and the Act of
1795, required all policies of marine insurance to be in writing and to be stamped. In 1894
‘The Marine Insurance Codification Bill’ was introduced in the House of Lords, by Lord
Herschell, and it is its content - slightly altered - which provided the basis for the 1906
Act, namely ‘An Act to Codify the Law Relating to Marine Insurance’ .The early marine
insurance legislation chiefly left it to the market and the Courts to develop the principles
of marine insurance law which have been ultimately codified in the marine Insurance Act
1906 ( MIA 1906). The MIA 1906 is mainly a codification of around 200 years of judicial
decisions and still nowadays there is no equivalent to it codification. The Act in many
points is presumptuous in that its wording is binding and will operate in the absence of any
contrary party agreement. Moreover, the marine insurance contracts which hare
underwritten in England are governed by the various sets of Standard Marine Clauses
which frequently eliminate the power of the presumptions set by the Act. In addition,
many post-Act decisions help refine the meaning of the Act. The 1906 Act approved the
use of the Lloyd’s S.G. (Ship and Goods)Form of Policy , previously adopted by Lloyd’s
in 1779. The Institute of London Underwriters drafted clauses appended to the policies, in
order to deal with certain area of inefficacy of the SG Policy. The clauses of 1982,1983
resulted in the SG Policy being abolished and replaced by a simpler wording which acts as
a cover sheet for the relative Institute Clauses. The Institute Clauses have been revised
many times, lastly in November 2003.10

9
Ibid
10
Dr. Kyriaki, The History, Evolution and Legislative Framework of Marine Insurance, Link available at
https://www.scribd.com/doc/20000408/History-of-Marine-Insurance

11
2.2.5 Historical Background of Marine Insurance in Bangladesh

The actual age of marine insurance is uncertain but on the basis of secondary sources; it
means books, journal article, Wikipedia etc., following history of marine insurance is
drawn. The historical development can be divided into seven stage, thus 12th Century,
Hanseatic League, 14th Century, Corporation of Lloyd’s, S. G Policy , MAR Policy and
finally Marine Insurance Act.11In 12th century, the Lombard probably knew about marine
insurance. Maritime insurance was the earliest well-developed kind of insurance, with
origins in the Greek and Roman maritime loan.12Hanseatic League was established in
1358 at Luback city of German. Hanseatic League was a German Trading Organization
regarding merchant shipping business. There were 190 cities of 19 countries. They
constituted this League to spread their merchant business among the said 190 cities. Once
a time they felled the necessity of marine insurance.In 14th Century Separate marine
insurance contracts were developed in Genoa and other Italian cities in the fourteenth
century and spread to northern Europe. Premiums varied with the estimates of the variable
risk from pirates.Corporation of Lloyd’s is an institution regarding marine insurance.
Firstly the founder Edward Lloyd’s opened a coffee house in 1680s at Tower Street of
London. It was popular for sailor, merchant or owner of vessels and carried of shipping
goods. When they used to discuss about perils of the sea loss and damages, compensation
with the taking of coffee in these cases Edward Llyods constitute a corporation body
namely Corporation of Lloyd’s regarding sharing of losses of the goods. He died in 1720
but his name has been preserved in the institution. Now it is a big and popular market of
Marine Insurance.13

Lloyd’s made a S.G. form of marine policy. But this policy was arise to international
debate and criticized by the judiciary for its ;lack of clarity,-simplicity, certainty.In 1978
UNCTAD had also criticized the S.G. policy publishing a report, thus: “Marine Insurance:
Legal and Documentary Aspect of the Marine Insurance”.
11
Available link at https://en.wikipedia.org/wiki/Marine_insurance
12
Ibid
13
Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition, Shams Publication,
Dhaka, 2016, p. 289.

12
Later on MAR policy was made.As a result of such criticism, the institution of Landon
Underwriters and the Lloyd’s Underwriters Association jointly made a new policy namely
MAR policy replacing S.G. policy.14At the end of 19th century, United Kingdom governed
a codifying Act regarding marine insurance namely “Marine Insurance Act, 1906” It is
regulated by the common law.

2.3 Concluding Remarks

Marine insurance plays a very vital role in securing loses of the buyers, sellers, and ship
owners and it helps them to conduct their business on or through the seas and the oceans.
The risks at the high seas are much unexpected, and it is important that at least some of the
risk is financially covered through the insurance. Marine insurance generally fulfills the
overseas transportation requirements. Excluded loses are also an important part of the
marine insurance law so that the insurers are not made liable for the loss which happened
due to the misconduct of the assured party or due to any event which was inevitable

Reference:
Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition, Shams
Publication, Dhaka, 2016, p. 289.

Dr. Kyriaki, The History, Evolution and Legislative Framework of Marine Insurance,
Link available at https://www.scribd.com/doc/20000408/History-of-Marine-Insurance

https://en.wikipedia.org/wiki/Marine_insurance

14
Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition, Shams Publication,
Dhaka, 2016, p. 289.

13
Chapter Three
Laws and Regulation Regarding Marine Insurance

3.1 Marine Insurance Act 1906


In Bangladesh in the absence of any legislation relating to marine Insurance the court had
followed the principles of English Law and English decisions regarding marine Insurance
and also follows the UK Marine Insurance Act, 1906. It includes law relating to

-Insurance interest (sec. 4-6) - Assignment of policy (Sec. 50-51)


-Insurance Value (sec.15) -Premium (Sec. 52-54)
-Disclosure of fact (Sec.17-31) -Loss and Abandonment (Sec. 55-566)
-Double Insurance (sec.32) -Measure of Indemnity (Sec. 67-78)
-Warranties (sec.33-41) -Rights of Insurer on payment (Sec.1)
-The Voyage (42-49) -Measure of-Return of premium (Sec. 82-84)
Indemnity
-Mutual(Sec. 67-78)-
Insurance (Sec. 85-86)
-Supplemental (Sec. 86-94)

Besides this, to try the suit regarding marine insurance, Admiralty Court Act 2000 plays a
vital role.

3.2 Admiralty Court Act 2000


Admiralty jurisdiction of the High Court Division.-The High Court Division shall be a
Court of Admiralty. 15

Section 8: Suit to be admitted, heard and disposed of by a Bench of Single Judge:

Every suit under this Act shall be brought before, heard and disposed of by a Bench of
Single Judge of the High Court Division in its Admiralty jurisdiction.Provided that, the

15
Section 3 of the Admiralty Court Act 2000.

14
Chief Justice may constitute a Bench of two or more judges to hear and dispose of any suit
under this Act.

Section 12: It is necessary to say that Admiralty Court Act, 2000 also include -
-The Court of Admiralty act, 1840
-The Court of Admiralty act, 1861

3.3 The constitution of Bangladesh

Article 101: The High Court Division shall have such original, appellate and other
jurisdictions and powers as are conferred on it by this Constitution or any other law.

Article 103 (1): The Appellate Division shall have jurisdiction to hear and determine
appeals from judgments, decrees, orders or sentences of the High Court Division.

3.3 Admiralty Rules, 1912

Admiralty jurisdiction, which was conferred on the High Court by the Letters Patent, was
re-conferred on the High Court by the Colonial Court of Admiralty Act, 1890. Section 7 of
the Act of 1890 conferred power to make Rules of Court to regulate the procedure and
practice of the Court in exercise of its admiralty jurisdiction. Pursuant to the statutory
authority, the Calcutta High Court framed the Admiralty Rules which were approved by
the Privy Council in December, 1911 and came into operation on and from 1 st June 1912.
This jurisdiction was preserved by section 106 of the Government of India Act, 1915 and
section 233 of the Government of India Act, 1915. These independent Rules were framed
to carry out the obligation imposed upon the High Court by the said statute.16

The Admiralty Rules were published in the gazette on 12th June, 1912, and they are still in
force in Bangladesh pursuant to the provisions of section 11 of the Admiralty Court Act,

16
Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition, Shams Publication,
Dhaka, 2016, p. 365-366.

15
2000. Section 11 of the present Act provides that until rules are framed under the new Act
the admiralty rules which were in existence will be followed. Admittedly no rules has yet
been framed under the Admiralty Court Act, 2000. Therefore the rules framed in 1912
under the provisions of the previous Act are still the governing rules vis-à-vis the
procedure in the Admiralty Court.

As to the applicability of the Original Side Rules17 to the Proceedings of the Admiralty
Court, his Lordship Mr. Justice A.B.M KhairulHaquein Multicargo Limited vs. Ponl
Barcelona and other18s held that the Original Side Rules remained part of the Admiralty
Rules in spot of the repeal of the Letters Patent by Law Reforms Ordinance 1978 and
continued to remain so in view of section 11 of the Admiralty Court Act, 2000 by virtue of
the principle of legislation by reference, and as such Original Side Rules are also made
applicable to the proceedings of Admiralty Court.19

3.5 Evidence Act 1872


In the proceeding of the suits before the Admiralty Court, Evidence Act shall be applied
the take examination of witness.

3.6 Judicial Pronouncement


The Supreme Court of Bangladesh in the Eagle Star Insurance Company Limited vs.
Rahmania Trading Co. [(1976) 28 DLR (AD), 111].puts it clearly: -

“The contract of insurance and marine insurance is not dealt with by any specific
law of this country. In England matter is now largely covered by the Marine
Insurance Act 1906. There is no such law in our country. Marine Insurance
contract is therefore governed by the general principles of contract and also the

17
Clause 31 of the Letters Patent of 14th May, 1862 vested the High Court at Fort William with all civil and
maritime jurisdictions and clause 32 with criminal jurisdiction.
18
(2005) 2 LG [cited in Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition,
Shams Publication, Dhaka, 2016, p. 366]..
19
Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition, Shams Publication,
Dhaka, 2016, p. 365-366..

16
English principles. The principles in English Marine Insurance Act 1906 are also
applicable.”

The Appellate Division in Sadharan Bima Corporation vs. Bengal Liners Ltd20 held;-

“In determining issues of marine insurance in genera and the issue of unrepaired
damage in particular, uptil now, there is no law on marine insurance in the statute
book in Bangladesh. Yet , in respect of marine insurance on general the Court of
Bangladesh follow the general principles of contract and English law and practice,
which are held in high esteem even by the American Courts.”

3.7 Marine Insurance in Pakistan

Marine Insurance in Pakistan, 2018 is also same to the Act which is followed by
Bangladesh. But the Marine Insurance Act, 2018 is developed by Pakistan on the basis of
Pakistanis perspective. It has also same principles and liabilities like as Marine Insurance
Act, 1906 which is followed by Bangladesh. All of the sections of Marine Insurance of
Pakistan are similar to Bangladesh.

Reference

Statute

Admiralty Court Act 2000

Admiralty Rules, 1912

Constitution of Bangladesh

Evidence Act 1872

Marine Insurance Act 1906

20
16 BLD (AD) 186

17
Case

Multicargo Limited vs. PonlBarcelona (2005) 2 LG

Sadharan Bima Corporation vs. Bengal Liners Ltd 16 BLD (AD) 186

Books

Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition, Shams
Publication, Dhaka, 2016.

18
Chapter Four
Brief Discussion on Marine Insurance

4.1 Introduction

Theoretical discussion includes the critical analysis of present laws regarding to marine
insurance and define the marine insurance with it principles recognized by the
international organization. Marine Insurance law is a part of commercial law. Insurance
may be defined as a cooperative device to spread the loss caused by a particular risk over a
number of persons who are exposed to it and who agree to insure themselves against that
risk.

4.2 Definition of Insurance

Insurance may be defined as a cooperative device to spread the loss caused by a particular
risk over a number of persons who are exposed to it and who agree to insure themselves
against that risk. This means that insurance provides a pool to which the many contribute a
certain sum of money called the premium, and out of which the few who suffer losses are
compensated by the insurer.21

4.3 Definition of Marine Insurance

Marine insurance provides protection against loss of marine perils.The marine perils are a
collision with a rock, or ship, attacks by enemies, fire, and captured by pirates, etc. these
perils cause damage, destruction or disappearance o” the ship and cargo and non-payment
of freight. So, marine insurance insures ship (Hull), cargo and freight. The fire insurance
does not protect only losses but it provides certain consequential losses also war risk,
turmoil, riots, etc. can be insured under this insurance, too.22

21
Kuchhal, M C, Mercantile Law, 6th Edition, Vikas Publishing House PVT LTD, New Delhi, 2007, p. 429.
22
Ibid, p. 58.

19
4.3 Types of Insurance

There are many insurance in all over the world but in general 7 types of insurance are
existed in everywhere thus; Marine Insurance, Fire Insurance, Life Insurance, Property
Insurance, Liability Insurance, Social Insurance and Guarantee Insurance. 23 But M C
Kuchhal divided insurance business into two main branches; Life Insurance and General
Insurance. General Insurance business means fire, marine or miscellaneous insurance
business and items like employers” liability insurance, burglary insurance, fidelity
guarantee insurance, livestock insurance; crop insurance, motor vehicles insurance, etc.
fall under miscellaneous insurance business category. 24

4.4 Subject Matter of Marine Insurance

Anything in respect of which there is a risk of loss from maritime perils may be the subject
of marine insurance. It will be recalled that there is a distinction between the subject
matter of insurance and the subject matter of the contract of insurance, that every lawful
marine adventure may be the subject of a contract of marine insurance, and that a contract
of marine insurance may be extended to cover risks other than maritime perils in a narrow
sense. However, even though a marine insurance contract may include risks arising inland,
the contract must be substantially one relating to a marine adventure. Therefore, the
subject matter of the insurance must be capable of exposure to maritime perils.25

4.4.1 Hull Insurance

The goods or cargoes shipped to a foreign country are exposed to the perils of the seas.
The pirates and the men of war may loot away the goods. The marine insurance which
safeguards cargoes from perils is known as cargo insurance. The Hull Insurance is further
23
Available at https://iedunote.com/types-of-insurance
24
Kuchhal, M C, Mercantile Law, 6th Edition, Vikas Publishing House PVT LTD, New Delhi, 2007, p. 432.
25
I-Law, Marine Insurance: Law and Practice , Available at https://www.i-
law.com/ilaw/doc/view.htm?id=130878

20
Subdivision into General Cargo vessels, Dry Bulk Carriers, Liquid Bulk Carriers,
Passenger Vessels, and Other Vessels.26

4.4.2 Cargo Insurance

The word Hull refers to the body of the ship or vessel. The ship is exposed to a number of
risks like cyclone, collision and arrest by foreign naval power. The insurance which
protects the ship owner against the loss of ship is known as hull insurance.27

4.4.3 Freight Insurance

The ship owner losses the freight when cargo pays freight at the time of shipment of
goods and goods do not reach the port of destination. The ship owner guards against
possible loss of freight by freight insurance.28

4.4.4 Liability Insurance

Liability Insurance is one in which the insurer undertakes to indemnify against the loss
which the insured may suffer on account of liability to a third party caused by collision of
the ship and other similar hazards.29

4.5 Types/Classes of Marine Policies

The major types of marine insurance policies are Voyage policy, Time policy, Mixed
policy, Floating policy, Open Cover and Building risk policy. Where the subject matter is
insured for a specific voyage, say from Karachi to Port Saeed it is named as voyage
policy. A time policy is taken for definite period of time, usually not exceeding 12 months

26
Chaudhuri, AzizulHaq, Risk & Insurance, 2nd Edition, Brothers’ Publications, Dhaka, 2008, p. 62.
27
Ibid
28
Ibid
29
Available at https://www.termpaperwarehouse.com/essay-on/What-Are-The-Subject-Matter-Of/120658

21
say from January 1, 1981 to December 31, 1981. This policy is most suitable for hull
insurance.30

4.5.1 Voyage Policies

The policy is issued to cover a particular voyage from one port to another and from one
place to another. The policy mentions the port of departure and the port of destination,
between which the risks are generally underwritten. This policy is not suitable for hull
insurance as a ship usually does not operate over a particular route only. However, this
policy may include time factor also as from Bombay to London for one year. In this case
the risk may be covered from one place to another covering a period of one year. The
policy is used mostly in case of cargo insurance. The goods remain covered even when the
ship halts at intermediate ports. The risks at the port of departure and at the port of
destination may be covered by incorporating suitable, clauses in the policy. The liability of
the insurer continues during landing and re-shipping of the goods.31

4.5.2 Time Policies

Under this policy, the subject-matter is insured for a definite period of time, e.g., from 6
a.m. of 1st January, 1976 to 6 a.m. of 1st January, 1977. The policy is generally taken for
one year although it may be for less than one year. This policy is commonly more used for
hull insurance than for the cargo insurance. The policy may cover, while navigating the
vessel or while under construction. Risks covered under construction are for more than 12
months. There are standard clauses in relation to freight, premium, interests, etc., which
are added to this policy. The time policy may be taken in case of goods and other movable
vessels.32

4.5.3 Voyage and Time Policy or mixed Policies:


30
Ibid.
31
Chaudhuri, AzizulHaq, Risk & Insurance, 2nd Edition, Brothers’ Publications, Dhaka, 2008, p. 62.

32
Ibid, p. 63.

22
In this policy, the elements of voyage policy and of time policy are combined in under this
policy. The reference is made certain period after completion of voyage. For example, 24
hours after arrival. It may be beneficial to hull as well as to cargo insurance.33

4.5.4 Valued Policies

Under this policy the value of loss to be compensated is fixed and remains constant
throughout the risk except where there is fraud and excessive over-valuation. The value of
the subject-matter is agreed between the insurer and the assured at the time of taking the
insurance. It is also called insured value or agreed value. It forms the measure of
indemnity at the time of loss. The insured value is not necessarily the actual value. It may
be total of invoice, e.g., cost of goods, freight; shipping charges, insurance and a certain
percentage of margin (generally 10 per cent) to cover anticipated profits.34

4.5.5 Unvalued Policies

When the value of policy is not determined at the time of commencement of risk but is left
to be valued when the loss takes place. The value thus left to be decided later on is called
the insurable value or unvalued or valuable policy. In deciding the value, the invoice
cost,shipping and insurance charges are included and no margin for anticipated profit is
added. Usually unvalued policies are not common in marine insurance because evaluation
of loss at the time of damage poses a difficult problem. It is extremely difficult when
consignment goes nearer the port of destination. In hull insurance, the insurable value is
determined taking into account the value of the ship at the commencement of risk
including provision and, stores for officers and crew plus the charges of insurance. In
insurance on freight whether paid in advance or otherwise, the insurable value is the gross
amount of freight plus the charges of insurance. Similarly, in cargo insurance it would be
the cost of goods plus expenses and insurance charges. A limitation of insurable value is

33
Ibid.
34
Link available at http://ravneetarora.blogspot.com/2013/03/20-different-types-of-marine-insurance.html

23
desirable not only to fix the measure of indemnity under an unvalued policy, but also to
provide an approximate basis for the calculation of value in a valued policy.35

4.5.6 Floating Policies

This policy describes the general terms and leaves the amount of each shipment and other
particulars to be declared later on. The declaration is made in order of dispatch of
shipment. The policy is taken for a round large sum which is specified at each declaration
and is attached to each shipment. With each declaration the amount will be reduced till it
is exhausted when the insured sum is said to be “closed” and the policy is “fully declared”
or, “run off. The most popular form of contract is “Open Cover”. It is an agreement
between the insured and the insurer by which the assured on his part agrees to declare, and
the insurer on his part agrees to accept all the shipments falling within the scope of the
“open cover” which is merely an original ship”.

It is not a legal contract of marine insurance and suffers from the same legal disability as
the “original “ship”. However the insured and the insurers are honour bound. To give
“Open Cover” a legal form, a policy is issued for the purpose. Separate policies are not
issued in case of each shipment but only one policy is issued at the time of entering into
contract. All declarations are written on the back of the policy.A classification clause is
usually inserted in “open cover” to provide the agreed rates of premium. Similarly,
valuation clauses are also inserted to provide the basis for valuation in the event of loss
taking place. This policy is suitable for a cargo-owner who makes regular shipments of
cargoes. All his shipments are automatically covered as soon as the declarations are made.
The floating policies are mostly used in the age of gigantic trade.36

4.6 Methods of Marine Insurance

According to the study books of The Chartered Insurance Institute, there are variant
methods of insurance as follows:37

35
Ibid.
36
Chaudhuri, AzizulHaq, Risk & Insurance, 2nd Edition, Brothers’ Publications, Dhaka, 2008, pp. 63-64.
37
Link Available at https://en.wikipedia.org/wiki/Insurance

24
 Co-insurance – risks shared between insurers
 Dual insurance – having two or more policies with overlapping coverage of a risk
(both the individual policies would not pay separately – under a concept named
contribution, they would contribute together to make up the policyholder”s losses.
However, in case of contingency insurances such as life insurance, dual payment is
allowed)
 Self-insurance – situations where risk is not transferred to insurance companies and
solely retained by the entities or individuals themselves
 Reinsurance – situations when the insurer passes some part of or all risks to another
Insurer, called the reinsurer

4.7 Principles or Essentials of Marine Insurance

The principles of all types of insurance are generally the same and they have been
discussed earlier, in detail. Some of the principles related to marine insurance are given as
under. The marine insurance has the following essential features which are also called
fundamental principles of marine insurance, (1) Features of General Contract, (2)
Insurable Interest, (3) Utmost Good Faith, (4) Doctrine of Indemnity, (5) Subrogation, (6)
Warranties, (7) Proximate cause, (8) Assignment and nomination of the policy. (9) Return
of premium.

4.7.1 Features of General Contract

(a) Proposal: The broker will prepare a slip upon receipt of instructions to insure from
ship owner, merchant or other proposers. Proposal forms, so common in other branches of
insurances, are unknown in the marine insurance and only the 'slip' so called 'the original
slip' is used for the proposal. The original slip is accompanied with other material
information which the broker deems necessary for the purpose. The brokers are expert and
well versed in marine insurance law and practice.The various kinds of marine proposals

25
are altogether too diverse, so elaborate rating schedules are not possible and the proposals
are considered on individual merits.38

(b) Acceptance: The original slip is presented to the Lloyd's Underwriters or other
insurers or to the Lead of the insures, who initial the slip and the proposal is formally
accepted. But the contract cannot be legally enforced until a policy is issued.The slip is
evidence that the underwriter has accepted insurance and that he has agreed subsequently
to sign a policy on the terms and conditions indicated on the slip. If the underwriter should
refuse to issue or sign a policy, he could not legally be forced to do so.

(c) Consideration: The premium is determined on assessment of the proposal and is paid
at the time of the contract. The premium is called consideration to the contract.

(d) Issue of Policy: Having effected the insurance, the broker will now send his client a
cover note advising the terms and conditions, on which the- insurance has been placed.
The broker's cover note is merely an insurance memorandum and naturally has no value in
enforcing the contract with the underwrites. The policy is prepared, stamped and signed
without delay and it will be the legal evidence of the contract. However, after issue of the
policy the court has power to order the rectification of the policy to express the intention
of the parties to the contract as evidenced by the terms of the slip.

4.7.2 Utmost Good Faith

The contract of marine insurance depends upon the principle of utmost good faith. The
insured should disclose all the facts about the goods. If the conceals any thing then
contract becomes invalid.39Section 19, 20, 21 and 22 of the Marine Insurance Act 1963
explained doctrine of utmost good faith. The doctrine of caveat emptor (let the buyer
beware) applies to commercial contracts, but insurance contracts are based upon the legal
principle of uberrimae fides (utmost good faith). If this is not observed by either of the

38
Link available at http://www.niilmuniversity.in/coursepack/Insurance/Marine_Insurance.pdf
39
Chaudhuri, AzizulHaq, Risk & Insurance, 2nd Edition, Brothers’ Publications, Dhaka, 2008, p. 110.

26
parties, the contract can be avoided by the other party. The duty of the utmost good faith
applies also to the insurer. He may not urge the proposer to affect an insurance which he
knows is not legal or has run off safely40.But the duty of disclosure of material facts rests
highly on the insured because he is aware of the material common in other branches of
insurance are not used in the marine insurance. Ships and cargoes proposed for insurance
may be thousands of miles away, and surveys on underwriters' behalf are usually
impracticable. The assured, therefore, must disclose all the material information which
may influence the decision of the contract. Any non-disclosure of a material fact enables
the underwriter to avoid the contract, irrespective of whether the non-disclosure was
intentional or inadvertent. The assured is expected to know every circumstance which in
the ordinary course of business ought to be known by him. He cannot rely on his own
inefficiency or neglect. The duty of the disclosure of all material facts falls even more
heavily on the broker. He must disclose every material fact which the assured ought to
disclose and also every material fact which he knows.41The broker is expected to know or
inquire from the assured all the material facts. Failure in this respect entitles the
underwriter to avoid the policy and if negligence can be held against the broker, he may be
liable for damages to his client for breach of contract. The contract shall be an initio if the
element of fraud exists.

Exception: In the following circumstances, the doctrine of good faith may not be adhered
to:
(i) Facts of common knowledge.

(ii) Facts which are known should be known to the insurer.

(iii) Facts which are not required by the insurers.

(iv) Facts which the insurer ought reasonably to have in furred from the details
given to him.

(v) Facts of public knowledge.

40
Link available at http://www.niilmuniversity.in/coursepack/Insurance/Marine_Insurance.pdf
41
Link available at http://www.niilmuniversity.in/coursepack/Insurance/Marine_Insurance.pdf

27
4.7.3 Insurable Interest

Insurable interest means that the insured should have interest in the subject when it is to be
insured. He should be benefited by the safe arrival of commodities and he should be
prejudiced by loss or damage of goods. The insured may not have an insurable interest at
the time of acquiring a marine insurance policy, but he should have a reasonable,
expectation of acquiring such interest. The insured must have insurable interest at the time
of loss or damage, otherwise he will not be able to claim compensation. 42Section 7, 8 and
9 to 16 provide for insurable interest. An insured person will have insurable interest in the
subject-matter where he stands in any legal or equitable relation to the subject-matter in
such a way that he may benefit by the safety or due arrival of insurable property or may be
prejudiced by its loss, or by damage thereto or by the detention thereof or may incur
liability in respect thereof.43

Since marine insurance is frequently affected before the commercial transactions to


which they apply are formally completed it is not essential for the assured to have an
insurable interest at the time of effecting insurance, though he should have an
expectation of acquiring such an interest. If he fails to acquire insurable interest in due
course, he does not become entitled to indemnification.Since the ownership and other
interest of the subject matter often change from hands to hands, the requirement of the
insurable interest to be present only at the time of loss makes a marine insurance
policy freely assignable.44

Exceptions: There are two exceptions of the rule in marine insurance.

1. Lost or Not Lost: A person can also purchase policy in the subject-matter in which it
was known whether the matters were lost not lost. In such cues the assured and the
underwriter are ignorant about the safety or otherwise of the goods and complete reliance
was placed on the principle of Good Faith. The policy terminated if anyone of the two

42
Ibid, p. 119.
43
Link available at http://www.niilmuniversity.in/coursepack/Insurance/Marine_Insurance.pdf
44
Ibid

28
parties was aware of the fact of loss. In this case, therefore, the insurable interest may not
be present at the time of contract because the subject-matter would have been lost.

2. P.P.I. Policies: The subject-matter can be insured in the usual manner by P.P.I. (Policy
Proof of Interest), e., interest proof policies. It means that in the event of claim
underwriters may dispense with all proof of insurable interest. In this case if the
underwriter does not pay the claims, it cannot be enforced in any court of law because
P.P.I, policies are equally void and unenforceable. But the underwriters are generally
adhering on the terms and pay the amount of claim. The insurable interest in marine
insurance can be of the following forms:

4.7.4 Doctrine of Indemnity

This principle means that the insured will be compensated only to the extent of loss
suffered. He will not be allowed to earn profit from marine insurance. The underwriter
provides to compensate the insured in cash and not to replace the cargo or the ship.
The money value of the subject-matter is decided at the time of taking up the policy.
Sometimes the value is calculated at the time of loss also.45Under Section 3 of the Act
at is provided 'A contact of marine insurance is an agreement whereby the insurer
undertakes to indemnify the assured in the manner and the extent agreed upon. The
contract of marine insurance is of indemnity. Under no circumstances an insured is
allowed to make a profit out of a claim. In the absence of the principle of indemnity it
was possible to make a profit.46 The insurer agrees to indemnify the assured only in the
manner and only to the extent agreed upon. Marine insurance fails to provide complete
indemnity due to large and varied nature of the marine voyage. The basis of indemnity
is always a cash basis as underwriter cannot replace the lost ship and cargoes and the
basis of indemnification is the value of the subject-matter. This value may be either the
insured or insurable value. If the value of the subject matter is determined at the time
of taking the policy, it is called 'Insured Value'. When loss arises the indemnity will be
measured in the proportion that the assured sum bears to the insured value. In fixing
45
Ibid, p. 127.
46
Link available at http://www.niilmuniversity.in/coursepack/Insurance/Marine_Insurance.pdf

29
the insured value, the cost of transportation and anticipated profits are added to
original value so that in case of loss the insured can recover not only the cost of goods
or properties but a certain percentage of profit also.
The insured value is called agreed value because it has been agreed between the
insurer and the insured at the time of contract and is regarded as sacrosanct and
binding on both parties to the contract. In marine insurance, it has been customary for
the insurer and the assured to agree on the value of the insured subject-matter at the
time of proposal. Having, agreed of the value or basis of valuation, neither party to the
contract can raise objection after loss on the ground that the value is too high or too
low unless it appears that a fraudulent evaluation has been imposed on either
party.Insured value is not justified in fire insurance due to moral hazard as the property
remains within the approach of the assured, while the subject- matter is movable from
one place to another in case of marine insurance and the assured value is fully justified
there. Moreover, in marine insurance, the assured value removes all complications of
valuation at the time of loss. Technically speaking the doctrine of indemnity applies
where the value of subject-matter is determined at the time of loss. In other words,
where the market price of the loss is paid, this doctrine has been precisely applied.
Where the value for the goods has not been fixed in the beginning but is left to be
determined the time of loss, the measurement is based on the insurable value of the
goods. However, in marine insurance insurable value is not common because no profit
is allowed in estimating the insurable value.47

Again if the insurable value happens to be more than the assured sum, the assured
would be proportionately uninsured. On the other hand, if it is lower than the assured
sum, the underwriter would be liable for a return of premium of the difference.

Exceptions: There are two exceptions of the doctrine of indemnity in marine insurance.

1. Profits Allowed: Actually the doctrine says that the market price of the loss should be
indemnified and no profit should be permitted, but in marine insurance a certain profit
margin is also permitted.

47
Link available at http://www.niilmuniversity.in/coursepack/Insurance/Marine_Insurance.pdf

30
2. Insured Value: The doctrine of indemnity is based on the insurable value, whereas the
marine insurance is mostly based on insured value. The purpose of the valuation is to
predetermine the worth of insured.

4.7.5 Cause Proxima

This is a Latin word which means the nearest or proximate cause. It helps is deciding
the actual cause of loss when a number of causes have contributed to the loss.48 The
immediate cause of loss should be determined to fix the responsibility of the insurer.
The remote cause for a loss is not important in determining the liability. If the
proximate cause is insured against, the insurer will indemnify the loss.49According to
Section 55 (1) Marine Insurance Act,' Subject to the provisions of the Act and unless
the policy otherwise provides the insurer is liable for any loss proximately caused by a
peril insured against, but subject to as aforesaid he is not liable for any loss which is
not proximately caused by a peril insured against.' Section 55 (2) enumerates the losses
which are not payable are (i) misconduct of the assured (ii) delay although the delay be
caused by a peril insured against (iii) ordinary wear and tear, ordinary leakage and
breakage inherent vice or nature of the subject matter insured, or any loss proximately
caused by rates or vermin or any injury to machinery not proximately caused by
maritime perils.

1. 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 loss
proximately caused by a peril insured against.

2. The insurer will not be liable for any loss caused by delay unless otherwise
provided.

3. The insurer is not liable for ordinary wear and tear, ordinary leakage and
breakage, inherent vice or nature of subject-matter insured, or for any loss

48
Ibid
49
Link available at http://www.publishyourarticles.net/knowledge-hub/business-studies/meaning-a-
principles-of-marine-insurance/830/

31
proximately caused by rats or vermin, or for any injury to machinery not
proximately caused by maritime perils.

Dover says "The cause proximate of a loss is the cause of the loss, proximate to the
loss, not necessarily in time, but in efficiency. While remote causes may be
disregarded indetermining the cause of a loss, the doctrine must be interpreted with
good sense." So as to uphold and not defeat the intention of the parties to the contract.
Thus the proximate cause is the actual cause of the loss. There must be direct and non-
intervening cause. The insurer will be liable for any loss proximately caused by peril
insured against.

4.7.6 Subrogation

Subrogation is a right that a person has of standing in the place of another and availing
himself of all the rights and remedies of that another, whether already enforced or not. In
insurance, after payment of a claim, the insurers shall be entitled to take over the legal
right of the insure against the liable third party for the purpose of recovery. 50Section 79 of
the Act explains doctrine of subrogation. The aim of doctrine of subrogation is that the
insured should not get more than the actual loss or damage. After payment of the loss, the
insurer gets the light to receive compensation or any sum from the third party from whom
the assured is legally liable to get the amount of compensation. The main characteristics of
subrogation are as follows:

1. The insurer subrogates all the remedies rights and liabilities of the insured alter
payment of the compensation.

2. The insurer has right to pay the amount of loss after reducing the sum received by
the insured from the third party. But in marine insurance the right of subrogation arises
only after payment has been made, and it is not customary as in fire and accident
insurance, to alter this by means of a condition to provide for the exercise of

50
Chaudhuri, AzizulHaq, Risk & Insurance, 2nd Edition, Brothers’ Publications, Dhaka, 2008, p. 138.

32
subrogation rights before payment of a claim.At the same time the right of subrogation
must be distinguished from abandonment. If property is abandoned to a marine insurer,
he is entitled to whatever remains to the property irrespective of value of subrogation.

3. After indemnification, the insurer gets all the rights of the insured on the third
parties, but insurer cannot file suit in his own name. Therefore, the insured must assist
the insurer for receiving money from the third party.

If the insured is revoking from filing suit against the third party, the insurer can receive
the amount of compensation from the insured. Section 80 of the Act deals with the
right of contribution between two or more insurers where there is over insurances by
double insurance. It is corollary of principle indemnity.

4.7.7. Warranties:

A warranty is that by which the assured undertakes that some particular thing shall or
shall not be done, or that some conditions shall be fulfilled or whereby he affirms or
negatives the existence of a particular state of facts. Warranties are the statement
according to which insured person promises to do or not to do a particular thing or to
fulfill or not to fulfill a certain condition. It is not merely a condition but statement of
fact. Warranties are more vigorously insisted upon than the conditions because the
contract comes to an end if a warranty is broken whether the warranty was material or
not. In case of condition or representation the contract comes to end only when these
were material or important.51 Warranties are of two types:(1) Express Warranties, and
(2) Implied Warranties.

1. Express Warranties: Express warranties are those warranties which are expressly
included or incorporated in the policy by reference.

2. Implied Warranties: These are not mentioned in the policy at all but are tacitly
understood by the parties to the contract and are as fully binding as express warranties.

51
Link available at http://www.niilmuniversity.in/coursepack/Insurance/Marine_Insurance.pdf

33
Warranties can also be classified as (1) Affirmative, and (2) Promissory. Affirmative
warranty is the promise which insured gives to exist or not to exist certain facts.
Promissory warranty is the promise in which insured promises that he will do or not do a
certain thing up to the period of policy. In marine insurance, implied warranties are very
important. These are:

1. Seaworthiness of Ship.
2. Legality of venture.
3. Non-deviation.

All these warranties must be literally, complied with as otherwise the underwriter may
avoid all liabilities as from the date of the breach. However, there are two exceptions
to this rule when a breach of warranty does not affect the underwriter's liability: (1)
where owing to a change of circumstances the warranty is no longer applicable. (2)
Where compliance would be unlawful owing to the enactment of subsequent law.

i. Seaworthiness of ship:

The warranty implies that the ship should be seaworthy at the commencement of the
voyage, or if the voyage is carried out in stages at the commencement of each stage.
This warranty implies only to voyage policies, though such policies may be of ship,
cargo, freight or any other interest. There is no implied warranty of seaworthiness in
time policies. A ship is seaworthy when the ship is suitably constructed, properly
equipped, officered and manned, sufficiently fuelled and provisioned, documented and
capable of withstanding the ordinary strain and stress of the voyage. 52 The
seaworthiness will be clearer from the following points:

1. The standard to judge the seaworthiness is not fixed. It is a relative term and
may vary with any particular vessel at different periods of the same voyage. A ship
may be perfectly seaworthy for Trans-ocean voyage.53A ship may be suitable for

52
Link available at http://www.niilmuniversity.in/coursepack/Insurance/Marine_Insurance.pdf
53
Ibid

34
summer but may not be suitable for winter. There may be different standard for
different ocean, for different cargo, for different destination and so on.

2. Seaworthiness does not depend merely on the condition of the ship, but it
includes the suitability and adequacy of her equipment, adequacy and
experience of the officers and crew.

3. At the commencement of journey, the ship must be capable of


withstanding the ordinary strain and stress of the sea.

4. Seaworthiness also includes "Cargo-Worthiness". It means the ship must


be reasonably fit and suitable to carry the kind of cargo insured. It should be
noted that the warranty of seaworthiness does not apply to cargo. It applies
to the vessel only. There is no warranty that the cargo should be seaworthy.

It cannot be expected from the cargo-owner to be well-versed in the matter of


shipping and overseas trade. So, it is admitted in seaworthiness clause that the
cargo would be seaworthy of the vessel and would not be raised as defense to any
claim for loss by insured perils.It should be noted that the ship should be seaworthy
at the port of commencement of voyage or at the different stages if voyage is to be
completed in stages.

ii. Legality of Venture;

This warranty implies that the adventure insured shall be lawful and that so far as
the assured can control the matter it shall be carried out in a lawful manner of the
country. Violation of foreign laws does not necessarily involve breach of the
warranty. There is no implied warranty as to the nationality of a ship. The implied
warranty of legality applies total policies, voyage or time. Marine policies cannot
be applied to protect illegal voyages or adventure. The assured can have no right to
claim a loss if the venture was illegal.54 The example of illegal venture may be
trading with an enemy, violating national laws, smuggling, breach of blockade and

54
Link available at http://www.niilmuniversity.in/coursepack/Insurance/Marine_Insurance.pdf

35
similar ventures prohibited by law. Illegality must not be confused with the illegal
conduct of the third party e.g., barratry, theft, pirates, rovers. The waiver of this
warranty is not permitted as it is against public policy.

iii. Other Implied Warranties: There are other warranties which must be complied
in marine insurance.

(a) No Change in Voyage: When the destination of voyage is changed intentionally


after the beginning of the risk, this is called change in voyage. In absence of any
warranty contrary to this one, the insurer quits his responsibility at the time of change
in voyage. The time of change of voyage is determined when there is determination or
intention to change the voyage.

(b) No Delay in Voyage: This warranty applies only to voyage policies. There should
not be delay in starting of voyage and laziness or delay during the course of journey.
This is implied condition that venture must start within the reasonable time. Moreover,
the insured venture must be dispatched within the reasonable time. If this warranty is
not complied, the insurer may avoid the contract in absence of any legal reason.

(c) Non deviation: The liability of the insurer ends in deviation of journey. Deviation
means removal from the common route or given path. When the ship deviates from the
fixed passage without any legal reason, the insurer quits his responsibility. This would
be immaterial that the ship returned to her original route before loss. The insurer can
quit his responsibility only when there is actual deviation and not mere intention to
deviation.

Exceptions: There are following exceptions of delay and deviation warranties:

1. Deviation or delay is authorized according to a particular warranty of the policy.


2. When the delay or deviation was beyond the reasonable approach of the master
or crew.
3. The deviation or delay is exempted for the safety of ship or insured matter or
human lives.
4. Deviation or delay was due to barratry.

36
4.7.8 Assignment:

A marine policy is assignable unless it contains terms expressly prohibiting


assignment. It may be assigned either before or after loss. A marine policy may be
assigned by endorsement thereon or on other customary manner. A marine policy is
freely assignable unless assignment is express prohibited. A marine policy is not an
incident of sale. So, if there is intention to assign a policy when interest passes, there
must be an agreement to this effect. Sections 53 of the Marine Insurance Act, 1963
states, Where the assured has parted with or lost his interest in the subject-matter
insured and has not, before or at time of so doing, expressly or impliedly agreed to
assign the policy, any subsequent assignment of the policy is inoperative. ' Section 17
of the Act states, "Where the asserted assigns or otherwise parts with his interest in the
subject-matter insured, he does not thereby transfer to the assignee his rights under the
contracts of insurance.55

4.8 Conclusion

At last it is quite clear that the laws regarding marine insurance includes various effective
police though it has simple problem in some section like as section 17 & 18. Because,
under this sections insurance company gains profits and thugs the insured person claiming
that the insured person did not disclose all information with good faith on the insured
goods.

Reference
Statutes
The Marine Insurance Act, 1906.

55
Link available at http://www.niilmuniversity.in/coursepack/Insurance/Marine_Insurance.pdf

37
Book

Chaudhuri, AzizulHaq, Risk & Insurance, 2nd Edition, Brothers’ Publications, Dhaka,
2008.

Kuchhal, M C, Mercantile Law, 6th Edition, Vikas Publishing House PVT LTD, New
Delhi, 2007.

Case Law
Shadharan Bima Corporation vsBengle Liners Co.Ltd 16 BLD (AD) 186.

Online (Blog & Article)

Publishyourarticles.net, Link available at http://www.publishyourarticles.net/knowledge-


hub/business-studies/meaning-a-principles-of-marine-insurance/830/

Wikipedia, Link Available at https://en.wikipedia.org/wiki/Insurance

Ravneetarora.blogspot.com, Link available at


http://ravneetarora.blogspot.com/2013/03/20-different-types-of-marine-insurance.html

Termpaperwarehouse.com, Link available at https://www.termpaperwarehouse.com/essay-


on/What-Are-The-Subject-Matter-Of/120658

I-Law, Marine Insurance: Law and Practice, Available at https://www.i-


law.com/ilaw/doc/view.htm?id=130878

Iedunote.com, Link available at https://iedunote.com/types-of-insurance

Wikipedia.org , Link Available at


https://en.wikipedia.org/wiki/Insurance&https://iedunote.com/types-of-insurance

Link available at
http://www.niilmuniversity.in/coursepack/Insurance/Marine_Insurance.pdf

38
Chapter five

Comparative Study on Marine Insurance between Bangladesh andPakistan

5.1 Introduction

This chapter contains the comparative study on marine insurance between Bangladesh and
Pakistan. It includes the concept of marine insurance in between Bangladesh and Pakistan
and what are the difference amongst the laws regarding marine insurance in between
Bangladesh and Pakistan.

5.2 Marine Insurance under Pakistan

The Marine Insurance Act 2016 was passed by the National Assembly on Tuesday, 14th
June 2016 in Islamabad. It consists of 18 chapters, including detailed descriptions ranging
from marine insurance to voyage, insurable interest to insurable value, policy to the
assignment of the policy, double insurance to warranties, premium to the return of
premium, loss and abandonment, partial losses including salvage, general average and
particular charges, measure of indemnity, rights of the insurer on payment, mutual
insurance, etc. The rules of construction of the policy have been clearly stated in 18 points.

The agenda behind this bill is to provide the legal framework for the regulation of marine
insurance in Pakistan and to remove contradictions and similarities with other laws
existing in the field. It provides rules for the construction and interpretation of marine
insurance policies to encourage and help promote the marine insurance sector. The Senate
Standing Committee on Commerce and Textile Industry has approved the “Pakistan
Marine Insurance Bill, 2017” with certain amendments to encourage and promote marine
insurance sector, provide a legal framework for regulations and formulate rules for
construction/ interpretation of marine insurance policies. The committee met here with
Syed ShibliFaraz in the chair on Thursday to regulate the business of marine insurance.

39
The bill was referred to the committee by the Senate, while the National Assembly has
passed the Bill during its session on May17, 2017.56

The Bill will now be sent to the House and if passed, it will be referrred to the National
Assembly. The chairman of the committee said that the Bill will be presented in the
upcoming Senate session convened for October 23, 2017. According to committee
chairman, a balance has been struck down after introduction of amendments to protect
both insurance companies as well as the persons who avail the policy/insured. As per the
proposed legislation, the Securities and Exchange Commission of Pakistan (SECP) will
regulate marine insurance business and extend it to the whole country. The meeting was a
continuation of Wednesday”s meeting where the committee had directed for a consultative
meeting between the ministry and stakeholders to agree upon the draft amendments. The
amendments proposed are aimed at making this law adaptable to new developments and
international best practices, as it is based on 1906 law.57

The adopted amendments included changing the jurisdiction of the bill from Islamabad
Capital Territory to the whole of Pakistan; excluding some redundant terminologies like
the words rovers, streamer ships etc, making the scope of the bill more comprehensive
defining the terms on the same pattern as in Insurance Ordinance 2000. The secretary
Commerce and Textile Industry told the meeting that previously the burden of proof was
on insured but now it will be on insurer. Furthermore, two more clauses about knowledge
of insurer reinforced the same things mentioned in the previous clause. The amended draft
also added a clause to effectively block overriding this law or the insurance ordinance in
any agreement or contract of insurance. However, the law also provides for modification
in case of mutual insurance where two parties can agree on special terms by consensus.58

This has been agreed upon after consultations with the SECP and the PNSC which are the
major stakeholders. The amended version also provides that power to make rules in this

56
Tahir Amin, 2017, ‘Pakistan Marine Insurance Bill’ with amendments, Business Recorder, available at
https://fp.brecorder.com/2017/10/20171020228005/

57
Tahir Amin, 2017, ‘Pakistan Marine Insurance Bill’ with amendments, Business Recorder, available at
https://fp.brecorder.com/2017/10/20171020228005/
58
Ibid

40
regard will rest with the federal government so they will be approved by the cabinet,
power to issue directives and circulars will rest with minister-in-charge and power of
regulations will rest with the SECP which is the regulatory body in this area. The
committee agreed that penalties for violation should be varying on the basis of premium
amounts, losses incurred and the parties involved. It was also agreed that the law will be
prospective in nature and all contracts, according to the previous law, will remain in place
till their expiry. The committee chairperson observed that the law while protecting big
contractors should also cover trollers and small fishing boats. The ministry responded that
act covers the small corporative.59

The committee was informed that the Insurance Ordinance 2000 (Section 4. (3)(a)
classifies marine, aviation and transport business as non-life insurance business. However,
Section 115 of the Insurance Ordinance 2000 titled “Application of Pakistan law to
policies in Pakistan” states that nothing in this section shall apply to a policy of marine
insurance. Therefore, as such the matter of marine insurance is not covered by the
“Insurance Ordinance 2000.”

Presently, Pakistan does not have a law to deal with marine insurance. The marine
insurance business in Pakistan is carried out on the basis of British Marine Insurance Act,
1906. This Act has long been held as the international industry standard and the marine
insurance acts of many countries are based on this Act. The committee was further
informed that the disputes involving marine insurance have been decided by the courts in
Pakistan by following the general provisions of British Marine Insurance Act and then
interpreting these in the light of laws applicable in Pakistan. As substantial part of the
marine insurance is reinsured in the international market; therefore, any interpretation
different than the international practices considerably complicates business relations.60

At present, the Marine Insurance Act, 2018 was passed by the National Assembly of
Pakistan as bill was presented before the National Assembly of Pakistan. The new
enactment was done in 2nd February, 2018 on Wednesday.

59
Tahir Amin, 2017, ‘Pakistan Marine Insurance Bill’ with amendments, Business Recorder, available at
https://fp.brecorder.com/2017/10/20171020228005/
60
Ibid.

41
5.3 Marine Insurance under Bangladesh

In Bangladesh, in the absence of any legislation relating to Marine Insurance, the courts
had followed the principles of English Law, and English decisions based on such
principles as well as the provisions of the UK Marine Insurance Act, 1906. The Supreme
Court of Bangladesh, in the Eagle Star Insurance Company Limited vs. Rahmania
Trading Co.61 puts it clearly: -

“The contract of insurance and marine insurance is not dealt with by any specific law of
this country. In England matter is now largely covered by the Marine Insurance Act 1906.
There is no such law in our country. Marine Insurance contract is therefore governed by
the general principles of contract and also the English principles. The principles in
English Marine Insurance Act 1906 are also applicable.”

The Appellate Division in a leading case namely; Sadharan Bima Corporation vs. Bengal
Liners Ltd62 held that;-

“In determining issues of marine insurance in genera and the issue of unrepaired damage
in particular, uptil now; there is no law on marine insurance in the statute book in
Bangladesh. Yet, in respect of marine insurance on general the Court of Bangladesh
follow the general principles of contract and English law and practice, which are held in
high esteem even by the American Courts.”

5.4 Problems and Loopholes of Marine Insurance in BD

Poor Knowledge on Policy: The marketing of insurance is greatly hampered in the


remote village of Bangladesh where the agents are appointed from respected locality. This
is because; educated young people are seemed to be reluctant to become insurance agents.
Such agents cannot play efficient role in convincing a prospective policyholder.63

61
28 DLR (AD) 1976, p.111
62
16 BLD (AD) 186
63
Link available at http://toptenbrandlist.blogspot.com/2012/01/history-of-insurance-business-in.html

42
Illiteracy: Mass illiteracy is another factor that adversely affects the marketing of
insurance. About 70% of the population is floating in the sea of ignorance. Illiteracy leads
one to think that the insurance is deception; it is no value in life. They cannot think
rationality because they do not know what is insurance and what its importance as security
for future.

Religious Superstition: Religious attitude of the people also stands against efficient
insurance. The religious people believe that the future is uncertain, it is in the hand of
Allah and they do not think it necessary to buy life insurance policy for them.

Low Savings: People of Bangladesh have a very small saving potentially and thus have
less or no disposable income. Almost the whole of the income is exhausted in the process
of maintaining the day-to-day life. Thus they are left with little amount, which may not
deemed to sufficient for the payment of premiums. This factor discourages many to buy
life insurance policy.

Insufficient insurance protection: Many difficulties arise from the fact that the insured
wants to keep the insurance premiums low in order to keep the general business expenses
low. However, in case of damage, the insured often is disappointed when he receives only
payments commensurable with the law premium which are either insufficient to cover the
repair cost of vessel or insufficient to purchase a new replacement vessel.

Shortage of Fund: Most of the policyholders cannot continue their policies owing to price
spiral and shortage of fund.

Lack of proper management: At the time of making insurance regarding vessels policy
(hull insurance) the insurer should investigate, for instant,-how well the vessel is built, -
whether it can safely carry goods, and men, whether it can safely carry the type of marine
engine used, whether it is a still ship, a wooden ship or composite ship

No Specific Provision regarding filing a suit: There is no specific provision on filing a


suit regarding the dispute of marine insurance under this Act. Tough Admiralty Court
deals with the dispute of marine insurance but there is no direct provision on it.

43
Low Awareness: Insurance awareness is poor. Agents are not skilled enough. These
agents cannot perform their job properly to make the people aware of life insurance.

Vagueness Term: Section 03 of the Admiralty Court Act 2000 provides it nature of
jurisdiction which deals with the dispute regarding marine. But there is also no specific
statement about dealing marine insurance. However, indirectly section 03, especially 3 (g)
of the marine insurance Act 2000 provides that – "Any claim for loss of or damage to
goods carried in a ship" shell be dealt with Admiralty Court." Here the term "any claim"
may be a claim against the loss of peril insured.

No specific provision on time limitation of filing suit:

There is no specific provision of filing suit regarding any dispute of marine insurance and
time limitation of filing suit and from which period , the time shall be counted is not
specified.

5. 5 Case Study Regarding Marine Insurance

Consort Shipping Line Ltd v FAI Insurance (Fiji) Ltd [1998] FJHC 205; Hbc0383.97s (29
October 1998); aff’d. FAI Insurance (Fiji) Ltd v Consort Shipping Line Ltd

[1999] FJCA 10; Abu0075u.98s (11 February 1999)

Marine Insurance- Mandatory Arbitration provision- right to arbitration not waived


by commencement of proceedings

The defendant insured the plaintiff’s vessels with a standard marine hull policy. The
policy included a mandatory provision that provided that all differences be referred to an
Arbitrator. Unaware of the provision, the insured filed a writ claiming damages for the
sinking of his two vessels. On obtaining a copy of the policy the insured sought a stay of
the proceedings so that the matter could be referred to Arbitration. The insurer argued that
since the insured had commenced legal proceedings the court could not be satisfied that
the plaintiff was prepared to go to Arbitration as required by the Arbitration Act.

DECISION: Matter stayed and referred to Arbitration

44
HELD: The insured had not waived its rights to Arbitration. In fact, the contract of
insurance specified that any waiver or variation of rights must be agreed to in writing.
Further, the commencement of an action does not necessarily indicate a lack of readiness
and willingness for Arbitration.

Kingdom of Tonga & Shipping Corporation of Polynesia Ltd v Allianz Australia


Insurance Ltd [2005] TOSC 8; CV 723 2003 (25 February 2005)

Marine Insurance- Voluntary removal from ‘class’- breach of express


warrantysuspension of insurance- renewal of insurance constitutes a fresh contract-
no automatic renewal

The plaintiff’s vessel, the MV Olovaha sustained severe damage in a cyclone on January
15, 2003. The plaintiff looked to its insurer to cover its loss, but the insurer denied
coverage. The plaintiff sued to recover.

DECISION: Action dismissed.

HELD: The defendant was the insurer for 3 of the plaintiff’s vessels including the MV
Olovaha. However, in July 2002 the plaintiffs had removed the MV Olovaha from ‘class’,
such class referring to a classification by Germanischer Lloyd, a world leading
classification Society. A vessel in class is subject to the Society’s rules including periodic
surveying and maintenance. The plaintiffs had voluntarily removed the vessel because of
its age and were aware that the insurance would be suspended as a result because removal
from class was contrary to a warranty in the policy. The defendant claimed that the
coverage had not been renewed for 2003, but even if it had, it would have been subject to
the same warranty and at the date of the occurrence the vessel was not class. The plaintiffs
argued that the defendant had agreed to reinstate cover upon certification that the vessel
was up to requisite standard for Local Class certification- a much less stringent
classification. The plaintiff’s case relied upon various oral discussions and written
communications between the plaintiff’s broker and the defendant’s underwriting manager.
The court decided that any decision regarding reinstatement of coverage could only be
made by the underwriters after proper consideration of all the material facts and there was

45
no evidence that the underwriter had received a vessel report. Each renewal constituted a
fresh contract and any agreement reached in July 2002 would have no relevance to the
2003 contract unless that had been expressly agreed to in the negotiation of the 2003
contract. There was no evidence of a promise to automatically renew coverage in 2003
after the plaintiffs had voluntarily suspended coverage in July 2002. This was especially
true where the vessel had been removed from class so the former coverage could not be
renewed.

Laho Ltd v QBE Insurance (Vanuatu) Ltd [2001] VUSC 130; Civil Case 24 of 2000 (2
April 2001)

Marine Insurance- Seaworthiness- Presumption of loss due to ‘perils of the sea’ if it


can be shown that vessel was seaworthy prior to setting out

The vessel owned by the plaintiff went down with 27 people on board. The events
surrounding the sinking were unknown. The plaintiff sought a declaration that the
defendant insurer was obliged to indemnify the plaintiff in respect of the loss. The vessel
was insured for loss due to ‘perils of the sea’.

DECISION: Action dismissed.

HELD: If it is was known that the vessel was seaworthy when she set out and she
disappeared with crew, then on the balance of probabilities she must have sunk, and on the
balance of probabilities the sinking must have been due to the perils of the sea. If the
vessel is not shown to be seaworthy when she left on her last voyage, the presumption
does not apply since it cannot be held on the balance of probabilities that her presumed
sinking was due to perils of the sea rather than to her unseaworthy condition. The plaintiff
was unable to prove on a balance of probabilities that the vessel was seaworthy when she
set out on her last voyage. The court dismissed the action on this point, but went on to
consider the defendant’s other claims.

The non-disclosure of material facts will void insurance coverage where the nondisclosure
of the material fact has induced the insurer to assume the risk. In this case the vessel had

46
taken on water and there had been substantial work done to the hull after the issuance of
the safety certificate which the insured had supplied to the insurer and before the issuance
of insurance. The insured had also applied to increase the passenger load form 20 to 25
and this also was not known to insurer. The court found these to be material facts which
had not been disclosed to the insurer and would have voided coverage.

The court also found that the insured had breached express warranties in the policy. The
express warranties must be exactly complied with whether material to the risk or not. In
this case the plaintiffs had not complied with the strict manning of vessel requirements.

Pimco Shipping Pty Ltd v Moeder, Hermann and Moeher Trading Pty Ltd [1987] PGNC
57; [1987] PNGLR 427 (23 December 1987)

Marine Insurance- Carriage of goods by sea- Statutory provision for time for making
claim- Indemnity proceedings- Indemnity proceeding barred if claim barred

The plaintiff owned and operated a coastal vessel. In 1978 goods carried by the vessel
were damaged in transit and as a result the owner of the goods sued the plaintiff and were
awarded damages. The plaintiff claims that at the time of that shipment the defendant was
the actual owner of the vessel and brought suit on the basis that the defendant indemnify
the plaintiff for damages.

DECISION: Action dismissed.

HELD: The indemnity action by the plaintiff is time barred pursuant to the Sea-Carriage
of Goods Act Art. III, r. 6 which provides that suit in respect of loss of or damage must be
brought within one year after delivery of goods or when the goods should have been
delivered. In the original proceeding the owner of the goods was granted default
judgement against the plaintiff here. The 2d defendant in that case was the company that
had been formed to buy the vessel. However at the time of the loss the present defendant
was the actual owner of the vessel as the corporation had not yet been formed. The
personal defendant should have, but was not added as a third party in the original action.
Because there was no liability on the part of the defendant to the owner of the goods

47
established within the time limitation period, the plaintiff cannot now seek indemnification
outside of the time period. Indemnity may not awarded without the support of liability on
the part of the indemnitor to the injured party.

Westpac Banking Corporation v Dominion Insurance Ltd [1996] FJHC 148; Hbc0468j.94s
(8 October 1996) aff’d.

Dominion Insurance Ltd v Westpac Banking Corporation [1998] FJCA 48; Abu0005u.97s
(27 November 1998)

Marine Insurance- non payment of premiums does not affect the existence of the
contract of insurance- court looks at wording of Renewal notice and history of
dealings between the parties

The plaintiffs were the owner of the insured vessel and the bank who held the mortgage on
the vessel and was named payee on the policy. The defendant was the insurer. The
plaintiff had insured the vessel with the defendant since October 1990. There had been 3
renewals of the coverage in October 1991,1992 and 1993. The vessel was damaged
beyond repair in March 1994. The insurer defendant denied coverage on the basis that no
insurance premiums had been received since the October 1993 renewal.

DECISION: for the Plaintiff

HELD: The fact that no premiums have been paid does not affect he existence of the
contract. The court looked at the Renewal notices and at the history of dealings between
the parties. As to the Renewal notices, while they demanded payment, there was no clear
statement that coverage would be canceled if payment was not received. As to the dealings
between the parties, the court found that previous claims had been paid as credit for owing
premiums so clearly in the past it had been the practice to renew without the payment of
premiums.

48
5.6 Conclusion

Marine insurance acts as a mechanism that helps in mitigating risk caused during any
hazardous situation which as a consequence causes financial loss to ship, cargo or any
goods or property while transporting it overseas. The purpose of marine insurance is to
secure the risk of the ship-owner, or the cargo or any movable property that may suffer
from any financial instability during a voyage. But there are certain risks that an insurer
does not prefer to insure in order to make his position secure as an underwriter. These
risks which are not covered in a marine insurance are usually the risks which are either the
negligence of the ship-owner or the cargo owner, or a packaging fault which is negligence
arising due to human act which an underwriter would not prefer to insure.

Reference

Case Law

28 DLR (AD) 1976 p.111


16 BLD (AD) 186

Book

Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition, Shams
Publication, Dhaka, 2016
Saha, TanoyKumer and Mondal, Tithi Rani, A Study on Insurance: Its Development &
Legal Aspects in Bangladesh, 1st Edition, University Publication

Journal [online]

Gillingham, H. E. (1933). Marine Insurance in Philadelphia 1721-1800. Patterson


and White co., Philadelphia, PA.

49
North, D. C. (1960).The United States balance of payments, 1790-1860. In National
Bureau of Economic Research, editor, Trends in the American Economy in the
Nineteenth Century. Princeton University Press, Princeton, NJ.

Huebner, S. (1905). The development and present status of marine insurance in the
United States. The Annals of the American Academy of Political and Social
Science, 26:421–479.

Christopher Kingston, Marine Insurance in Britain and America, 1720-1844: A


Comparative Institutional Analysis, March 24, 2005.

White, P. L., editor (1956). The Beekman Mercantile Papers 1746-1799. New York
Historical Society, New York, NY.

Addya Mishra, 2014, Marine insurance and its legal aspects in India: Perils of the Sea,
International Journal of Law and Legal Jurisprudence Studies, available at
http://ijlljs.in/wp-
content/uploads/2014/12/Short_Article_Marine_insurance_and_its_legal_aspects_in_Indi-
1.pdf

Link available at https://fp.brecorder.com/2017/10/20171020228005/

http://www.paclii.org/libraries/maritime-law/case-summaries-marine-insurance/index.html

50
Chapter Six
Conclusion

6.1 Introduction

The dissertation paper tries to cover the whole matters regarding marine insurance in UK,
USA and Bangladesh. It focuses the difference, nature and principles of marine insurance
in UK, USA and Bangladesh. In these cases the policy of marine insurance in UK and
Bangladesh is same because of Bangladesh follows the UK Marine Insurance Act, 1906.

6.2 Findings

This dissertation paper has successfully proved the objects and question’s answers
pertaining to marine insurance in Pakistan and Bangladesh chapter three. (See, clause, 3.1
– 3.6) This dissertation paper has shown the comparative studies in a nut shell on marine
insurance betweenPakistan and Bangladesh under chapter five where Bangladesh and
Pakistan follows the Act namely, Marine Insurance Act, 2018 but Bangladesh follows the
UK Marine Insurance Act, 1906.

6.3 Achievement of the Research Objectives:


This dissertation paper has fulfilled all of it objects which is mentioned in this paper (see
chapter three, clause, 3.1 – 3.6) The first object of this paper is to investigate the laws and
regulations regarding marine insurance in Pakistan and Bangladesh is shown chapter three.
Second object is to find out the drawbacks of the laws marine insurance are also shown in
chapter five (see, clause, 5.4) where the theoretical discussion is stipulated. Thirdly the
object is to recommend the solution to update the laws regarding marine insurance in
Bangladesh perspective is shown in chapter five.

51
6.4 Solution of Research Questions

This dissertation paper has answered the questions which are putted in chapter one under
para 1.4. First question of this dissertation paper is whether the existing laws and
regulations regarding marine insurance are adequate or not is properly illustrated by the
researcher in chapter three. In a nut shell the answered is the existing laws and regulations
aren’t fully effective because of some loopholes of laws which are also mentioned in
chapter five. The existing laws are borrowed form UK. The laws should be made in
Bangladesh perspective. In this cases, section 8, 23, 24, 25, 26, 31 (2), 35, 39 and 40
should be amended. Because those sections has been amended in Pakistan, USA and UK
for present situation and for better service.

The third question is that are there any loopholes or drawbacks of the marine insurance in
Bangladesh is also answered through this dissertation under chapter five. (see, clause, 5.6)
Where the statement refers that yes, there are some loopholes of the laws regarding
protection from inhuman treatment in Bangladesh perspective.

6.5 Conclusion

In a whole it can be said that the dissertation paper has successfully explained the research
objects and research questions. This dissertation includes the reasons and
recommendations so that the concerned authority can take help form this paper to upgrade
the laws and regulations due to protecting assured person against insured property. In this
cases, section 8, 23, 24, 25, 26, 31 (2), 35, 39 and 40 should be amended.

52
Bibliography

Statues

Admiralty Court Act 2000

Admiralty Rules, 1912

The constitution of Bangladesh, 1972

Evidence Act 1872

Marine Insurance Act 1906

Case Law

The Eagle Star Insurance Company Limited vs. Rahmania Trading Co, 28 DLR (AD)
1976 p.111
Sadharan Bima Corporation vs. Bengal Liners Ltd , 16 BLD (AD) 186

Book

Hasan, S.M Mohiuddin, Admiralty and Maritime Laws of Bangladesh, 6th Edition, Shams
Publication, Dhaka, 2016
Saha, TanoyKumer and Mondal, Tithi Rani, A Study on Insurance: Its Development &
Legal Aspects in Bangladesh, 1st Edition, University Publication

Journal Article [Online]

Alam, Md. Asraful,Flag Vessel Protection Law in Bangladesh: A Critical


Analysis,International Journal of Innovative Research & Development, 2016 [viewed at

53
Mar1, 2018] Available from:
http://www.ijird.com/index.php/ijird/article/download/100019/72169

Christopher Kingston, Marine Insurance in Britain and America, 1720-1844: A


Comparative Institutional Analysis, March 24, 2005.

Gillingham, H. E. (1933). Marine Insurance in Philadelphia 1721-1800. Patterson


and White co., Philadelphia, PA.

Huebner, S. (1905). The development and present status of marine insurance in the
United States. The Annals of the American Academy of Political and Social
Science, 26:421–479.

North, D. C. (1960).The United States balance of payments, 1790-1860. In National


Bureau of Economic Research, editor, Trends in the American Economy in the
Nineteenth Century. Princeton University Press, Princeton, NJ.

White, P. L., editor (1956). The Beekman Mercantile Papers 1746-1799. New York
Historical Society, New York, NY.

54