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AA Talk: HULL INSURANCE CLAUSES – Agency Commission Unrepaired Damage

(As noted in Issue 122 the Editor of this column would visit ITC-Hulls 1/10/83 with the assistance of the one “ITC HULLS 1.10.83” which was written by Mr. D. John Wilson who kindly allowed the Editor copyright on his book for any future editions.)

 

AGENCY COMMISSION

Almost every accident to a ship results in the Ship-owner or Manager encountering considerable extra work and, for instance, in the case of a serious stranding, this might include arranging for

  • Salvage,
  • Entry into a port of refuge,
  • Surveys,
  • Towage to another port for repairs,
  • Temporary and/or permanent repairs,
  • The obtaining of spare parts and forwarding to the port of repair,
  • Superintendence of the repairs,
  • Settlement of repair accounts,
  • Salvage security,
  • All General Average formalities, etc.

Actual out-of-pocket expenses incurred in making these various arrangements have always been claimable from Underwriters, but it has also been an established practice that the Owner (repeat, Owner) of a ship was not entitled to claim any remuneration for his own time and trouble on such affairs, whether as general or particular average.

The Association of Average Adjusters have a Rule of Practice No. A3 on the subject dating from 1906 and reading as follows:

AGENCY COMMISSION AND AGENCY

That, in practice, neither commission (excepting bank commission) nor any charge by way of agency or remuneration for trouble is allowed to the shipowner in average, except in respect of services rendered on behalf of cargo when such services are not involved in the contract of affreightment.

Over the years, however, and for various reasons, many ship-owners have formed separate companies to manage their ships for them – or have employed specialist ship managers – and these management companies have often put forward a separate fee for the extra work to which they were put in attending to the average matters listed earlier, plus their work of collecting the necessary documents and presenting them for adjustment purposes.  Whether such fees were permissible under the management contract is not known, but they were often claimed from and paid by hull underwriters.

Thus, over many years a practice has grown of allowing an agent or manager acting on the Assured’s behalf to charge a fee for the work involved in compiling the Assured’s claim for the Assured to recover this as part of the claim on policies of insurance on hull and machinery which is subject to English law and practice.  There is probably no parallel in any other branch of insurance.  However, as noted earlier, a ship-owner who manages his own ships and presents his own claims, cannot enjoy the privilege.  This produces a result which can be termed anomalous and this anomaly is even more marked where the difference between the management company and the ship owning company is little more than a technicality.

At one time it was considered whether the charges should not be allowed to any management or agency company which was a subsidiary or in any way affiliated to the ship-owning company.  In 1970, a Special Committee of the Association of Average Adjusters, which included representatives of Underwriters and Ship-owners, was appointed to consider the above-mentioned Rule of Practice in the light of modern conditions and make such recommendations as might be thought fit regarding its revision.  After considerable consideration, a Report was issued on 22nd January 1971 wherein “it was unanimously agreed that the present Rule of Practice should remain unaltered and the Underwriters’ Representatives would consult their principals for agreement that the present practice of allowing agency fees where these had been incurred in connection with the average be continued but reserving the right to question the quantum of such fees if considered unreasonable.”   Evidently, in practice Underwriters have continued to pay for the fees charged by vessel Owners’ managers for the time spent handling damage claims, dealing with brokers, surveyors, lawyers, adjusters and others, if they appear to be reasonable.

A further point which needs stating is that it was often the management company which appointed the average adjuster and, human nature being what it is, it was sometimes difficult for the average adjuster to contain the fees proposed by the management company within reasonable bounds.  Thus, allowance of large agency fees was not uncommon.

In 1983 the London market introduced a completely new set of Institute Clauses for the insurance of the hull and machinery of ocean-going (blue water) vessels to be used in conjunction with the new Marine Policy Form.  Obviously, Underwriters seized the opportunity to exclude liability for remuneration in connection with a claim altogether, whether to a ship-owner or to a managing company.  The wording they have chosen as follows (Clause 17 of ITC-83) does not seem to reflect their intention:

17        AGENCY COMMISSION

In no case shall any sum be allowed under this insurance either by way of remuneration of the Assured for time and trouble taken to obtain and supply information or documents or in respect of the commission or charges of an manager, agent, managing or agency company or the like, appointed by or on behalf of the Assured to perform such services.

A straight construction of these words means that fees payable to a management company for those services listed earlier in these comments may still continue to be claimed and paid.  Indeed, by inference, perhaps, even a ship-owner operating his own ships should now be entitled to claim similar remuneration?

In practice, however, Underwriters have made it clear that their intention was to exclude all claims for remuneration by the Assured, their managers or agents for time and trouble incurred on any aspect of a claim.  Accordingly, ship’s proportion of agency fee allowable in general average would need to be deducted from the claim on policy of insurance subject to ITC – Hulls 1/10/83.

For the record, whilst it was blindingly obvious, without any form of explanation, that agency charges included in a port agent’s general account covering expenses incurred in respect of the vessel thereat are not excluded by the terms of this Clause, to avoid the risk of having the settlement under the adjustment delayed, at one time, the following explanatory note, or similar, would appear in the adjustment:

Adjusters’ Note:

The fee charged in the above account represent charges of port agents for handling operations connected with the vessel at the port.  Allowance therefor is not excluded by the terms of Clause 17 of the Institute Time Clauses – Hulls 1/10/83.”

It is noted that the wording of Clause 17 of the ITC – Hulls 1/10/83 is the same as Clause 19 of the International Hull Clauses (01/11/03).

Understandably, it is not uncommon to see Ship-owners special clauses incorporated in the hull and machinery policies of insurance subject to ITC – Hulls 1/10/83 specifically delete the Clause 17, thus enabling the Assured to enjoy the pre-1983 practice mentioned earlier.

No equivalent provisions are to be found in the American Institute Hull Clauses but it is noted that in practice Underwriters in the American Market would not pay for any agency charge which was made by the Assured himself.  For Underwriters to entertain payment, the charge would necessarily have to be made to the Assured – Owner by a managing agent or company.

UNREPAIRED DAMAGE

Section 69 (3) of the Marine Insurance  Act  1906  provides  that :

“Where the ship has not been repaired, and has not been sold in her damaged state during the risk, the assured is entitled to be indemnified for the reasonable depreciation arising from the unrepaired damage, but not exceeding the reasonable cost of repairing such damage”.

Until about 1950 there was a well-established practice in the London market for negotiating any claim for unrepaired damage.  It was generally on the following lines:

  1. Where the ship was sold, to endeavour to find out what price the purchaser of the vessel would have paid for her if the damage did not exist, subtract the actual price paid, and claim from Underwriters in respect of the difference – (always assuming that this difference was less than the cost of repairing the damage!)
  2. Where the ship was not sold, to take the basic cost of repairs as estimated by Underwriters surveyor, generally to ignore dry-docking and other incidental charges, and to offer the Assured a figure less than this sum, the amount depending on the likelihood of whether or not the damage would eventually be repaired.

 

That is to say, prior to 1950 the settlement of claims for unrepaired damage was based on what the market considered to be the pure principle of Marine insurance, i.e. to INDEMNIFY the Assured for the actual amount he had lost – or was likely to lose – by reason of the unrepaired damage, and with the settlement based solely on the estimated cost of repairs and ignoring the insured value (other than as a limit on the amount payable).

 

There then followed a series of law cases in England and the U. S. A., including Elcock v.Thomson (1949), Irvin v. Hine (1949), the “Armar” (1954), and Delta Supply Co. v. Liberty Mutual (1963),

and these cases introduced the Insured Value of the vessel into the calculation.  Although never challenged by Underwriters in the Courts (e. g. see the “Medina Princess” – 1965), they regarded the introduction of the Insured Value into the calculation as something of an irrelevance, in the sense that any claim for repairs actually carried out was payable in full, regardless of whether the real value of the ship was over – or under – insured.

 

The position under the legal cases is best demonstrated by an extreme example where an elderly

ship with a sound market value not much more than her scrap value sustains a serious damage, e. g.:

The Courts decided that this 40% Depreciation was to be applied to the Insured Value of the vessel and the legal claim on underwriters to be either:

  1. a) The resultant figure, or
  2. b) The estimated cost of repairs,

whichever was the less.  For example:

It will be appreciated that the real loss sustained by the assured as the result of the accident is only the difference between the sound and damaged values, – i.e. 200,000 – but as most ships tend to be insured for more than their real value, the general effect of the legal cases was to produce a much larger claim for the assured, i.e.:

The London market introduced a new clause in 1983 dealing with the vexed question of unrepaired damage; Clause 18 of the ITC-Hulls 1/10/83 reads as follows:

  1.        UNREPAIRED DAMAGE

18.1     The measure of indemnity in respect of claims for unrepaired damage shall be the reasonable depreciation in the market value of the Vessel at the time this insurance terminates arising from such unrepaired damage, but not exceeding the reasonable cost of repairs.

18.2     In no case shall the Underwriters be liable for unrepaired damage in the event of a subsequent total loss (whether or not covered under this insurance) sustained during the period covered by this insurance or any extension thereof.

18.3     The Underwriters shall not be liable in respect of unrepaired damage for more than the insured value at the time this insurance terminates.

Clause 18.1 overrides the effect of the legal cases and, to a large extent, re-introduces the pre-1950 practice mentioned earlier.  The Insured Value will be ignored, other than as a limit on the amount of the claim.

Clause 18.2 is a restatement of the position under English as codified by Section 77(2) of the Marine Insurance Act  1906, which provides  that :

“Where, under the same policy, a partial loss, which has not been repaired or otherwise made good, is followed by a total loss, the assured can only recover in respect of the total loss”

The purpose of a marine insurance policy is to indemnify the Assured for losses which he sustains as the result of perils insured against and, in general, a ship-owner does not sustain any loss until he repairs the damage and incurs the cost of those repairs.  It follows, therefore, that if the vessel becomes a total loss before an earlier damage has been repaired, the Assured loses nothing by reason of that earlier accident.

English law applies the principle that “the greater absorbs the lesser”, and the subsequent total loss overrides and/or absorbs the earlier damage.

Even if the subsequent total loss is the result of some peril excluded – or not covered – by the policy, the same rule of “the greater absorbing the lesser” still applies, and there is no claim for the earlier partial loss left unrepaired – see the legal cases of Livie v. Janson (1810) and Wilson Shipping Co., Ltd. v. British and Foreign Marine Insurance Co., Ltd. (1919).

It should be noted that the above remarks apply only to situations where both the earlier partial loss and the subsequent total loss occur on the same policy.

As soon as a policy expires, the Assured has a legal right to claim from his Underwriters in respect of any damage sustained during the currency of that policy and which is presently unrepaired.  The agreed insured value in the succeeding policy is assumed to take account of the fact that the vessel was then in a damaged condition (even though the matter was probably not considered by Ship-owners or Underwriters at the time) and in the event of a total loss occurring on that following policy, the full insured value will be paid, while a claim for supposed depreciation will be paid on the earlier policy.

This point was covered in the interesting case of Lidgett v. Secretan (1871), where a vessel sustained damage during the currency of one policy and, while repairs were being carried out – but during the currency of  a following policy – the vessel caught fire and was totally lost, The Underwriters of the first policy were held liable to pay the cost of the repairs actually completed at the time of the fire, plus a claim in respect of the unrepaired damage, while the Underwriters of the second policy were liable for a total loss and the full insured value.  A very complete indemnity!

Clause 18.3, limiting claims to the insured value, was introduced to the ITC Hulls only in 1983 and relates to the equally new provisions in Clause 1.3 where the original insured value of the vessel may be reduced to some lower figure if the vessel sails for the purpose of being broken up.

Lines 117/119 of the American Institute Hull Clauses (June 2, 1977) reads as follows:

No claim for unrepaired damages shall be allowed, except to the extent that the aggregate damage caused by perils insured against during the period of the Policy and left unrepaired at the expiration of the Policy shall be demonstrated by the Assured to have diminished the actual market value of the Vessel on that date if undamaged by such perils.

The wording is quite different from the ITC Hull clause, but the effect of both is identical in that the judgements of the British and American courts have been set aside as commercial irrelevancies.  To support a claim, the Assured must demonstrate that the damage left unrepaired when the policy expired has actually brought about a depreciation in the vessel’s value.  The AIHC do not state that the indemnity cannot exceed the estimated reasonable cost of repairs as do the ITC Hulls, but, of course, that is also the position in the American market.

The following self-explanatory wording is commonly seen under the Ship-owners Special Clauses incorporated in hull and machinery policies of insurance:

“Underwriters’ liability in respect of unrepaired damage will be the estimated cost of repairs at the first reasonable opportunity including estimated dry-dock and services, tank cleaning, superintendence and removal, if necessary.”

 

Raymond Wong

 

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海天搏击五十年—叶伟膺先生访谈录

Photo 1: 2017年5月17日,叶伟膺(右)与吴焕宁(中)和尹东年(左)教授应邀出席北京大学《口述海商法史》座谈会

    叶伟膺先生从事海商法、海事仲裁、海损理算、海事律师实务和研究工作五十余年,期间曾在美国海特律师事务所和英国国际理霍(海损理算)公司学习和工作七年多。他是中国海事仲裁委员会(以下简称“海仲委”)的两位元老之一;他参与设立“海损理算处”和香港中英合资的“德理有限公司”,办理海损理算业务;他参与中国《海商法》的制定工作、出席联合国贸发会和国际海事委员会召开的会议并在会上发言,参与对《约克—安特卫普规则》的修订工作;他于1982年首批取得律师资格,1994年被司法部评为一级律师;他1992年被评为研究员和有突出贡献的专家,由国务院发给证书和政府特殊津贴。鉴于此,本篇的题目就定为《海天搏击五十年—叶伟膺先生访谈录》。

    问:叶先生您好,谢谢您接受我们的采访。您是中国著名的海商法专家,请问您是怎样与海商法工作结缘的?您学习海商法和从事该项工作有何体会?

叶:不必客气。我很乐意同你们年轻人聊天。有朋自远方来,论天下之精微,理万物之是非,不亦乐乎!我不是什么中国著名的海商法专家,而是一名普通的海商法律工作者。我是广东普宁人,1938年生。因为家里穷,故断断继续才从小学念到高中,成绩优异,老师们都希望我能考上名牌大学,但填志愿时,领导却只允许我报考师范学院。结果我考到华中师范学院,学习英语。毕业后本应去教书,但因工作需要,被分配到中国国际贸易促进委员会(以下简称“贸促会”)法律部工作,成为该校第一批到中央外事机关工作的四个人之一。

1964年7月15日,我到贸促会法律部向邵循怡副部长[1]报到。两天后,海仲委高隼来副处长[2](以下简称“高老”)带我到北兵马司交通部港监局开会,见到许多领导和专家,如:周启新、冯法祖先生等。会议由王承训船长介绍一起外轮碰撞我国渔船的案件以及处理意见。回来后,高老要我在一个小时之内写一份600-700字的报告,呈送南汉宸主席[3]和其他领导。就这样,我与海商法结下了不解之缘,成为到海仲委工作的第二个人,并和高老一起从事海事仲裁、海损理算、海事律师实务和研究工作,至今50余年。这是工作的需要,时代的要求,在此期间,国家需要有人从事这几项工作。

Photo 2: 1986年,叶伟膺(左)与王德超先生(右)在香港会见国际经贸法、仲裁法和海商法专家邵循怡先生

 

因为我在学校没有学过海商法,毕业后又从校门到机关门,没有实践经验,“先天不足”,故必须下大功夫补课:

  1. 苦读魏文翰教授的《海商法讲座》、《共同海损论》和中国后来出版的绝大部分海商法教科书。啃《British Shipping Laws》和英、美 两本关于共同海损(General Average)的权威专著。看不懂时就请教高老和邵副部长;
  2. 到航运、保险和外贸公司、船检和商检局、港监和救捞局、修造船厂了解情况和学习,拜各行各业的专家、船长、轮机长、船员和工人为师。学会在海图上标出船舶的位置和航迹。懂得承运花生和花生仁,应根据“露点通风原则”进行合理通风等;
  3. 到上海和大连港监实习,听胡伯康科长和林钧鑫同志介绍处理海事的经验。由陈晓明等三位港监官员带上船,先后从宁波到上海,从上海到大连,体验海上航行的生活和了解航海的实况;
  4. 赴国内外20多个港口(外国6个,不包括到罗得岛、悉尼、伦敦和利物浦等地开会和参观)调查和处理海损事故。经常到外锚地,攀绳梯登轮取证,上驾驶台、下机舱了解情况;
  5. 在办案中学习。向法官、仲裁员和对手学习,独立思考,不断总结,逐步提高。我的体会是:理论与实践相结合是学习海商法和做好工作的最佳方法。

参与海商法的制定工作

    问:您很早就参与海商法的制定工作,能给我们介绍相关的情况吗?

叶:建国之初,我国政府和相关部门就参照苏联1929年《海商法》和一些国际公约着手起草《海商法》。1952年至1963年,《海商法》草案九次易稿,邵循怡和高隼来同志参加该项工作。我到贸促会法律部工作时,看到《海商法》第九稿,并参加对该稿的学习和讨论。此后,由于“四清运动”和“文革”的干扰,起草工作中断。1974年,贸促会法律部任建新部长[4]率团出席在汉堡举行的国际海事委员会第30届大会,了解到国外海商法律、法规制定工作的进展情况。回国后,向有关部门提出加快制定我国海上运输法律、法规的工作,推动了制定中国《海商法》的进程。1975年,在贸促会的建议下,由外交部、外贸部和交通部联合向国务院呈交请示报告,提出以独立自主、平等互利和参照国际惯例三项原则,整理和制定海商法规,由当时主持中央工作的邓小平同志批准。同年,成立《海商法》整理小组,由交通部远洋局和贸促会两家轮流主持小组的工作。1982年,由交通部牵头,有关部门参加,恢复起草工作。后成立海商法起草委员会,由朱曾杰(以下简称“朱老”)任办公室副主任,抽调上海和大连海运学院的尹东年和司玉琢老师以及交通部的杨文贵同志,协助朱老处理日常工作。《海商法草案》各章分给相关单位起草。贸促会负责第十章“共同海损”和相关章节,由我参照《北京理算规则》和《1975年约克—安特卫普规则》的规定,执笔起草后,送朱老汇总。

1985年1月,《海商法(草案)》上报国务院审核。由于《海商法》具有国际性等特点,故国务院对此事十分重视,专门成立《海商法》审查研究小组,花了六年的时间,邀请全国各有关部门和国内外专家、学者,多次开会,广泛征求意见,最后才基本定稿,这就是《中华人民共和国海商法(草案)》,也称1991年3月31日《修改稿》。

为了慎重起见,在报请全国人民代表大会审议之前,国务院法制局又于1991年5月21日至23日,在北京香山未名山庄召开《海商法(草案)》专家论证会。会议由国务院法制局领导孙琬钟、顾问郭日齐和交通部副部长林祖乙同志主持,朱老负责具体的工作。为这次采访,除发现我所提修改意见的资料外,还找到一份名单,从中可以看到参加会议的专家如下:

社科院 王家福、谢怀栻、梁慧星教授;经贸大学 沈达明、黎孝先、赵宏勋教授;中国法律咨询中心 魏家驹、徐鹤皋教授;中国法律事务中心 高宗泽高级律师;中国贸促会 邵循怡研究员、叶伟膺副研究员;中国远洋运输公司 朱曾杰研究员、张常临译审;外交学院 姚壮教授;中国政法大学 吴焕宁教授;大连海运学院 司玉琢副教授;上海海运学院 尹东年、金祖光副教授;天津南开大学 陈文秋副教授。

这次会议,主要讨论我们所提出的两点建议:(1)对共同海损部分,进行补充,加进有关如何确定船舶、货物和运费共同海损牺牲金额的规定和其他修改意见;(2)在其他大多数国家没有改变之前,中国《海商法》还需规定:承运人对其雇员管船过失和延迟交货的责任,应该有所限制。这涉及到适用什么规则的问题。[5]

经过三天的讨论和协商,最后所有领导和与会专家、学者达成共识,采纳我们上述的意见。会后,对草案做进一步修改,1992年6月7日提交全国人民代表大会常务委员会审议。

1992年9月18日,人大法工委在人民大会堂召开专家座谈会,研究《海商法(草案)》。我作为特邀专家和贸促会的代表,参加会议并回答了人大法工委领导提出的相关问题。同年11月7日,《海商法》由中华人民共和国第七届全国人民代表大会常务委员会第二十八次会议通过并公布,自1993年7月1日起施行。《海商法》由张常临同志翻译成英文。

 Photo 3: 2005年12月,原参加制定《海商法》的部分专家尹东年、叶伟膺、朱曾杰、高隼来、司玉琢和吴焕宁(前排自左至右二、三、五、六、七和八)在北京出席

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《两岸三地海商法研讨交流会》

    问:您对如今修改中国《海商法》有何意见?

叶:我的建议如下:

  1. 不要贪大求全,变化不要太快太大。从《汉堡规则》和《2004年约克-安特卫普规则》不被海运界接受的情况应该得到启示;
  2. 浪损不是船舶碰撞,根据船舶保单条款,保险人不负赔偿责任;
  3. 《海商法》应允许双方当事人将SCOPIC条款并入救助合同,并按约定支付酬金;
  4. “无效果一按约定支付报酬”的海难救助应适用《海商法》。

海仲委的两位元老之一

    问:您在海仲委工作是什么情况?办理过多少案件?有什么体会?

叶:以前,中国没有涉外的仲裁机构,在国际贸易和海运中发生争议需到外国仲裁,工作十分麻烦,费用也很高,而且我国的企业输多赢少,经济上吃亏,政治上影响也不好。贸促会第一代领导人南汉宸和冀朝鼎同志[6]识多见广,十分重视仲裁工作。1952年,就在会内设立仲裁部(后改称法律部)。

1954年5月6日政务院通过了《在中国国际贸易促进委员会内设立对外贸易仲裁委员会的决定》。据此,1956年4月2日贸促会设立了对外贸易仲裁委员会(以下简称“贸仲委”)。

因海事纠纷有其特殊性和复杂性,有关单位,包括交通部要求贸促会设立海事仲裁委员会。1957年2月,港监局负责人来贸促会正式提出。理由是随着对外贸易的发展,来我国沿海和港口的外轮日益增多,发生海难,签订救助契约时,外方不接受当时我国由“海事处理委员会”处理的做法。例如,1954年英国“查普林”轮在榆林港搁浅,我们派船救助,因当时我国没有仲裁机构,也没有救助标准合同格式,故外轮船长要求按国际习惯签订劳合社标准格式救助合同,发生纠纷到伦敦仲裁,否则拒绝救助,并要求由香港派船来施救。经交通部和外交部研究后,同意其要求。这种情况应尽快设法解决。

1958年11月21日,在周恩来总理的主持下,国务院全体会议第八十二次会议通过《在中国国际贸易促进委员会内设立海事仲裁委员会的决定》。据此,1959年1月22日,海仲委正式成立。同时通过《仲裁程序暂行规定》以及《救助契约标准格式》和《碰撞仲裁协议标准格式》。

1964年我到法律部时,两个仲裁委员会的业务人员很少,其中有邵循怡(法律部副部长)、贸仲委的董有淦(副处长)、王守茂、胡瑞孚(这四人都已去世)、徐士章、靳广华、海仲委的高隼来(副处长)和叶伟膺(此四人也已到耄耋之年)。开始大家在一起办公,后来才慢慢分开,但还是经常在一起讨论问题。

凡事开头难,但大家工作都十分努力,收集了许多外国的资料,研究各国仲裁的立法、规则和做法。海仲委成立初期,就受理和审理了“范雷特”轮海难救助案(1963年)和“青岛”轮碰沉“浙乐202”渔船案(1967年)。我们打破了外国对仲裁的垄断,国人为之振奋,欢欣鼓舞!

但事情并非一帆风顺,在“文革”动乱期间,仲裁业务受到严重的冲击,特别是1969年干部下放“五七干校”后,实际上仅留下我一人。而我的主要任务是开展和从事海损理算工作。

70年代初期,领导从“五七干校”调回来一批干部,并任命任建新同志为法律部部长,他尊重和爱惜人才,大胆使用干部,勇于开拓,仲裁工作才慢慢得以恢复和发展。

1978年,党的十一届三中全会,把中心工作从阶级斗争转移到经济建设上来。改革开放后,随着航运和经贸业务的不断扩大,海事和经贸仲裁案件也越来越多,中国的仲裁得到了更大的发展,在国际上也已经很有影响。任建新等领导和高隼来、邵循怡和唐厚志等仲裁员积极参加国际仲裁员大会和国际海事仲裁员大会,参加联合国和国际海事委员会召开的会议和活动。 高老还作为仲裁员,多次到斯德哥尔摩商会仲裁院和香港国际仲裁中心审理案件。有一次,他在香港审理案件,同庭的两位仲裁员是原香港律政司司长唐明治(Michaed Thomas)和按察司司长韩恩德(Neil Kaplan)先生。

1987年,中国加入了《1958年承认及执行外国仲裁裁决公约》。从此,中国所做出的仲裁裁决,便可以在140多个国家和地区得到承认和执行。

1995年9月1日,《中华人民共和国仲裁法》施行后,各省市纷纷成立了263个仲裁委员会。但成立最早、规模最大、受案最多、主要审理涉外案件的还是海仲委和贸仲委。

我国仲裁的做法,基本上与国际接轨:(1)依据有效的书面仲裁协议受理和审理案件;(2)当事人可以各自选定一名仲裁员;(3)仲裁庭以事实为根据,以法律为准绳,参照国际惯例,尊重双方当事人的约定,独立公正,公平合理地审理案件;(4)专家办案;(5)一审终局……。此外,根据中国的国情和中华民族的传统文化,我们又独创了仲裁与调解相结合的做法,即经双方当事人同意,仲裁庭对争议进行调解。此一做法,在许多情况下既可以更好更快地解决争端,又能保持和增进当事人之间的良好关系,是成功的经验。但开始时不为国际社会所认可,外国人认为仲裁就是仲裁,不能与调解相结合。但经过多年的实践和我们做工作,现在已被接受,并被称为“东方经验”,许多国家也采用了这一做法。

我是两个仲裁委员会的仲裁员,办理海事和经贸案件。但因成立初期属创建阶段,案件不多,后来我又有相当长的时间不在北京工作,故在仲裁员中,我承办的案件不是最多,而是较多的一位。质量也比较好,公正性更是勿可质疑。

从事仲裁工作,我比较深的体会是:

  1. 公正是仲裁的生命线,必须永远坚持。否则,只要有一个案件裁决不公,在世界上的影响就很不好,当事人就不到中国来仲裁了。几代人艰苦奋斗,建起来的大厦,一夜之间,就可能倒塌,所取得的成绩将付之东流!
  2. 保证裁决的质量。应认真阅读材料,听取双方的意见。查明事实,正确适用法律,裁决正确,说理充分,让赢者高兴,输者也口服心服。
  3. 办案要快。效率是生命,时间是金钱,在保证质量的前提下,快速做出裁决,让遭受损失的一方尽快收回赔款。

Photo 4: 2004年1月7日,叶伟膺(左三)与原政法大学校长江平教授(左二)和经贸部著名国际经贸法专家曹家瑞先生(右三)在北京开庭审理中日买卖船舶争议案

开创海损理算业务 勇拓香港理算市场

    问:请问您在北京和香港从事海损理算工作是什么情况?有什么不同,遇到哪些困难?

叶:1964年,我参加工作时,中国没有自己的海损理算机构,船舶在远洋运输中发生海损事故时,均由外国人理算,理算书用英语编制,中国很少人能看懂,更谈不上审核。

随着我国国际贸易和航运事业的不断发展,应交通部、外贸部和中国人民保险公司等单位的要求,1964年,贸促会指定高老和我负责筹建“海损理算处”。1966年4月23日,刻制公章,正式受理案件。1968年6月30日和1970年10月1日,先后编制并发出“海东”轮和“Atticos”轮两份共同海损理算书。此举填补了我国在这一领域的空白,打破了外国的垄断,国人感到十分振奋和鼓舞!1969年1月8日,我们向国务院补呈了《关于在我国办理共同海损理算问题的报告》。

在北京从事海损理算工作非常不容易,因为:

  1. 理算工作很难。理算人员必须受过长期的特别训练,具有丰富的专业知识。此外,由于海上运输涉及到许多方面,所以要求理算师懂得一些海商法律、海上航行、货物运输、租船、海难救助、船舶碰撞、船舶检验和海上保险的知识。贸促会原来没有这样的人才;
  2. 在中国,陈干青先生应该做过理算,但他1953年9月因患心血管病去世。1941年,魏文翰先生曾经编制过“民本”轮共同海损理算书,但我们没有见过。“文革”期间,我到上海向其求教时,他正被当成资产阶级反动学术权威受批挨斗!故我们在国内没有老师可以请教!“文革”期间又绝对不许派人出国学习;
  3. 人员严重不足。特别是60年代后期至70年代初,大批干部下放,实际上仅留下我一人,除理算外,还要兼管仲裁的一些日常工作,实在是分身乏术;
  4. 未制定理算规则和法律,理算原则不明确。军代表不许我们参照国际规则理算。直至1971年,任建新出任法律部部长后,才采取各项措施,花大力气,着手解决以上难题。他从“五七干校”调回来一大批干部,其中包括高隼来、邵循怡、唐厚志、戎洁心、许秀姑、许履刚、黎东发、徐士章和阎存厚等同志。高隼来负责理算处的日常领导工作。此外,还聘请人民保险公司的王恩韶和周泰祚同志以及交通部的冯法祖总船长几位专家当顾问,大胆放手使用他们。这样,理算处的人员最多时有18位,可以说是“兵多将广”了。

有了人以后,接着便是对其进行培训。任建新把大家组织起来,取长补短,相互学习,并进一步查阅外国的相关书籍和资料,学习《1950年约克-安特卫普规则》,参考许多外国编制的海损理算书。此外,对外开放,邀请一些外国著名的海损理算师来华访问,他们中有英国的William Richards和Hudson先生,瑞典的Pinos先生等。同时,积极参与国际上的相关活动。1973年10月8日,任建新亲自率团,以观察员的身份,出席在西班牙马德里举行的欧洲国际海损理算师协会第七届大会,了解国际上的有关情况和发展动态。他还指示理算处致函许多国家的海损理算师,调查各国有关海损理算的法规和习惯做法。学习培训和调查情况的工作持续数年,大大提高了理算人员的业务水平,加快了办案的速度。

经过数年的办案实践,任建新又领导大家总结办案经验,并参照国际上普遍采用的1950年和1974年《约克-安特卫普规则》,制定《中国国际贸易促进委员会共同海损理算暂行规则》(简称《北京理算规则》),并于1975年1月1日经对外贸易部、外交部、交通部和财政部批准后公布。《北京理算规则》由王恩韶同志翻成英文,请程希孟、胡明正等先生提意见,修改后对外发布。

从此,所有的中国船舶和从外国租来的船舶发生海损事故时,均委请理算处理算。我们取得了很大的成绩,被评为先进集体。1977年8月4日党和国家领导人邓小平、叶剑英、华国锋和李先念同志在人民大会堂接见全国外贸系统先进集体和个人。我作为理算处的代表出席接见和合影。

Photo 5: 1977年8月4日,党和国家领导人邓小平、(前排左一)叶剑英

(前排右二)、华国锋(前排左二)和李先念(前排右一)接见

全国外贸系统先进集体和个人。第五排左二为叶伟膺

 

 

 

 

 

 

 

 

 

 

 

80年代中期,我们又将目标瞄向香港。经领导批准,1985年7月15日,我带了两万美元的开办费,一个人飞赴香港与英国国际理霍公司合作办理海损理算业务。 后合资成立“德理有限公司”,高老任董事长,王德超先生和我任副董事长。

我在香港办理理算业务,更加困难,因为:(1)工作语言是英语;(2)共同海损、海上保险等业务,是英国人的专利;(3)市场竞争十分剧烈,当时在香港有八家外国理算公司,要抢到一个案子,实在不容易。

因此,起初有些人认为中国大陆人做不了理算,不用多长时间,就得返回大陆!怎么办?(1)虚心向国外同行学习;(2)拼!天道酬勤,经过数年的艰苦拼搏,我们的业务不断增加,至1991年秋回国时,除已办案件外,我们受理待办的案件有160多件,预计可以收取理算费数千万港元。工作取得了很好的社会效益和经济效益。更重要的是通过香港这一窗口,了解到国际上的习惯做法,提高中国的理算水平,使之与国际接轨。与此同时,许多外国理算公司却因案源不足,纷纷倒闭,其理算师则返回本国或者改行。

 

Photo 6: 1985年夏至1991年秋,叶伟膺在香港从事海损理算和律师业务

 

 

 

 

 


Photo 7: 1985年10月15日,叶伟膺应邀在香港海事保险学会做“中外海损理算

规则和做法异同”的讲演

 

 

 

 

 

.


Photo 8: 1985年12月30日,叶伟膺(左)和广州海运局周勤正船长在香港处理“罗浮山”轮共同海损案

 

 

 

 

 

 

 

 

 

 

 

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Photo 9: 1987年10月16日叶伟膺(前排左四)和海损理算专家王德超先生(右一)在香港会见仲裁法专家唐厚志先生

 

 

 

首批取得律师资格 从事海事律师工作

    问:除了海事仲裁和海损理算外,您能介绍一下从事律师工作的情况吗?

叶:1957年,中国的律师制度遭到严厉的批判,律师被说成是“讼棍,无事生非,为资产阶级服务”。“文革”期间,造反派更是无法无天,大叫“砸烂公检法!”

1979年中央提出恢复律师制度,贸促会率先成立了中国第一家法律顾问处,后根据司法部的要求,于1984年改称为中国环球律师事务所(以下简称“环球所”)。

1982年,我首批取得律师资格,司法部律师资格通知书为(82)司律通字第0020号。从此,我便作为律师承办案件。

1982年至1983年,我到美国纽约海特律师事务所学习和工作一年,期间,拜见了倪徵[7]先生、魏文翰[8]、王铁崖、芮沐、赵理海和爱德华(哥伦比亚大学)教授。

 

 

 

 

 

 

photo 10: 1982年3月8日叶伟膺在纽约海特律师事务所办公楼旁留影。后面是被本.拉登炸毁的世贸中心,旁边是屹立于海港中的“自由女神”

 

 

 

 

 

 

 

 

 

photo 11: 1983年春,叶伟膺和外运公司的余本松先生(右一)在美国拜见周恩来总理南开中学的同学、原交通部顾问、上海海运学院教授、海仲委仲裁员魏文翰先生(右二)

 

 

 

 

 

 

 

Photo 12: 1983年春,叶伟膺自纽约归国途中,到旧金山参加由贝汉庭船长驾驶的“栁林海”轮首航美国四周年庆典并参观金门大桥

 

 

 

 

 

 

 

 

 

在美期间,我协助海特律师事务所的律师办理过不少案件。其中,有中国人民保险公司状告美国政府第一案:[9],成功追回338万美元。

此外,通过阅卷,发现有几起案件,争议金额仅有三、四万美元,不够支付诉讼和律师费用,而且官司胜负难料。我建议跟委托人讲明,通过协商解决。美国律师听后,觉得言之有理,照此办理。

还有一起租船争议案件,因遭遇恶劣气候,燃料不足,遂弯航避难港加油,船期损失应由谁承担?我帮美国律师找到一个案例(Hurbut v. Turnure,81 Feb.Rep.208 and the Abbazzia, 127 Feb. Rep. 495)。根据该案例,因船方没有加足燃料,以便完成下一段航程(另加20-25%的安全系数),故应承当责任。美国律师听后非常高兴,认为胜诉在握。从此,对中国律师刮目相看。

1985年至1991年,我到香港从事律师业务,是中国第一位外派常驻办案的律师。[10] 1991年秋,我奉调回京任环球所副主任。当时环球所的业务发展很快,是中国第一大所,因为律师素质高,办案质量好,曾闻名海内外,许多客户都慕名而来。80-90年代,我本人接受中外当事人,特别是保险公司和航运公司的委托,办过不少海事、海商案件,跟外国海事律师交手的机会也比较多。例如:

  1. “罗浮山”轮共同海损分摊争议案。我代船东委请律师,并协助该律师与货方在美国打官司,历时三载,历经三审,最后协商解决,在美国司法界和律师界产生很大的影响;
  2. “恩宝”、“红旗138”和“金鹰1号”三轮碰撞案。我在中国与美方打官司,历时三载,历经两审,将美方的索赔金额从306,517.81美元减至63,000.00美元。更重要的是我们向世人展示了中国律师的水平!

因此,有些海事律师很想从我这里了解这一段《中国律师史》。保险学会和一些保险公司也聘请我当顾问,并做《口述中国海上保险史》。

 

 

Photo 13: 2002年10月6日,叶伟膺与贸促会会长俞晓松、全国政协副主席任建新和原全国律师协会会长任继圣(自左至右)出席中国环球律师事务所成立二十周年庆典

 

 

 

 

 

国际会议上发言为国争光

问:谢谢您让我们分享这些办案经历!您多次参加国际会议,有什么印象深刻的事情吗?

叶:我参加由国际海损理算师协会、国际海事委员会和联合国贸发会召开的一些会议。印象比较深刻的有:

1. 联合国贸发会航运委员会国际航运立法工作组第十三届大会

根据交通部和贸促会的要求,我参加由中国常驻联合国日内瓦代表处(王天策)、交通部(俞天文)、外经贸部(孟于群)、中国人民保险公司(缪建民)和贸促会组成的五人代表团, 出席1991年11月11日至18日在日内瓦召开的联合国贸发会航运委员会国际航运立法工作组第十三届大会。

参加会议的有44个国家的100多名代表。中心议题是改革现行共同海损分摊制度。会议第一天是一般性发言。第二天是专家会议,同往常一样,会议分为四组,苏联和东欧国家为D组。当时苏联正处在解体之中,寒冬难度。东欧国家也正发生激烈的变化,人心不定,故D组很少发言。以英国为首的发达国家为B组,他们表现得异常活跃。英国代表认为共同海损分摊制度已存在很长时间,运作没有问题,因此,反对做任何改革。英国代表一发言,其他发达国家的代表就纷纷响应,表示支持。77国集团的代表为A组,不同意B组的意见,认为共同海损分摊制度是发达国家设立的,理算规则也是由他们制定的,它偏袒发达国家的船东,损害了发展中国家作为货方的利益,属旧国际经济秩序的一部分,必须改革,甚至有人提出应当将它彻底废除。但却苦于提不出具体的意见,当天下午会上就没有人发言了。见此情景,英国代表得意洋洋地说:“你们都说目前的共同海损分摊制度不好,主张改革,但却提不出具体的意见,那就休会,回去好好学习,准备好意见后,再来开会吧”。大会主席十分无奈,但也只好宣布:“暂时休会,明天再开”。

11月13日上午,中国代表团要求发言。大会主席和秘书处十分高兴,所有与会代表也很感兴趣,都想听听中国的意见,会场十分安静。这时,中国代表站起来发言:

“谢谢主席先生,中国代表团认为,同空运和陆运相比,海上运输存在着更大的危险,船舶在海上航行,遭遇共同危险,为了船舶和货物的共同安全,有意并合理所做出的特殊牺牲或者支付的额外费用,由各受益方按其价值的比例分摊,这一原则是公平合理的。其次,共同海损分摊制度己有很长的历史,目前己为国际上的航运界、保险界和贸易界所接受,它的运作基本是良好的;如果不能找到比它更好的和可行的办法替代它,那么,就不可以也不可能全面彻底地废除共同海损分摊制度。”讲到这里,许多发达国家的代表热烈鼓掌。

这时中国代表突然词峰一转,指出:“但是,任何一种制度都不是十全十美的,它必须随着社会的发展逐步改进和完善。大多数人都承认,在目前的海上保险制度下所进行的共同海损理算和分摊做法,有时是很费时和费钱的,并且给各方增加了不少额外工作。因此,我们可以相互交换意见,进行充分的讨论,积极寻找办法,以便简化共同海损理算和分摊的做法”。这时,发展中国家的代表热烈鼓掌。

接着,我们指出目前国际海上保险和共损分摊制度存在着不少问题,并提出了许多具体的改革意见。还特别强调,共同海损的发展方向和出路是简化。中国代表的话音刚落,会场即响起了长时间的热烈掌声。

接着,会议就中国代表的发言进行讨论。各国代表对我们的发言给予了很高的评价。认为发言“态度认真,观点正确,内容丰富,所提改革意见具体”。罗马尼亚和泰国的代表说:”“中国代表是出席这次会议的真正专家”。加拿大代表Jerry J.Rysanek 先生两次跑来同我们握手,表示热烈祝贺 。英国代表也表示:“要认真考虑中国代表团的意见”。

对此,我国常驻联合国日内瓦代表处十分高兴,说此次中国代表团的发言“为国争了光”!

 

 

 

Photo 14: 1990年5月6日,叶伟膺在伦敦参加英国海损理算师协会年会

 

 

 

 

 

 

 

Photo 15: 1991年11月13日,叶伟膺在联合国贸发会航运委员会国际航运立法问题工作组第十三届大会上发言。左为外运公司孟于群先生

 

 

 

 

 

 

Photo 16: 1994年10月2日,叶伟膺在悉尼出席国际海事委员会第三十五届大会

 

 

 


Photo 17: 1994年10月3日,叶伟膺在悉尼国际海事委员会第三十五届大会上发言,参与《约克—安特卫普规则》的修订工作

 

 

 

 

 

 

 

Photo 18: 1995年10月10日,叶伟膺在希腊罗得岛出席欧洲国际海损理算师协会第十八届大会

 

 

 

 

 

 

Photo 19: 1995年10月10日,叶伟膺(左一)在希腊罗德岛出席欧洲国际海损理算师协会第十八届大会晚宴

 

 

 

 

2. 国际海事委员会第四十届大会

2012年,国际海事委员会第四十届大会在北京举行。为了简化,《2012年约克—安特卫普规则修改草案》拟规定:对救助费用不超过共同海损总额X%的案件不进行理算。我请教国际海事委员会的一位负责人:“未理算怎么就能知道这个百分比呢?为了知道这个百分比,就需要先进行理算,哪怎么谈得上简化呢?”他说:“我虽然在伦敦大学教共同海损,但从来没有做过理算,回答不了你的问题,反之,我应该向你学习”。英国教授如此谦虚,值得学习!

2016年,国际海事委员会第四十一届大会在纽约通过《2016年约克—安特卫普规则》,我即将其翻译成中文,并写评论文章,发表在网上和多家杂志上,供大家参考。我翻译或者参与翻译《共同海损—美国法律与惯例》一书和几乎所有的《约克—安特卫普规则》,2016年大概是最后一次啦!

顺便提一下,2000年,我退休后,不再过问理算处和环球所的工作,但继续办理一些仲裁案件,专心从事海商法的研究工作,读书、写短文并出版一本小书《海天搏击四十年—海商法文集》,对自己的工作做一个小结,它从一个侧面折射出我国海商法工作的发展历程。此外,我还应邀到航运、保险公司和相关院校讲课,为在中国普及海商法知识尽点微力。

 

 

 

 

Photo 20: 2016年10月30日,高隼来和叶伟膺在北京与部分仲裁员、海损理算师和律师联欢

 

 

 

 

 

问:谢谢您接受我们的采访,并介绍了这么多海商法的历史和您的亲身经历!

叶:不必客气。如前所述,我有幸赶上中国从封闭到改革开放的时代,参与中国法律从不健全到不断加强的过程。作为见证者和亲历者,我感到十分自豪!但我们还需继续努力,根据我国的国情并汲取世界法律文明的成果,尽快把我国建设成一个“法治”社会。

学海无涯,我的知识太少了!一生仅做一点事,办几个案件,惭愧!

最后,请允许我用苏东坡的诗来结束我们这次的采访吧:

 

“人生到处知何似?应似飞鸿踏雪泥。泥上偶然留指爪,鸿飞哪复计东西!”

口述人:叶伟膺先生

记录人:北京大学“口述海商法史”小组寇梦晨

时  间:2018年7月15日采访,7月17日上网

本文转载自“口述海商法史”公众号。仅对文字做些小修改

  1. 邵循怡(1913-2007)福州人。早年在哥伦比亚大学商学院学习。1952年至1966年,任贸促会法律部副部长,主管仲裁和其他法律事务工作。
  2. 高隼来,1926年生,浙江嘉兴人。东吴大学法律系毕业。海商法、仲裁法和经贸法专家。懂日语和俄语,精通德语和英语。1959-1964年通读British Shipping Laws。
  3. 南汉宸(1895-1967),山西赵城人。全国人大常委。原任中国人民银行第一任行长,后任贸促会主席。
  4. 任建新,1925年生,山西襄汾人。1946-1948年在北京大学化学工程系学习。1971-1983年任贸促会法律部部长和贸促会副主任。后任最高人民法院副院长、院长、中共中央书记处书记、中共中央政法委书记和全国政协副主席。
  5. 详见叶伟膺著:《海天搏击四十年—海商法文集》,中国商务出版社2012年第1版,第89-92页。
  6. 冀朝鼎(1903—1963年),山西汾阳人。早年留美,获哲学硕士、法学和经济学博士学位。曾任中国银行副董事长,后任贸促会秘书长和副主席。系第一位用英语在中央人民广播电台对外发表讲话的官员。
  7. 倪徵(1906-2003)江苏吴江县人。国际法学家。1947年9月16日,作为中国检察组首席顾问,在东京远东国际军事法庭上控告日本战犯;1958年8月22日,在北戴河向毛主席和周总理汇报国际海洋法以及各国关于领海的规定。后中国声明领海为12海里;1984年11月9日,在联合国当选为国际法院法官。倪先生是原海仲委的仲裁员,叶伟膺曾作为秘书协助先生办案。
  8. 魏文翰(1896—1989)天津人。1922-1923年就读于哈佛大学。1927年获芝加哥大学法学博士学位。1928-1938年在上海当律师,后任民生实业公司协理、代总经理。后来又自开轮船公司。1949年任南北通航谈判首席代表。著有《海商法讲座》和《共同海损论》等。
  9. 详见叶伟膺著:《海天搏击四十年—海商法文集》, 中国商务出版社2012年第1版,第210-212页。
  10. 在国外,理算师仅做理算,律师只管打官司。在中国,80-90年代,专业人才奇缺,需要少数人既做理算,又从事律师工作。因不在同一案件中,无利害冲突,故各方不提异议。

 

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AA Talk: HULL INSURANCE CLAUSES – Constructive Total Loss

Raymond Wong

It is an amazing surprise that the Institute Time Clauses – Hulls 1/10/83 (ITC-83) remain widely used after some 34 years in hull and machinery insurance policies!

There were indeed attempts to modernize hull insurance cover, through a 1995 version of the ITC wording and the International Hull Clauses (IHC) 2003, but both failed to attract much market support.  In early April this year, it was reported that leading London underwriters would review the ITC-83 to see how they could be improved to meet current ship-owners and underwriters needs.

Understandably, Assureds likely believe the devil they know is better than the devil they do not know.  However, it is very common to see hull and machinery policies incorporating ITC-83 but adding on ship-owners’ special clauses with favourable wording either tailor-made or extracted from IHC and/or other hull forms.

For the next few issues of Seaview, the Editor of this column will revisit ITC-83 with an emphasis on claims-related clauses, identifying the major differences with the American Hull Form (which is being used by a few large fleets in Hong Kong).  There are plenty of analyses of the ITC-83 by English local market experts; the Editor would however comment with the assistance of the one “ITC HULLS 1 10 83” which was written by Mr. D. John Wilson, a well-respected average adjuster.

The Editor wrote in 1988 the following Forward for the Chinese version of the “ITC HULLS 1 10 83”, which was published in Taiwan:

I knew Mr. D. John Wilson by name in 1969 through the book he wrote on the ”One Hundred Year of The Association of Average Adjusters 1869-1969”.  I met John in London in 1973 when, in conjunction with the present Lord Donaldson, Master of the Rolls, and Lord Justice Staughton, he was editing the current tenth edition of the British Shipping Laws, Vol.7 – the Law of General Average and the York-Antwerp Rules.

For years John has enjoyed the somewhat daunting and unending task of helping the juniors of the Richards Hogg Group progress with their studies and average adjusting work.  He was indeed the man I had to satisfy before being put forward to sit for the examination of the Association of Average Adjusters (AAA).

We had the opportunity of working together in Hong Kong for a couple of years.  Apparently, he gained the impression that I was an interested person so that when I was visiting Tokyo where he was resident in August 1984, he granted me the privilege of reading his more or less final draft on the ITC HULLS – 1.10.83.  When I had read it from cover to cover, I was fully convinced that it would be the best (and perhaps the first) analysis and comparison of some of the clauses issued by the Institute of London Underwriters covering Hull, Freight, Disbursements and Excess Liabilities etc. plus the American Institute Hull Clauses.  I immediately asked John if he would allow the book to be translated into Chinese.  He gave his consent without hesitation but in return I had to make him a chop for his Chinese name.

Whilst I was deliberating how I should proceed with the translation, my colleague in Taipei, Edmund Chen, completely out of the blue, told me enthusiastically on the phone that he and Ms. Christine Wang would take up this formidable task.  Having now read the Chinese version, I believe that the joint vigorous effort of Christine and Edmund is going to be of great value to any Chinese practitioners and students in the field of shipping and/or insurance.  My heart-felt congratulations on their success.

As the Chairman of the AAA 1987/1988 John wrote an extremely valuable booklet on “The Insurance of Average Disbursements and other Subsidiary Interests following a Marine Casualty” which was published by the Association in May 1988.  John, I understand, is now working on the new edition of the British Shipping Laws, Vol.7 – the Law of General Average and the York-Antwerp Rules.

The Editor understands that John’s Analysis of the 83 Clauses was largely prepared for the Japanese market and the leading insurers there did all the printing, a copy was given to the Editor personally by John who kindly allowed him (the Editor) copy right on this book for any future editions.

It is worth reminding readers that the ITC-83 state that the insurance is subject to English law and practice, meaning that, subject to any overriding provision in the policy, the Marine Insurance Act 1906 and the UK Insurance Act 2015 will apply.

 

CONSTRUCTIVE TOTAL LOSS

A Constructive Total Loss is defined by section 60 of the Marine Insurance Act 1906, which is subject to any express provision in the policy.  In ascertaining whether a ship is a constructive (or commercial) total loss and not worth repairing, a prudent uninsured owner would have regard to three main factors:

  1. The estimated cost of repairing the ship,
  2. The estimated value of the “wreck” as scrap, and
  3. The estimated value of the ship when repaired.

As a general rule, if 1 + 2 is greater than 3, then the vessel is a C.T.L.

It will be noted that each of these three factors depends on an estimate, always a somewhat flexible or “elastic” figure.

An uninsured owner has only himself to consider when evaluating these estimates and making his decision whether to repair or scrap the vessel, but the position is totally different when the vessel is insured.  Each estimate will then provide a fruitful source for argument between the parties, more particularly when it is recognized that so much money used to be at stake under the particular conditions of an old fashioned policy of marine insurance subject only to the provisions of the Marine Insurance Act.

If the ship-owner under such a policy was able to demonstrate that the vessel was a constructive total loss and not worth repairing, on an estimated sound value of the ship when repaired of, e.g 500,000 he was entitled to recover the full insured value of the vessel – whatever that might be, e.g.1,000,000 plus his subsidiary insurances, if any, on Freight & Increased Value, etc. of a further, say 250,000, will equal 1,250,000.

In addition (and although this does not concern the ship-owner himself), many reinsurances of the ship on Total Loss Only conditions would be affected by the decision of the original hull underwriters as to whether or not the vessel was a constructive total loss.

Clause 19 of ITC-83 does contain an express provision, which reads as follows:

19. CONSTRUCTIVE TOTAL LOSS

19.1 In ascertaining whether the Vessel is a constructive total loss, the insured value shall be taken as the repaired value and nothing in respect of the damaged or break-up value of the Vessel or wreck shall be taken into account.

19.2 No claim for constructive total loss based upon the cost of recovery and/or repair of the Vessel shall be recoverable hereunder unless such cost would exceed the insured value. In making this determination, only the cost relating to a single accident or sequence of damages arising from the same accident shall be taken into account.

To reduce the areas of possible dispute between ship-owners and underwriters in ascertaining whether the vessel is a constructive total loss, this clause provides that:

The insured value shall be taken as the repaired value, and Nothing in respect of the damaged or break-up value of the vessel or wreck shall be taken into account.

There is thus only one factor left within the realms of estimate – (the likely cost of repairing the ship) – and, further, that estimated repair cost must be compared with the insured value of the ship instead of her market value.  In practice, most ships tend to be insured for more than their market value and it becomes more difficult, therefore, for the assured to demonstrate a constructive total loss and thereby enable him to recover the insured value of his vessel, plus any sums insured on subsidiary insurances such as Freight & Increased Value.

The first sentence of Clause 19.2 sets out in greater detail and reiterates what is already implied in the first section of the clause, i. e. that

“No claim for constructive total loss based upon the cost of recovery and/or repair of the Vessel shall be recoverable hereunder unless such cost would exceed the insured value.”

The second sentence of Clause 19.2 was largely borrowed from the American Institute Hull Clauses ( June 2, 1997 ).  The clause provides that only the costs relating to a single accident may be taken into account in determining whether the vessel is a constructive total loss.  This resolves a problem which had been discussed for many years and which was mentioned in the case of the “Medina Princess” (1965) and also in his address to the Association of Average Adjusters in 1982 by Lord Justice Donaldson, later Master of the Rolls.

For example, a vessel insured for 1,000,000 might sustain damage by grounding, repairs to which were deferred, but which would cost………………………………………………………………………………………..      400,000

 

Subsequently, the vessel is involved in a collision or some other accident, repairs to

which would cost ………………………………………………… …………………………..…….….      650,000

.                                                                                                                                                                                                  1,050,000

Clearly, the vessel is a constructive total loss within the terms of Clause 19.1, but should the assured be entitled to claim the insured value of the vessel, plus the sums insured on his subsidiary insurances, – and that without the application of any policy deductibles (under Clause 12.1 )?  Or should his claim be limited to one for Unrepaired Damage (under Clause 18 ) and be subjected to the application of the policy deductibles?

 

As already stated, this problem has now been resolved and a claim for constructive total loss can only be based on the costs relating to a single accident.

  1. Costs of recovery &/or repair of the Vessel which may be included in computing a C.T.L.
  2. Repairs to hull and machinery of the vessel, including spare parts
  3. (Add) 10% for contingencies – as recommended by the “Renos” 2016
  4. Air freight on spares
  5. Cost of dry-docking and general services
  6. Superintendent’s fees and expenses
  7. Towage to repair port (including crew wages and maintenance, bunkers, etc.)
  8. Cost of discharging cargo necessary to enable repairs be effected
  9. Cost of Class survey
  10. Port charges, pilots, towage, etc.
  11. General Average contributions payable by ship (cargo sacrifice)
  12. Cost of salvage of the vessel
  13. SCOPIC liability – as upheld by the Court of Appeal in the “Renos” 2018

Lines 134/139 of the American Institute Hull Clauses (June 2, 1977) reads as follows:

TOTAL LOSS

In ascertaining whether the Vessel is a constructive Total Loss the Agreed Value shall be taken as the repaired value and nothing in respect of the damaged or break-up value of the Vessel or wreck shall be taken into account.

There shall be no recovery for a constructive Total Loss hereunder unless the expense of recovering and repairing the Vessel would exceed the Agreed Value. In making this determination, only expenses incurred or to be incurred by reason of a single accident or a sequence of damages arising from the same accident shall be taken into account, but expenses incurred prior to tender of notice of abandonment shall not be considered if such are to be claimed separately under the Sue and Labour clause.

The provision is largely of identical effect to their counterparts in the ITC-83, the difference being that the American Hull form specifically state that “expenses incurred prior to tender of notice of abandonment” and “are to be claimed separately under the Sue and Labour clause” cannot be ranked when calculating the cost of recovery and repairs of the vessel.

Ship-owners Special Clauses

The following self-explanatory wording is commonly seen under the Ship-owners Special Clauses incorporated in the hull and machinery policies of insurance (the wording being the same as Clause 21 of the IHC 2003):

21. CONSTRUCTIVE TOTAL LOSS

21.1 In ascertaining whether the Vessel is a constructive total loss, 80% of the insured value shall be taken as the repaired value and nothing in respect of the damaged or break-up value of the Vessel or wreck shall be taken into account.

21.2 No claim for constructive total loss based upon the cost of recovery and/or repair of the Vessel shall be recoverable hereunder unless such cost would exceed 80% of the insured value. In making this determination, only the cost relating to a single accident or sequence of damages arising from the same accident shall be taken into account.

Furthermore, there are other clauses amended to the effect that it would be necessary to show costs up to 80% of the Insured Value or Market Value at the Assured’s option (or whichever is lower).

 Raymond T C Wong

Average Adjuster

 

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HKMLA Drinks Gathering and CPD Seminar – 31 May

The HKMLA is holding a drinks get-together combined with a 1-hour seminar on recent shipping cases of interest.

Free to attend – drinks, food and a 1-hour seminar on recent cases of interest.

1 CPD point applied for.

When:     Thursday 31 May, 6.00pm for speakers at 6.30pm to 7.30pm

Where:    FCC Veranda

Programme:

1. Raymond Wong (Asia Maritime Adjusting Hong Kong): General average: “The Longchamp” [2018] 1 Lloyd’s Rep 1

2. Fergus Saurin (HFW): Charterparties: Lukoil Asia Pacific Pte Ltd v Ocean Tankers Pte Ltd [2018] EWHC 163 (Comm)

3. Nick Luxton (Gilt Chambers): Hague Visby Rules limitation: “The Aqasia” [2016] 2 Lloyd’s Rep 510, Sea Tank Shipping AS v Vinnlustodin [2018] EWCA Civ 276 and Kyokuyo Co Ltd v AP Møller-Maersk A/S [2018] EWCA Civ 778

4. Edward Alder (Prince’s Chambers): C/P guarantees and arbitration: Jiangsu Shagang Group Co Ltd v Loki Owning Co Ltd[2018] EWHC 330 (Comm)

We look forward to seeing as many as possible of you.

Please RSVP with email secretary@hkmla.org

香 港 海 商 法 協 會 HONG KONG MARITIME LAW ASSOCIATION

A Member of Comité Maritime International

www.hkmla.org

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Substituted Expenses in Particular Average on Ship?

The Institute organized an evening seminar on the subject “Substituted Expenses in General Average per York-Antwerp Rules” on 20th March 2018, a workshop in Hong Kong following the English Supreme Court’s decision on “The Longchamp” case, which was reported in the last issue of “Seaview”.

The Editor was not surprised to receive a question: “What about the substituted expenses in Particular Average?”.

It is worth recalling that the principle of substituted expenses is not generally recognized under English law, which position is, however, varied by the York-Antwerp Rules in the case of general average.

In the case of Wilson v. Bank of Victoria [1867] (which case pre-dates the York-Antwerp Rules), an auxiliary sailing ship, on a laden voyage from Australia to Britain, struck an iceberg and sustained damage, being dismasted.  The ship put into Rio de Janeiro where, on account of the prohibitive cost of repairs, only temporary repairs were carried out allowing the ship to proceed to destination under steam with coal being purchased at Rio and at Fayal for such purpose.  A claim was made by the Shipowners for contribution towards the cost of the coal purchased on the grounds that they were substituted expenses for the expenses that would have been incurred at Rio if permanent repairs had been effected there.  The claim was disallowed by the court holding that the use of the auxiliary engine to bring the vessel home, and the consequent expenditure on coal, was merely the performance of a service by the Shipowners to the owners of the cargo carried and was therefore not a subject for contribution.

The Editor has some notes on the subject of “Substituted Expenses in Particular Average” made by his former partners and colleagues who are highly respected average adjusters and would like to share these with readers of “Seaview”.

Particular Average, as defined by section 64(1) of the Marine Insurance Act 1906, is a partial loss of the subject matter insured caused by a peril insured against, and the measure of indemnity for the partial loss of ship is the reasonable cost of repairs, as provided by section 69 of the Act.

It is perhaps a fallacy to think that alternative means of repair are open to the Shipowners in circumstances where they are obliged (vis-à-vis their Underwriters) to effect repairs at the most reasonable cost.  There may in theory be several ways in which a Shipowner can go about effecting a particular repair, but only one of those ways can be the most reasonable.  Once the most reasonable course of repairs is determined, the other alternatives cease to exist and it therefore follows that the course adopted cannot have been a substitution for another alternative.

This was the gist of Wilson v. Bank of Victoria, i.e. that for there to be a substitution an alternative must exist.  It was held in that case that, in as much as the Master could, by the expenditure of a small sum on temporary repairs and coal, bring the ship safely to destination, it was his duty under the contract of carriage to do so.  Consequently, the perceived alternative of landing the cargo and repairing at the port of refuge was not an alternative open to the Shipowner at all and it was therefore a fallacy to say that the cost of the coal (which the Shipowners were seeking to recover in General Average) was incurred in substitution for those measures.  The principle can therefore be applied to Particular Average claims that, as the Shipowners are obliged to effect the most reasonable repair, the claim must be based on the actual cost thereof and not on the cost of some alternative prohibited from taking.

For Particular Average on ship, the test continues to be “the reasonable cost of repairs” and hence any cost which is not a repair cost cannot be allowed as part of the claim without the specific agreement of Underwriters.  An example of a non-repair cost which Underwriters do agree to bear or contribute to, depending on the circumstances, is the cost of removal from one place of repair to another because the latter is cheaper.  On the face of it, this appears to be no different to the situation where the Shipowners incur extra fuel costs, say by burning diesel instead of fuel oil, to get from a port of refuge, where repairs are expensive, to destination, where repairs are cheaper.  However, in the first example, Owners have derived no operational benefit from the removal cost.  That is not the case with the second example, where the voyage on which the extra operating costs have been incurred is a freight-earning voyage.

Mr. John Crump, in his address on “Reasonable Cost of Repairs” at the annual general meeting of the British Association of Average Adjusters in May 1992, highlighted a few interesting cases on which he commented as follows:

QUOTE

(A) A vessel has damage to her steering gear in an area where repairs are expensive. Class agrees that the vessel may continue to trade for a limited period until she reaches a cheaper repair area provided extra tugs are employed when entering and leaving ports.

(B) A vessel has a main engine damage and Class agrees a temporary repair until she reaches a more appropriate and cheaper repairing port. The repair adopted, however, involves burning diesel oil instead of the customary fuel oil during the interim period.

(C) Damage to a winch, or winches, is sustained during discharge. Rather than effect repairs at the discharge port, which is an expensive one, equipment is hired to enable the affected hold(s) to be discharged, thus enabling the vessel to repair later at reduced cost.

In case (A) the assured claims for the cost of extra tugs, in case (B) he claims for the extra cost of diesel oil over fuel oil consumption and in (C) the claim is for hire of equipment for discharge. In each case the claim is based on the fact that the extra costs incurred saved greater repair costs for which Underwriters would otherwise have been liable.  At the same time, I would submit that it is difficult, if not impossible, to argue that any of them in themselves form part of the cost of repairing the ship.

The only law case of which I am aware which is sometimes quoted as authority for applying the “substituted expenses” idea to insurance claims is Lee v. Southern Insurance (1870) LR5, CP397.

That case in fact involved not an insurance on ship but an insurance on freight and the facts were as follows:

A vessel was bound for Liverpool with a cargo of palm oil and stranded off the Welsh coast.  Cargo had to be discharged and the Shipowner arranged to forward it by rail to destination at a cost in excess of £200, thereby earning his freight which was at risk.  The vessel was then towed to Caernarfon, where she was made seaworthy for the rest of the voyage.

The forwarding costs were claimed under the freight policy, but the Court held that such claim must be limited to £70, which would have been the cost involved in reshipping the cargo onto the original vessel after repair.

The case thus involved a claim for particular or special charges, not a claim for particular average loss. I cannot see it as referring in any way to the “substituted expenses” concept, for the hypothetical reshipping costs of £70 were introduced solely as a test of the reasonableness or otherwise of the forwarding costs of £200. The older editions of Arnould report the facts of the case under the sub heading “Only reasonable expenses recoverable.”

Reverting to the three practical examples already mentioned, I submit that as a matter of principle the unfortunate assureds have no remedy for recovery of any of their extra costs under the hull policies.

At first sight this stance seems a harsh one, even ‘uncommercial’.  In each instance a peril covered by the policy has operated and the assured has, as a direct consequence, incurred costs.  As a result of his doing so Underwriters on the ship have been saved money.  Should they not respond on that basis?

It should perhaps first be pointed out that the assured too would almost certainly have saved substantial sums as a result of the actions taken. That, however, is not, in my view, the real point which is that the losses suffered by the assured as a result of incurring those extra costs relate to freight or earnings rather than hull insurance.  If the freight was at risk and insured for the voyage on which these various expenses were incurred, I would suggest they would form a particular or special charge on the freight policy. That is their essential character and the fact that nowadays freight is frequently at the risk of the cargo owner rather than the Shipowner so that the latter will then seldom have appropriate insurance cannot alter that character.

Could I add one final point about this type of case. It will doubtless be argued that if the assured cannot recover this type of expense from his Underwriters he may on occasion seek to avoid incurring it and allow the latter to take the rap for the increased repair costs that result.  I do not believe that argument to be realistic.  Even in those cases, probably rare ones, in which the assured himself does not gain from adopting the practical and commercially sensible course, it must be remembered that the test of ‘reasonableness’ of the ultimate repair cost must still be applied and if the assured increases the latter cost solely to save additional costs of keeping his ship operational in order to protect his freight or earnings, that increase will not, strictly, be for account of Hull Underwriters.

I submit that the concept of substituted expenses, which under English law is of doubtful validity in any context, can certainly have no application to a claim for particular average on a hull policy.

UNQUOTE

The following are few common examples where the damages are caused by perils insured against, the insurances being subject to English law and practice:

Example 1. 

Vessel sustains damage to stern-tube seals.  There are 2 alternatives open to the Shipowner – an emergency drydocking which will be claimed in full from Underwriters, or deferment of repairs for 3 months which will involve additional consumption of lubricating oil but save 50% of drydock dues.  Can the cost of lubricating oil be claimed from Hull Underwriters?

It is tempting to take the view that if it can be shown that Underwriters benefited from the extra consumption of the lube oil they should pay for it or contribute towards it.  It is submitted that since the Shipowners are obliged to effect repairs at the most reasonable cost, they do not, in reality, have the option of drydocking immediately.  The extra consumption of lube oil is thus of no benefit to Underwriters – they were only ever liable for the cost of repairs as deferred and carried out in drydock. The excess lube oil consumption is not a repair cost – it is an extra or enhanced operational cost.  There are no grounds for allowing it to Particular Average.

Example 2

Vessel under Time Charter.  Turbo charger breaks down in the South Atlantic. The vessel can continue to Santos but additional diesel oil will be consumed and will be charged by Time Charterers to Shipowners.  The alternative is that the vessel could be towed to Santos.  The vessel uses the extra diesel oil.  At Santos repairs are deferred again but more additional diesel oil is claimed on the basis that repair costs would be cheaper if repaired later.  Can the extra cost of diesel oil be claimed from Hull Underwriters?

Applying the same logic as in Example 1 above, there does not appear to be any ground that either the tugs or extra fuel getting to port could be charged to Underwriters.  The second set of alternatives, once at the port, are effectively the same as in Example 1 and cannot be allowed to Particular Average.

Example 3. 

Vessel’s crankshaft condemned but the new crankshaft will take 6 months to supply. Instead the Owners grind down existing crankshaft as temporary repair. Temporary repairs result in following –

(i) additional manning required in engine room;

(ii) turbo charger requires more frequent cleaning;

(iii) additional consumption of diesel oil;

(iv) as a result of running out of balance, some fretting results in main engine.

Can these additional costs (i) to (iv) be claimed from Hull Underwriters?

Firstly, Underwriters should recognize that the sole purpose of the ship is to be a freight or revenue earning instrument.  It is patently unreasonable to leave her out of commission for 6 months awaiting parts if, by way of a temporary repair, she can be quickly returned to employment with the permanent repair effected on delivery of the necessary parts. It follows therefore that the temporary repairs is in itself reasonable and forms a direct claim on Underwriters.

There is suggestion that where a temporary repair is reasonable, any extra operating costs which is known will result direct from the temporary repair would be treated as part of the cost of that repair.  However, it is submitted that whilst (ii) and (iv) can comfortably be allowed as Particular Average as they involve damage or quasi damage to the vessel, (i) and (iii) should be disallowed as they are merely the enhanced cost of running the vessel in semi-damaged condition.

Editor’s Note:  It is advisable that if claims are put forward at the request of the Assured, which are not in accordance with the law (and practice as it should be) then the Adjusters should seek prior agreement of the Underwriters before issuing the adjustment, making it clear to both parties what the position is.

 

(Editor: Raymond T C Wong Average Adjuster)