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Hong Kong Maritime Week 2022

Lecture & Workshop on


in the context of Institute Time Clauses – Hulls 1/10/83

Course IV Total Loss and Sue & Labour Charges

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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.)



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:


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:


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.


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:


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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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





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



  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。






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。




 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










  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》。











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。






  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





  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。



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














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。




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








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
















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












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












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!




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









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。






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”。





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








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














时  间:2018年7月15日采访,7月17日上网


  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.



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:


19.1 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:


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):


21.1 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