VOLUME I, ISSUE 3 | ISSN: 2456-3595 INTERNATIONAL JOURNAL OF LEGAL INSIGHT

A CRITICAL STUDY ON PERILS OF THE SEA UNDER MARINE INSURANCE

J.R. Archana

ABSTRACT

The

Marine Insurance and it is difficult to define. They are natural accidents that are peculiar to
water. A marine policy covers the risk to insurable property from the Maritime perils like perils
of the sea, fire, etc. Some perils are expressly mentioned in the marine policy and some are
not. An idea of Perils of the Sea could be gathered mainly from the judicial decisions and from
the Marine Insurance Act. The main aim of this article is first, to define perils of the sea.

Thirdly, it aims at classifying the subjects covered under perils of the sea and perils on the sea
and those excluded from the perils of the sea. Lastly, it studies the burden of proving perils of
the sea with case laws.

Keywords: Imminent, Impending, Insurable Property, Jeopardy, Maritime Perils, Perils of the
Sea.

INTRODUCTION

Generally, marine insurances include hull1 (vessel), goods (cargo),2 freight3 (cost of transport)
and drilling rigs.4 The marine policy is proposed to cover the risk from maritime perils like
perils of the sea, fire, etc. The perils are laid down in the standard policy given in the Schedule
of Marine Insurance Act, 1963. In order to make the policy suitable to individual
other perils are included or some perils excluded from the policy. Thus, the policy must clearly
count the perils insured and the excluded perils. Due to this, the exact scope of the insurance is

* J.R.Archana, Student, School of Excellence in Law, The Tamil Nadu Dr. Ambedkar Law University,
Chennai, Tamil Nadu.
1
Hull insurance means insurance of the vessels and its machinery to cover against all perils of the sea. It is
normally taken on an annual basis.
2
Cargo insurance means the insurance of goods or merchandise carried by the vessels. They are arranged for the
duration of the voyage.
3
Freight denotes the cost of transporting goods or the hire charges of the vessel. Freight can be paid in advance
or separately. The freight is at risk because if the ship fails to reach the destination, freight is lost wholly or
partly and it been insured.
4
Drilling rigs are installations made in offshore and they also need be insured.

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made known both to the underwriter5 and the insured. There are many perils which take place
on the sea and these perils could be distinguished from perils of the sea as dealt in this article.

THE APPLICABLE LAWS

1. The English Marine Insurance Act, 1906.

2. The Indian Marine Insurance Act, 1963.

PERILS OF THE SEA

the definition given by jurists, judicial decisions and legal statutes. The definition is inclusive.6

7
Perils of the Sea defined in
The Hague Visby Rules8 under

any liability to a
third-party incurred by the owner of, or other person interested in or responsible for, insurable

perils consequent on, or incidental to the sea navigation, that is, perils of the seas, fire, war
perils, pirates,9 rovers,10 thieves, captures, seizures, restraints and detainment of princes and

designated by the policy.

Se

5
In Marine insurance, an insurer is called as underwriter. They are professionals who are expert in ensuring that
their client is protected from unforeseen losses and casualties.
6
K.S.N. MURTHY & K.V.S. SARMA, MODERN LAW OF INSURANCE IN INDIA 209-213 (5th ed., 2014).
7
CHALMERS, MARINE INSURANCE 152 (7th ed., 1971).
8
The Hague Visby rules are a set of international rules for the international carriage of goods by sea. The official
title of the Hague rules is "International Convention for the Unification of Certain Rules of Law relating to Bills
of Lading".
9
A pirate is a person who attacks and robs ships at sea.
10
A rover is a person who spends their time wandering.

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ship in the course of a voyage by the immediate Act of God without the intervention of human
agency. Perils of the Sea refers only to fortuitous11 accidents or casualties not attributable to
the free will and want of a human being. Even in Acts of God, it does not include the natural
and ordinary action of the winds and waves.

Every maritime adventure12 involves a risk and as Lord Herschell puts it in Thames and Mersey
Insurance Co. v. Hamilton, Fraser & Co.,13 a maritime adventure not only means damage
which was caused by the seas, but also includes damage of a character and the object of a
marine insurance contract is to secure an indemnity against both types of damage. The

or charter-party, but its application is different to the contract.14

PERILS OF THE SEA

nature or arise from some irresistible force, or from inevitable accident or some overwhelming
power that cannot be guarded by the ordinary exertions of human skill and prudence. The term

immediate

Foundering at Sea

If a ship (vessel) is found missing for a considerable period of time and no news is received

the perils of the sea.

11
12
Marine adventure is defined under section 2(d) of Marine insurance Act, 1963 as any adventure where - any
insurable property is exposed to maritime perils; the earnings or acquisition of any freight, passage money,
commission, profit or other pecuniary benefit, or the security for any advances, loans, or disbursements is
endangered by the exposure of insurable property to maritime perils; any liability to a third-party may be incurred
by the owner of or other person interested in or responsible for, insurable property by reason of maritime perils.
13
(1887) 12 AC 498.
14
Hamilton v. Pandorf (1887) 12 AC 325.

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Ship Wrecks

When the ship strikes against a rock or hill and is driven to shore by violent action of the winds,
it can be known

Stranding

When the ship gets out of control (from ordinary course of voyage) owing to an accident and

Collision

When a ship strikes against another ship, it is known as

EXCLUDED FROM PERILS OF THE SEA

Wear and Tear

Ordinary wear and tear15 to the vessel is due to ordinary action of the winds and waves. It
16
means natural decay or deterioration which takes place in usual course. In it

invari

Springing a Leak

The ship may develop a leakage, not as a result of an accident or peril of the sea.

Breakage of Goods

Due to movement of the ship, if the goods were broken or damaged during the voyage, it is not
a peril of the sea. But, if it is due to violent action of the waves and consequent labouring of
the ship, it is a peril of the sea.

15
Murthy & Sarma, supra note 6, at 211.
16
Sassoon v Western Assn Co, (1912) AC 561 (PC).

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Inherent Vice

The underwriter would not be liable for any loss caused due to the defect in the goods, e.g., if
the fruits become rotten or wine becomes bad due to inherent decomposition. In Overseas
Commodities Ltd v. Style,17 tins of canned pork were insured under an all risks policy including
inherent vice and when it was spoiled by inherent vice, it was held that having regard to the
peculiar nature of the subject-matter, i.e., pasteurised and not wholly sterilized pig product, it
was inconceivable that the underwriters should, with their eyes open, had accepted liability for
loss by inherent vice developing at any time in future, since such a product would inevitably,
if not consumed within a limited period, suffer loss from inherent vice for being perishable, it
necessarily contained the seeds of its own ultimate destruction.

Death of Animals on Board due to Natural Course

The cargo containing animals may die due to natural course. It is noted that death of animals,
etc., due to natural causes, is not a peril of the sea.

Loss by Delay

Section 55(2) (b) of the English Marine Insurance Act reads:

The Section enunciates the rule that an insurer is not liable for damage caused by delay, though
the delay results from a peril insured against. At present, special clauses are often inserted to
protect the insurer or the assured, from the consequences of delay. The uncertainty about loss
of freight is now cleared by inserting there clauses.18

Loss by Rats and Vermin

If loss was caused by rats, etc., it will not be deemed as peril of the sea. 19 In Hamilton v.
Pandorf,20 where the rats gnawed a hole in a pipe and sea water entered damaging the cargo of

17
18
The Institute Time Clause (Freight) - 1.10.70 Chalmers, Marine Insurance.
19
Hunter v. Potts (1815)0 4 Camp 203.
20
(1887) 12 AC 518.

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rice and there was no negligence on the part of the carrier, it was held that the insurer was not
liable.

PERILS ON THE SEA

Fire

Any damage which is a result of fire and smoke has been included under fire-peril. The water
used for extinguishing fire may cause damage to the insured goods. This peril is insurable. Any
damage done due to lightning, explosion and fire as a result of negligence of the crew is
recoverable form underwriters. The losses which are not included in the standard policy could
be covered by having special clauses and paying extra premium.

Man of War

This is the vessel which has been authorised by nations for the purpose of defence or attack in
times of hostilities. Any damage to the goods or ships arising out of collision against a man-
of-war is insurable.

Enemies

The ships belonging to the enemy may cause loss to the insured and is re-underwritten by the
marine policy. This policy extends to all the persons of the enemy country and to their hostile
acts, provided such acts form part of the enemy actions.

Pirates, Rovers, Thieves

The perils caused by pirates,21 rovers and thieves22 were common in olden times. In these days,
they are considerably reduced. These acts have been committed for the pursuit of personal gain

any of the crew members or officers of the passengers. The word piracy has various shades of
meaning. The Privy Council in Re Piracy Jure Gentium expressed the view that actual robbery

21
Violence or depredation on the high seas or in the air, for private ends, using aircraft or vessels is known as
piracy. The person who is engaged in piracy is called as pirate. Rule 8 of the English Marine Insurance Act gives

ship from the shore. Piracy is the offence of causing depredation on the seas without being authorised by any
sovereign state.
22

passenger.

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is not an essential element in the crime of piracy jure gentium and that a frustrated attempt to
commit piratical robbery is equally piracy jure gentium.23

Jettison

for the relieving the ship for common safety. The aim of the intentional throwing away of the
goods or property is to relieve the vessel from some looming peril. Accidental falling of things
does not constitute jettison. The own inherent-vice of cargo is also not included in the jettison.

Barratry

24
includes every wrongful act wilfully committed by the master or crew at the
prejudice of the owner. It must be committed outside the knowledge of the owner. The
examples of barratry are theft, setting fire to ship, fraudulent selling of vessel and cargo without
If barratry is insured, the underwriter is liable for losses arising
out of barratry.

Restraints and Detainments

The prevention of free use of a poet by the Government of the country is known as restraints.
It may cause interruption and possible loss of voyages. The loss covered by restraint by political
parties especially the restraint of Princes,25 Kings, etc. has been covered under perils on the

its cargo or other interference by the police power of a nation while a vessel is in port. It does
not cover losses which are the result of delay or interruption of the voyage.

In Oriental Insurance Co. Ltd. v. Peacock Plywood (P) Ltd.,26 when the vessel was detained

maintainable as the loss was not caused due to maritime peril.

23
(1934) AC 586, 600 (PC).
24

25
Rule 10 of the English Marine Insuranc
26
AIR 2005 CAL 97 (DB).

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War Perils (The Free of Capture and Seizure Clause or Taking at Sea)

by an enemy but also by revenue and statutory authorities. In order to include perils of sudden
declaration of war, the war clause or free of capture and seizure clause was added. By deletion
of this clause, the policy is automatically restored to its original condition and adequate
premiums were charged for the purpose.

In Nishana Trading Co. v. Chiyoda,27

Explosion

The explosion on board of a vessel damaging hull, cargo or both could be constructed as a peril
on the sea. An explosion on shore might damage a ship or its cargo. In order to include the risk
of explosions, the Marine cargo policies have been amended. The explosion, in the case of hull

28

Strikes, Riots and Civil Commotion Clause

The Marine Insurance on cargo is extended to cover from warehouse to warehouse or

otherwise, insures the goods on shore before shipment. After discharge, the danger of
underwriters is held liable for losses, resulting from the unlawful acts of strikes, riots or civil
commotions that are materially enhanced. The insurers are reluctant to assume liability for
losses due to unlawful acts.

All other Perils

Loss occurred by salt water of the sea, action of worms on timber and cattle dying due to want
of fodder as a result of lengthy voyage constitute sea perils. There are also other damages due
to oil, s
only perils similar in kind to the perils specifically mentioned in the policy.

27
(1969) 2 All ER 776 (CA).
28
In Thames and Mersey Marine Ins. Co v Hamilton Frazer & Co, a special clause has been evolved known as

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In Thames and Mersey Mar. Ins. Co. v. ,29 the

donkey engine that used to pump water into the main boilers was damaged because a valve
which should have been kept open was kept closed. It was held that this damage was not
covered by this head. Similarly, damage caused to the hold of a ship by the fall of a boiler due
30

CASE LAWS

In West Coast Resorts v. Allianz Insurance Company of Canada,31 an interesting question arose
that whether the loss resulting from the sinking of a barge at her mooring in calm water was a
mployed in marine

unintentional ingress of sea water at a part of the barge and in a way where sea water was not
expected to enter in the normal course of things. The water that entered did so because, as the

consequence of worm infestation. The water that sank the barge entered through a part of the
hull in a way that was expected given the condition of the planking. It was not fortuitous. I
conclude that, because the ingress of sea water that sank the barge was not fortuitous, the

In Montaya v. London Assurance,32 a cargo of hides and tobacco was insured. Sea water was
also shipped. During a storm, the hides became putrid and the fumes from them started
imparting a nauseous flavour to the tobacco. It was held that the damage to the tobacco was
caused by perils of the seas.

In Mountain v. Whittle,33 a houseboat was insured under a time policy against perils of the seas.
In order to have it cleaned, it was being towed to a convenient yard 7 miles away. But, the tug
employed for the purpose was too big and it raised very heavy breast waves which entered the
houseboat and sank her. It was held that the loss was caused by perils of the sea.

29
(1887) 57 LT 695 (HL).
30
Stoll Baltic Steamers v Marten, (1916) 1AC 304.
31
2006 BCCA 469.
32
1851.
33
(1921) 1 All ER Rep 626.

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In Samuel (P) & Co. v. Dumas,34 a vessel was insured against perils of the sea by the
mortgagees of the vessel. While on a voyage, she foundered off the coast of Spain in clam
weather. It was held that the insurer was not liable as scuttling was not a peril of the sea.
Scuttling is wilful and deliberate throwing away of a ship by those in charge of her and so is
not fortuitous.

In Chinnaswami Mudaliar v. Home Ins. Co, Madras,35 25 cases of betel nuts sent from
Nagapattinam port to Penang were insured from warehouse to warehouse. While the goods

suddenly became rough. High swells splashed into the boat and the goods became wet with
water and were destroyed as per orders of the Health Officer. It was held that the insurer was
liable to indemnify the insured.

In C.C.R. Fishing Ltd. v. British Reserve Insurance Co.,36 it was held that to constitute a loss
caused by a peril of the sea, the loss must be peculiar to a marine activity in the sense that it
could not have occurred on land and the cause of the loss must have been fortuitous, that is, it
might be something that might have occurred, not something that was bound to occur.

gligence or
fault prevents a vessel owner from coming within the definition of a peril of the sea such that

seaworthy vessel is fatal to establishing the defenc

In Sassoon v. Western Assurance Co.,37 the plaintiffs were the owners of a wooden hulk which
was used to carry opium. It was insured under a time policy. There was a leak due to the rotten
condition of the wood and the opium was spoiled due to water entering through the wood. It
was held that it was not a peril of the sea because there was nothing fortuitous or unexpected
as naturally, opium in such an old wooden hulk is likely to spoil. On the other hand, if damage
was caused in an unexpected way, though the immediate cause of it was a voluntary act
necessary to protect the goods from an expected peril, it would be a peril of the sea.

34
(1924) All ER Rep 232.
35
1981 ACJ 919 (SC).
36
1990 CanLII 145 (SCC).
37
(1912)AC 561 (PC).

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In Canada Rice Mills Ltd. v. Union Marine and General Insurance Co. Ltd.,38 the ventilators
of a ship were closed to prevent the entry of sea water and rain during heavy weather. The
closing of the ventilators damaged the rice due to excessive heat. It was held that the incursion
of the sea water through the ventilators was within the definition of the perils of the sea and
that the damage, being in fact caused by an action taken necessarily and reasonably to prevent
the perils of the sea affecting the goods, was itself a loss due to perils of the sea. Lord Wright
observed that when there is an accidental incursion of the sea water, which is not expected in
the ordinary course of things, and there is a consequential damage, it is a loss by the perils of
the sea.

BURDEN OF PROVING PERIL OF THE SEA

The burden of proving on balance of probabilities that a vessel was lost by perils of the sea is
and remains throughout on the owners. It is not enough for the owners, in order to discharge
the burden, merely to prove the incursion of seawater into the insured vessel that sunk in mid-
sea. Any entry of sea water is not in itself a peril of the sea and the incursion is been shown as
an accidental or fortuitous.39

In Rhesa Shipping Co. S.A. v. Herbert David Edmunds,40 the Vessel, Popi M, was sailing
through the Mediterranean in calm seas and fair weather when there was a large and sudden
entry of water into her engine room through her shell plating on the port side. The engine room
quickly filled with water and the crew abandoned her. Water continued to fill the aftermost
compartments of the vessel and she finally sank in the deep water. The owners claimed under
the two-time policies effected on the vessel by them. They claimed that the proximate cause,
for the loss of vehicle, was a peril of the sea or alternately, by negligence of the crew. The
defendant insurers denied the claim on the ground that the loss was not caused by a peril of the
sea but by defective, deteriorated and decayed condition of the vessel and alternately, if the
loss was caused by the negligence of the crew, the plaintiffs had failed to show that they had
exercised due diligence. House of Lords agreed with the contention of the insurers and held
that the only inference which could be drawn from the primary facts was that the true reason
for the loss of the vessel was in doubt and neither the learned Judge, nor the Court of Appeal
was justified in drawing the inference that there had been a loss by perils of the sea, whether in

38
(1940) 4 All ER 169 (PC).
39
40
Rhesa Shipping Co S.A. v Fenton Insurance Co Ltd, (1985) 2 Llo

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the form of collision with a submerged submarine or any other form. Under the circumstances,
the plaintiff had failed to discharge the burden of proof, which was on them to prove, that the
proximate cause of loss was due a peril of sea.

PERILS EXPRESSLY MENTIONED IN THE POLICY

The perils mentioned in the Standard Policy form are perils of the sea, men of war, fire,
enemies, pirates, rovers, thieves, jettisons, letters of mart and counterment surprisals, takings
at sea, arrests, restraints and detainments of kings princes and people, and all other perils losses,
etc.

PERILS NOT EXPRESSLY MENTIONED

The insurer is also liable to indemnify the insured in respect of two other types of losses,
namely,

1. General Average loss41

2. Salvage charges42

CONCLUSION

extremely important to always bear in mind the two conditions, as proposed by Ivamy - first,

oid
confusion among underwriters and the insured. Risk or Peril is relatively the most important
part of Marine Insurance. The concept of insured perils signifies a very central issue under
ritime perils and the
underwriter agrees to indemnify the assured against any loss caused by those perils. Finally, it

other.

41
According to Section 66(2) of the Marine Insurance Act, any extraordinary sacrifice made or expenditure
incurred in time of peril, voluntarily and reasonably, for the purpose of preserving the property imperilled in the
common adventure is a general average loss.
42

recoverable under maritime law by a salver independently of contract. The do not include the expenses of
services in the nature of salvage rendered by the assured or his agents or any person employed for hire by them
for the purpose of aver

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SUGGESTIONS

From the above study, i

Both are different under the Marine Insurance. In order to avoid confusion, these perils might
be expressly mentioned in the Marine Insurance policy. According to this study, it is clear that
losses in Marine Insurance business are the result of the various perils. Marine Insurance policy
does not necessarily cover all the risks. Underwriter is liable to indemnify an insured in respect
of only losses which result from perils insured against. When the loss occurred is beyond the
insured peril, the insured has to bear the loss himself. The onus of proof under a policy of
marine insurance is upon the insured to show that the loss was proximately caused by an insured
peril. When g
underwriter. The perils insured against have been mentioned in the policy and the underwriter
shall be liable for damages caused by the insured perils.

**********

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