1. Professor of Shipping Law, University of Cape Town, Rondebosch 7701, South Africa.
  2. The brief history of the development of marine insurance which follows is taken from Hare Shipping Law & Admiralty Jurisdiction in South Africa, Juta, 1999, Chapter 17.
  3. See generally on early shipping, Unger The Ship in the Mediaeval Economy 600 -- 1600 McGill, 1980.
  4. Emerigon A Treatise on Insurances, 1783 (Meredith translation, 1850) at 1. See also Zimmermann The Law of Obligations, Juta, 1990 at 181 -- 186 in which the author details the historical 'loan to merchants' (pecunia traiectiticia or fenus nauticum) tracing its Greek and Roman roots.
  5. The Code of Hammurabi (2250 B.C.) is generally quoted as the earliest recorded example of a maritime loan incorporating a risk 'premium', though more in the form of bottomry. For a detailed history of the origins of marine insurance, see the comprehensive study by Marnewick The Codification of Marine Insurance in South Africa: unpublished LLD thesis for the Faculty of Law, University of Natal, Chap 3; See also De Jager The Roots and Future of the South African Law of Marine Insurance: special publication 18 of the Institute of Marine Law, University of Cape Town, 1993; McKellar 16 VUWL Rev 161; Schoenbaum Maritime & Admiralty Law, 2nd Ed, West at §19-1; Dillon and Van Niekerk S.A. Maritime Law and Marine Insurance : Selected Topics, Butterworths,1983; Van Niekerk An Introduction to and some perspectives on the sources and development of Roman-Dutch Insurance Law Unisa 1988; and Van Niekerk The Decline, Revival and Future of the Roman-Dutch Law of Insurance in South Africa Unisa 1986. See also Mutual & Federal Insurance Company Limited v Outdshoorn Municipality 1985 (1) SA 419 (SCA) from page 426. For a brief history of the reception of European insurance law into England and developments in that country leading to the promulgation of the 1906 Marine Insurance Act, see O'May O'May on Marine Insurance, 1993, Chap 1.
  6. Trenerry The Origin and Early History of Insurance (1926) at 8.
  7. Outdshoorn Municipality, supra, at 426. See also Marnewick op cit at36:
    It is probably true that the ancients did not know or practice insurance according to a contract falling within the current definition of insurance, but that does not mean that the merchants of two thousand years ago did not take account of the risk in their operations or did not make provision for it. Far from that. While premium insurance for profit may not have been known or practised by the ancients, various devices were used by them to provide for the risk of loss on goods in transit.
  8. See Dig 22.2.1-9; Dig 45.1.1-2; Cod 4.33; Justinian's rate of interest for a maritime loan was 12% of which 6% was a risk premium. See further McKellar 16 VUWLReview 161 (1986) quoted by Schoenbaum op cit at p 402 fn 5. McKellar points out that 6% as an all risk rate for marine insurance for a voyage in the unchartered Mediterrannean without so much as a compass compared most favourably with today's rates.
  9. Interest on loans generally was prohibited by the Pope between 1227 and 1235.
  10. Thus Sanborn op cit at 246 cites the theologian Sachetti, writing in 1370 No one save God can insure anything in this life.
  11. Sanborn op cit at 245.
  12. Sanborn op cit at 243 cites and quotes the full text of a maritime loan document executed in 1347 in Genoa as being the earliest known insurance policy. It is a promise to pay a (fictitious) loan, conditional upon any misfortune being suffered by the 'insured' vessel. These early policies still had elements of the maritime loan apparent.
  13. §18-11 below.
  14. See further discussion in Sanborn op cit at p 248. The requirement of absolute ownership was soon softened to include other interests in the property to be sold.
  15. The Italian underwriters who set up shop in Lombard Street lasted until they were expelled in favour of English merchants in a demonstration of nationalistic fervour by Elizabeth I. The early English writers remained accommodated in Lombard Street until they moved to the Royal Exchange and Lloyds Coffee House. See O’May op cit at 1 fn 3.
  16. Sanborn writes (op cit at 253)
    The usages of the Italian merchants have crystallised into a universal body of rules, and these rules, as the basis of a long series of interpretations and of judicial decisions, have become a part of English law, and are accepted in the English courts to this day, as having' a binding and exclusive force.
    See also Lohre v Aitchison 3 QBD (1878) 558.
  17. Sanborn op cit at p. 253 quotes a Florentine policy of 1397:
    And the risks which the insurers are content to bear concerning the said goods, shipped or to be shipped upon the said vessel, from the hour when the said vessel shall set sail …. Are of God, the sea, nations, fire , and of jettison; of restraint of princes or of peoples or of any other person, of reprisals, of arrest and of every other case, peril, fortune, impediment or mishap, which in any way can happen.
    Compare this text to the earliest extant English policy in the Bodleian Library at Oxford, dated 1613, and quoted in full in Appendix III of Sanborn op cit p 414.
  18. Grotius Inleidinge tot de Hollandsche Rechtsgeleerdheid, 1631, which relies greatly on the ordinances of Amsterdam 1598, Middelberg 1600 and Rotterdam 1604. Grotius’ Inleidinge are regarded by Marnewick as 'the fount of the Roman-Dutch Law of Marine Insurance'.
  19. Writers such as Magens, Valin, Pothier, Emerigon, Park and Marshall all helped the process of the spread of marine insurance principles throughout Europe and England.
  20. J.P. van Niekerk The Development of the Principles of Insurance Law in the Netherlands from 1500 to 1800 Juta, 1999 at 955.
  21. Van der Keessel Praelectiones 1148 quoted in van Niekerk at 957.
  22. Van Niekerk op cit at 958.
  23. Some jurisdictions dealt with the requirement of seaworthiness in legislation see for instance the Placcaart of Philip II in 1563 which laid down criteria of seaworthiness for purposes of marine insurance. Prof. van Niekerk concludes that because of the statutory requirement of seaworthiness, it was not the practice of Dutch underwriters to make specific contractual provisions for seaworthiness.
  24. As marine insurance was an area generally beyond the reach of admiralty, one can presume perhaps that the development of the warranty was the province of the common law jurists. See Hare op cit para 17-2.2 at 655.
  25. Pawson v Watson [1778] 2 COWP 785; 98 ER 1361 at 1362.
  26. See for example Emerigon A Treatise on Insurances, 1783, Chap 1 Sec V:
    Insurance is a contract stricti juris. If the covenants are clear in themselves, and contain nothing prohibited by law, the judge is not allowed to stray out of them.
  27. And a very different glossary of terms: in English contractual law a warranty is a non-essential term never giving rise to a right to repudiate. A condition is what the Roman Dutch lawyers refer to as an essential term which, if it goes to the root of the contract, would then give the right to repudiate. See Bunge v Tradax [1981] 2 Lloyd’s Rep 1 and Photo Production v Securicor [1980] 1 Lloyd’s Rep 545.
  28. Woolmer v Muilman (1763) 3 Burr 1419; 97 ER 905.
  29. Chalmers is reported to have consulted over 2 000 judgements and opinions drawn from both sides of the English Channel in his quest for what was an extraordinarily precise and concise exposition of the then common law of marine insurance. Any international initiative to formulate rules should aspire to nothing less.
  30. Other areas of difference can be found inter alia in constructive total loss and abandonment, subrogation and utmost good faith. See further Hare Shipping Law & Admiralty Jurisdiction in South Africa, Juta, 1999, Chapters 17, 18 and 19.
  31. English Marine Insurance Act, 1906 sec 33(1).
  32. Huddleston v RACV Insurance (Pty) Ltd [1975] VR 683 and the report of the UK Law Commission, No. 104, Comnd 8064 October 1980 at 82.
  33. Thus e.g. in non marine insurance law in South Africa in the case of Jordan v New Zealand Insurance Co Lts 1068 (2) SA 238 E, an assured completed a proposal form in which he stated his age to be one year older than he actually was at the time. This would have reduced the risk in actuarial terms, yet the insurer was able to repudiate liability upon the basis of a breach of warranty, utterly immaterial which had no causal connection with the loss. It was as a consequence of this case that the South African legislature introduced a statutory provision requiring materiality in a breach of an affirmatory warranty in order for an insurer to be able to repudiate the contract. See sec 63 (1) of the Short-Term Insurance Act, 1998.
  34. Description of a warranty as a trump card is attributable to Boberg Trumping an Insurance Warranty (1969) 86 SALJ 335.
  35. See for example Provincial Insurance Co v Morgan [1933] AC 240 HL. The principle had strong European roots. See for instance Emerigon op cit Chap I Sec V:
    … where the agreements of the parties have been drawn up in an obscure and ambiguous manner, the magistrate is authorized to form his decision by the light which legal equity, the common law, the nature of the contract, and the circumstances of the case, may afford him.
  36. See further Birds Modern Insurance Law, Sweet & Maxwell, 1993 at 4 and 131.
  37. Birds op cit at 130 fn 59.
  38. See generally Cattell (and others) Marine Insurance Survey: A Comparison of United States Law to the Marine Insurance Act, 1906, Tulane Maritime Law Journal Vol 20, 1995, 1-103. Warranties are dealt with at 39 – 49.
  39. Schoenbaum Admiralty and Maritime Law, West 2nd Ed at 424.
  40. See Healy The Hull Policy: Warranties, Representations, Disclosures and Conditions 41 Tulane Law Review 245 (1967). See for example Drake Fishing v Clarendon American Insurance Co 136 F.3d 851 (1st Cir 1998)
  41. As was done tactically with success in Wilburn Boat Co v Fireman’s Fund Insurance Co 347 US 310 (1955).
  42. A call made by Ed Cattell in the Tulane Maritime Law Journal, supra at 1. Prof Sturley has called for a Restatement of the law of marine insurance as a more flexible alternative to a statute. See Sturley Restating the Law of Marine Insurance: A Workable Solution to the Wilburn Boat Problem JMLC Vol 29 No 1 (1998) 41 – 58. This paper calls for an international "Restatement" in the form of Rules.
  43. The juxtapositioning of US State and federal law in the field of shipping is cited by a major stumbling block in the place of ideals of international uniformity of issues of maritime law, simply because to the outsider at least, there is seldom an identifiable single principle which can be said to be "the United States law". Another commentator regards the state/federal divide to have led to the ‘disintegration’ of uniformity of maritime law in the United States: See Peltz: The Myth of Uniformity in Maritime Law Tulane Maritime Law Journal, 103. Other articles in the same edition of the Journal deal extensively with the fragmentation of United States maritime law into federal and state regimes.
  44. This is because history has shown the USA to be somewhat notoriously recalcitrant in putting its accession pen to international conventions.
  45. See the report of the Australian Attorney General's Department The Marine Insurance Act 1909: Issue Paper June 1998.
  46. Sec 39(3).
  47. Sec 39(1).
  48. Sec 39(3).
  49. Sec 39(3) and sec 40(2).
  50. The New Zealand Marine Insurance Act of 1908, similar in content to the English Act, still covers pleasure craft insurance. Warranties are dealt with in secs 37 and 42.
  51. Civil Code of Quebec article 2554.
  52. Civil Code of Quebec – non-marine insurance article 2412.
  53. Forsakringsavtalslagen; SFS 1927:77, currently under revision.
  54. Again, I borrow from the reply of the German Maritime Law Association to the CMI’s marine insurance questionnaire.
  55. See the reply of the China Maritime Law Association to the CMI’s marine insurance questionnaire.
  56. Hare op cit para 17-2 at 655 et seq. English law has been held to apply to warranties in South African general insurance law: Colonial Mutual Life Assurance Society Limited v de Bruyn 1911 CPD 103 at 126 and Morris v Northern Assurance Company Limited 1911 CPD 293 at 304. As Roman-Dutch law is applicable to marine insurance, it is arguable that the English warranty has no place in present South African law. This argument would however probably be defeated by the counter that the English law of marine insurance warranties was received into South African Roman-Dutch law during the century that English law was directly applied -- in the Cape and the Orange Free State at least. See further Hare op cit para 17-2 at 653 et seq.
  57. Sec 63(1) of the Repealed 1943 Insurance Act.
  58. This contrasts with the objective test of materiality which in South African law requires for determining the effect of a non-disclosure precontractually see Hare op cit para 18-5 at 695 et seq.
  59. Clifford JA in Clifford v Commercial Union Insurance Co of SA 1998 (4) SA 150 (SCA).
  60. See the 1995 Institute Time Clauses (Hulls) Clause 3 extending cover for breach of warranty of cargo, trade, locality, towage, salvage services or date of sailing.
  61. Zurich Insurance Company v Morrison [1942] 1 ER 529 at 537 per Lord Greene MR.
  62. Anderson v Fitzgerald (1853) 10 ER 551.
  63. [1927] AC 139.
  64. Law Commission Report No. 104 Cmnd 8064, October 1980.
  65. At page 82.
  66. Emerigon op cit Chap I Sec VI fn (m).