As with any other commercial activity, maritime insurance has an essential role in the overseas trade that involves transportation of goods from one country to another via ships, this type of insurance covers perils of the sea including the loss of ships, cargo, terminals and any transport or property by which the cargo is transferred.
Marine insurance policy is a method of protection for the importer of the goods to ensure the safe arrival of the goods as well as the shipping company which seeks the safety of the ship; therefore, these parties conclude the marine insurance policy which is contract whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed against marine losses and damages.
Maritime insurance operations in Egypt are facing several problems, the most important of which are:
- The high rates of losses, mainly due to ship collisions, drowning or loss especially after the wide spread of giant ships.
- The increase in the rates of insurance which was due to higher loss rates and inadequate premiums in loss coverage as insurance companies had to accept low-value premiums to cope with intense competition.
- The reform expenses which came out as a result of the high prices worldwide, that was accompanied by a sharp increase in ship repair especially after the price increase in the in labor force and raw materials.
- The problem of rescue especially for large carriers that do not have the means to discharge their cargo and the difficulty of access to rescue means to it, especially from the international point of view where there are international problems in terms of allowing foreign equipment to enter the territorial waters of a particular country.
- The problem of the outbreak of fire in ships: The fire always destroys the ship and comes on all shipments, even the fire that leads to the machines leaks to the goods, in addition to the absence of personnel trained on the fire increases the rate of loss.
In Egypt, Maritime Trade Law No. 8 for the year 1990 regulates the maritime insurance contract and the subject of granting the risks of shipment in Articles (340-400) including the two types of maritime which is known as follows:
- Cargo Insurance:
Cargo insurance is a method of protecting the loss and damages of cargo that might occur during the shipment form the points of origin till the final destination where the goods are to be delivered, it is an essential requirements for business execution in the international trade, when the importer is having large quantities of goods and specific terms and conditions shall be prescribed by the Cargo Insurance policy which protects the importer as well as the exporter whom are interested in the safety of their goods during shipment and any loss that occur during the shipment is to be indemnified by the insurance company.
Legally, all carriers shall be liable for a minimum amount of insurance, known as carrier liability. However, carrier liability provides very limited coverage, and in any case of force majeure or accidents or even acts of war could damage their cargo. Therefore, shippers can request cargo insurance to protect their goods from loss, damage, or theft during the shipment. Mostly, goods are insured while being stored and until they reach the importer.
In the field of insurance, policies are tailored for specific types of shipments according to the value of goods but in some cases there might be a percentage of profit included in the value of goods.
- Hull Insurance :
Hull insurance is one of the special types of marine insurance policies which covers a broad range of damages on a vessel’s hull, machineries, and equipments that gives the ship owner a level of confidence and security in operating their ship on international waters. The type of marine insurance policy depends on the usage of the vessel. All vessel operators however, should obtain hull insurance as an extra safety measure.
This insurance method is concluded for the benefit of the ship owner where the body of the ship is secured either for one trip or for number of trips for a specific duration which starts by shipping the goods on board and ends by discharging of goods on the condition that this period does not exceed the insurance duration.
According to Article (244) of the Maritime Trade Law, it is stated that any maritime claim that might arise pursuant to a contract of carriage, will be time barred after two years from the date on which the goods were delivered or ought to have been delivered. Delivery of the goods is considered to be the time when the goods pass through the port gates. Time stops running on the date the action is officially filed before Egyptian Court, which date is reflected on the court summons. However, any recourse action against a third party by a person against whom a claim has been made will be time barred after the expiry of 90 days from the date the claim was made or from the date on which the claim was paid. And two years for marine insurance claims filed before the Egyptian courts.
Carriage of Goods by Sea within the scope of the International Conventions:
According to the United Nations Convention on the Law of the Sea (UNCLOS), the States Parties shall fulfil in good faith the obligations assumed under this Convention and shall exercise the rights, jurisdiction and freedoms recognized in this Convention in a manner which would not constitute an abuse of right.
And according to The Hague rules, the basic obligations of the carrier in respect to cargo are that the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried. Thus, it is noteworthy that the obligation is not only to carry but also to “keep” and to” take care for” the goods till discharging them, such proceedings shall be governed by the terms of the insurance policy and within the limits thereof. In light of the foregoing caveat, it states the responsibility of the bailees, common carriers and the ship owner to exercise the due diligence while delivering the goods at destination in the same conditions in which he received from the shipper and his failure to do so will make him strictly liable as an insurer.
The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity and weight, as furnished by him, and the shipper shall indemnify the carrier against all losses, damages and expenses arising or resulting from inaccuracies in such particulars. The right of the carrier to such indemnity shall in no way limit his responsibility and liability under the contract of carriage to any person other than the shipper.
As for the carrier, he shall be bound to exercise such due diligence in order to make the ship sea worthy, make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried fit and for their reception and upon receiving the goods, the carrier shall, on the demand of the shipper issue to the shipper a bill of lading showing the identification marks of the goods as the same as furnished by the shipper before the loading of these goods which is considered as a prima facie evidence of the receipt of the goods by the carrier as therein described. In case of any loss or damage which is not apparent, a notice shall be given within three days of the delivery date and in any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.
The Basic framework for cargo litigation nowadays:
The Hague convention provided the basic legal structure for the adjudication of claims arising from the carriage of goods by sea under the bills of lading in and between most countries of the world. Consequently, common carriage is irrelevant in virtually all bill of lading cases as well as the bailment which is considered rarely in such litigations.
Under the Egyptian constitution, international conventions, once adopted, become binding on Egyptian courts and apply by force of law in the same way as national legislation. Therefore, the Hague Rules as well as the Hamburg Rules will apply whenever any of the cases stipulated in Article 2 of the said convention exist. The domestic code, therefore, covers only internal shipments between one or more Egyptian ports. Egyptian legislation also governs all conservatory or executory measures to be taken in Egyptian ports against ship or cargo, relating to marine cargo claims, irrespective of the substantive rules of law applying to the subject matter.
Judicial case law maintains that there is an obligation incumbent upon the carrier in bill of lading contracts to effect complete and safe delivery of the cargo at destination. Consequently, whether under the Egyptian code or the conventions rules, violation of the said obligation is established simply by the fact that the result did not occur, without the need to prove any fault or negligence on the part of the carrier.
The normal procedures is for the courts to award damages on an invoiced value basis. If the claimant can prove that it has effectively suffered loss of profits, calculated on arrived sound market value at port of destination, this may be added to the actual losses.
Interest on damages awarded by the courts is fixed by law at five per cent per annum, running in most cases from the date of the final court decision. Financial judgments are usually expressed in Egyptian currency, because there is still some uncertainty as to the award of damages in foreign currencies.
Package limitation of liability has always been recognized in Egypt, either under the Hague/Hague Visby Rules or under the Hamburg Rules. First instance judgments, with very limited exceptions, are open to appeal within forty days, and further appeal to the Court De Cassation, on points of law only, within sixty days.