“The analysis of Proxima Causa in Marine Insurance”

SUBMITTED BY

MOHAMED FARVACE

BA0140034

Project Submitted to

Mrs. Deepika Sivakumar

Assistant Professor of Law

TAMIL NADU NATIONAL LAW SCHOOL

(A State University established by Act No. 9 of 2012)

Navalurkuttapattu, Srirangam (TK), Tiruchirappalli-620009

APRIL 2018

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 DECLARATION

I MOHAMED FARVACE, hereby declare that this project work entitled –‘The
analysis of Proxima Causa in Marine Insurance’has been originally carried out by me
under the guidance and supervision of Mrs Deepika Sivakumar, Associate Professor of Law,
Tamil Nadu National Law School, Tiruchirappalli - 620 009. This work has not been
submitted either in whole or in part of any Degree / Diploma in this Institution or any other
Institution/University.

Place :Tiruchirappalli -------------------------------

----

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 TABLE OF CONTENTS

CHAPTER 1 ........................................................................................................................................... 4
1.1 INTRODUCTION ........................................................................................................................ 4
1.2 BRIEF HISTORICAL BACKGROUND ..................................................................................... 4
1.3 THE MEANING OF THE TERM PROXIMATE CAUSE .......................................................... 6
CHAPTER 2 ....................................................................................................................................... 7
2.1 TEMPORAL IMMEDIACY AND DOMINANCE IN EFFICACY ............................................ 7
2.2 COMMON SENSE APPROACH TO THE MEANING .............................................................. 9
CHAPTER 3 ......................................................................................................................................... 10
APPLICATION OF THE PROXIMATE CAUSE ........................................................................... 10
3.1 APPLICATION OF PROXIMATE CAUSE TO GENERAL INSURANCE POLICIES .......... 10
3.2 TWO OR MORE PROXIMATE CAUSE OF LOSS ................................................................. 11
CHAPTER 4 ......................................................................................................................................... 12
4.1 CONCEPT OF LOSS AND PROXIMATE CAUSE.................................................................. 12
4.2 INTERCONNECTIONS BETWEEN INHERENT VICE AND PROXIMATE CAUSE ......... 13
4.3 BURDEN OF PROVE OF PROXIMATE CAUSE OF LOSS ................................................... 14
CHAPTER 5 ......................................................................................................................................... 15
5.1 COLINVAUX’S RULES............................................................................................................ 15
5.2 CHALLENGES TO THE DOCTRINE OF PROXIMATE CAUSE OF LOSS ......................... 17
CHAPTER 6 ......................................................................................................................................... 18
RECOMMENDATION AND CONCLUSION ................................................................................ 18
BIBLIOGRAPHY ................................................................................................................................. 19

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 CHAPTER 1
1.1 INTRODUCTION

The concept of causation is difficult to find as no proper definition is laid down. From the
beginning of humanity to modern era legal scholars have difficult to describe causation. The
concept and definition plays a very important role in the realm of insurance law1.

In marine insurance law the insurer company not just indemnifies the covered peril, but also
against the loss or damage causally linked to the perils covered under the insurance contract2.
The term “casually linked” is not defined by the legislatures but the concept is the general
rule of ‘Proximate causa’ or causa proxima non remota spectator. This is defined under the
Section 55(1) of the Marine Insurance Act, 1906 of the U.K.

“Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer
is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid,
he is not liable for any loss which is not proximately caused by a peril insured against”3

Section 55 of the Marine Insurance Act states the general rule of proximate cause previously
adopted by the common law and declares that insurer will be liable for the damage
‘proximately’ caused by a peril insured against. This principle is against the principle
followed earlier i.e. of ‘remote cause’. This principle stated that the event nearest in time and
directly leading to the loss is the cause of the loss.

The Act does not go further to explain the meaning of the doctrine ‘proximate cause’ as used,
this lead to various interpretations of the meaning of the doctrine. Proximate cause is defined
to be the immediate or effective cause not necessarily closest in time.

1.2 BRIEF HISTORICAL BACKGROUND

Marine insurance is an institution of great antiquity. The first statute dealing with Marine
Insurance was passed in 1601. The principle of proxima causa as developed side by side with
the marine insurance, the reason being it is the heart beat of the marine insurance. Causation

1
Graydon S. Staring and George L. Waddell, Marine Insurance (Tulane Law Review, Vol. 73, 1999) 29
2
Howard N. Bennett, Causation in the Law of Marine Insurance: Evolution and Codification of the Proximate
Cause Doctrine, The Modern Law of Marine Insurance (D. Rhidian Thomas, LLP, 1996) 173.
3
Section 55, Marine Insurance Act, 1906

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is insurance law is easy to describe but difficult to apply. The basic notion behind this is that
the insured should only be able to claim for the losses covered by the policy or in other words
the loss must have caused by a peril which the insures had agreed to cover. Also, the
insured’s claim should not be rejected for a loss caused by a peril which is proximately
connected to the perils covered in the insurance policy.4

“In a marine insurance contract, an insurer ‘underwriter’ agrees to assume some portion of
the maritime risks on a vessel or cargo, or both, in exchange for a premium. The risks
covered may include a variety of risks at sea or in port, for a particular voyage or for a period
of time.”5The existence of the contract of marine insurance can be traced back to centuries. It
is the contract of marine insurance which is the ‘earliest authenticated insurance contract’
displaying the characteristics of insurance in terms of risk transfer due to any inevitable event
in lieu of any payment of premium. The earliest account of insurance came in the form of
‘bottomry’, a monetary payment that protects traders from debt if merchandise is lost or
damaged.

In 1829, the Madras Equitable began transacting life insurance business in the Madras
Presidency. The British Insurance Act was enacted in the year 1870. In 1907, the Indian
Mercantile Insurance Ltd was set up. It was the first company which began to transact all
classes of general insurances. In 1914 the GOI established the publishing returns of Insurance
Companies in India. Specifically in shipping law India has undergone a wide change and
considerable expansions and thus it became mandatory to codify it for smooth working and
development of Marine Insurance law in India6.

In India the marine insurance law was put in a statutory form in the year 1963- Marine
Insurance Act, 1963. The preamble to the Act states that it is “an Act to codify the law
relating to marine insurance.” In the case of Bank of England v Vagliano Brothers7, Lord
Herschel said that “The canon of construction generally applicable to a codifying statute is

4
Proximate Causation in Insurance Law ,http://onlinelibrary.wiley.com/doi/10.1111/j.1468-
2230.2005.00539.x/pdf
5
Christopher Kingston, Marine Insurance in Britain and America, 1720-1844: A Comparative Institutional
Analysis, EHS (13-04-18, 11.13 PM), http://www.ehs.org.uk/dotAsset/332686ee-2db9-4f09-abc6-
cb900150d473.pdf
6
Addya Mishra and Archika Agarwal, Marine insurance and its legal aspects in India: Perils of the sea,
International Journal of Law and Legal Jurisprudence Studies :ISSN:2348-8212:Volume 1 Issue 8
7
Bank of England v Vagliano Brothers,(1891) A.C. 107, 144 H.L

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well known: the language of the statute must be given its natural meaning, regard being had
to the previous state of the law only in cases of doubt or ambiguity.

1.3 THE MEANING OF THE TERM PROXIMATE CAUSE

The principle of the doctrine proxima causa is generally accepted by the court, especially
after it codification under Section 55 of the Act, However, the true meaning of the term is not
completely agreed upon. The dictionary meaning of the word ‘proximate’ is ‘closest in
relationship’ and ‘immediate’8. The meaning of the word ‘immediate’ is ‘nearest in time or
relationship’9. Therefore the meaning of the principle proxima causa can be understood in
two different ways, one is the temporal immediacy and another is dominance in efficacy10.

Causa proxima non remota spectator has been frequently quoted as the fundamental principle
in the law of marine insurance which is embodied by the doctrine of proximity. The maxim
means that it is the proximate cause, not the remote cause that should be looked at in
determining the insurer’s liability. Generally, Proximate cause refers to an action that leads to
an unbroken chain of events that end with someone suffering a loss. Proximate cause is used
to examine how a loss occurred and how many events may have played a part that resulted in
the loss. Proximate cause refers to the initial action that caused a loss11.

In the case of Pawsey v.Scottish Union and National (1908) the court stated that Proximate
cause means the active, efficient cause that sets in motion a train of events which brings
about a result, without the intervention of any force started and working actively from a new
12
and independent source . It is an effective and efficient means that there is direct link
between the cause and the result, and that the cause is strong enough that in each stage of the
events one can logically predict what the next event in the series will be, until the result under
consideration takes place.

8
https://en.oxforddictionaries.com/definition/proximate
9
https://en.oxforddictionaries.com/definition/immediate
10
Howard N. Bennett, Causation in the Law of Marine Insurance: Evolution and Codification of the Proximate
Cause Doctrine, The Modern Law of Marine Insurance (D. Rhidian Thomas, LLP, 1996) 173.
11
Shambhavi, Doctrine of Proximate Cause- The Application of common sense, Charted Accountant Practice
Journal, 2012
12
(1918) 58 S.C.R. 169

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 CHAPTER 2

2.1 TEMPORAL IMMEDIACY AND DOMINANCE IN EFFICACY

In temporal immediacy, the court looks only at the immediate cause of the loss or the last
event in the chain of causes. The approach to the principle of proximate cause was endorsed
in the case of Pink v Fleming13. The basic argument to follow the approach of temporal
immediacy was that it would be very difficult to examine the particular cause for a particular
loss, which might have been caused due to a number of causes. Therefore the court chose the
immediate cause as the reason of loss, without having examining the chain of causes.

In the 20th century the courts in U.K unambiguously adopted the dominance in efficacy
approach and rejected the temporal immediacy approach. Reischer v Borwick14 is a landmark
case which formulated this approach. In this case, a tug named Rosa was insured with the
defendants only against collision with any object including ice. During the voyage it collided
with a floating snag which resulted in water entering the tug. It was then anchored and by
temporary measures the hole was plugged. When the insured started towing her, the hole
reopened due to the motions and the tug filled with water. The insured claimed indemnity for
the total loss but the underwriters paid only for damage cause by the snug and refused greater
liability. The court held in the favour of the insured and held that the collision was the
efficient and predominant cause of the loss. Lopez LJ in his judgement stated:

“In cases of marine insurance only the proximate cause is to be regarded and all other to be
rejected, although the loss would not have happened without them. Damage received in
collisions must therefore, in this case be proximate cause of the loss to entitle the plaintiff to
recover.”

The leading case that defines proximate cause is Leyland v Norwich Union Fire Insurance
Society15, where the court rejected the approach taken earlier that the proximate cause is the
direct or the case last in time and endorsed the decision in Reischer v Borwick16. In this case a
steamship named Ikaria, was insured under a policy, which covered perils of the sea but
contained a Free of capture and seizure clause (F.C &S) which stated ‘Warranted free of
capture, seizure and detention and the consequences thereof or any attempt thereat piracy
excepted, and also from all consequences of hostilities or warlike operations’. The ship was
13
Pink v Fleming, (1890) 25 QBD 396
14
Reischer v Borwick, (1894) 2 QB 548, CA
15
Leyland v Norwich Union Fire Insurance Society, [1918] AC 350
16
Supra note 4

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hit by missile fired by a hostile submarine and as a result two holes were made in it which
filled with water. However the ship reached the port and it could have been saved if it was
allowed to remain there. But fearing that the ship will sink and block the quay, the authorities
asked the insured to move the ship to the outer harbour. In the outer harbour the ship sank
due to the weather conditions.

The assured claimed that only the last cause or last in time cause should be considered and
therefore the ship sank due to the perils of the sea. However, this argument was contended by
the insurer and claimed that the proximate cause was the missile and therefore it excluded by
the F.C and S clause. The court held that perils of the sea were not the cause of the loss and it
was caused by the missile and dismissed the last in time approach to proximity of causation.
Lord Shaw in his judgement held that the overruling principle is to look at a contract as a
whole and to ascertain what the parties really meant. He rejected to treat proxima causa as the
cause which is nearest in time. He delivered the meaning of proximate cause, which has since
been accepted.

“The cause which is, truly proximate is that which is proximate in efficiency. That
efficiency may have been preserved although other causes may in the meantime have
sprung up which have yet not destroyed it, or truly impaired it, and it may culminate in
a result which it still remains the real efficient cause to which the event can be ascribed.
Proximate cause is an expression referring to the efficiency as an operating factor upon
the result. Where various factors or causes are concurrent, and one has to be selected,
the matter is determined as one of fact, and the choice falls upon the one to which may
be ascribed the qualities of reality, predominance, efficiency”.

Also, in the case of Brownsville Holdings v Adamjee 17Insurance the court held that the
rule is that the immediate and proximate cause will be seen and not a remote cause. The
maxim sed causa proxima non-remote spectature which means that see the proximate
cause and not the distant cause. The real cause of the loss is to be considered. If the real
cause is insured, then the insurer is liable to pay otherwise not.

The principle laid down in the Leyland case, that the term ‘proximate cause’ should be
construed to mean ‘predominant or efficient cause’ and has been followed in a number of

17
Brownsville Holdings v Adamjee, [2000] 2 Lloyd's Rep 458

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cases such as Board of Trade v Hain SS Co Ltd18; Yorkshire Dale SS Co Ltd v Minister of
War Transport, The Coxwold19; Ashworth v General Accident Fire and Life Assurance
Corporation 20; and Gray and Another v Barr21. It can be concluded from these decisions
that ‘proximate cause’ is the real and efficient cause leading naturally and reasonably to
the loss. It can also be deducted that an event does not happen independently. Therefore,
we must look at the whole web of events in an attempt to find the real and efficient cause,
which leads naturally and reasonably to the loss.

2.2 COMMON SENSE APPROACH TO THE MEANING

It has been an age old practice to find or deduce the proximate cause aided by common
sense on a case to case basis. It follows that it does not require a special talent to find the
cause of loss out of the chain of events. In the famous case of Yorkshire Dale steamship
Co ltd v Minister of War Transport 22 , the court held that ‘the interpretation does not
require a scientific view of causation, it depends on the judicial creativity in ascertaining
the link between the peril and the loss’. Also, it depends on the nature of the inquiry i.e.
the inquiry for ascertaining the truth or determining the fault under the laws.

In the case of Ionides v The Universal Marine Insurance co, Judge Willes held that “you
are not to trouble yourself with distant causes, or to go into a metaphysical distinction
between causes efficient and material and causes final, but you are to look exclusively to
the proximate and immediate cause of loss.’’23

Lord Greene in the case of Athel Line Ltd v Liverpool and London War Risks Insurance
Association24 stated that finding the proximate cause is a really a matter of common sense
and intelligence of a reasonable man.

Therefore the approach has changed with time on ascertaining the proxima causa. Gone
are those days when proxima causa was considered to be the closest in time but with the
current approach a cause may be closest in time but still not a proxima causa. The proxima

18
Board of Trade v Hain SS Co Ltd, [1929] AC 534
19
Yorkshire Dale SS Co Ltd v Minister of War Transport, The Coxwold (1942) 73LIL Rep 1
20
Ashworth v General Accident Fire and Life Assurance Corporation, [1955] IR 268
21
Gray and Another v Barr [1971] 2 Lloyd’s Rep 1, CA.
22
Supra note 19
23
Ionides v The Universal Marine Insurance co, 1863, 14 CB, (NS) 259, 289.
24
Athel Line Ltd v Liverpool and London War Risks Insurance Association, 1946, 1KB 117.

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causa is that cause that set other cause in motions which results in loss, this cause could be
ascertained by the application of mere common sense.

CHAPTER 3
APPLICATION OF THE PROXIMATE CAUSE

There are different consequences of the principle of Proximate cause on the insured and
the insurer. Firstly, this principle narrows down the liability of the insurer only to the loss
which is a proximate cause of the insured peril. Secondly, it widens the liability of the
underwriters with regards to remote causes, contributed by certain circumstances without
which such an event would not have happened25.
The application of this doctrine is not difficult when the loss is caused by just one event.
In such cases the court only looks at whether such cause is covered under the insurance
policy or not26. It becomes difficult for the court to ascertain the real cause of loss when
there are more than one cause which contributes to the loss. The situation becomes more
difficult when all the causes appear equally influential.

3.1 APPLICATION OF PROXIMATE CAUSE TO GENERAL INSURANCE

POLICIES

The principle of proximate cause is also applicable in the determination of kindred insurance
liabilities, like motor insurance, fire insurance etc. its rules and applications are on all fours,
and cases can be cited freely once the facts of a particular case are in pari material. In the case
of Liesch v The standard life assurance27 the court held causality is a philosophical and legal
question. The law takes a practical approach by treating the causality as practical factual
matter. The doctrine of proxima causa has been used in a number of non marine insurance
cases. In the case of Sherwin-Williams Co. Of Canada v Boiler Insp and Ins. Co. Of Canada28
the court held that “the direct or proximate cause may not be the last, or, indeed, that in any
specified place in the list of causes but is the one which has been variously described as the

25
Arnould's Law of Marine Insurance and Average, 763 at p. 185 (Sir M.J. Mustill & J.C.B. Gilman, 16th ed.
1981).
26
Susan Hodges, Cases and Materials on Marine Insurance Law (Cavendish Publishing, 2004) 336.
27
Liesch v The standard life assurance ,2005 BCCA 195; 39 B.C.L.R. (4th) 313 at 324
28
Sherwin-Williams Co. Of Canada v Boiler Insp and Ins. Co. Of Canada , [1950] S.C.R. 187, aff’d, [1951] A.C.
319 (H.L.)

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‘effective’, the ‘dominant’ or ‘the cause without which’ the loss or damage would not have
been suffered.”
The principle of proxima causa has developed in the United Kingdom with time. In the case
of Wayne Tank co Ltd v The Employers liability Assurance Co lts29 the court applied the
doctrine of prixima cause in deciding a property damage claim.

3.2 TWO OR MORE PROXIMATE CAUSE OF LOSS

Usually more than one cause leads to a loss or damage. These causes may operate
simultaneously or successively. Susuan Hodge, argued that there can be situations where
the causation to the loss can be attributed to various causes30.

In Lloyd (JJ) Instruments Ltd v Northern Star Insurance Co Ltd, ‘Miss Jay Jay’31 a yacht
‘Miss Jay Jaythat was insured with the insurer under a time policy of insurance. It was
damaged during the voyage. The insured claimed indemnity for the loss suffered but the
insurer refused to pay claiming that the loss was suffered by the yacht because of its faulty
design and not because of perils of the sea. The court held that the combination of both the
faulty design and adverse weather was the cause of the damage. In this case there were
two proximate cause of loss: an included cause of loss (adverse weather) and a cause of
loss (faulty design). The court stated that if only the faulty design was responsible for the
loss then the insured would not be liable to indemnify the insured. But since in the current
case there exists a cause which was covered under the insurance policy and which was
equally responsible for the loss, therefore the insurer must be liable. Thus when there are
two or more effective proximate cause and there is no express exclusion in the policy the
underwriters are liable to pay.

In the case of Wayne Tank and Pump Co Ltd v Employers Liability Insurance Corporation
Ltd 32 the plaintiffs designed and installed equipment for storing and conveying liquid wax in

29
Wayne Tank co Ltd v The Employers liability Assurance Co lts ,1974,QB 57.
30
http://books.google.co.uk/books?id=G8sBdRAYzLQC&pg=PA344&lpg=PA344&dq=two+or+more+proxima
te+cause
31
Instruments Ltd v Northern Star Insurance Co Ltd, ‘Miss Jay Jay’ , [1987] 1 Lloyd’s Rep 32, CA

32
Supra note 29

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a factory. The plaintiffs had a policy of insurance which indemnified them for ‘damages
consequent upon ... damage to property as a result of accidents’. The insurance policy had a
clause which excluded the loss by ‘the nature or condition of any goods... sold or shipped by
or on behalf of the insured’. The equipment caught fire due to negligence and destroyed the
factory. The plaintiffs asked the insurer to indemnify which they refused. The court held that
the dominant cause of loss was the defective nature of the installation of the equipment and
therefore the insurer will not be liable. The reasoning given by the court was that there were
two separate causes, one was covered under the insurance policy and the other was excluded.
Since in the current case it could clearly be distinguished that the loss was caused by a clause
which was explicitly excluded, therefore the insurer are not liable to indemnify. Thus when
there are two or more effective proximate causes and there are express exclusions in the
policy and the loss is caused due to the cause excluded the insurers are not liable to pay.

CHAPTER 4
4.1 CONCEPT OF LOSS AND PROXIMATE CAUSE

Since the contract of insurance is a contract of indemnity, the liability of the insurer only
arises when there is a loss to the insured. However there is a caveat to the effect that the
insurer is only liable upon the ‘loss’ being ‘proximately caused’ by the peril insured
against.
Section 56(1) of the Marine Insurance Act, states that;
‘A loss may be either total or partial. Any loss other than a total loss as herein defined is a
partial loss.’33
The Act also provides that a loss may be actual total loss or constructive total loss 34there
is deemed to be actual total loss when the goods are destroyed, so damaged as to cease to

33
Marine insurance Act of 1906
34
Ibid, 56(2)

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be the thing insured35, or where the assured is irretrievably deprived of them. In the case of
Reischer v Borwick 36 the court did not make distinction between actual loss and
subsequent loss. In the case of Navierade Canarias SA v Nacional Hispanica
Aseguradore 37 the court rejected the assured argument that ‘consequent on’ and
‘proximate cause’ meant the same thing while construing marine loss. Lord Diplock held
that the proper construction was that the delay was caused by an intermediate event
between the occurrence of the peril insured against and the loss of freight for which the
peril was, otherwise known as proximate cause in the marine insurance.

The application of loss and proximate cause is not isolated. Certain elements must be present
in a marine insurance cause of action which includes-

1. The peril must be covered under the insurance policy.

2. The loss is proximately connected to the risk insured against
3. The insured has the insurable interest over the insured goods and has fulfilled the entire
requirement to bring in a claim.
4. The assureds’ claim is not defeated by fraud or breach of good faith
38
5. The assured has complied with all the warranties and conditions.

4.2 INTERCONNECTIONS BETWEEN INHERENT VICE AND PROXIMATE

CAUSE

It is a settled principle on insurance law that the insurer is not liable for the loss causes by
ordinary wear and tear, breakage and leakage, inherent vice or loss caused proximately by
rats or vermin etc. This principle is also laid down in Section 55(2) of the Marine Insurance
Act of the United Kingdom and also in the institute of cargo clauses.

The concept of inherent vice was first defined in the case of Soya v white39 where the court
held that the insurer would not be liable for the loss caused as a result of goods natural
behaviour in the ordinary course of the voyage without the intervention of external factor. In

35
Chuah J.C.T, Op cit, p.370.
36
Reischer v Borwick, 1894, 2QB 548.
37
Navierade Canarias SA v Nacional Hispanica Aseguradore , [1977] 1 Lloyd's Rep. 457.
38
Chuah J.C.T, Op cit,p. 370
39
Soya v white ,1983, 1 Lloyds, Rep

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the landmark case of Global Process Systems v Syarikat Takaful Malaysia Berhad 40 the court
narrowed the definition of the inherent vice and stated that the test for inherent vice was not
whether the weather was within the range that could be reasonably be anticipated, but
whether is it a loss that is bound to happen during a voyage.
The court in this case narrowed down the construction of incidents of the voyage that will be
treated as inherent vice in marine insurance. However, ascertaining the proximate cause and
inherent vice would require specific facts of the conditions. Therefore inherent vice can only
be a proximate cause of loss if there is no other insured peril that is a proximate cause. This
means that the insured and marine surveyors will be strictly scrutinized. The court will have
to look at specific facts to ascertain whether the loss was a result of ordinary voyage that is
bound to happen or if there is a new independent cause that is responsible for the loss.

4.3 BURDEN OF PROVE OF PROXIMATE CAUSE OF LOSS

When a loss is caused to the assured as a result of perils of the sea or the causes covered
under the insurance policy the insurer becomes liable to indemnify the insured. The duties of
the insured as regards to making a claim includes notice of the loss, furnish particulars of the
loss, to furnish proof of loss etc. If the insured fulfil the said duties and makes a claim then
the insurer cannot refuse to indemnify. If the insurer denies to indemnify then the assured can
institute an action in the court and prove that the proxima causa was the the insured peril. The
proof of the proxima causa in different scenario are-

A) PERILS OF THE SEA

Perils of the sea is defined to mean the natural actions of the sea that overcomes the strength
of a well designed ship taking normal precautions and following the marine practices 41. In
the famous case of Compania naviera vascongada v British and Foreign Marine Insurance
Co. Ltd 42the court held that the onus of proof lies on the insured to prove that the loss was
caused due to the perils of the sea. There must be some evidence by the insured to prove the
loss by perils of the sea. On the other hand the burden to prove the unseaworthiness of the
plaintiff’s ship is on the insurer. In the case of Green v Brown43 the court held that there is a

40
Global Process Systems v Syarikat Takaful Malaysia Berhad [2009] EWCA Civ 1398.
41
Black LawDictionary, 6th edition, p’1138;
42
Compania naviera vascongada v British and Foreign Marine Insurance Co. Ltd, (1934)54LILRep35,
43
Green v Brown, (1743) 2str 1199.

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presumption of loss by peril of the sea when a ship has sailed and never heard of.

B) PERIL OF BARRATRY
Barratry is defined as a wrongful act wilfully committed by the crew or the master to the
prejudice of the owner or as the case may be. When the assured brings a claim of loss caused
by barratry, the onus of proof is on the insurers to show that there was complicity on the part
of the owner, the assured also has the burden of proof to show that there was no complicity
on the part of the owner of the ship. It follows the common law principle of the person who
asserts must prove. On the other hand even the insured has the duty to prove all the
requirements of the claim and also show that there was no complicity.44

Therefore it has been established principle that for a court to consider a cause as proximate
cause and within the insured peril, then the assured must discharge the onus to prove and
show that all the conditions are met.

CHAPTER 5
5.1 COLINVAUX’S RULES

Colinvaux suggested a number of sub-rules for applying the principle of proximate cause.
These rules have been taken from various case laws and have been used in determining the
proximate cause of particular losses45.

1. THE PERIL INSURED MUST IN FACT OPERATE (APPREHENSION OF A

PERIL)

For a right of recovery to arise it is important that the insured risk or peril actually takes place.
Insured cannot claim for recovery for any action taken to avoid the peril on a just
apprehension of peril. This is because the proximate cause of the loss is no longer the peril.
This approach was followed in the case of Kacianoff v. China Traders Insurance Co Ltd 46, in
this case the plaintiff insured 4000 barrels of salt beef under a war risk policy which also
included cover for capture. The first two cargos were captured by Japanese warships because

44
Id.
45
Colinvaux's Law of Insurance (Robert Merkin ed., 7th ed. 1997) 106.
46
Kacianoff v. China Traders Insurance Co Ltd, [1914] 3 KB 1121

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of hostilities between Japan and Russia. To protect the cargo the plaintiff had the cargo
discharged and it was sold and forwarded to somewhere else. The plaintiff claimed for
indemnity which the underwriters rejected. The court rejected the claims of the plaintiff and
held that the loss was not caused by the risk insured against. The cargo had to be in peril of
capture for claim to succeed but in this case the cargo was never in risk of capture.

2. ONCE THE RISK OPERATES, DAMAGE TO THE SUBJECT MATTER

FROM EFFORTS TO CHECK THE PROGRESS OF THE CASUALTY OR
PROTECT THE SUBJECT MATTER IS ALSO COVERED (RESPONSE TO
PERILS).

This approach states when a peril is covered by the policy, any actions taken to avoid or
maximise any loss from that peril will not supplant the peril as the proximate cause. In the
case of Canada Rice Mills Ltd. v Union Marine & General Insurance Co. Ltd47 the crew
members closed the hatched and ventilators due to the weather conditions which lead to the
heating of the cargo of rice. The court held that “Damage to cargo due to action which are
reasonable and necessary to prevent the perils of the sea affecting the goods, is a loss due to
the peril of the sea and is recoverable as such.

Also in the case of Symington v. Union Insurance of Canton48, the loss of corks into the sea to
prevent the fire from spreading was held to be covered by the policy even though the loss to
the corks was caused due to water.

3. NOVUS ACTUS INTERVENIENS

This principle is applicable when there is an intervention of an independent new cause. When
an independent cause intervenes a chain of events it breaks the chain of events, thereby
making the intervening cause the proximate cause of the loss.

4. THE DEATH- BLOW

When a loss is caused due to human agency or is followed by natural forces leading to the
loss of the insured goods, the chain of causation is not broken. In the case of Leyland v.
Norwich Union fire insurance Society, the ship suffered damage from the missile fired by a

47
Canada Rice Mills Ltd. v Union Marine & General Insurance Co. Ltd, [1941] AC 55
48
Symington v. Union Insurance of Canton, (1928) 32 Ll.L.Rep. 287

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submarine sank due to a storm. The court held that the proximate cause of her loss was the
firing of the torpedo and not the storm.

5.2 CHALLENGES TO THE DOCTRINE OF PROXIMATE CAUSE OF LOSS

Though lot of attempts have been made to define the ambit, scope, tests etc of the Doctrine of
Proxima Causa still there exists many problems which the legislatures and judiciary has to
counter. These problems include-

1. HOW TO DETERMINE THE PRXIMA CAUSA-

It is always difficult to determine the proxima cause when there is a chain of broken or
unbroken events. There has been a confusion regarding the approach that has to be taken in
ascertaining the proxima causa i.e. most direct cause and the remote efficient cause. The
judicial decisions has brought the rationale of interpreting the proxima cuase to ‘common
sense’, this has made it the rule of thumb and not the rule of law. This approach has made it
subjective and it varies from jurisdiction to jurisdiction and judge to judge.

2. NON USE OF THE DOCTRINE

The rule of proximate cause no longer represents the rule in certain jurisdictions such as
Canada. In the case of C.C.R Fishing Ltd V British Reserve Insurance co49 the court held that
the question whether insurance applies to loss should not be dependent on metaphysical
debates such as of various cases were proximate cause. Indemnity should not be dependent
on such debates and reasoning and that this test is calculated to produce disputed claims and
litigation.

3. LANGUAGE OF THE POLICY

The standard form of insurance contract contains words such as ‘caused by’, ‘attributed to’,
‘reasonable attributed to’, ‘in consequences thereof’, ‘arising from’. These words have been
added in the current versions of hull clause, institute cargo clause etc. The question that raises

49
C.C.R Fishing Ltd V British Reserve Insurance co, 1990, 1 S.C.R, 814, p.823

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is that whether these words are synonymous or contradictory to the meaning of the principle
of proxima causa. The answer to this question will help in ascertain the meaning and
application of the doctrine vis a vis other expressions used in the insurance contract.

CHAPTER 6
RECOMMENDATION AND CONCLUSION

The doctrine of proxima causa should follow the path of reason and should not just be an
exercise to decipher some abstract cause or remote cause. This implies that for a claim to
succeed the assured must have fulfilled all his duties and obligations including the obligation
of good faith. Therefore a practical approach should be taken as to ascertain what caused the
loss, the insurance policy should be literally interpreted and good faith must be exercised in
order not to defeat the marine insurance contract justice. The loss suffered should be brought
within the risk if it is established after considering the entire context of the case, the loss is
shown to be fortuitous in the sense that it would not have occurred save for an unusual event
not ordinarily to be expected in the normal course of things.

The doctrine of proxima cause forms the heart beat of the marine insurance contract. The
determination of real cause depends upon the working and practice and circumstances of the
loss. The determination of proxima causa is easy in cases where there is single cause which is
covered under the insurance policy. In that case the insurer will have to indemnify for the loss.
However, if there are concurrent causes, the insured perils and excepted perils have to be

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segregated. The concurrent causes may be first, separable and second, inseparable. Separable
causes as those which can be separated from each other. The loss occurred due to a particular
cause may be distinguished.

If the circumstances are such that the perils are inseparable, then the insurers are not liable at
all when there is existence of any excepted peril. If the causes occurred in form of chain, they
have to be observed seriously to know which cause ultimately triggers off the marine loss.
When there is unbroken chain, the excepted and insured perils have to be separated. If an
excepted peril precede the operation of the insured peril so that the loss cause by the latter is
the direct and natural consequences of the excepted peril, there is no liability.
In the situation of broken chain of events with no excepted peril involved, it is possible to
separate the losses. The insurer is liable only for that loss which caused by an insured peril;
where there is an excepted peril, the subsequent loss caused by an insured peril will be a new
and indirect cause because of the interruption in the chain of events.

BIBLIOGRAPHY
 STATUTORY ACTS
1. The English Marine Insurance Act, 1906
2. The Indian Marine Insurance Act, 1963

 CASES

Ashworth v General Accident Fire and Life Assurance Corporation

Athel Line Ltd v Liverpool and London War Risks Insurance Association

Bank of England v Vagliano Brothers

Board of Trade v Hain SS Co Ltd

Brownsville Holdings v Adamjee

C.C.R Fishing Ltd V British Reserve Insurance co

Canada Rice Mills Ltd. v Union Marine & General Insurance Co. Ltd

Compania naviera vascongada v British and Foreign Marine Insurance Co. Ltd

Global Process Systems v Syarikat Takaful Malaysia Berhad

Green v Brown

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Instruments Ltd v Northern Star Insurance Co Ltd, ‘Miss Jay Jay’

Ionides v The Universal Marine Insurance

Kacianoff v. China Traders Insurance Co Ltd

Leyland v Norwich Union Fire Insurance Society

Leyland v. Norwich Union fire insurance Society

Liesch v The standard life assurance

Navierade Canarias SA v Nacional Hispanica Aseguradore

Pawsey v.Scottish Union and National

Pink v Fleming

Reischer v Borwick

Sherwin-Williams Co. Of Canada v Boiler Insp and Ins. Co. Of Canada

Symington v. Union Insurance of Canton

Wayne Tank co Ltd v The Employers liability Assurance Co lts

Yorkshire Dale SS Co Ltd v Minister of War Transport, The Coxwold

 ARTICLES

1. Addya Mishra, Marine insurance and its legal aspects in India: Perils of the Sea,
International Journal of Law and Legal Jurisprudence Studies :ISSN:2348-8212:Volume
1 Issue 8
2. J.R. Archana, A CRITICAL STUDY ON PERILS OF THE SEA UNDER MARINE
INSURANCE, INTERNATIONAL JOURNAL OF LEGAL INSIGHT, VOLUME I,
ISSUE 3, ISSN: 2456-3595
3. Meixian Song, Rules of Causation under Marine Insurance Law, University of
Southampton
4. Shambhavi, Doctrine of Proximate Cause- The application of Commonsense, Chartered
Accountant Practice Journal

5. Malcom Clarke, The Proximate Cause in English Law, The Cambridge Law Journal, Vol.
40, No. 2 (Nov., 1981), pp. 284-306
6. V. Abbot, Perils of the Seas: A study in Marine Insurance, Harvard Law Review, Vol. 7,
No. 4 (Nov. 25, 1893), pp. 221-230
7. Alex L. Parks, Marine Insurance: Proximate Cause, 10 J. Mar. L. & Com. 519 (1979)
8. Angelo Giampietro, Proximate cause in Maritime Insurance, London Metropolitan
University

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  WEBLIOGRAPHY

1. https://www.irmi.com/articles/expert-commentary/the-enigma-of-causation-in-insurance-
contract-interpretation
2. http://indian-insurance-industry.blogspot.in/
3. https://legaldictionary.net/proximate-cause/
4. https://iedunote.com/proximate-cause-marine-insurance

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