2011 was a relatively quiet year in the courts for Australian
marine insurers, with no significant decisions to be reported.
However, the decision in the UK Supreme Court in Global Process
Systems Inc v Syarikat Takaful Malaysia Berhad  UKSC 5
was noted by the local market with considerable interest. That
decision further explored the meaning of "inherent vice",
supporting the conclusion in Soya GmbH v White  1
Lloyd's Rep 122. The UK Supreme Court agreed that
"inherent vice" meant the risk of deterioration of goods
shipped as a result of their natural behaviour in the ordinary
course of the contemplated voyage without intervention of any
fortuitous accident or casualty. However, the complex judgments
overlayed this definition with findings that the "ordinary
course of the voyage" did not encompass all weather conditions
that the ship could forseeably encounter and that there should be
no limitation applied to the requirement of a fortuitous external
accident. The consequence is that loss will not be attributable to
inherent vice if there was any fortuitous external causal
The litigation over the APL Sydney and the damage it caused to a
submarine pipeline in Port Phillip Bay was successfully
There was more activity in aviation litigation, with the
Queensland Court of Appeal reviewing the first instance decision in
QBE Insurance (Australia) Limited v Cape York Airlines Pty
Ltd  QCA 6. In dismissing the appeal, the court
reiterated the requirement that the insurer make a "valid
election" to pay for damage to an aircraft or to pay the cost
to repair it. However, there was a small amount of good news for
the insurer, because the claim for loss of use of the aircraft was
reduced as it amounted to a double recovery.
QBE Insurance has also found itself embroiled in an ongoing
battle of jurisdictions with litigation in both Australia and the
US in relation to claims arising from the 2005 accident at Lockhart
River, which killed 13 passengers and two pilots. A limited
anti-suit injunction was granted by Bergin CJ in the New South
Wales Supreme Court in favour of the insurer in QBE Insurance
(Australia) Limited v Hotchin & Ors  NSWSC 68.
Bergin CJ found that litigation in Cook County, California, was
"unconscionable, vexatious and oppressive", noting that
the choice of law clause in the policy provided for Australian law
and the geographical cover of the policy was Australia and
In Rosengarten v American Airlines Inc  VCA 1535,
the Victorian Civil and Administrative Tribunal dismissed an
application from a passenger on an American Airlines flight whose
baggage was lost. The tribunal itself lacked jurisdiction for the
claim as it was not a "court", as required under Article
33 paragraph 1 of the Montreal Convention 1999.
THE YEAR AHEAD
We expect 2012 to be generally one of "plain sailing"
in the marine sector, with no sign of implementation of the long
talked about amendments to the Marine Insurance Act 1909
In aviation insurance we continue to keep an eye on the outcome
of the review of carriers' liability and insurance conducted by
the Department of Infrastructure, Transport, Regional Development
and Local Government.
The issue of whether third-party surface damage insurance should
be made mandatory will no doubt be an area of interest to insurers.
The preliminary findings of the review suggested that a compulsory
third-party scheme should be implemented, although government was
seeking additional data from industry before a decision is made on
whether to proceed with that proposal.
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Contractors and principals should ensure they have appropriate insurance coverage instead of relying on indemnity clauses.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).