Australia: ´Inherent Vice´ And Inevitable Loss Reconsidered

Last Updated: 18 May 2009
Article by Andrew Tulloch

A recent decision of the English Commercial Court provided an opportunity for reconsideration of the law of inherent vice and the concept of inevitable loss in marine insurance. The case creates no new law but reaffirms the decision of the House of Lords in Soya GmbH Mainz KG v White [1982] 1 Lloyd's Rep 136.


The case of Global Process Systems Inc & Anor v Syarikat Takaful Malaysia Berhad [2009] EWHC 637 (Comm) concerned the loss at sea off South Africa of three of four legs of a jack-up oil rig which was being towed from Texas to Malaysia.

It was agreed that the loss occurred because of fatigue cracking caused by repeated bending of the legs while being towed on a barge through the sea. The owners of the barge claimed under a policy of insurance, maintaining that the loss of the rig was accidental and within the terms of the 'all risks' cover. The insurer maintained that the cause was 'inherent vice' in the legs of the rigs. The insurer also maintained the loss was an inevitable consequence of the voyage and that accordingly it was not liable for the loss. The policy of insurance incorporated the Institute Cargo Clauses (A) 1/1/82 under which there is no cover for 'loss, damage or expense caused by inherent vice or nature of the subject matter insured'.


Justice Blair in the Commercial Court of the English High Court heard the case and delivered judgment on 31 March 2009. He noted in his judgment that the case was principally one about causation or the proximate cause of the loss. Justice Blair noted that the test to be applied in considering the proximate cause is one based on the common sense of the ordinary businessman or seafarer (per Bingham LJ in TM Noten BV v Harding [1990] 2 Lloyd's Rep 283 at 286-287).

Justice Blair also accepted that if the loss was inevitable, then the claimants should not succeed. He noted that the question of inevitability had to be judged at the time when the policy incepted.

Justice Blair concluded that the failure of the legs on the rig as it was towed around the Cape of Good Hope was very probable but not inevitable.

Looking then at the issue of whether this was a loss by inherent vice, Justice Blair noted that the burden was on the insurer to make out the exclusion.

The claimants maintained that the term 'inherent vice' refers to 'the natural behaviour of the insured cargo without external intervention'. Reliance was placed on the decision in Mayban General Insurance Bhd v Alstom Power Plants Limited [2004] 2 Lloyd's Rep 609.

The decision in Mayban concerned an electrical transformer shipped during severe winter weather conditions which arrived damaged. In that case, the trial judge, Lord Justice Moore-Bick, found the damage was caused by the violent movement of the vessel due to the actions of the wind and sea. He found that the loss was caused by the inability of the transformer to withstand the ordinary conditions of the voyage rather than by the occurrence of conditions that it could not reasonably have been expected to encounter.

In the current case, the claimant sought to argue that it is wrong to say that if conditions encountered by the vessel are no more severe than could reasonably have been expected then the conclusion must be that the real cause of the loss is the inherent inability of the goods to withstand the ordinary incidents of the voyage.

However Justice Blair considered this was a misinterpretation of the Mayban decision. Instead the Court in Mayban was required to consider the proximate cause of the damage to the transformer in circumstances where the wind and weather were identified as a cause as was the inherent nature of the transformer being shipped. Lord Justice Moore-Bick decided that inherent vice was the proximate cause but did not suggest that in order to qualify as a peril of the sea the weather had to be extraordinary.

Justice Blair also rejected the claimants' assertion that inherent vice is the natural behaviour of the insured cargo 'without external intervention'. He considered that a misinterpretation of the words of Lord Diplock in Soya v White who had used the words '... without the intervention of any fortuitous, external accident or casualty'.

Justice Blair noted that 'whereas' the vice 'must be internal, the damage, being the consequence of that vice, can and often will develop with the assistance of an external circumstance, typically the weather'.

In his judgment Justice Blair also made it clear that inherent vice has the same meaning in both carriage of goods by sea and in the law of marine insurance.

Justice Blair concluded that:

  • The failure of the legs was very probable, but not inevitable.
  • The proximate cause of the loss of the legs was not inadequate repairs during the course of the voyage but rather the inherent inability of the legs to withstand the normal incidents of the voyage, including the weather reasonably to be expected.

Accordingly he found that the cause of the loss was inherent vice and the claimants failed against the insurer.


The decision confirms and reinforces the definition of inherent vice provided by Lord Diplock in Soya v White. It also reinforces the Mayban decision and deals with criticism that has been made of that decision.

In addition, the decision importantly confirms that inherent vice should be regarded as having the same meaning in both the law of marine insurance and in relation to carriage by sea.

In so far as Australia and New Zealand is concerned, it can be expected that this decision will be followed by the courts here even though our courts are not bound to follow English decisions.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

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”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.