UK: Builders' Risks - Co-Insurance And Waiver Of Liability

BMT Marine & Offshore Survey Ltd v. Lloyd Werft Bremerhaven GmbH [2011]1
Commercial Court, 24 January 2011

Where a Claimant (A) sues Defendant (B) the latter may deny liability on the grounds of lack of any wrongdoing. Alternatively, B may accept liability for breach of duty but he may contend that the loss was, at least in part, also the result of wrongdoing on the part of C, either by way of breach of C's contract with the Claimant or as a joint tortfeasor. The result is that C may be held liable to contribute to the damages payable to the Claimant, under a mechanism governed in England by the Civil Liability (Contribution) Act 1978 ("the 1978 Act").

The present case concerned a fire at a shipyard belonging to Lloyd Werft Bremerhaven GmbH ('LWB'), which occurred while repair and conversion work was being carried out on the vessel m/v 'CALA PALMA'. The vessel suffered significant damage in the fire.

The conversion works were being undertaken pursuant to a contract between Owners and LWB, which provided for German law and for the exclusive jurisdiction of the Courts of Hamburg.

At the time of the fire the vessel was insured under a hull policy incorporating the Institute Time Clauses - Hulls - Port Risks (20.07.87), and selected clauses of the Institute Clauses for Builders Risks (1.6.88), but with the choice of English law expressly overridden in favour of Italian law. As required under the terms of the conversion contract, the policy named both the Owners and LWB as co-assureds, though it did not refer to any express waiver of subrogation against LWB. It also required, as a condition precedent to liability, that a shipyard and/or project risk assessment survey be carried out by BMT Marine and Offshore Survey Ltd ("BMT").

Following the fire, the insurers settled the claim from their assureds, the Owners, and thereby took an assignment of the attendant subrogation rights under Italian law. In pursuit of those rights, they commenced English proceedings against BMT, alleging that they had failed to exercise reasonable skill and care in the conduct of the risk assessment survey, in particular in relation to the review of hot works procedures adopted by LWB and its sub-contractors. For its part, BMT denied any lack of reasonable skill and care, and contended that the cause of the fire was in fact the negligence and/or breach of contract by LWB (or its sub-contractors) in carrying out the hot works.

Accordingly, BMT brought the present Part 20 proceedings against LWB, claiming a contribution or indemnity from LWB under the 1978 Act. In response, LWB contended that, as a matter of German law and on the proper construction of the conversion contract, Owners had agreed to waive or surrender any right to claim against LWB, whether in contract or in tort in respect of work done to the vessel. Consequently, argued LWB, they were under no liability to Owners, and hence could not be obliged to contribute.

The first question for the court to consider was whether, as a matter of German law, the conversion contract did indeed excuse LWB of liability to Owners, as alleged. LWB argued that it did, and that was why the contract required insurance to be procured for the benefit of both it and Owners. The risk of losses was to be borne by insurance, not by means of claims between the parties. BMT, on the other hand, contended that LWB remained liable to Owners, but simply that Owners were required to procure insurance of the type stipulated.

The German law experts agreed that until 2000 there had been a line of cases in the German Federal Supreme Court to the effect that, contracts which provided for co-insurance were generally regarded as amounting to a waiver of liability between the parties in relation to liability for losses covered by the insurance. Since then, however, BMT contended that German law had developed in a different direction, such that co-insurance no longer amounted to a waiver. While, clearly, there could be no exercise by insurers of subrogation rights between co-assureds, that was not the case here, since the Part 20 claim was being pursued by BMT, not by Owners' insurers.

The court accepted that, under German law, it was entitled to take into account not merely the wording of the final contract, which in this case was not entirely clear, but also the intention of the parties as revealed in the negotiations leading up to it. Having reviewed all of the evidence, it concluded that LWB were intended to benefit from a waiver of liability under the contract, save in those cases where builders' risks insurance had been withdrawn due to the fault of LWB's management.

On the basis, therefore, that LWB owed no liability to Owners for the loss, there could be no claim for contribution under the 1978 Act, since it could not be said that BMT and LWB were together "liable in respect of the same damage"2

Result: Judgment (on preliminary issue) for the Defendant, LWB

Taylor Wessing acted in this matter, in providing the German law expert evidence on behalf of the successful Defendant, LWB.


1 [2011] EWHC 32 (Comm)

2 S. 1 Civil Liability (Contribution) Act 1978.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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.

In association with
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.