4 Utmost good faith
The concept of utmost good faith is not used in Nordic marine insurance.(1) See further Trine-Lise Wilhelmsen, “Issues of marine insurance. Duty of disclosure, duty of good faith, alteration of risk and warranties”, SIMPLY Scandinavian Institute Yearbook of maritime law 2001, p. 41 ff. at p. 103 ff., CMI Yearbook 2000 Singapore I, pp. 332–411 at p. 369 ff. cf. p. 347 ff. However, the duty of disclosure of the person effecting the insurance has a long history – but one which is not connected to war in particular. The regulation is first found in the 1871 Plan(2)Almindelig norsk Søforsikringsplan Oktober 1871. § 26, stating that the insurance was void if the assured or the policy holder did not inform the insurer of any known circumstance that presumably would result in that the insurer not giving effect to the insurance at all or giving effect to it, but with a higher premium.(3) In particular, it was emphasized that this included information about carriage of explosive or dangerous goods (letter a). The same was true if the insurer was given wrong information with the purpose of obtaining a reduced premium (letter b) or if the assured did not inform the insurer of the increase in the risk, after having requested the insurance but before it was contracted (letter c). The provision did not give reason to any remark in the Commentary.
The regulation was retained in NMIP 1881 and 1894 § 28, but it was now spelled out in greater detail. The main addition here was that breach of the duty of disclosure resulted in the insurance being void unless the insurer knew or ought to have known of the non-disclosed circumstance. This was true even if the person effecting the insurance was acting in good faith. According to the Commentary 1894, the more extensive regulation was adopted from the Maritime Code.(4) Forhandlinger 1894 pp. 34–35. The special rule on dangerous goods was deleted because the committee wanted a general and not a casuistic provision. In 1907 the provision was moved to § 4, but the content was mainly retained.
In 1930, the regulation of the duty of disclosure was placed in § 7 to § 11. The regulation conforms to the Nordic ICA 1930 and established the rules which are still used today. This regulation represented a central shift in the provisions, in favour of the assured. It is stated in the Commentary that the 1907 rules were unnecessarily strict, and that it was agreed that the person effecting the insurance should be protected if he gave his information in good faith. It was also argued that the insurance should not necessarily be void if the person effecting the insurance was negligent.(5)Motiver til Norsk Sjøforsikringsplan av 1930, Det Norske Veritas, Oslo 1930 (Motiver 1930) p. 9. The main characteristic is a distinction between the definition of the duty of disclosure (§ 7), and the sanctions for breach of this duty (§§ 8 and 9). Furthermore, the sanctions are softened compared to earlier plans; although the sanction that the contract is not binding is still used for fraud and bad faith (§ 8), for negligence there is a complicated regulation based on the consequences for the insurance if the insurer had known of the non-disclosed circumstances (§ 9 no 1). If the person effecting the insurance is acting in good faith, the insurer is liable for any casualty, but may cancel the contract (§ 9 no 2).(6) The regulation is continued in the Norwegian Marine Insurance Plan of 1964, Det Norske Veritas, 1964 (NMIP 1964) § 24 to § 30, NMIP 1996 and NP 2013 § 3-1 to § 3-7.
The Norwegian regulations from 1930 onwards are far less strict on the policy holder than was the principle of utmost good faith, as codified in the Marine Insurance Act 1906 in sections 17, 18 and 19.(7) See further Trine-Lise Wilhelmsen, Issues of marine insurance. Duty of disclosure, duty of good faith, alteration of risk and warranties”, SIMPLY 2001, p. 41 ff. at p. 70 ff. cf. p. 103 ff., CMI Yearbook 2000 Singapore I, p. 332–411 at p. 369 ff. cf. p. 347 ff. The English regulation was criticized by the CMI in its work on harmonization of marine insurance in the 1990s, and presumably this was part of the reason why the duty of disclosure is now regulated by the Insurance Act 2015.(8) Wilhelmsen/Bull 2017 pp. 32–33. For this particular regulation, it appears that the English regulation, developed during times of war, was now being influenced by the continental and Nordic approach to marine insurance.