6 Causation
Until the NMIP 1930, the Plan contained no specific regulation on causation, and it appears that the issue did not cause specific problems until World War I. However, during this war, several cases involving a combination of marine and war perils were heard. In a judgment of fundamental importance, the Admiralty Court, with the support of the Supreme Court, cf. ND 1916 p. 209 Skotfos, established that the entire loss was attributable to “the factor which is regarded as the dominant cause of the accident”.(1) See Bull/Wilhelmsen pp. 287–288, 290–291, Commentary NMIP 2023 p. 81.
Skotfos was stranded in January 1915 on Orknøyene, partly because the navigator had misjudged the current, partly because the North Ronaldshay lighthouse was darkened due to the war. The liability for the damage was attributed to the insurance against marine perils. The majority of the Supreme Court, – 6 out of 7 judges – agreed with the result and mainly also to the reasoning by the court of Admiralty. The court of Admiralty stated i.a. (referred from ND 1916 p. 76 at pp. 78–79) that a casualty was normally due to several different causes. However, common opinion would hold that, the situation would normally be that the characteristics of the casualty are decided by one factor, which is the main cause of the accident. From a logical point of view, several factors might be necessary pre-conditions for the accident and be of similar importance. In legal reasoning, however, one should distinguish between the significant and the insignificant. The significant factor was the one that brought the accident into actual effect and gave it its specific characteristics. The expressions: damage caused by, following, due to, or similar, should be interpreted in this light. In cases with several interconnected causes, one should look for the central aspect, the main cause, the dominant characteristic feature, and not the less significant parts of the situation. This should also be the approach for to interpreting the marine insurance plan and the starting point for assessing Skotfos's stranding. The court did not doubt that the stranding was caused by a marine peril and thus constituted a marine accident. The vessel grounded because it drifted further due to current than the navigator realised. It was possible that the stranding could have been prevented by light in the North Ronaldshay lighthouse. But even if the darkening of the light was a war peril, it did not make the stranding a war accident, as it only had minor significance in the circumstances in which the sailing took place, and could not be seen as determining the characteristics of the accident.
The reasoning in the Skotfos case was followed in all later judgments after World War I for combinations of causes between war perils and marine perils.(2) Cf. for instance Rt. 1917 p. 1008 Valhall, Rt. 1921 p. 424 Solglimt, Rt. 1921 p. 516 Nanset and Rt. 1921 p. 619 Europa. See also Trine-Lise Wilhelmsen, Årsaksprinsipper og tolkningsprinsipper i forsikringsretten, Tidsskrift for Erstatningsrett og forsikringsrett, 2011 no. 4 (Wilhelmsen 2011), pp. 228–258, at p. 239. It should be noted that these judgments, together with some cases from accident insurance, concerning cases where an insured person who had been in an accident died as a result of a combination of the accident and illness,(3) See in particular Rt. 1901 p. 706, Rt. 1904 p. 600 and the overview inRt. 1933.931. established the dominant cause rule as the main rule for causation in Norwegian insurance law.(4) Bull/Wilhelmsen p. 288, Brækhus/Rein p. 259. The causation principle entails the establishing of which peril constitutes “the dominant-cause factor” or “the dominant peril”. The entire loss shall be allocated to the peril which is thus designated as the dominant cause. This means that the assured will either receive full cover or none at all, depending on which peril is regarded as dominant.
A feature common to the marine insurance decisions was, however, that it required a very great war peril for the court to regard that peril as the dominant cause. If errors of any significance had been committed by the crew, such errors were practically always regarded as the dominant cause, with the result that the casualty in its entirety fell upon the marine-risk insurer.(5) Motiver NMIP 1964 pp. 27–28, Commentary NMIP 1996 Version 1999 p. 60, Selmer, Forsikringsrett, 2 ed., 1982 (Selmer) pp. 249–250, Brækhus/Rein p. 259.
The marine-risk insurers objected to the fact that this led to a significant part of the increase of the marine risk attributable to a war situation (darkened lighthouses, removal of navigation marks, sailing in convoys etc.) being imposed on them. In connection with the revision of the Plan in 1930, the Committee therefore decided to adopt a rule of apportionment. In the event of a combination of causes, the relative strengths of the various perils were to be evaluated and the loss apportioned, taking into consideration the significance of the individual causal factors. Instead of a choice between two extreme solutions (either A or B being liable for the entire loss), this method offered a whole range of in-between solutions, making it possible to choose in each individual case the apportionment which would seem to best fit the specific circumstances of the case.(6) Motiver NMIP 1964 p. 28, Commentary NMIP 1996 Version 1999 p. 60, Selmer pp. 249–250, Brækhus/Rein p. 259.
The background for the introduction of the rule of apportionment in 1930 was the conflict between the insurers against marine and war perils, respectively. However, the rule of apportionment contained in the 1930 Plan was worded in very general terms, and was to be applied to all cases where there was a combination of perils insured against and uninsured perils, unless otherwise provided by other provisions of the Plan.(7) Motiver NMIP 1964 p. 28, Commentary NMIP 1996 Version 1999 p. 60, Selmer pp. 249–250, Brækhus/Rein p. 260.
During World War II (1940–45), the rule of apportionment was applied in ca. 100 court cases concerning casualties which were partly attributable to war perils and partly to general marine perils.(8) Commentary NMIP 1996 Version 1999 pp. 60–61, Selmer p. 250. These questions are discussed thoroughly by Bugge in AfS 1 pp. 1–26. See also Brækhus/Rein, pp. 262 ff. On account of this high incidence of litigation, the decision was made in the revision of the Plan in 1964 to revert to a dominant-cause rule in respect of the combination assessment between war and marine perils, although in a modified version.(9) NMIP 1964 § 21, see Commentary NMIP 1996 Version 1999 p. 61, Selmer p. 250, Brækhus/Rein p. 260. The discretionary rule of apportionment was retained, however, for other combinations of causes and also made applicable in the event of a combination of perils insured against and perils which had arisen due to neglect or negligence on the part of the person effecting the insurance or the assured.(10) NMIP 1964 § 20, see Commentary NMIP 1996 Version 1999 p. 61–62, Selmer p. 250, Brækhus/Rein pp. 260–261. The reason was that the rule of apportionment had gradually become part of the general conception of justice, and that in practice it was applied fairly frequently in settlements.(11) Commentary NMIP 1996 Version 1999 p. 61, Selmer p. 251, Brækhus/Rein p. 261. It was rarely used, however, in case law.(12) Commentary NMIP 1996 Version 1999 p. 61.
This regulation was retained in the 1996 revision and is still upheld. The Commentary provides the following reasons for this decision:(13) Commentary NMIP 1996 Version 1999 pp. 61–62.
“The advantage of this solution is that the premium is in “correct” proportion to coverage in that the insurer is not held liable for the effect of causal factors that fall outside the scope of cover of the insurance. Also considerations of fairness favour such a solution: the assured has paid a premium to be covered against certain risk factors and has no reasonable claim to be covered against other perils. A third advantage is in the relationship to the rules relating to the duties of disclosure and care: under ICA, a reduction system as regards the assured’s breach of the duty system contained in ICA chapter 4 has been established, which entails that the indemnity may be reduced if the assured’s breach of duty has contributed to the damage. Such a system is less expedient in marine insurance: it is regarded as unfortunate for the insurer to be allowed to make a discretionary reduction based on inter alia considerations of degree of fault. By retaining the rule of apportionment, a more or less equivalent possibility of reduction is, however, achieved by virtue of the fact that a breach of the duty of disclosure or care in the event of a combination of causes can be allocated such a proportion of the loss as indicated by the significance of the breach. A flexibility in the claims settlement is thereby achieved which may put less of a strain on the relationship between the insurer and the assured than a strict reduction based on an evaluation of fault. One advantage of this solution is that the premium is in “correct” proportion to the insurance cover in that the insurer is not held liable for the effect of causal factors that fall outside the scope of cover of the insurance. A second advantage is considerations of fairness: the assured has paid a premium to be covered against certain risk factors and has no reasonable claim to be covered against other perils. A third advantage is the flexibility created in cases where an objective peril interact with subjective breaches of the duties of disclosure and care. The Norwegian Insurance Contracts Acts has established a system with discretionary reduction of liability in case of such breaches. This approach is not convenient in marine insurance as it is regarded as unfortunate for the insurer to be allowed to make a discretionary reduction based on inter alia considerations of degree of fault. The rule of apportionment, however, provide a more or less equivalent possibility of reduction by treating a breach of the duty of disclosure or due care as a cause interacting with objective causes and being attributed weight depending on the degree of fault. A flexibility in the claims settlement is thereby achieved which may put less of a strain on the relationship between the insurer and the assured than a strict reduction based on an evaluation of fault.”
This provision is therefore one of the few examples where wars have been an important factor for developing marine insurance.