Wars and Laws: how war has influenced the development of the law of marine insurance

It is an honour to be invited to talk to you this evening. The talk is a modfied version of a lecture I gave in London late last year: the fifth Jonathan Hirst Memorial Lecture. The series had been set up by the chambers where I had worked as a barrister before becoming a judge, in honour of Jonathan, who had been head of chambers but had died young. Much of his practice involved marine insurance, so it seemed appropriate to speak on that topic.

The idea for the title came from the “Arbitration Award” of Sir Christopher Staughton in The Bamburi. [1982] 1 Lloyd’s Rep 312. (At the time Sir Christopher was a high court judge, but under the Arbitration Acts high court judges could be appointed to sit as “judicial arbitrators”; except the fee went to the government, not the arbitrator!). The Bamburi was a test case between a large number of Lloyd’s underwriters and the owners of The Bamburi and about 70 other ships. The cases arose out the detention of many ships in the Persian Gulf in the course of the Iran-Iraq war, which had started in 1980. Although Sir Christopher was appointed as a judicial arbitrator to try these test cases in private, the Award was published. In the Award he said: (page 313):

“The political and commercial history of the Western world for the last two hundred years is reflected in the cases on war risks insurance”.

In my view, Sir Christopher was being too cautious in confining the influence of war to “war risks insurance”. War influenced the development of all insurance, but particularly all aspects of marine insurance. This is particularly true of the English law of marine insurance. To cover the subject comprehensively would need a book. Indeed in 2021 Professor Robert Merkin published two large volumes entitled “Marine Insurance: a legal history”, which I have looked at but deliberately not consulted in detail. My aim is different. It is to take a number of marine insurance topics and particular cases and place them in their historical context, in order to show how wars have influenced the development of the law. The concepts are all fundamental to the English law of marine insurance. I have chosen five.

First, the doctrine that a contract of marine insurance is one of “utmost good faith”; secondly, the requirement that a person who insures a ship or cargo (or freight) must have an “insurable interest” in the thing insured; thirdly, the development of the concept of a “constructive total loss” of an insured thing – be it ship, cargo or freight; fourthly, the division of insurance risks into what have become known as “marine risks” and “war risks”; and, lastly, the development of the doctrine of “causation” in marine insurance.

First, though, a lightening journey through early marine insurance. There is a poem by the English 20th century poet John Masefield called “Cargoes”. The first verse is about the cargoes onboard a “Quinquireme of Nineveh from distant Ophir”. It is said someone once joked that the cargoes were probably insured by Phonecian merchants. More recently, insurance law was moulded by the Rhodians and is found in the codes of the Ile d’Oleron. Modern marine insurance was developed by the Genoese and was found in England from at least the 16th century. A statute of 1601 created a court to deal with marine insurance cases. (43 Eliz c.12). The Act referred to “the usage of the merchants both of this realm and of foreign nations, when they make any great adventure, to give some consideration of money to other persons to have from them assurance made of their goods, merchandise, ships and things adventured, which course of dealing is commonly called a policy of assurance”. A standard form of policy, which became the “SG Policy” (short for Ship and Goods Policy) was in use in England from the end of the 15th century. The notoriously convoluted wording was formalised in 1779 and remained in use, virtually unchanged, until finally discarded in the 1980s. But many of the cases that are still relevant today relate to terms in the SG Policy wording.

The English law of marine insurance was also influenced by continental treatise writers. The works of the French jurists Valin, Pothier and Emerigon were very influential on 18th century English judges, particularly Sir William Murray, Lord Mansfield, Chief Justice of the King’s Bench from 1756–1788. That period covered the Seven Years War – 1756–63 – and the War of American Independence: 1776 to 1783. Lord Mansfield decided many marine insurance cases. But to start I want to examine Carter v Boehm (1766) 3 Burr 1905 (97 ER 1162): one of the most important cases in marine insurance law.

The event giving rise to the case took place in the Seven Years War, which was fought out in Europe, America, India and in the Dutch East Indies, now Indonesia. It is famous (in British eyes at least) for General Wolfe’s victory at Quebec, the British-Hanoverian victory at Minden, Admiral Hawke’s defeat of the French navy at Quiberon Bay and the British victory at the battle of Plassey, where Robert Clive led troops of the British East India company. It was, as Winston Churchill once remarked, the first “world war”.

However, it was not all victories for the British. In Sumatra the main British East India Company settlement was Bencoolen (now called Benkulu). It was defended by the inaptly – named “Fort Marlborough”. This was more of a “factory or settlement”, not a military fort to defend attacks by a European enemy.

A policy of insurance was taken out in 1760 for one year, (backdated to 1759) against the loss of the fort from an attack by a foreign enemy. The policy was for the benefit of the Governor of the Fort, George Carter, through the agency of his brother. Mr Boehm was a Lloyd’s underwriter. On 1st April 1760 the “fort” was attacked by a French man of war of 64 guns and a frigate of 20 guns. These forces of the French East India Company were under the command of Count D’Estaigne. They had “the connivance of the Dutch”, as Lord Mansfield put it in his judgment. The fort was taken, given over to the Dutch and the prisoners were taken to Batavia, now Djakarta.

The Governor, Mr Carter, brought a claim on the insurance for the loss of goods totalling some £50,000. (You can probably multiply that sum by 100 to get present day values). The underwriter pleaded in defence that there had been a “fraud”, by concealment of circumstances which ought to have been disclosed: in particular, the weakness of the fort and the probability of it being attacked by the French. The response was that these facts were “universally known to every merchant upon the exchange in London”. At the trial the special jury of merchants of the City of London found for the claimant, but the defendant sought a new trial on the issue of law of whether there had been a concealment by the insured of relevant facts, with the result that it vitiated the policy.

In his famous judgment Lord Mansfield made his ruling on the duty of an insured to disclose all material facts which he knows: “good faith forbids either party by concealing what he privately knows to draw the other into a bargain, from his ignorance of that fact and his believing the contrary”. The reason for this was “to encourage good faith”. But the insured may be “innocently silent” of things which the underwriter knew or ought to know. Lord Mansfield said that this “governing principle” of good faith applied to all contracts. In doing so, as his biographer CJS Fifoot put it, Lord Mansfield “strained the digestion of the common law”. In the 21st century (under the care particularly of a judge who is now in the Supreme Court, Lord Leggatt) the digestion of English contract law to this particular concept has become more robust, or more accommodating, depending on how you want to look at it.

On the facts of the case, Lord Mansfield concluded that there had been no concealment; that the underwriters either did or should have known of the condition of the “fort”; and that when the policy was taken out there was no knowledge of a likely attack by the French.

Many cases on the duty of “utmost good faith” followed Carter v Boehm. The principle was codified in the Marine Insurance Act 1906 in sections 17, 18 and 19. The first of those sections has been modified and the latter two sections were repealed and replaced by a duty of “fair presentation” by the insured, in the Insurance Act 2015. That expression reflects the phrase used by Lord Mansfield himself in Carter v Boehm when he said “the question therefore must always be whether there was, under all the circumstances at the time the policy was underwritten, a fair presentation…”. Since the 2015 Act there has been a debate as to the extent of the post contract duty of “utmost good faith”. But there can be no doubt that war led to the case that has been the foundation of modern marine insurance law on this fundamental duty.

Next: “insurable interest”. In the late 17th and early 18th century, when the marine insurance industry was growing in London, there was no settled principle that a person who took out an insurance on a ship or cargo, or the “maritime adventure”, had to have some kind of legal interest in the thing insured; in other words, that he had to have “an insurable interest”. Effectively, a person could bet on whether the ship or the cargo would be lost on the voyage. These “bets” were known as ‘gaming policies’ and they were perfectly legal and were enforced by the courts. The standard wording in those days was “of interest or no interest, without benefit of salvage” – as was the case in the policy in Carter v Boehm. Later the wording was often changed to “policy proof of interest” or “PPI”. Gaming policies became notorious and underwriters lost much money on them. So they were made illegal, but with regard to British ships and cargo only, by the Marine Insurance Act 1745. From then on the issue of whether an insured was wagering or had some legal interest in the subject matter of the insurance became of crucial importance. But the ambit of the doctrine was uncertain.

We now come to the “Revolutionary” and “Napoleonic”: wars. These were the last of a series of wars between France and England/Britain between 1689 and 1815 – another “One Hundred Years’ War” effectively. In all those wars, The British tried to keep involvement “on the continent” to a minimum; often subsidising allies to provide the land armies. The British relied on the Royal Navy, not always with complete success, for example in the War of American Independence. The British system included blockading French ports and those of its allies and the Royal Navy and privateers captured French and allied cargo ships.

These cargo ships were then taken either to Britain or to some port in a British colony where the captors would hope to have the ship and cargo condemned as “Prize”. The Prize Court had been established in the 17th century as part of the High Court of Admiralty. There were Vice-Admiralty Courts of Prize in British colonies such as in Jamaica. (That Court alone condemned prizes worth £2,300,000 during the Revolutionary war).

Prize money was, to use the phrase of the distinguished Naval Historian, NAM Rodger, the “traditional balm to the wounded naval spirit”. Admirals and Captains could become rich on prize if they were on the right station during the Napoleonic War. But there were also legal dangers in capturing a ship for prize. If the captured ship turned out to be a neutral ship the Prize court could award damages, which the Captain of the capturing ship had to pay. “Law is a bottomless pit and I have no inclination to fathom its depths” as one Royal Naval Commodore put it when refusing to consider taking a Danish ship as prize.

Taking the captured ship back to Britain, or to another Prize Court, in order to be adjudged Prize involved the usual maritime risks as well as the risk of recapture by the enemy. For example, after the Battle of Trafalgar, where several ships of the French and Spanish fleet had been captured, there was a huge storm and a large number of the potential prizes were lost. So, obviously, one way to deal with this possibility of loss en passage was to insure the ships and their cargoes.

The case of Lucena v Craufurd (1806) 2 Bos & Pul (NR) 269 concerned eight Dutch ships which had been captured on 10 June 1795 by HMS Sceptre, commanded by Captain Essington, in company with some East India Company men of war. At the time the United Provinces (now the Netherlands) were a reluctant ally of France. A British Order in Council authorised the capture of Dutch ships and cargo and set up a board of Commissioners whose task was to bring them to Britain and then sell them once they had been condemned as Prize. The chief Commissioner was Mr James Craufurd. Royal Navy ships (“carrying Letters of Marque” authorising them to seize enemy ships) were under instructions from the Admiralty to take all ships and cargoes belonging to subjects of the United Provinces and to bring them to Britain. The eight Dutch ships were captured off the Cape of Good Hope and (coincidentally) taken to Saint Helena in the South Atlantic. A policy of marine insurance against the loss of the captured ships, underwritten by Mr Lucena, was issued in favour of Mr Craufurd and the other Commissioners. On the voyage from Saint Helena to Britain four ships were lost. The Commissioners claimed on the policy, arguing that the ships and cargoes had been lost by an insured peril: “perils of the seas”. The defence was that the Commissioners had no legal interest in the ships at the time they were lost.

The case was argued in the Court of Exchequer and and the Court of Exchequer Chamber, where the claimants won on the point. The case then went to the House of Lords, where, under the custom of the time, ten judges of the Court of Exchequer Chamber and the Court of Common Pleas were summoned to give their opinion on eight questions of law put to them by the Lord Chancellor, Lord Eldon. Question five asked if the claimants had an interest in the ships and cargoes “so that a legal and valid assurance could be affected on the said goods and on the bodies of the said ships”. On that question the judges were divided. The majority said yes; but two judges, Chambre J and Lawrence J, said no. The judgment of Lawrence J has since been accepted as being the best analysis of the concept of an insurable interest. (The great writer of the standard English law textbook on Marine Insurance, Joseph Arnould, described Lawrence J as “that learned master of maritime law”). Effectively the judgement of Lawrence J was adopted by Lord Eldon (who had by then become a former Lord Chancellor), Lord Ellenborough, Chief Justice of the King’s Bench and Lord Erskine (the new Lord Chancellor, who, incidentally, had argued the case for the claimants in the Exchequer Chamber and even in the House of Lords). However, at a retrial, it was held that the Commissioners could claim on the insurance on behalf of the King, who, it was held, had an interest in the ships and cargo at the time of their loss.

In the Napoleonic wars British trade had actually expanded by 60% and its merchant marine had grown from 1.4 to 1.8 million tons. The City of London had received money, seeking security, from embattled continental financial centres such as Amsterdam and Frankfurt. The English marine insurance industry boomed. British administrations were anxious always to increase trade and find new markets – plus ca change – and a particular area was that of the River Plate, where trade had been growing since the 1780s. In 1804 Spain had allied herself with France. The success of the Royal Navy at the Battle of Trafalgar and a successful invasion of the Cape of Good Hope turned eyes to South America. An unofficial expedition of Royal Navy ships under Commodore Sir Home Popham, was mounted, with the aim of conquering the Vice-Royalty of Buenos Aires in the tottering Spanish Empire.

This attempted invasion of what is now Argentia and Uraguay failed dismally. Popham was court-marshalled, but the government of Lord Grenville (the soi-disant “ministry of All the Talents”, which had at least abolished the slave trade in the British Empire in 1807) decided nevertheless to send reinforcements. The Grenville government did not last long; but the next administration was equally ambitious. It wanted to open up the South American markets to British manufacturers and take over the Peruvian gold and silver mines. In this second attempted invasion the naval squadron was commanded by Admiral Sir Charles Stirling. Again, it was ultimately unsuccessful and the commander, Lieut – General Sir John Whitelocke was court-marshalled and cashiered.

In the course of an attack on Montevideo in this second expedition, a ship called “Prize No 3”, along with other vessels, was captured from the Spaniards by the conjoined forces of the British Army and the Royal Navy. She and her cargo were insured by a “prize agent” on behalf of Sir Walter Stirling and other “captors”. She was lost by perils of the seas on her homeward voyage to Britain and the “captors” claimed on the insurance. There were two issues: whether the “prize agent” had acted on behalf of the captors, the Army and Navy; and whether they had an insurable interest before the condemnation of the vessels as Prize; or, alternatively, did the King have an interest, in which case it was said that there was no evidence that the agent had acted on his behalf.

The Court of King’s Bench, on an application for a new trial on the legal issue, concluded that the captors had an insurable interest because they had actual possession of the vessel after its capture. The important point of law made by Lord Ellenborough was that a person who has a defeasible interest in goods. (that is one that may subsequently be lost, legally speaking), may have a good insurable interest. The situation was like a consignee of goods, whose interest may be defeated by loss or stoppage of the goods in transit for non-payment of the price. The interest in the goods was more than a “mere expectation”.

The law on insurable interest, as expounded in these case, has been codified in the Marine Insurance Act 1906 section 5. There has been argument at the margins of the doctrine, but the principles in the early cases have stood firm. Suggestions by the Law Commission in a report in 2012 that the law on insurable interest should be amended or that the doctrine should be abolished, have not been met with enthusiasm from either the market or the lawyers.

Next: the doctrine of constructive total loss of insured property. This is a doctrine that is exclusive to marine insurance. It does not exist in other forms of insurance, such as non-marine, or aviation insurance, although something like it has been evolved through the cases, particularly in relation to aviation insurance. The concept of a “constructive total loss” or, as practitioners call it “CTL”, is in the legal news at present, because of the war in Ukraine and the effect it is having on ships and aircraft that have been detained because of the war. The CTL concept is simple: an insured can claim as for the total loss of the subject-matter insured even when it is not completely lost by an insured peril, eg such as when sunk, or blown up, provided the insured can show that the insured object’s ultimate loss appears to be unavoidable or its loss could not be avoided without an expenditure that would be more than the object’s value after the expenditure has been incurred.

If an insured wishes to claim for a constructive total loss then he has to give a “notice of abandonment” of the insured property to the insurer. This notice means what it says; the insured is declaring that it abandons all its legal interest in the property insured to the underwriter/insurer; and in return it claims on the insurance policy for the loss.

In practice insurers never accept a notice of abandonment (“NOA”), because if they do so it is an acceptance that a loss has occurred and, unless there are other defences, they have to pay out on the loss under the policy. Instead, the practice has been to agree to put the insured in the same position as if proceedings had been started. In the old days the insurance “slip” – the scrappy bit of paper on which the insurance was written by the underwriters at Lloyd’s – was marked (or “scratched”) “writ issued”. To succeed, the insured has to prove that, at the time of the NOA and its rejection by underwriters, the insured was, in fact, deprived of possession of the ship, or cargo, and it was unlikely that it would recover it; or that the cost of recovering it would be more than its worth once recovered.

The doctrine of the constructive total loss developed from cases where ships and cargo had been captured by enemy forces in time of war. The SG policy wording included amongst the perils insured those of “men of war, enemies, pirates, rovers” and “arrests, restraints and detainment of all kings, princes and people of what nation, condition of quality soever…” Characteristically, a ship would be captured by an enemy warship or privateer, then recaptured by British forces. At some stage the insured might attempt to “abandon” the ship to the underwriter. The issue for the court was whether there had been a constructive total loss (in the sense I have described) at the time of the abandonment to the underwriter.

Two early cases, both decided by Lord Mansfield, demonstrate the difficulties. First, Goss v Withers (1758) 2 Burr 683. This was therefore during the Seven Years War. There were two policies, one on the hull of the David and Rebeccah and the other on her cargo of fish. The voyage was from Newfoundland to a port of discharge in Portugal or Spain. The vessel was badly damaged in a storm and a quarter of the cargo was jettisoned. She was then captured by the French on 23 December 1756 and her master and crew taken off and carried to France. The ship remained in French hands for 8 days, then was retaken by a British privateer. The ship and remaining cargo were taken to Milford Haven but, not surprisingly, the cargo was by then rotten. On 18 January 1757 the insured offered to abandon the ship and cargo but that offer was rejected. The issues of law were (1) whether the capture created a “loss” and (2) whether the insured had the right to abandon the ship and cargo to the insurers. “Yes” said Lord Mansfield. At the time the ship and cargo were abandoned to the insurer, there had been a loss by capture; the subsequent recapture did not restore the property as it had been before the loss to the insured. Salvage had to be paid, the voyage had to be abandoned; the charterparty was dissolved; the freight was lost; the ship and cargo had to be brought into an English port (not to Spain or Portugal as contemplated) and the cargo was rotten. Therefore the insured had the right to abandon once the ship was brought into Milford Haven and could recover for a total loss.

Secondly: Hamilton v Mendes (1761) 2 Burr 1199. There the Selby and her cargo of tobacco were insured for a voyage from Virginia to London. On 6 May 1760, (so in the middle of the Seven Years War), she was taken by a French privateer Aurora, hailing from Bayonne. The English crew of Selby were taken off and she was sailed to Bayonne. Near the port the vessel was retaken by a Royal Navy ship, the Southampton, under the command of Captain Antrobus, who took her to Plymouth on 6th June. The owner sent notice of abandonment on 23 June 1760. It was rejected although the insurer offered to pay the costs of salvage (which had had to be paid to the Royal Navy ship) and any other expenses. The ship had suffered no damage and the cargo was safely delivered later in London.

The claim for a total loss failed. Lord Mansfield stated that the right to claim for a total loss in a case like that depended on the true situation when the notice of abandonment was given. And if at that time (in this case after the vessel had got to Plymouth) “the advice shows the peril to be over, and the thing in safety, [the insured] cannot elect [to abandon] at all, because he has no right to abandon when the thing is safe” (1212). He distinguished Goss v Withers where, he said, that at the time of abandonment the whole ship and cargo were “literally lost”; cargo had been jettisoned and “the voyage entirely lost”; the cargo of fish had perished by the time it got to Milford Haven and the “ship shattered”.

The rule that in determining whether there had been a total loss at the time of abandonment the “ultimate state of facts” had to be considered, rather than what was thought to be the case at the time, was firmly established by Naylor v Taylor (1829) 9 B & Cr 724. That was a case of capture in the River Plate of a ship called Monarch by a Brazilian warship. The Emperor of Brazil had declared a blockade of the ports of the “government of Buenos Aires” and the ship was thought to be running the blockade. Lord Tenterden CJ gave the judgment of the court and confirmed the rule that the ultimate state of facts had to be considered. It remains the law.

Two particular problems about deciding when there was a CTL remained. First, what was the degree of deprivation that was needed; secondly how long did the insured have to be deprived of possession of the insured subject matter before it could be said that he was unlikely to recover it.

On the first of these issues there was an important case which arose out of the siege of Paris in 1870 by the Prussian army in the course of the Franco-Prussian War. You will recall that this war was engineered by the Prussian Chancellor, Count Bismark and the Emperor Napoleon III of France fell into Bismark’s trap. Although the French mobilised first and made some advances, the Prussian armies had a decisive victory at Sedan and Napoleon III abdicated. Leon Gambetta led the new provisional republican government, but the Prussian armies advanced to Paris, where they laid siege on 20 September 1870. The siege lasted till the armistice was declared on 26 January 1871. France then suffered the indignity of having to cede much of Alsace – Lorraine to Prussia and had to pay huge reparations. To cap it all, the new German Empire was proclaimed in the Versailles palace.

Meanwhile the facts of Rodoconachi v Elliott (1874) LR CP 518 took place. A consignment of silks from Shanghai to London had been insured at Lloyd’s against, among other perils “…arrests, restraints, and detainments of all kings, princes and people &c”. The silks were sent by ship to Marseille and then transported by train to Paris, arriving there on 18 September 1870. The intention had been to send the silks by rail on the “northern railway” from Paris to Boulogne and then ship them to Dover and transport them by train to London. But by 18 September 1870 the Prussian army had seized the “northern railway” and then the siege of Paris began on 20 September. Although the silks were not touched or damaged, it was impossible to move them from Paris. The assured gave notice of abandonment to underwriters on 7 October 1870, claiming a CTL of the goods. The principal issue before the Court of Exchequer Chamber was whether the fact that the goods could not move from Paris meant that the insured was deprived of possession of the goods by reason of “restraint of kings or princes”. Yes, said Baron Bramwell, a distinguished commercial judge. He said (page 522): “what we have to look at is whether, by the immediate and direct pressure of the German army, the goods were prevented from reaching their destination. A siege like the present, which was intended to reduce the besieged place by famine, is a prohibition of all commerce and intercourse in the besieged place”. The fact that the goods themselves were not directly impeded was not to the point. So, having referred to a decision of the US Supreme Court, Grotius and the celebrated English Admiralty judge Lord Stowell, the learned Baron concluded that “the effect of the siege of Paris was to cut off entirely all foreign connection and correspondence [so that] the goods in this case were restrained or prevented from leaving Paris by the operation of that siege” and that was within the insured peril of restraint of princes.

The principle established in that case that there could be a constructive total loss of goods where they themselves were unharmed but could not be delivered because the marine adventure had been frustrated by reason of war or some other restraint remained after the Marine Insurance Act 1906 was passed. It was confirmed by the House of Lords in British and Foreign Marine Insurance Company Ltd v Samuel Sanday [1916] 1 AC 650. There British ships were carrying cargo from South America intended for Hamburg. The cargo was insured in London. The first world war was declared whilst the ships were on their voyage and they diverted to British ports at the suggestion of the Admiralty. The cargo owners sued for CTLs, arguing that the frustration of the voyage entitled them to claim. The House of Lords held that was correct. But the decision caused surprise in the marine insurance market because they considered that this conclusion meant insurers were liable for risks that were more of a political nature, rather than those of violence. The result was the creation of a standard clause in marine policies, the “Frustration Clause”. This was in the form of a “warranty”, that is a promise by the insured that something would not occur: “warranted free from any claim based upon loss of or frustration of the insured voyage or adventure caused by arrests, restraints or detainments of Kings, Princes, Peoples etc”. But the scope of the Frustration Clause was limited by the House of Lord’s decision in Rickards v Forestal Land, Timber & Railways Co [1942] AC 50, another case arising out of the capture of goods during a voyage, but during the second World War.

The question of the degree of deprivation of possession needed to amount to a CTL remained in issue for more than a century. It is considered at length by Sir Christopher Staughton in The Bamburi. There the vessel had been detained, but officers and crew could get on board. The judge decided that the test was whether the insured had “the free use and disposal” of the vessel, which phrase is now used in the standard “Detainment clause” in marine policies, which I mention again in a minute.

The issue of deprivation of possession arose again in a case I argued as counsel: Royal Boskalis Westminster NV v Mountain [1997] LRLR 523. This arose out of Saddam Hussein’s invasion of Kuwait in 1990. The insured’s dredgers were working in the Shatt al Arab and they and their crews were detained after the invason. The insured gave a notice of abandonment of the vessels, claiming a CTL. Subequently the insured obtained the release of the crews and dredgers by paying (secretly) a large ransom to the Iraqi government, in breach of UN sanctions. The insureds claimed, as an alternative to a CTL, that the ransom payment was a ‘sue and labour’ expense. Many issues arose in the case, which was probably the most interesting case that I did at the Bar. But on the issue of whether there had been a CTL by reason of loss of the “free use and disposal” of the vessels, Rix J held, on the facts, that they had not, largely because the dredgers were still able to do their work in the Shatt.

The other problem which remained after Rodoconachi was the question of how long the detention had to be. Eventually, the issue was solved by having a standard clause in what became the “War and Strikes Clauses”, which clause was called the Institute Detainment clause from 1983 onwards. (It had been in use as an additional clause before then). The Detainment clause states that if the vessel has been the subject of capture etc and the insured had lost “the free use and disposal” of the vessel for a continuous period, usually 12 months, that is sufficient to constitute a CTL. The problem in the Royal Boskalis case was that the detention had not been for that long. This led to interesting expert evidence on the state of mind of Saddam Hussein concerning his intentions in Kuwait and in relation to detained vessels and aircraft at the time that the notice of abandonment was given and rejected by underwriters.

So to the next topic: how war or the threat of it led to the separation of “marine risks” from “war risks” in marine insurance policies and subsequently to the development of two sets of standard terms, known now as the “Institute Clauses”. As we have seen, the old SG Policy wording had stated that the “perils” that were insured against included: “of the seas, men of war, fire, enemies, pirates, rover, thieves, jettison, letters of mart and countermart, surprisals, takings at sea, arrests restraint and detainments of all kings, princes and people….barratry….”. The total list, with fifteen specific perils, was a comprehensive cover against most kinds of damage that were thought likely to occur to a ship or cargo on the high seas. Of the fifteen identified perils, eleven related to some sort of violence on the high seas. As Joseph Arnould put it in his text book on marine insurance: “protection against human malice..was regarded by shipowners and merchants as the most important part of their insurance cover”. (Arnould 16th ed para 880).

Given the high risk of loss by a “war peril” in the 18th century, underwriters sometimes inserted a clause in policies which excluded cover against war risks. This was in the form of a “warranty”, that is to say a contractual promise by the insured, that the vessel or cargo would be “free of capture and seizure”. It became known as the “f.c and s clause” and, indeed, that term is still widely used. An early example is in 1739 in a policy on the hull of “Charming Peggy” for a voyage from North Carolina to London. This voyage took place during the so – called War of Jenkin’s Ear between Spain and Britain, which lasted from 1739 to 1748 and took place mostly in the Carribean. (In fact the ear of Captain Jenkins of the British brig Rebecca had been cut off by Spanish coast guards in 1731). British ships trading from America were in danger of being seized by Spanish naval vessels; hence the exclusion. The evidence was that “Charming Peggy” had set sail but never been heard of since. The underwriters argued that because there was an exception in the policy it was up to the insured to prove that the loss occurred in the manner alleged- ie. that she had sank at sea. Interestingly there was evidence from witnesses in the trade that if a vessel goes missing the presumption is that she has foundered at sea. That presumption is now enshrined in s.58 of the Marine Insurance Act 1906. The issue of the cause of the loss was left to the jury who found for the claimant.

Although the f.c & s clause existed, it was not much used after 1815. In the ensuing period, as the historian of Lloyd’s, DEW Gibb states (220) “Neither the strength of our national forces nor the capacity of underwriters had been tested by experience”. However, the attitude of Lloyd’s underwriters and insurance companies in London to war risks changed dramatically in the last 20 years of the nineteenth century, for two allied reasons. The first was the invention of the torpedo in 1862 and, subsequently, the launch of the first submarine by the French Navy in 1893. This new threat to shipping by torpedoes launched from underwater was dramatized in a short story by Sir Arthur Conan Doyle, which imagined a single French submarine stationed off the mouth of the Thames torpedoing British merchantmen as they entered or left the estuary.

The second reason was Anglo-French rivalry, particularly in Africa. This grew strongly once France had picked herself up after her defeat in the Franco-Prussian War in 1871. Whilst Britain had looked more to the East Coast of Africa, (Kenya, Uganda), France concentrated on North Africa (she had annexed Algeria in 1834) and in West Africa. In 1883 British forces then bombarded Alexandria in order to quell the “Urabi Revolt” against the Egyptian Khedivate. The revolt threatened the joint Anglo-French control over Egyptian finances and their joint control of the Suez canal. The British effectively took over management of the Egyptian government and the de facto governor was Evelyn Baring, Earl of Cromer, who recommended that the British occupation continue; as it did.

These moves alarmed the French who wished to prevent a British control of Eastern Africa from “Cape to Cairo”. Thus the French expanded into what Lord Salisbury (the British Prime Minister for much of the 1890s) euphemistically called “the light soil areas” of Africa. Tension between the two powers was high throughout the 1880s, but reached new levels from 1895. Colonel Jean Baptiste Marchand, who had been posted in the French army to what is now Mali in 1885, hatched a project with the Ministry of Colonies in Paris to lead an expedition across Africa to a settlement on the White Nile, with a possible intention of daming it. The Asssemblé Nationale agreed to finance the plan and in 1897 Marchand set off with a band of 150 men, including porters. This in turn alarmed the British, who started a two pronged movement to foil the French plan. General Kitchener was instructed to move south from Egypt into the Sudan, where he had to fight the local leaders to make progress. At the same time there was an attempt to build a railway north from Nairobi through Uganda into southern Sudan. Marchand reached the settlement of Fashoda on the White Nile in July 1898 and raised the French flag. After the battle of Omdurman in September 1898 Kitchener and his flotilla of gun boat forces also reached Fashoda. Ultimately, after a stand off and with both countries’ navies at readiness for war, the French foreign minister Declassé ordered Marchand to abandon Fashoda. In France he mutated from “l’héro de Fashoda” to “le martyr” de Fashoda. But war had been avoided – just.

This threat of war made underwriters at Lloyds and in the companies market very nervous. In 1896 the London Assurance company wrote to the committee of Lloyds suggesting that there be a rule that a clause excluding war risks should be inserted in standard marine policies of both Lloyds and companies. That was rejected. Yet the tension caused by Marchand’s expedition resulted in a reversal of policy. The Committee called a general meeting of underwriting members on 15 June 1898 to consider a resolution that in future all risks of war should be excluded from ALL Lloyd’s marine policies unless a special agreement should be reached that they be covered. The resolution was passed. As DEW Gibb put it, the resolution was “a decree of divorce between war and marine” risks and “the twain have not been one flesh” since then.

The following year a further resolution was passed to the same effect. The different nature of marine risks and war risks was therefore recognised, and, in the London markets at least, they had thenceforth to be separately insured. However, the result was what Arnould described (16th ed para 880) as a “convoluted method of insuring against war risks” which continued until the new Marine policy terms and Institute Clauses for marine and war risks were introduced in 1983. The simple course would have been to have a separate war risks policy that covered the risks that were excluded by the f.c & s clause. Instead, the war risks insurance covered “the risks excluded from the standard form of English marine policy by the f.c & s clause”. So, in order to recover in respect of a loss from one of the war risks, there were two questions to be answered: (1) was the loss caused by one of the perils covered by the ordinary marine policy wording; and (2) if so, was it then excluded by the f.c & s exception. (Arnould 880).

This “convoluted method” leads to the last topic I want to touch upon, namely causation. There is one particular case, arising from a wartime casualty, that has been very influential in the law of causation in relation to marine insurance and the law of causation generally. It is Leyland Shipping Company v Norwich Union Fire Insurance Society [1918] AC 350. When war against Germany was declared in August 1914, the Royal Navy immediately put into operation a blockade of all German shipping, following the example of the blockade in the Napoleonic wars. It was ultimately successful, (by 1918 Germany was near starvation), but in early 1915 the German Navy retaliated. It declared that the area around the British Isles was a war zone in which all merchant ships, including those from neutral countries, would be attacked by the German High Seas Fleet. The German Navy enlarged its submarine fleet and used it with increasing effect, up until the torpedoing of the British passenger line Lusitania on 7 May 1915. She was carrying 128 US citizens who were amongst the 1215 passengers who lost their lives. President Woodrow Wilson protested strongly to the German government. The German Navy suspended U-boat operations altogether from September 1915 until February 1917.

In January 1915 Ikaria was on a voyage from South America to Le Havre and London and was insured for marine risks including perils of the seas, but the policy contained an f.c & s clause in a form then current: ‘warranted free of capture seizure and detention and the consequences thereof …and also from all consequences of hostilities or warlike operations whether before or after the declaration of war”. On 30 January 1915 the vessel approached Le Havre and stopped to take on a pilot, some 25 miles NW of the port. She was struck by a torpedo fired by a German U-boat and hit abreast the No 1 hatch, making two large holes in the vessel and filling the No 1 hold with water. The crew left in a tug because it was feared Ikeria might sink. But she kept afloat and she was taken to the Quai d’Escale in Le Havre. The courts found, as a fact, that had she been able to stay there she would have been saved. However, a gale sprang up and the vessel ranged and bumped against the quay. The port authorities feared she might sink and block the quay, which was being used to land military supplies. Therefore they ordered her away and she went to anchor at the outer harbour. There she took the ground at every low tide as her bow was down so much because of the water in the No 1 hold. The bulkhead between the No 1 and No 2 hold gave way and the vessel became a total loss on 2 February 1915.

The issue before the courts was whether, as the claimant argued, the loss was by “perils of the seas”, that is as a result of the damage suffered at the outer harbour where she sank; or was a loss by “hostilities”, viz the torpedo. The test, laid down in s.55 of the Marine Insurance Act 1906 was (and is) that an insurer is liable for losses “proximately caused by a peril insured against”. Before this case it was common to ascribe the last cause of the loss as being the proximate cause. That approach was rejected in the Leyland Shipping case. Rowlatt J and the Court of Appeal had held that the loss was proximately caused by the torpedo, so the insurers were able to rely on the f.c & s exclusion. The House of Lords agreed. Lord Shaw of Dunfirmline gave the speech that analysed the issue of causation best. He cautioned against too much theorising. He rejected the notion that causation is a “chain” and thought it more like a net. The “proximate” cause was the “efficient” cause. In this case that cause was the torpedo.

Leyland Shipping remains the leading case on what is meant by “proximate cause”, in the context of marine insurance, although its application when there are two or more causes that are concurrent has caused difficulties. Judges have resorted to an appeal to “commonsense standards” to decide amongst competing causes, see eg. the speech of Lord Wright in Yorkshire Dale Steamship co Ltd v Minister of War Transport [1942] AC 691, at 706; another case on whether the loss was a war risk or a marine risk. Lord Hoffmann, in an interesting article on causation in the Law Quarterly Review in 2005 said (adopting a remark of Lord Keynes about economic theories adopted by those in authority) that if “you are looking for the intellectual influences on the older judicial members of the House of Lords, the best way is to ask what was new and exciting in legal philosophy 50 years ago”. That was, he thought, not a sure guide. In the end, Lord Hoffmann said, a judge “has to decide, as a matter of law, what causal connections the law requires and then decide, as a question of fact, whether the claimant has satisfied the requirements of the law”. That, I think, is precisely what was done by the judges in Leyland Shipping. And it was done by the Supreme Court most recently in Financial Conduct Authority v Arch Insurance [2021] AC 649 dealing with causation in the case of business interruption insurance cover and losses caused by Covid.

That is all there is time for! Wars have certainly caused laws as well as laws sometimes causing wars. I don’t suppose it will be any different in the future.

Thank you.