The Function of Protection & Indemnity Marine Insurance in Relation to Ship Owner´S Liability for Cargo Claims: Framing the Legal Context

By Joseph Tshilomb JK, LLM;MSc

In the early days of shipping and international maritime trade many more casualties occurred at sea. Ever since, ship owners liability for cargo claims has been increasing both in number and in cost in spite of the huge technical development in international maritime transport.
In order to make it easier for ship owners to operate safely and efficiently the Protection and Indemnity appeared around 1870 as mutual marine insurance. Besides Hull & Machinery and Cargo Insurance offered on the international commercial market in insurance, Protection and Indemnity Insurance (known under the acronym P&I) is a ship owners insurance cover for legal liabilities to third parties. This cover is generally achieved by entering the ship in a mutual insurance club. Nowadays, the mutuality is performed by an underwriter who endeavors to see that each owner carries his fair share of the risk. The members of P&I clubs are ship owners, charterers or ship management companies.
At present, a major function of the Protection and Indemnity insurance is to cover the ship owner for legal and contractual liability for loss of cargo or damage to cargo if there has been a breach of the carriage contract. This liability is called Third party liability.
The ship owner will handover the cargo claim to his P&I Club.
In order to clarify this liability, Article 3, Paragraph 2 of the Hague Visby rules stipulates:
Subject to the provisions of Article 4 the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried.
Therefore, the focus in this research study is placed on the function of Protection and Indemnity insurance covering the ship owners liability for damage to cargo or loss of cargo.

• Language: English
• Publisher: AuthorHouse UK
• Release date: Mar 4, 2016
• ISBN: 9781524628840

Joseph Tshilomb JK, LLM;MSc

The author holds two postgraduate degrees, namely an MSc in Maritime Studies and an LLM in Private International Law. He is a Swedish national. Following an inspiring employment as Claims Executive Officer in charge of Protection and Indemnity Insurance in Scandinavia, he has been successfully working the last twenty years in the field of Global Delivery Chains looking at the daily flow of the cargo on the International Market. He is very happy to share with readers his professional achievements as both academic researcher in International Commercial Law and Expert in International Trade.

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© 2016 Joseph Tshilomb JK MSc & LLM. All rights reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

Published by AuthorHouse   03/02/2016

ISBN: 978-1-5246-2882-6 (sc)

ISBN: 978-1-5246-2883-3 (hc)

ISBN: 978-1-5246-2884-0 (e)

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Contents

Acknowledgement

Preword

Preface

Introduction

Chapter I Hague Rules

1.1. Origin

1.2. Hague Rules Liability System

1.3. Main Features of the Hague Rules

Chapter II Hague-Visby Rules

1. Background

2. Hague-Visby Rules Versus Hague Rules

Chapter III Hamburg Rules

1. Some Difficulties Perceived in the Hague Rules and the Hague-Visby Rules

2. Main Differences Between Hamburg and Hague-Visby Rules

Letters of Guarantee

Rules of Interpretation

Chapter IV Brief Presentation of the Rotterdam Rules

Introduction

1. Overview of the Rotterdam Rules

2. The Volume Contract Concept Under The Rotterdam Rules

3. Arguments in Favour of the Rotterdam Rules

4. The Perceived Shortcomings in the Rotterdam Rules

Chapter V Impact of the Maritime Carrier’s Liability Regimes on Marine Insurance Law & Practice

Insuring a vessel liability

Some words on the Marine Insurance Industry

Protection and Indemnity

Legal Impacts

Chapter VI Bill of Lading: Essence and Evolution Through Electronic

Documents

Definition of the Bill of Lading

Other definitions of the bills of lading

Evolution of the bill of lading and electronic documents

SITPRO (Simplification of Trade Procedures)

Conclusion

Bibliography

Index

Acknowledgement

The author would like to express his gratitude to individuals and organizations who assisted him with moral support and useful advices while working on the project. Without their valuable feed-backs, it would have been more difficult to complete the work.

In particular, he is grateful to AuthorHouse® for its wide-ranging support from the kind invitation to write a book on the subject to the valuable publishing resources which made possible the achievement of this literary endeavour. The encouragement and support offered by Debbie from Edinburgh have enhanced his integration in the British society. For her dedication to this work the author would like to express heartfelt gratitude!

The author wish particularly to thank the Degen Family in Stockholm and Family Hammar in Köping through this publication!

As the list of names for those who contributed to the project is not exhausted, the author extends his sincere appreciation to all those who have not been mentioned.

IN MEMORY OF

Wilhelm Feussner SJ (Josephina Hemmet in Bromma, Sweden),

My sister Ruth Yeza and

My cousin Noël Nzimbo Adrien (T)

Thank you for showing me that life is a pilgrimage on earth that needs to be decorated with flowers of love and compassion!

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Preword

Great dreams need more time and careful considerations for their successful achievement; it is advisable to proceed gradually until the desired building is raised and decorated.

These words were my advice to the author of the book in need of quality time!

I was well aware that Mr Joseph Tshilomb was researching in the complex area of International Trade Law.

He is a Swedish citizen and native from Elisabethville (L´shi). I have known Mr Tshilomb during many years and have had many encounters with him talking about ethical matters concerning global and environmental aspects. He has shown a strong spirit of cooperation and motivation to achieve his project on shipping, maritime law and international trade.

I would like to emphasize the author´s kind and generous character. He is a cultivated gentleman and scholar. His mind is strong and stable; he argues in a tolerant and convincing way. He feels at home in international social surroundings. He is able to change easily to different languages depending on the persons participating in the conversation.

With all these matters in mind, I think I have good and many reasons to recommend the result of his research.

+ Erwin Bischofberger

PhD (University of Frankfurt)

Professor emeritus

Karolinska Institute

Stockholm, October 2011

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Preface

In the early days of shipping and international maritime trade safe arrivals of ships were a real challenge. Ship owners and cargo owners were gathering together in coffee houses in London in the hope to hear good news about ships as much more casualties occurred at sea at that time. The concept of marine insurance emerged from these uncertainties related to the safe arrival of the ships carrying cargoes.

Ship owners needed to assure a safe voyage and provide the cargo owners with a conditional loan covering a substantial part of the goods carried on the ship. In the case of the safe arrival of the ship, the cargo owner will fully compensate the ship owner and pay back the conditional loan received at the loading of the cargo on the ship. Nowadays, the shipping industry has witnessed major technical developments.

On one hand, the industry has experienced real improvement in safety standards brought on by better port state control systems, higher standards of classification and the advent of the International Safety Management Code. The increase in ship size and the significant progress in containerization have led to further improvements in the industry.

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