“The contract of marine insurance is highly idiosyncratic; it involves juristic concepts that are peculiar to itself such as sue and labour, subrogation, abandonment and constructive total loss; to give but a few examples. The general law of contract is able to throw but little light upon the rights and obligations under a policy of marine insurance in the multifarious contingencies that may occur while the contract is in force.”
“The validity of a transfer of a tangible moveable and its effect on the proprietary rights of the parties thereto and of those claiming under them in respect thereof are governed by the law of the country where the moveable is at the time of the transfer (lex situs).”
“Agree settle CTL claim on the basis that there are no circumstances known to the assured that may prejudice cover or may otherwise affect the claim, such payment is made without prejudice to this reservation. Net open market residual value of vessel to be accounted to insurers.”
“… a cession or transfer of the ship to the underwriter, and of all his property and interest in it, with all the claims that may arise from its ownership, and all the profits that may arise from it, including the freight then being earned. Its operation is as effectually to transfer the property of the ship to the underwriter as a sale for valuable consideration, so that of necessity it vests in the underwriter a chattel of more or less value, as the case may be.”
“Lord Blackburn in 1877, before the Marine Insurance Act, in Simpson v. Thomson[1877] 3 App Cas 279 said, at page 292: ‘I do not doubt at all that where the owners of an insured ship have claimed or been paid as for a total loss, the property in what remains of the ship, and all rights incidental to the property, are transferred to the underwriters as from the time of the disaster in respect of which the total loss is claimed for and paid.’ He distinguishes the case from subrogation to a right to recover damages against a third party in respect of the thing insured, which he says follows on payment for a total loss, but must be exercised in the name of the assured and in respect of his right.”
“All authorities agree that abandonment operates as a cession or transfer of whatever remains of the subject-matter insured, from the assured to the insurer. But is the transfer absolute or conditional? In the first place, a valid abandonment may be defeated by a subsequent change of circumstances before action brought, e.g., in the case of capture and recapture: see section 62 and notes. In the second place, can the insurer disclaim an onerous property which is properly abandoned to him? See that question discussed in the note to section 79, and see further, note D on abandonment, post page 166. An amendment made in the Commons Committee to subsection (1) strengthens the view that he can disclaim. The words ‘is entitled to whatever remains’ were altered to ‘is entitled to take over, etc’.”
“The authorities fully bear out the proposition that whatever remains of the subject-matter insured vests in the insurer when he settles for a total loss. ‘The assured’, says Lord Cottenham, ‘must give up to the underwriters all the remains of the property recovered, together with all benefit and advantage belonging or incident to it, or rather such property vests in the underwriters.’ (Stewart v. Greenock Marine Insurance Company [1848] 2 H.L.C. at page 183). But is the vesting absolute or conditional, that is to say, can the insurer disclaim the property if it is onerous? Suppose a ship is wrecked in harbour and the insurer pays for a total loss. There may be an obligation to remove the wreckage, the expense of which would exceed the value of the wreckage. The question has been discussed, but not decided, in England. The footnote in the text of Chalmers refers, inter alia, to the case of Arrow Shipping Co v. Tyne Improvement Commissioners to which I have referred above. In France, it seems, the insurer can disclaim. See Pothier, Traité d’Assurance, paragraph 136. In Committee the words ‘is entitled to take over’ were substituted for the words ‘is entitled to’, and this amendment strengthens the view that the insurer is not compelled to accept an onerous property.”
“We herewith declare that we abandon the registered letter… for which we claim compensation, and that we are ceding all our rights to the Helvetia…”
“The notice of abandonment, however, is the normal means by which an election to abandon is notified, and we would suggest, made. … That notice, however, does not effect abandonment, even if it is valid. It is essentially an offer to cede, a formal or even informal recognition that, if the insurer so elects, he will, upon payment, be entitled to a complete interest in the thing insured or what remains of it as from the time of the casualty. If that offer is accepted it becomes irrevocable. If it is rejected, like any offer, it can be withdrawn: Royal Boskalis at page 556. If it is neither accepted nor withdrawn, but nevertheless valid, then in due course a judgment of the Court will confirm its validity, with the consequences provided for under section 63.”
“No-one doubts that the underwriter on hull damaged by collision and abandoned as a constructive total loss is entitled to the benefit of the right of the assured to sue the wrongdoer for the damage to hull. But he derives his right from the provisions of section 79, whereby he is subrogated to ‘all rights and remedies of the assured in and in respect of the subject-matter’, very different words from ‘all proprietary rights incidental thereto’. And it is to be noted that in respect of abandonment the rights exist on a valid abandonment, whereas in respect of subrogation they only arise on payment; and that subrogation will only give the insurer rights up to 20 shillings in the pound on what he has paid.”
“… The word ‘abandonment’ does not itself appear in section 61, which speaks rather of the choice available to the assured to ‘abandon the subject-matter insured to the insurer’. What is being chosen is therefore a legal concept rather than an act, physical or mental. The legal concept is the cession of the ship to the insurer (see the dictum of Martin B in Rankin v Potter cited above and now sections 63 and 79 of the Act). That cession occurs in both forms of total loss, actual as well as constructive (Kaltenbach v. Mackenzie [1878] 3 C.P.D. 467, see paragraph 58 above). The cession, however, only occurs upon payment, and only if the underwriter is willing to accept the cession: for even in the case of an actual total loss, where the cession operates as a matter of law, the language of section 79(1) speaks of the insurer being ‘entitled’ to take over the interest of the assured: see Allgemeine Versicherungs-Gesellschaft Helvetia v. Administrator of German Property[1931] 1 KB 672 at 687 to 688 per Lord Justice Scrutton. In the case of a constructive total loss, because of the need for a notice of abandonment save in exceptional cases, the underwriter’s decision will effectively occur when he accepts, if he does, a notice of abandonment (see section 62(6)), but even so the abandonment only takes effect on payment. It is then retrospective to the time of the casualty: see section 79(1). That is abandonment.”
“In brief, a valid notice of abandonment or election to abandon does not automatically vest the property in the underwriter. As is made clear by sections 63(1) and 79(1) of the 1906 Act, the underwriter is entitled to take over the assured’s interest in whatever remains of the subject matter insured and all proprietary rights incidental thereto when he settles the claim on a total loss basis, but is not bound to do so. He may already have made an irrevocable decision to take over the property if he has ‘accepted’ the assured’s notice of abandonment, but even then it is only on payment of the claim that the cession takes effect. The offer which the assured makes when he elects to abandon is to transfer his interest upon payment. If the underwriter accepts that offer, the transfer takes place when the claim is settled but the underwriter’s title as abandonee of the property vests retrospectively from the date of the casualty.”
“In practice, it is rare nowadays for underwriters to accept abandonment and take over the assured’s proprietary interest unless there is a clear financial advantage in their doing so. In may cases, the property may be a damnosa hereditas, because of potential liabilities for wreck removal, or salvage efforts may simply not seem worth the trouble, from underwriters’ perspective. It is probably not open to underwriters, however, to accept an abandonment in part, seeking to take the plums while leaving the duff behind, or to claim the benefit of salvage at a later date having initially declined the abandonment when the assured’s claim was settled.”
“As a matter of commercial prudence, no doubt, an underwriter who settles a claim for total loss should make it clear whether he is disclaiming an interest in the property or wishes to take the benefit of any salvage, so as to avoid any risk of its being inferred that he has made his election, in either direction, but in principle it would appear that he can keep his options open indefinitely.”
“… The argument for St Paul on this application was that St Paul claimed, and had, an interest in the claim because it was entitled to pursue the claim in Ballast’s name either with its consent, or if it did not consent, by seeking an order that its name be lent to the proceedings; and that St Paul had a proprietary interest, by way of a lien or charge, over the fruits of the claim and ‘possibly’ also in respect of the claim itself as a right of action.”
“It appears equally clear that where a ship is only partially insured, so that her owners remain to some extent ‘their own underwriters’, the effect of a notice of abandonment will be to make the owners and the underwriters joint tenants of the property, in the proportion which the amount uninsured bears to the insured.”
“The abandonment does not vest the property. The Registry Acts prevent the passing of the property except in a certain way. The owners, however, become trustees for the underwriters.”
“The doctrine [renvoi] should not therefore be invoked unless the object of the English conflict rule in referring to a foreign law will on balance be better served by construing the reference to mean the conflict rules of that law.”
“If it can be shown that a court sitting at the situs would not apply its own domestic law but, under its conflict rules, would apply the domestic law of another country, an English court should follow the doctrine of renvoi and do likewise. In other words, in this context the ‘lex situs’ should mean whatever system of law would be applied by a court of the situs. This would promote certainty and uniformity of result.”
“A similar argument suggests that when the English court applies the lex situs to determine the title to moveables situated abroad, it should interpret the lex situs broadly so as to include whatever the courts of the situs have decided or would decide. The argument is much weaker than in the case of land, because the moveables may be taken out of the jurisdiction of the foreign court.”
“Whether the second or third solution should be adopted depends on whether English law applies the doctrine of renvoi in this context. There is no authority on the question, but in my judgment the question should be answered in the negative. The doctrine has most frequently be applied in the field of succession. Outside that field it seems that it has been applied only to legitimation by subsequent marriage. It has not been applied in contract or other commercial situations. It has often been criticised, and it is probably right to describe is as largely discredited. It owes its origin to a laudable endeavour to ensure that like cases should be decided alike wherever they are decided, but it should now be recognised that this cannot be achieved by judicial mental gymnastics but only by international conventions. The determination of a question of priority between competing claims to property is based on considerations of domestic legal policy, since it involves striking a balance between two competing desiderata, the security of title and the security of a purchase. A decision by an English court, based on English principles of conflict of laws, that the question should be determined by the application of the rules of a foreign law is also based on considerations of legal policy, albeit at a higher level of abstraction. It involves a policy decision, at the higher level, that the policy which has been adopted, at the lower level, by English law should not be applied because the considerations which led to its adoption in the domestic law are not relevant in the particular circumstances of the case; and to a policy decision, at a higher level, that the policy which has been adopted, at the lower level, by the foreign law should be applied in its stead. In my judgment there is or ought to be no scope for the doctrine of renvoi in determining a question of priority between competing claims to shares, and in the absence of authority which compels me to do so – and there is none – I am not willing to extend it to such a question. I should add that all the expert witnesses agreed that the doctrine of renvoi has no place in the modern New York conflict of laws, for much the same reasoning as I have described, and I accept their evidence on this point.”
“The reference is to the domestic law of the place in question; at one time there was an argument for renvoi, but mercifully (or sadly, as the case may be) that has been abandoned.”
“With regard to compensation for damages resulting from an infringement of rights, the law of the place in which the infringement occurred shall be applied. If both parties are nationals of the same country or domiciled in the same country, the law of their own country of their place of domicile may also be applied.”
“9(1) The rules in this part apply for choosing the law (in this Part referred to as ‘the applicable law’) to be used for determining issues relating to tort or (for the purposes of the law of Scotland) delict. … (5) The applicable law to be used for determining the issues arising in a claim shall exclude any choice of law rules forming part of the law of the country or countries concerned.”
“Renvoi is therefore excluded in relation to claims in tort which fall within the scope of Part III of the 1995 Act. Section 9(5) would seem to reflect the common law position on this question, but this view has been rejected by the High Court of Australia which has applied the doctrine of renvoi in relation to a foreign tort.”
“The application of the law of any country specified by this Convention means the application of the rules of law in force in that country other than its rules of private international law.”
“In the Convention the word ‘law’ means the rules of law in force in a State other than its rules of conflict of laws.”
“The application of the law of any country specified by this Regulation means the application of the rules of law in force in that country other than its rules of private international law.”
“It is the substantive law of the country which the parties have chosen as that by which their mutual legally enforceable rights are to be ascertained, but excluding any renvoi, whether of remission or transmission, that the courts of that country might themselves apply if the matter were litigated before them. For example, if a contract made in England were expressed to be governed by French law, the English court would apply French substantive law to it notwithstanding that a French court applying its own conflict rules might accept a renvoi to English law as the lex loci contractus if the matter were litigated before it. Conversely, assuming that under English conflict rules English law is the proper law of the contract the fact that the courts of a country under which English conflict rules would be regarded has having jurisdiction over a dispute arising under the contract (in casu Kuwait) would under its own conflict rules have recourse to English law as determinative of the rights and obligations of the parties, would not make the proper law of the contract any the less English law because it was the law that a Kuwaiti court also would apply.”
“As a purely practical matter it would seem that a court should not undertake the onerous task of trying to ascertain how a foreign court would decide the question, unless the advantages of doing so clearly outweigh the disadvantages. In most situations, the balance of convenience surely lies in interpreting the reference to foreign law to mean its domestic rules.”
“22-058 A ship is not like an ordinary personal chattel, and there are dicta indicating that a ship is situate in law at her port of registry and not where she is physically situate from time to time. This rule was adopted for a limited purpose by the legislature [in relation to stamp duty on probates, now repealed] and would seem to be both convenient and sound in principle when the vessel is upon the high seas. Where, however, a vessel is within territorial or national waters the reasons for ascribing her a situs at her port of registry are not compelling, and the artificial situs is displaced by the actual situs. Thus the English courts would not recognise the validity of a foreign government’s interference with vessels wearing its flag present within English waters. 22-061 An aircraft is, as is a merchant ship, not like an ordinary chattel, and on grounds of convenience it is arguable that it should be ascribed a permanent situs in the country where it is registered regardless of where it may be physically present from time to time. Such an ascription would avoid difficulties which could arise in the case of an aircraft in flight over the high seas or a territorium nullius. The country of registration is given paramount importance in international conventions dealing with rights of property in aircraft, and this importance is reflected in the provisions of English law relating to the registration of aircraft. However, the reasons for the ascription of an artificial situs are not compelling when the aircraft is either on or over the territory of a country; and it may be that an aircraft is situate where it physically is for the time being unless it is either over the high seas or over or on territory which is not under the sovereignty of any State.”
“It must also be noted in the present case that the Cristina, even when in Cardiff docks, may have, as being a foreign merchant ship, a different status from an ordinary chattel on land.”
“Although there is a somewhat tentative and limited suggestion in Dicey & Morris, The Conflict of Laws, 13th Edition, paragraphs 22E-060-061 that an aircraft ‘may at some times be deemed to be situate in its country of registration’, there are overwhelming reasons for treating an aircraft as situate in the State where it physically is for the time being, at least unless it is either over the high seas or over or on territory which is not under the sovereignty of any state. Realistically, Mr Shepherd did not (or not seriously) contend otherwise.”
“… In the case of American ships the laws of the United States provide the means of evidencing the title to them.”
“(1) Subject to any rights and powers appearing from the register to be vested in any other person, the registered owner of a ship or of a share in a ship shall have power absolutely to dispose of it provided the disposal is made in accordance with this Schedule and registration regulations. (2) Sub-paragraph (1) above does not imply that interests arising under contract or other equitable interests cannot subsist in relation to a ship or a share in a ship; and such interests may be enforced by or against owners and mortgagees of ships in respect of their interest in the ship or share in the same manner as in respect of any other personal property.”
“146. There seem to us to be powerful reasons for giving effect to the law of the country of register as the lex situs in relation to questions of title, property and assignment (subject, of course, to local statute and public policy). The chance location of a working merchant ship in a port within its range of sailing or on the high seas appears to introduce an element of arbitrariness to the legal analysis. This is especially so if, as is likely, the national register and registration laws of the port in question are directed to ships of that country. If a law of a country other than the country of registration is chosen to deal with the assignment of property in a ship, it is likely that there will be no statute dealing with registration that is made relevant. 147. The relevant choices appear to be the law of the forum, the law of the country of registry as the lex situs (and not merely when the ship is on the high seas), the law of the place of the ship if in another country’s territorial waters, and … the law of the domicile of the registered owner or operator. 148. … Given the importance of the register in the workings of international maritime law and commerce and the importance of the law of the flag state in many contexts, it would be odd to decline to give effect to a statute of the flag state governing the transfer, or not, of rights created or recognised by the statute of that country. Particularly for reasons of clarity and certainty in commercial dealings and conformity with notions of ship nationality, there is much to be said for regarding the situs of a merchant ship as its country of registry. These circumstances also commend the relevance and admissibility of evidence of the law of the flag state as to the role and effect of the register, in particular whether it gives title or rights by the fact of registration or merely acts as a prima facie record of such matters, and what recognition it gives to rights created by transactions dealing with the ship before registration. One is assisted to these views by the recognition of the fact that, if Australian law governs the questions solely, as the law of the forum, or the lex situs of the ship at the time of delivery, the question of who was ‘the owner’ in the proprietary sense would be determined without regard to any statute dealing with registration and its legal consequences. The Shipping Registration Act would be irrelevant because it only deals with Australian-owned ships. It would be similarly anomalous if the law of the country of domicile of the buyer or seller dealing with the registration of ships (if that were not the flag state’s law) were treated as relevant to the ascertainment of rights passing or created in a transaction by way of assignment.”