Appraisal of the Concept of ''Proximate Cause of Loss'' under the Marine

Insurance Cover

Table of Content

1.1 Introduction
1.2 Brief historical background.

2.1 Meaning of ‘proximate cause of loss’

2.2 Common sense approach to the meaning
2.3. Application of proximate cause to general insurance polices

3.1. Concept of loss and ‘proximate cause’

3.2. Scenario of two or more ‘’proximate causes’’
3.2. Relationship between inherent vice and ‘proximate cause’

4.1. Burden of prove of ‘’proximate cause of loss’’

4.2. Challenges facing the principle of proximate cause of loss
4.3. Recommendations and way forward
5 Conclusion
Bibliography

1.1 Introduction.

Marine insurance is not radically different from sundry insurance contracts; the general
rules and principles are in tandem with what is obtainable in everyday insurance issues.
However, there are some distinct peculiarities that make the principles and practice of
marine insurance somehow unique and thought provoking. But before we delve into this

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 uniqueness, it will be edifying to capture the fact that agreement of the parties is central to
the definition, application and interpretation of marine insurance.
The learned authors of Schmitthoff Export Trade1 were of the opinion while analysing
section2 (1) of the MIA 1906 that “the term marine insurance is misleading because the
contract of marine insurance can by agreement of parties or custom or trade be extended
so as to protect the assured against losses on the inland waters or land which are incidental
to the sea voyage.’’ Coming to the uniqueness of marine insurance, it is a statutory fact that
apart from the commonplace requirement of the assured and the insurer, there must in
addition be an insurance Broker who acts as a middle man between the assured and the
Underwriter.
The practice of engaging the services of a broker has long taken a pride of place in the
marine insurance and in accordance with the case of Anglo-African Merchants V Bayley2 , a
broker is usually the agent of the assured and owns him fiduciary obligations, but he is paid
by the insurer. The fundamental purpose of engaging a broker in the marine insurance
services is to bring the practice only at the reach of Professionals who understand the
business of risk and indemnity.
It goes without saying that the purpose of marine insurance is to serve as a back-up plan for
business that requires marine voyage and its concomitant risks which may bring about loss
to the assured.
However, it is a matter of common knowledge that a loss occurs only when there is a
‘cause’ present and operative, this cause must be efficient, effective and direct in order to
attribute marine loss to it, this loss is called ‘’Proximate cause of loss.’’ This principle is
unarguably the most visible, important and controversial principle of marine insurance
practice, it is the basis upon which liability is apportioned, and it is also the parameter
through which indemnification is measured.
This paper is therefore chiefly concerned with the definitions, attributes, applications,
criticisms, and the way-forward of the principle of proximate cause in the Marine insurance.

1 th
Carole, M., et al, Export Trade: The law and Practice of International Trade, 11 edition, sweet & Maxwell,
2007,P.393.
2
1970, 1Q.B.311.

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 1.2. Brief historical background.

Marine insurance is an institution of great antiquity. It was known in Lombardy in the fourteen
century and the first English Statute dealing with Marine Insurance was passed in the 1601 3.
More so, Lloyd’s Coffee House, the birthplace of Lloyd’s of London is first mentioned in the
records of 1688. The law relating to the marine insurance is codified in the marine insurance
Act of 1906.

The principle of proximate cause developed side by side with the marine insurance, this is
because it is the heartbeat of the practice. John Lowry and Philip Rawlings4 are of the view that
“Causation in insurance law is simple enough to describe and to justify, but sometimes rather
difficult to apply. Clearly, the insured should only be able to claim for those losses that fall
within the terms of the policy, or, in other words, the loss must have been caused by a peril
which the insurers had agreed to cover.’’ It is, therefore, important to determine the cause of
the loss in any marine insurance scenario.

2.1 Meaning of ‘proximate cause of loss’

The exact meaning of the principle will continue to befuddle the minds of insurers, assured, the
courts and the tribunals; it cannot be deciphered with mathematical precision, but requires
each case to be treated on its own merit and based on its peculiar facts. However over the
years, there are some workings definitions fashioned out by both the court and commentators
which have contributed invaluably in the further elucidation of the principle.
First, the marine insurance act of 1906 provides in section 55(1)5 that:

3
Carole, OP Cit. P 392.
4. Proximate Causation in Insurance Law ,http://onlinelibrary.wiley.com/doi/10.1111/j.1468-
2230.2005.00539.x/pdf(Accessed on 29-11-2010)

5
Marine Insurance Act, 1906 (http://www.derechomaritimo.info/SA-MIA06.htm)(Accessed on 17-11-2010).

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Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is
liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he is
not liable for any loss which is not proximately caused by a peril insured against ;

(2) In particular –

(a) The insurer is not liable for any loss attributable to the wilful misconduct of the assured, but,
unless the policy otherwise provides, he is liable for any loss proximately caused by a peril
insured against, even though the loss would not have happened but for the misconduct or
negligence of the master or crew;

(b) Unless the policy otherwise provides, the insurer on ship or goods is not liable for any loss
proximately caused by delay, although the delay be caused by a peril insured against;

(c) Unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear,
ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or for any
loss proximately caused by rats or vermin, or for any injury to machinery not proximately
caused by maritime perils.

The Act doesnt go further to explain the meaning of the doctrine ‘proximate cause’ as used,
this left the law in quandary and giving rise to multiple interpretations on the true meaning of
the principle. The cargo insurance terms definitions have this to say about proximate cause;
‘every event is the outcome of a chain (or net) of previous events’, but in the words of Bacon “It
were infinite for the law to consider the causes of causes, and their impulsions one of another;
therefore it contenteth itself with the immediate cause." This immediate or effective cause not
necessarily that closest in time to the event is termed the proximate cause.”6

The most important point of the principle of proximate cause came in the locus classicus case of
Leyland Shipping V Norwich Union7 in this case the insured ship was torpedoed. She was taken

6
http://www.offshorerisk.com/definitions/cargoterms.htm(Accessed on 11-11-2010)
7
1918, A.C. 350

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by tugs to the outer harbour to be docked. She then sprang a leak after knocking against the
quay. Fearing gale, she was then ordered to a berth where she moored. Her bulkheads gave
way and sank. The House of Lords held the ship was in imminent risk of sinking from the
moment she was injured by the torpedo attack. Lord Shaw of the opinion that;
“to treat the proxima causa as the cause which is nearest in time, is out of question, causes are
spoken of as if they were as distinct from one another as beads in a row or links in a chain,
…causation is not a chain but a net,. Art each point influences, forces, events, precedent and
simultaneous, meet; and the radiation from each point extends infinitely. At the point where
these various influence s meet it is for the judgment as upon a matter of fact to declare which
of the causes thus joined at the point of effect was the proximate and which was the remote…’’
Similarly, the court applying the rule established in the Leyland’s case held in Brownsville
Holdings V Adamjee Insurance8 that “what caused the sinking was the initial incursion of water
into the engine room and that was an operating factor that never lost its hold on the vessel.’’
The rule is that immediate and not the remote cause in to be regarded. The maxim is sed causa
proxima non-remote spectature i.e., see the proximate cause and not the distant cause. The
real cause must be seen before payment of the loss. If the real cause of loss is insured, the
insurer is liable to compensate the loss; otherwise the insurer may not be responsible for loss.

Inquiry into the definition of proximate cause will be summarized by the Business Dictionary
definition of proximate cause to the effect that it is the “Active, direct, and efficient cause of
loss in insurance that sets in motion an unbroken chain of events which bring about damage,
destruction, or injury without the intervention of a new and independent force. Also called
direct cause.’’9

2.2 Common sense approach to the meaning.

It has been the practice to deduce and sift the proximate cause from the circumstances of
each case while being aided by common sense, it follows that it doesn’t require a crystal

8
2000, 2 Lloyd’s Rep. 458
9
: http://www.businessdictionary.com/definition/proximate-cause.html#ixzz16QPbvqrb.(accessed on 12 -11-
2010).

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 ball to tell from chain of causes which one is efficient and direct causation of the marine
event.
Viscount Simon put forward this angle to proximate cause when he said in the case of
Yorkshire Dale Steamship Co ltd V Minister of War Transport (the Coxwold)10 that ;
“..the interpretation to be applied does not involve any metaphysical or scientific view of
causation, much depends on judicial creativity in distinguishing the causal link between the
peril and the loss.’’
Furthermore, how this decision is to be made depends on the nature of the inquiry. Where
the nature of the inquiry is to ascertain the truth as to what went wrong, the law’s duty is to
look for unexpected causes and explain the whole chain of events.11
Where the inquiry has its purpose the determination of fault as in the law of tort, human
culpability and causes will have a strong bearing.
In the case of Ionides V The Universal Marine Insurance co12, Willes J cautioned that “you
are not to trouble yourself with distant causes, or to go into a metaphysical distinction
between causes efficient and material and causes final, but you are to look exclusively to
the proximate and immediate cause of loss.’’

The purpose of the law of marine insurance is however not the attribution of fault or the
determination of truth, but simply the construction of the cover and perils insured against
and then the consideration whether the causes are covered.13
Lord Greene MR, still on this common sense approach to the meaning and applications of
proximate cause added his voice thus in the case of Athel Line Ltd V Liverpool and London
War Risks Insurance Association14 that “this was really a matter for the common sense and
intelligence of common man.’’

10
[1942,] A.C, 691.
11 nd
Chuah J.C.T, Law of International Trade, 2 ed,Thomson Sweet & Maxwell, 2001, p.341.
12
1863, 14 CB, (NS) 259, 289.
13
Ibid 341
14
1946, 1KB 117.

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Days are gone when the determination of proximate cause followed the cause closest in time to
the loss, some cases like Pink V Fleming (1890)15 were decided in the light of this believe, but
the law and practice of causation has seen a better deal in the Leyland’s cases16, thus a cause
may be closest in time to the loss, but still may not be the proximate cause. The proximate
cause should in accordance with mere common sense be the cause that set other causes into
motion, and which effect is present and operative throughout the event of the loss. This rule
appeals not just to common sense alone, but to equity and good faith as well.

2.3. Application of proximate cause to general insurance policies.

The principle of proximate cause is also applicable in the determination of kindred insurance
liabilities, like motor insurance, fire insurance etc. its rules and applications are on all fours ,
and cases can be cited freely once the facts of a particular case are in pari material.

The traditional view of proximate cause has cut across a wide spectrum of insurance practices,
in Canada; the court gave the rationale for this in the case of Liesch v The Standard
Life Assur.17 Co, where it was held thus;
“Causality is an often interesting philosophical and legal question. The law takes a
practical approach, treating causality as a practical factual matter. Courts ask the question,
what is the efficient or proximate cause of an occurrence? We would not think it productive
to proceed too far back in time. Philosophically, the cause of an event in a person's life
could be taken as far back as their birth or career choice but such an inquiry would range
beyond the helpful or appropriate in a legal context. A motor vehicle accident at an
intersection could occur consequent upon someone leaving home to drive to an appointment
but the proximate cause would be failing to properly observe a traffic signal. Only the latter
has legal relevance.’’

Consequently, the principle of proximate cause has been applied in plethora of non- marine
property insurances cases. It was also held in the case of Sherwin-Williams Co. of

15
25QB 396
16
Supra
17
2005 BCCA 195; 39 B.C.L.R. (4th) 313 at 324

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Canada v Boiler Insp. and Ins. Co. of Canada18 in which the policy insured against damage by
accident, including explosion, but excluded losses from and accidents caused by fire, that ;
“Seldom, if ever, does an explosion, fire or accident result from one cause; the law, from
all the causes leading up to a result, selects that which is direct or proximate and regards all
the others as remote. The direct or proximate cause may not be the last, or, indeed, that in
any specified place in the list of causes but is the one which has been variously described
as the ‘effective’, the ‘dominant’ or ‘the cause without which’ the loss or damage would not
have been suffered.”19
It is instructive to note that the principle of proximate cause recently suffered a blow20 in the
Derksen case21 where the Canadian court refused to pick and choose which negligent event
amounted to ‘proximate cause’. In this instant case, where during clean-up of a work site, one
of the contractor’s employees left a steel base plate unsecured at the rear of a supply truck. As
he drove the truck on the highway, the steel base plate flew off the compressor unit and
through the window of an oncoming school bus, killing one child and seriously injuring three
others. As a result, a number of negligence actions were brought. The plaintiffs alleged, among
other things, negligence at the work site and negligence in the operation of the truck, the court
held “the accident was the result of two concurrent causes: the failure to safely clean the work
site up and the failure to ensure that the truck could be operated safely. Neither cause was
dominant since the accident would not have occurred but for either cause…In any event, the
utility of the ‘proximate cause’ analysis with respect to insurance policies is questionable.’’

Despite the case above, the principle of proximate cause is still waxing strong in the United
Kingdom and other similar legal systems as the bedrock of causation in the insurance matters,
in the Wayne Tank Co Ltd V The Employers Liability Assurance Co Ltd 22 the British court of
Appeal succinctly applied the doctrine proximate cause in deciding a controversial property
damage claim.

18
[1950] S.C.R. 187, aff’d, [1951] A.C. 319 (H.L.)
19
ibid., at p. 202, per Estey J.
20
http://www.insurancecoverageblog.com/Derksen.pdf(accessed 19-11-20100
21
[2001] 3 S.C.R. per Major J. at 411.
22
1974,QB 57.

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3.1. Concept of loss and ‘proximate cause.’

The concept of loss and proximate cause are important in the marine insurance. since it has
been stated before that insurance contract is that of indemnity, it goes without saying that the
liability of the insurer can only be activated on the occasion of loss, however there is a caveat to
the effect that the insurer is only liable upon the ‘loss’ being ‘proximately caused’ by the peril
insured against.

Section 56(1) of the MIA23 provides that;

‘A loss may be either total or partial. Any loss other than a total loss as herein defined is a
partial loss.’

The Act also provides that a loss may be actual total loss or constructive total loss 24 there is
deemed to be actual total loss when the goods are destroyed, so damaged as to cease to be
the thing insured25, or where the assured is irretrievably deprived of them.
In the case of Reischer V Borwick26 The court held the collision of the plaintiff insured
paddle tug Rosa with a floating snag which resulted in fouling the port paddle wheel,
causing considerable damage to the tug’s machinery was the proximate cause of the wreck
of the paddle and not the waves of the sea (sea peril) during the process of towing the
paddle to the nearest dock. The court rejected the argument of the insurer defendant that
they can only indemnify the assured for damage caused by the collision, and not for
subsequent loss. The court did not make any distinction between actual or subsequent loss,
but unequivocally maintained that the proximate cause being the collision with the snag is
the efficient cause of the total loss. Lopes LJ stated the law thus;

23
Marine insurance Act of 1906
24
Ibid, 56(2)
25
Chuah J.C.T, Op cit, p.370.
26
1894, 2QB 548.

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 “ in cases of marine insurance, it is well settled law that it is only the proximate cause that
is to be regarded and all others rejected, although the loss would not have happened
without them.’’
In addition, the court has made a distinction between the phrase ‘consequent on’ and
‘proximate cause’ as they both affect the concept of ‘loss’. In the case of Navierade
Canarias SA V Nacional Hispanica Aseguradora27 the House of lords rejected the assured
argument that ‘consequent on’ and ‘proximate cause’ meant the same thing while
construing marine loss. In that case the assured had taken out a freight policy which
excluded “any claim consequent on loss of time whether arising from a peril of the sea or
otherwise.’’ When a broke down of the ship resulted in delay and suspension of the charter
party, Lord Diplock held that the proper construction was that the delay was caused by an
intermediate event between the occurrence of the peril insured against and the loss of
freight for which the peril was, otherwise known as proximate cause in the marine
insurance. The Law Lord went ahead to say that the phrase consequent on does not denote
causative, but a mere descriptive expression defining the scope or extent of the exception.

By and large, the application of loss and the role of proximate cause are not isolated, what
is important is that certain elements must be present for a marine insurance cause of action
to be a live issue, those elements are to wit;
a. “The insurance covers the risks the assured alleges;
b. The loss is proximately caused by the risk insured against;
c. The assured has the capacity to claim under the policy, that is to say he has properly
acquired the policy and he has insurable interest in the claim;
d. The assured claim is not defeated by any breach of good faith
e. The assured has committed no breach of express or implied warranties’’28.

3.2. Scenario of two or more ‘proximate causes’

27
1978, A.C 853.
28
Chuah J.C.T, Op cit,p. 370

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Susan Hodge, argued that there can be situations where causation can be attributed to two or
more efficient proximate causes.29This scenario had been canvassed and reasonably espoused
in the case of Lloyd Instrument Ltd V Northern Star Insurance co Ltd30 where his lordships are
called upon to determine whether a damage to a yacht hull was as a result of defective design
which the manufacturer not insurers are liable or adverse weather( sea), the court holding the
two as the causa proxima held per Lawton L J that;

“what has to be decided in this case is whether on the evidence the unseawortiness of the
cruiser due to the design defect was such a dominant cause that a loss cause by the adverse
sea could not fairly and on common sense principles be considered a proximate cause at all.
In my judgment the evidence did not establish anything of the kind, what it did established
was that but for the combination of unseaworthiness due to design defects and adverse
sea, the loss would not have been sustained. One without the other would not have caused
the loss, in my judgment both were proximate causes’’ (emphasis mine).
It is a settled view of the marine insurance law that when there are two or more proximate
causes of loss, the insurer is only liable if there is no express exclusion in the policy. Lord
Sumner in Samuel V Dumas 31 put forward the law that “where a loss is caused by two
perils operating simultaneously at the time of loss and one is wholly excluded because the
policy is warranted free of it, the question is whether it can be denied that the loss was so
caused , for if not the warranty operates.’’
Lord Denning taking the law further added that “the law in this respect is the same both for
marine insurance and non-marine insurance namely, if the loss is caused by two causes
effectively operating at the same time and one is wholly expressly excluded from the policy,
the policy does not pay.’’32

29
http://books.google.co.uk/books?id=G8sBdRAYzLQC&pg=PA344&lpg=PA344&dq=two+or+more+proximate+caus
e(Accessed 11-11-2010)
30
1987, 1 Lloyds Rep, 32.
31
1924 , 18 Lil Rep, 211
32
Wayne Tank and Pump co ltd V Employers liability insurance corporation, (supra)

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 3.2. Relationship between inherent vice and ‘proximate cause’.

Section 55(2)c of the Marine Insurance Act provides that Unless the policy otherwise
provides, ‘the insurer is not liable for ordinary wear and tear, ordinary leakage and
breakage, inherent vice or nature of the subject-matter insured, or for any loss proximately
caused by rats or vermin, or for any injury to machinery not proximately caused by maritime
perils’. This statutory exclusion also appears as clause 4.4 of the institute cargo clauses in
both the 1/1/82 and 1/1/09 , which provides in clause 4.4 “in no case shall this insurance
cover loss, damage or expense caused by inherent vice or nature of the subject matter
insured.’’

The concept of inherent vice was first defined by Lord Diplock when thus “the risk of
deterioration, of the goods shipped as a result of their natural behaviour in the ordinary course
of the contemplated voyage without the intervention of any fortuitous external accident or
casualty.’’33 However, the position of the law and the continual relevance of the definition per
Lord Diplock has been tempered with by the decision in Global Process Systems v Syarikat
Takaful Malaysia Berhad34, the Court of Appeal was asked to consider whether the loss of the
legs of a jack-up rig occurring during a tow in anticipated weather conditions was due to
inherent vice and, therefore, excluded under an All Risks Marine Insurance Policy. The Court
held that the test for inherent vice was not whether the weather was within the range that
could reasonably be anticipated, but whether it would be bound to occur as a usual incident of
the type of voyage being undertaken. On the facts the damage was caused by the perils of the
sea, not inherent vice, and was, therefore, not excluded.

The Court of Appeal's judgment is helpful to insured in providing a narrower construction of

incidents of the voyage that will be treated as constituting an inherent vice of the subject
matter insured in the context of marine insurance. Although the Court of Appeal found for the
assured on this occasion, the question of the type of weather and waves that on a particular

33
Soya V White, 1983, 1 Lloyds, Rep
34
[2009] EWCA Civ 1398.

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voyage are bound to occur will inevitably be sensitive fact and so, necessarily, will be the
determination of those conditions which mean the proximate cause of the loss is a peril of the
sea rather than inherent vice.

The conclusion that inherent vice can only be a proximate cause of loss if there is no other
insured peril that is a proximate cause is similarly helpful to insured. The consequences of the
judgment will no doubt lead to the role of marine surveyors being scrutinized and insured will
need to continue to comply strictly with marine survey policy conditions. It remains to be seen
how insurers in this class will respond in terms of certification requirements.35

4.1. Burden of prove of ‘proximate cause of loss’

When loss occurred as a result of any of the marine peril, the claimant is entitled to
enforce the Policy and the insurers become liable to pay the amount of the loss in
accordance with its terms. No claim imposed on the assured by law or by stipulations
of the policy. The due performance of these duties may be made a condition precedent
to the liability of the insurers. Therefore, the duties of the assured as regards the
making of a claim are to give notice of the loss, to furnish particulars of the loss, to
furnish proof of loss and to make no fraudulent claim.
It merits mentioning that if the assured makes claim upon fulfilment of the above
duties, but the insurer is denying liability and refused to indemnify the assured, it
then behoves on the assured to institute an action in court and substantiate his claim
that the Proximate cause of that loss or damage was an insured risk or peril(s) 36 the proof of
proximate cause of loss can be done in different scenarios, like;

a. Peril of the sea.

35
http://www.herbertsmith.com/NR/rdonlyres/D2CC7005-F979-4B6B-896F-
EFCE6697F05D/13998/Inherentviceandperilsofthesea080110.html( Accessed 29-11-2010).
36
Ismail Adua Mustapha & A.A. ,Owoade
,http://www.unilorin.edu.ng/publications/ismailam/PROOF%20OF%20LOSS%20IN%20MARINE%20INSURANCE%20
CONTRACT%20_CORRECTED%20VERSION_.pdf(Accessed 29-11-2010.)

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Peril of the Seas is defined to mean an action of the elements at sea of such force as to
overcome the strength of a well-founded ship and the normal precautions of good marine
practice37. In Compania naviera vascongada v British and Foreign Marine Insurance Co. Ltd 38
Branson J stated as follows: “… the law is, in my opinion clear, the onus of proof that the loss
was fortuitous lies upon the plaintiffs, but that does not mean that they will fail if the evidence
does not exclude all reasonable possibility that the ship was scuttled. Before that possibility is
considered, some evidence in support of it must be forthcoming. With regards to
unseaworthiness, on the other hand, the onus is upon the defendants to show that the vessel
was unseaworthy when she left.” There is a presumption of loss by perils of the sea when a ship
is known to have sailed
and never heard of, it is presumed to founder at sea. This presumption formed the ratio of the
case of Green v Brown39 where a Ship was missing and never heard of.

b. Peril of barratry.
Rule 11, Marine Insurance Act (n. 1), defines barratry to include every wrongful act wilfully
committed by the master or crew to the prejudice of the owner, or, as the case may be
the chatterer.
When a ship-owner pleads a loss caused by barratry, it is crucial on the part of
insurers to prove that there was complicity on the part of ship-owner, and that the
assured equally have the burden to prove that there was no complicity on his part. It
goes further that by the common law rule of “He who assert must prove” placed legal
burden on the insurer to prove the wilful misconduct. On the other hand, there is
equally fundamental rule of evidence that “the plaintiff must prove the essential
ingredients of his claim. It therefore befalls upon the claimant (Assured) to establish,
at the outset, a prima facie case that the loss was so caused and, in order to do so,
non-complicity must be established40.

37
Black LawDictionary, 6th edition, p’1138;
38
(1934)54LILRep35,
39
1743) 2str 1199.

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It has been established from the above two scenarios that for a court to hold that a cause is
proximate and within insured peril, then the assured must discharge the onus to prove on the
balance of probability the efficiency of the cause or in situation where elements of crime are
presence, to prove beyond reasonable doubt the proximate cause of loss.

4.2. Challenges facing the doctrine of proximate cause of loss.

The doctrine of proximate cause is facing a lot of challenges recently, they include;
First, sometimes it is not very clear as to what cause is proximate when there are multiple
causes. There are confusions whether to settle for the most direct efficient cause or a
remote efficient cause. The decision in Leyland’41 case didn’t help matter especially when it
brought the rationale for determining and constructing what is proximate cause at the door
step of ‘common sense’, this has led to courts developing rule of thumb and not rule of law,
and this has in some cases succeeded in standing the same common sense on its head just
to fulfil the requirement of the rule in Leyland’s case thereby indulging on metaphysical
contemplation it originally wanted to avoid.

Second, the principle of proximate cause no longer represents the rule in some jurisdictions
like Canada, for instance , since the case of Dersken42 in Canada, the bottom has been
dropped off the proximate cause rule , in fact in C.C.R Fishing Ltd V British Reserve
Insurance co43, which was the fore-runner of the Dersken case, the court held per Mclachlin
J, that “the question of whether insurance applies to a loss should not depend on
metaphysical debates as to which of various causes contributing to the accident was
proximate. Apart from the apparent injustice of making indemnity dependent on such fine
and contestable reasoning, such a test is calculated to produce disputed claims and
litigation.”

40
Ismail Adua Mustapha & A.A. ,Owoade, op cit.
41
supra
42
supra
43
1990, 1 S.C.R, 814, p.823

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 Third, a study of some of the standard policies previously and currently in use will reveal
that various expressions like ‘caused by,’ ‘attributed to’, ‘reasonably attributed to’, ‘in
consequences thereof’, ‘consequent on’, and ‘arising from’ have been employed in the
current versions of institute Hull clauses, Institute cargo clauses, and the Institute freight
clauses . The question that is begging for answer is, are these expression synonymous with
the concept of ‘Proximate cause’ or are they contradicting it, the answer to this question
will help in streamlining the meaning, effect and application of the principle of proximate
cause vis a vis other similar expressions employ in the marine insurance law.

4.3. Recommendations and way forward.

The doctrine of proximate cause in the marine insurance should be given a human face, it will
not be an exercise in trying to decipher some abstract cause, or some remote cause, but rather
should follow the path of reason. This implies that whenever there is an insurance contract, and
an insured peril happened, then the insurer should pay if the assured is not in breach of any
obligations or duties, especially obligation of good faith. The construction of proximate cause
should therefore reflect practical evidence of what causes the loss, literal interpretation of the
insurance policy cover, and exercise of utmost good faith in order not to defeat the end of the
marine insurance contract justice. It should be sufficient to bring the loss within the risk if it is
established that, viewed in the entire context of the case, the loss is shown to be fortuitous in
the sense that it would not have occurred save for an unusual event not ordinarily to be
expected in the normal course of things.

5 Conclusions
It has been shown above how the doctrine of proximate cause forms the fulcrum of marine
insurance practices, the general summary that can be gleaned from the discussions above
about proximate cause of loss doctrine are thus;
The determination of real cause depends upon the working and practice of insurance and
Circumstances of the loss. Also- If there is a single cause of the loss, the cause will be the

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 proximate cause and further, if the peril (cause of loss) was insured, insurer will have to
indemnify the loss.
If there are concurrent causes, the insured perils and excepted perils have to be segregated.
The concurrent causes may be first, separable and second, inseparable. Separable causes as
those which can be separated from each other. The loss occurred due to a particular cause
may be distinguished.
If the circumstances are such that the perils are inseparable, then the insurers are not liable
at all when there is existence of any excepted peril. If the causes occurred in form of chain,
they have to be observed seriously to know which cause ultimately triggers off the marine
loss.
When there is unbroken chain, the excepted and insured perils have to be separated. If an
excepted peril precede the operation of the insured peril so that the loss cause by the latter
is the direct and natural consequences of the excepted peril, there is no liability.
In the situation of broken chain of events with no excepted peril involved, it is possible to
separate the losses. The insurer is liable only for that loss which caused by an insured peril;
where there is an excepted peril, the subsequent loss caused by an insured peril will be a
new and indirect cause because of the interruption in the chain of events.

BIBLIOGRAPHY

BOOKS
Black LawDictionary, 6th edition, p’1138
Carole, M., et al, Export Trade: The law and Practice of International Trade, 11th edition, sweet &
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Chuah J.C.T, Law of International Trade, Thomson Sweet & Maxwell, 2nd edition, , 2001, p.341.
Day, D,M, the law of intl trade , Butterworths,page 119, 1981.
Hans Van Houtte, the law of intl trade. Sweet &Maxwell, 1995,

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Hodge Susan ; Cases and Materials on Marine Insurance Law, http://books.google.co.uk/books?id
(accessed 19-11-2010).
Ismail A. M & A.A. ,Owoade , Proof of loss in the Marine Insurance Contract,
,http://www.unilorin.edu.ng/publications/ismailam/PROOF%20OF%20LOSS%20IN%20MARINE%20INSU
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2010)
Indira Carr, principles of international trade law, 23d ed,Cavendish publishing limited, 2005.
Ray August, intl business law, 4th ed, pearson educational international, p 638, 2004

Roger Jones and GASBFRIEL a. moens, vol x, 2006, Routledge –cavendish

. http://www.businessdictionary.com/definition/proximate-cause.html#ixzz16QPbvqrb (Accessed on
2010).
http://www.offshorerisk.com/definitions/cargoterms.htm(Accessed on 11-11-2010).

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Anglo-African Merchants V Bayley, 1970, 1Q.B.311.
Athel Line Ltd V Liverpool and London War Risks Insurance Association, 1946, 1KB 117.
Brownsvile Holdings V Adamjee Insurance, 2000, 2 Lloyd’s Rep. 458.
C.C.R Fishing Ltd V British Reserve Insurance, 1990, 1 S.C.R, 814, p.823.
Compania naviera vascongada v British and Foreign Marine Insurance Co. Ltd, (1934)54LILRep35.
Derksen case, [2001] 3 S.C.R. per Major J. at 411.
Global Process Systems v Syarikat Takaful Malaysia Berhad, [2009] EWCA Civ 1398.
Green v Brown, 1743) 2str 1199.
Leyland Shipping V Norwich Union, 1918, A.C. 350.
Liesch v The Standard Life Assur, 2005 BCCA 195; 39 B.C.L.R. (4th) 313 at 324
Ionides V The Universal Marine Insurance co, 1863, 14 CB, (NS) 259, 289.
Lloyd Instrument Ltd V Northern Star Insurance co Ltd, 1987, 1 Lloyds Rep, 32.
Navierade Canarias SA V Nacional Hispanica Aseguradora, 1978, A.C 853

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Pink V Fleming (1890) 25QB 396.
Reischer V Borwick, 1894, 2QB 548.
Samuel V Dumas, 1924 , 18 Lil Rep, 211.
Sherwin-Williams Co. Of Canada v Boiler Insp. and Ins. Co. of Canada, [1950] S.C.R. 187, aff’d, [1951] A.C.
319 (H.L.).
Soya V White, 1983, 1 Lloyds, Rep.
Wayne Tank Co Ltd V The Employers Liability Assurance Co Ltd, 1974,QB 57.
Yorkshire Dale Steamship Co ltd V Minister of War Transport (the Coxwold), [1942,] A.C, 691.
http://www.herbertsmith.com/NR/rdonlyres/D2CC7005-F979-4B6B-896F-
EFCE6697F05D/13998/Inherentviceandperilsofthesea080110.html.(accessed 29-11-2010).

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