Dubai Court of Cassation Judgment No. 168/2009 Dated
15.11.2009.
In an action filed before the Dubai Court of Cassation, the Court
held that when the Insurance Company, the insurer of goods carried
by sea, pay compensation to the insured for the loss or damage, it
will subrogate the insured in his right and claim towards the
carrier. The legal proceedings held by the insurance company, in
this case, are arising from the Bill of Lading and not from the
Insurance Policy. Therefore the carrier has the right to raise the
same defences he might have before the consignee, towards the
Insurance Company which, in fact and law, replaced the consignee in
the Bill of Lading. Hence, the arbitration clause contained in the
Bill of Lading will apply towards the Insurance Company.
Claim
An Insurance Company ("the Claimant") filed a claim
before the Dubai Court of First Instance against inter alia the
carrier (third defendant). The claimant was the insurer of a
pleasure yacht shipped on board a vessel by the carrier, the third
defendant, from Antwerp Port to Jebel Ali Port. The yacht became a
total loss when its balance was disturbed and fell in the water
while landing it from the vessel. The Claimant compensated the
insured, owner of the yacht, and filed this claim against
defendants to claim the amount paid to the insurer.
Court of First Instance
The Court of First Instance rejected the claim accepting the third
defendant's argument that there is an arbitration clause
embodied in the Bill of Lading B/L which governs the legal
relationship between the carrier and the insurer (consignee).
Court of Appeal
The Court of Appeal affirmed the ruling of the Court of First
Instance. The claimant appealed further to the cassation
court.
Court of Cassation
At the Court of Cassation, the Claimant argued that the previous
courts had mistakenly committed the Claimant to the arbitration
clause in the B/L while the B/L was not signed by the Claimant. The
Claimant has argued further, that the B/L governs only the
relationship between the Consignee (insured) and the carrier (third
defendant) and its terms should not be valid towards the Claimant
who has compensated the consignee as this is simply subrogating the
Consignee in the right to sue.
The Court of Cassation following Article 261 of the Commercial
Maritime Code states:
"It shall be permissible for the carrier to give the shipper a
receipt for the delivery of goods before they are loaded on board
the vessel which shall be substituted for the Bill of Lading upon
the request of the shipper after the goods have been placed on
board the ship and the receipt shall have the same effect as the
Bill of Lading if it contains the particulars stipulated in Article
257 and is endorsed with the word "shipper",
It was concluded that the Insurer had the chance to review the B/L
and its terms before issuing the insurance policy.
The same court also held that, as per Article 398 of the Maritime
Code which states: "The insurer shall be subrogated up to the
extent of the payment of compensation that he has made to rights
and claims which the insured may have arising out of losses
included in the insurance",
A lawsuit, set up by the Insurance Company subrogating a consignee
is arising from the maritime contract ("Bill of Lading")
and not from the insurance contract (Insurance Policy), and is
considered if the claim is made by the insured itself. Thus, the
arbitration clause stated the Bill of Lading is to be applied
towards the Claimant, and insurer's claim before the cassation
court should be rejected.
The Court of Cassation therefore dismissed the appeal and upheld
the Judgments delivered by the lower courts.
Note from Al Tamimi & Company: Insurance companies should
examine the contents and clauses set out in the Bill of Lading
before issuing the insurance policy to avoid such situation in the
future
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