The problem of Hanjin and insurance
Hanjin began a procedure of financial intervention in Seoul at the order of the district court on 30 August 2016. The ships are docked, and is causing delays in forwarding and bottlenecks, which will likely result in extra costs the forwarders will claim from shippers and recipients.
Another matter is the insurance coverage of a shipper or recipient to recover the re-shipment. The immense majority of vessels in international commerce are insured under the clauses of the London Institute called ICC (A) in its latest edition, dating from 2009. This insurance is all-risk for losses or damage to the insured item unless excluded, and such exclusions often involve losses or damages caused by the insolvency or financial failure of the shipowner, operator or charterer, but only if they were aware beforehand of the situation of insolvency or financial failure. Hence, if it is unknown, it would be a non-excluded, covered risk.
This exclusion does not affect the recipient of the bill of lading. A financial error of the shipowner or other ship operator would, accordingly, be a risk covered by this insurance, with clause 12 acting in favor of shippers as follows:
Where, as a result of the operation of a risk covered by this insurance, the insured transit is terminated at a port or place other than that to which the subject-matter is covered under this insurance, the Underwriters will reimburse the Assured for any extra charges properly and reasonably incurred in unloading storing and forwarding the subject-matter to the destination to which it is insured hereunder.
In short, the insured party must take into account all factors and take the necessary measures to minimize the consequence of a covered accident. This is laid down by Spanish law and the insurance contract. Therefore, reshipment costs constitute an obligation for the insured party, as the expenses the insured party is obligated to incur in order to minimize the consequences of the accident, where such accident is the loss or damage of real or in-process goods owing to the insolvency of the shipowner or operator.
Were you aware of this procedure?