Collision happens in various forms, for instance, two floating or navigable objects coming into contact, or extending to harbours, wharves, piers, wreck and ice or the like.238
Determining the cause of loss in the context of one vessel hit into a structure or an obstruction is self-evident and simple, viz, the collision; while, the causation question in respect of the collision between two vessels is much more complicated.
Initially, a set of legal rules of the Court of Admiralty has been laid down on a fault-basis between the two colliding vessels before resorting to their underwriters respectively. The
236 Howard Bennett, “Fortuity in the Law of Marine Insurance” [2006] L.M.C.L.Q 315 237 Supra 100
Woodrop-Sim239 has been regarded and largely cited as the prime authority in this regard. It
is worthy of quotation in length here:
There are four possibilities under which an accident of this sort may occur. In the first place, it may happen without blame being imputable to either party; as where the loss is occasioned by a storm, or any other vis major : in that case, the misfortune must be borne by the party on whom it happens to light; the other not being responsible to him in any degree.—Secondly, a misfortune of this kind may arise where both parties are to blame; where there has been a want of due diligence or of skill on both sides: in such a case, the rule of law is that the loss must be apportioned between them, as having been occasioned by the fault of both of them.—Thirdly, it may happen by the misconduct of the suffering party only; and then the rule is, that the sufferer must bear his own burden. Lastly, it may have been the fault of the ship which ran the other down; and in this case the injured party would be entitled to an entire compensation from the other.
This rule was also referred in another leading case De Vaux v Salvador,240 where the insured
vessel “La Valeur” came into collision with a steam vessel called the “Forbes” and both suffered serious damage. The assured ship owner claimed for general average and an average loss to his underwriter. Lord Denman C.J. delivered a very interesting judgment on the application of the proximity rule:
…[Sic]“It were infinite” (says Bacon) “for the law to judge the causes of causes, and their impulsions one of another; therefore it contenteth itself with the immediate cause, and judgeth of acts by that, without looking to any farther degree.” Such must be understood to be the mutual intention of the parties to such contracts. Then how stands the fact? The ship insured is driven against another by stress of weather; the injury she thus sustains is admitted to be direct, and the insurers are liable for it. But the collision causes the ship insured to do some damage to the other vessel; and, whenever this effect is produced, both vessels being in fault, a positive rule of the Court of Admiralty requires the damage done to both ships to be added together, and the combined amount to be equally divided between the owners of the two. It turns out that the ship insured has done more damage than she has received, and is obliged to pay the owners of the other ship to some amount, under the rule of the Court of Admiralty. But this is neither a necessary nor a proximate effect of the perils of the sea; it grows out of an arbitrary provision in the law of nations from views of general expediency, not as dictated by natural justice, nor (possibly) quite
239 165 E.R. 1422 240 111 E.R. 845
consistent with it; and can no more be charged on the underwriters than a penalty incurred by contravention of the Revenue laws of any particular State, which was rendered inevitable by perils insured against.
Three points are noteworthy from this paragraph. The first one is to define what kind of loss that the insurer agrees to cover in the policy. As the judgment presented, two types of losses may occur upon a collision between two vessels, which are the physical loss of its own and the loss of the counter vessel incurred by this vessel itself, which is classified as damage arising from liability of the said vessel. As a matter of fact, the rules of Admiralty provide an approach which merges these two forms of losses and apportions liability accordingly between the ship owners. However, how far has the rule of Admiralty affected the operations and coverage of the insurance industry? Modern standard clauses which include ¾ Collision Liability and Sistership have responded to this question.241 The terms
indicate that insurers agree to undertake the liability based on the decision made by the maritime rules with the enumerated exceptions. Nevertheless, it is believed that the force of the doctrine of proximity is never diminished even in the cases of collision.242
This, therefore, leads to the second question, is it possible that negligence or fault in navigation outweighs the causal effect of a collision itself? Technically speaking, a collision is a form of perils of the sea. It was held once in an old bill of lading case, Woodley & Co v Michell & Co243 that a collision between two vessels by their respective negligence, without
the waves or wind or difficulty of navigation contributing to the accident, is not “a peril of the sea” within the terms of that exception in a bill of lading. However, a distinction with insurance policy was drawn due to the requirement of the doctrine of proximity instead of the causa causans in the case of bills of lading. Smith v Scott244 has established and affirmed
in the context of marine insurance, that a loss occasioned by another ship running down the ship insured, through gross negligence, is a loss by perils of the sea. Moreover, the aforementioned bill of lading case has been overruled by the latter landmark case, The
241 ITCH Cl. 8. 3/4THS COLLISION LIABILITY
8.1 ….
8.2 The indemnity provided by this Clause 8 shall be in addition to the indemnity provided by the other terms and conditions of this insurance and shall be subject to the following provisions:
8.2.1 Where the insured vessel is in collision with another vessel and both vessels are to blame then, unless the liability of one or both vessels becomes limited by law, the indemnity under this Clause 8 shall be calculated on the principle of cross-liabilities as if the respective Owners had been compelled to pay to each other such proportion of each other's damages as may have been properly allowed in ascertaining the balance or sum payable by or to the Assured in consequence of the collision.
…
242 Philip van Huizen, ‘Some General Principles of Insurance Law: Causality, Retro/active
Coverage and Uncertainty of the Event Covered’ in M. Huybrechts (ed) Marine Insurance at the turn of the Millennium (Intersentia 2000) vol 1, p 38
243 (1882-83) L.R. 11 Q.B.D. 47 244 (1811) 4 Taunton 126
Xantho, the House of Lords iterating that foundering caused by collision with another vessel is within the exception “dangers and accidents of the sea” in a bill of lading. Therefore, as the parties’ fault or negligence will not alter the nature of collision as a form of perils of the sea, it seems also sound to venture that negligence is equally not efficient enough to constitute a competing cause against perils of sea in terms of causal effect. Nevertheless, the negligence of the vessels exerts the efficiency in a quantitative manner in applying the admiralty rule. The fault of the counter vessel has been deducted from the measure of indemnity, though not as a causal factor in the insurance claim.
Moreover, taking account of the counter vessel, are their causal factors relevant to the said vessel in determining the cause of loss? A discussion has been undertaken in Chapter Two Concurrent Causes arising from the case, Board of Trade v Hain Steamship Co. Ltd. 245 In this
case, two vessels ran into each other by negligent navigation during war time. One of the vessels, the Trevanion was under the requisition of the Government and the Admiralty agreed to be liable for the loss arising out of warlike operations. The other vessel was employed by the United States Navy as a mine planter and officered and manned by a crew of that Navy. It was disputed whether the latter vessel had undertaken a warlike operation. The House of Lords ultimately held that the proximate cause of the loss of the former said vessel was a warlike operation; therefore, the admiralty should be liable for the vessel’s loss. It is indicated in the decision that the cause of the loss of the counter vessel may be relevant and material in the way that it may determine the nature of the collision, either a war risk or a marine risk. However, when looking into the claim between the vessel and its insurer, the proximate cause ought to concentrate on the vessel itself. That is to say, the insurer’s defences in terms of the insured coverage and exceptions should be restrictively applied without reference to a third party. Therefore, as concluded in the previous chapter, the causal factor of the counter vessel cannot be considered or even amount to a concurrent cause to the loss of the said vessel.
In summary, collision is generally a form of perils of sea in marine insurance law. The rule of admiralty law has considerable impact on the terms of policy and the legal approach to ascertain the insurer’s liability scope and measure in marine insurance cases. Nevertheless, the causation rules, in particular the doctrine of proximity, are constantly applied.