A Comparison of the 1982 and 2009 Clauses (3)

1982
2. This  insurance  covers  general  average  and  salvage  charges,  adjusted  or determined according to the contract of affreightment and/or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause except those excluded in Clauses 4, 5 6 and 7 or elsewhere in this insurance.

2009
2. This insurance covers general average and salvage charges, adjusted or determined according to the contract of affreightment and/or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause except those excluded in Clauses 4, 5, 6 and 7 below.

No change, other than the concluding words of the 1982 version are omitted as surplusage.

1982
3. This insurance is extended to indemnify the Assured against such proportion of liability under the contract of affreightment "Both to Blame Collision" Clause as is in respect of a loss recoverable hereunder. In the event of any claim by shipowners under the said Clause the Assured agree to notify the Underwriters who shall have the right, at their own cost and expense, to defend the Assured against such claim. ("Both to Blame Collision" Clause)

2009
"Both to Blame Collision Clause"
3. This insurance indemnifies the Assured, in respect of any risk insured herein, against liability incurred under any Both to Blame Collision Clause in the contract of carriage. In the event of any claim by carriers under the said Clause, the Assured agree to notify the insurers who shall have the right, at their own cost and expense, to defend the Assured against such claim.

This clause owes its existence to the law prevailing in the United States in collision cases. Under English law (since the Maritime Conventions Act in 1911) the degree of blame is divided between the vessels in proportion to their degree of fault, as decided by negotiation or an appropriate tribunal. Thus, if Vessel A is held to be 40% to blame and Vessel B 60%, cargo on Vessel A can recover 60% of its damages from Vessel B. Usually that cargo will not be able to recover the 40% balance from the carrying vessel because of the terms of the Contract of Affreightment which will contain exceptions regarding negligent navigation (this position will change in many cases with the introduction of the new UNCITRAL terms). Historically in the USA, if both vessels were to blame, the blame was always divided on a 50/50 basis, irrespective of the degree of fault. Additionally, the cargo on Vessel ‘A’ was allowed to recover 100% of its losses from Vessel ‘B’. Vessel B would then recover 50% of the Cargo A claim from Vessel A, so that Vessel A ended up paying 50% of the damage suffered by its own cargo. This situation was not an attractive one for shipowners so they began to insert a “Both to Blame” Collision Clause in bills of lading which enabled Vessel A to recover that 50% from Cargo A. As a result, it was necessary to insert a both to Blame Collision Clause in the cargo policy to confirm that cargo insurers would respond in respect of that liability to Vessel A.

Since 1975, the US Courts have moved away from the strict 50/50 split and will now apportion blame according to degrees of fault. However the ability for the 100% claim of Cargo A to go to Vessel B and then be recovered in part from Vessel A and then in turn from Cargo A remains, which explains the continuing need for the clause which, happily, is rather shorter than this explanation. The 2009 wording has been adapted slightly in the interests of clarity.