The aim of this work is to look and investigate the essential changes in coverage provided by the Institute Time Clauses (Hulls) 1995 in comparison o the International Hull Clauses 2003. The case law will be based on the ITCH 1995 due to insignificant number of case based on IHC 2003. Over the last hundred years, the Institute Time Clauses have become an international standard for period insurances on vessels, and this is reflected in the new title of “International Hull Clauses”.
The basis of their success has been providing the cover required by commercial interests, together with the greatest possible degree of certainty in the approach to claims. International Hull Clauses is an update to ITC 1995 due to reflect latest market practices, reflect the new International Safety Management (ISM) code . They also show the modern international world in which the shipowners operate by reflecting the development both in the shipping and the insurance industries.
The new closures contain more provision than the predecessors due to incorporation of the wordings found in Cover Notes, to have a more valuable document. The general principle changes introduced in the IHC 2003 are that now that they are in three parts. This is done to create more logical and distinction sections. Part 1 contains the principle insuring conditions. Part 2 contain commonly used additional clauses, to include optional covers which may be agreed on placing . Part 3 contain the claims the provision and sets out the duties of the Assured and Underwriters. Clause 1.
3 of the IHC 2003 is new and subjects the insurance contract to “the exclusive jurisdiction of the English High Court of Justice” unless the parties agree to the contrary. If the parties wish to apply other jurisdiction to the insurance policy they have to dismiss this clause. Clause 1. 4 provides that if any provision of the contract in “invalid or unenforceable” will have no effect on the other provisions of the insurance. Such cases as Mountian v. Whittle and The Xantho played a great part in the development of marine insurance, and of course those cases could not have had an effect on the IHC 2003.
Clause 2. 1. 8 now covers stores and parts and it is subject to strict liability. Clause 2. 1. 9 introduced cover due the “contact with satellites” what was not present in ITC 1995. In terms of coverage, what was Clause 6 of the Institute Time Clauses is now Clause 2 of the new Clauses. Aside from a few slight modifications, the most important distinctions between the sets of Clauses with respect to this coverage clause is in the treatment given to the bursting of boilers, breakage of shafts and latent defects.
With respect to the 1995 Clauses, there is one additional difference. This is the change in the due diligence stipulation to Clause 6. 2 which maintains that “provided that such loss or damage has not resulted from want of due diligence by the Assured, Owners, Managers or Superintendents or any of their onshore management. ” In Clause 2. 2 of the International Hull Clauses, this specification is now similar to the 1983 wording that states — “provided that such loss or damage has not resulted from want of due diligence by the Assured, Owners or Managers.
” Likewise, allusion to Superintendents and onshore management has been crossed out. Nonetheless, more extensive duties are placed on Assured, Owners and Managers under Clause 14 of the International Hull Clauses so much so that there is not likely to be much additional coverage, if any, under the International Hull Clauses over the 1995 Institute Time Clauses as an outcome of the modifications in the way the stipulations have been phrased.
Without doubt, Owners may in specific factual circumstances be in an inferior position because Clause 14 applies with regard to losses and fatalities as a consequence in any of the perils set out in Clause 2 and not merely those in Clause 2. 2 to which the provision is inadequate or restricted. In Clause 2, the principal change has something to do with latent defect. In this respect, the Institute Time Clauses Hulls phraseology was — 6.
2 This insurance covers loss of or damage to the subject matter insured caused by 6. 2. 1 Bursting of boilers, breakage of shafts or any latent defect in the machinery or hull. The broad connotation of the Clause and the coverage provided by it has been well comprehended. It is not the burst boiler or broken shaft or latent defect that is covered but loss of the vessel or damage to it that is caused by one of these, which is the consequential loss of or damage to the insured vessel.
If there is no such significant damage, for instance, a latent defect is discovered and nothing more, then there is no recovery at all under the insurance. However, if there is some consequential damage it is only the reasonable cost of repairs to that damage which is recoverable, not the part of the cost relating to fixing or repairing of the defect itself or the boiler or shaft. Such cost can be covered by buying additional coverage from underwriters under the Additional Perils Clause 1/11/95. The new clauses. Clause 2. 2 of the new clauses reads as follows.