Inherent Vice and Perils of the Sea Reviewed

In our Trade & Transport Bulletin of 7 May 2009 we discussed the judgment of Justice Blair of the English Commercial Court in Global Process Systems Inc & Anor v Syarikat Takaful Malaysia Berhad which reconsidered the law of inherent vice and the concept of inevitable loss in marine insurance. That decision has now been overturned by the English Court of Appeal in a judgment handed down on 17 December 2009 ([2009] EWHC 367 (Comm)).

Background

The case concerned the loss at sea off South Africa of three of four legs of a jack-up oil rig which was being towed from Texas to Malaysia.

It was agreed that the loss occurred because of fatigue cracking caused by repeated bending of the legs whilst being towed on a barge through the sea. The barge's owners claimed under the policy of insurance, maintaining that the loss of the rig was accidental and within the terms of the 'all risks' cover. The insurer maintained that the cause was 'inherent vice' in the legs of the