1. Introduction
Section 67 of the Insurance Act 2003 requires compulsory insurance on goods imported into Nigeria. A marine cargo insurance policy provides cover for loss or damage to goods conveyed in a maritime adventure and caused by perils of the sea. The insurance will cover the goods from warehouse to warehouse or on the expiration of 60 days after discharge. See ICC Clause 8 on duration of cover.

2. Types of Policies
2.1 There are two main types of cargo marine insurance policy. The first is the voyage or single cover policy. This policy is issued to cover carriage of goods for one specific voyage. The second is the floating or open cover policy. This policy covers all carriage of goods for one year and the insured will then make declarations for each voyage with a certificate of insurance issued for each declaration or voyage.

2.2 In Jessica Trading v Bendel Insurance (1996), the insured had taken out an open cover policy which was to remain open and to attach to all sending made after 7th July, 1977 to 6th July, 1978. The insured paid premium and was issued an insurance certificate on the 13th July, 1978 endorsed as per the open cover and subject to the conditions of the policy. The Supreme Court held that the insurance certificate issued was not a marine insurance policy because the open cover policy expired on 6th July 1978 and was no longer in operation at the time the certificate was issued on the 13th July, 1978 and therefore the insurer was not liable for any claim on the policy. See also, NICON v Power & Industrial Engineering (1991).

3. Institute Cargo Clauses (ICC) A, B or C
3.1 The insurance policy conditions usually incorporate the relevant Institute Cargo Clauses (ICC) depending on the nature of the goods or risk insured. The different types of marine cargo insurance cover are Clauses A, B or C of the Institute Cargo Clauses (ICC). The insurer will consider several underwriting and rating factors to determine cover and fix premium including; (i) the voyage and vessel; (ii) the type of cargo; (iii) the type of ICC cargo clause. The insurer may charge additional premium to cover policy extensions for extraneous risks which are not expressly covered by the Institute Cargo Clauses, e.g (i) theft, pilferage and non-delivery (TPND); (ii) rust, discolouration or oxidation of metal cargo; (iii) heating, sweating and condensation for hygroscopic cargoes; (iv) leakage or shortage of liquid bulk cargo; (v) import duty on damaged cargo; (vi) rejection of cargo by port authority etc. Specific clauses (e.g Trade Clauses) used for special types of cargo such as commodities or frozen foods etc may also attract additional premium.

Institute Cargo Clause (C)
3.2 This mainly covers the major accidents of the maritime adventure, sinking, collision, fire etc. The cover is for loss or damage to the cargo insured reasonably attributable to; (i) fire or explosion; (ii) vessel or craft being stranded, grounded, sunk or capsized; (iii) overturning or derailment of land conveyance; (iv) collision or contact of vessel with any external object; (v) discharge of cargo at a port of distress; OR loss or damage to the cargo insured caused by; (i) general average sacrifice; (ii) jettison. Clause C does not cover loss or damage caused by excluded perils enumerated in clause 4, 5, 6 and 7.

Institute Cargo Clause (B)
3.3 This clause covers the risks in Clause C plus the risk of entry of water, earthquake, loss of cargo during loading etc. The cover is for loss or damage to the cargo insured reasonably attributable to; (i) fire or explosion; (ii) vessel or craft being stranded, grounded, sunk or capsized; (iii) overturning or derailment of land conveyance; (iv) collision or contact of vessel with any external object; (v) discharge of cargo at a port of distress; (vi) earthquake, volcanic eruption or lightning; OR loss or damage to the cargo insured caused by; (i) general average sacrifice; (ii) jettisoning or washing overboard; (iii) entry sea, lake or river water into vessel; and (iv) total loss of any package lost overboard or dropped whilst loading or unloading. Clause B also does not cover loss or damage caused by excluded perils enumerated in clauses 4, 5, 6 and 7.

Institute Cargo Clause (A)
3.4 This clause provides the widest cover and covers all risks of loss or damage to the cargo insured except as provided by clauses 4, 5, 6 and 7. Unlike the ICC B & C Clauses, Clause A does not specify the perils covered but rather covers all perils but there are limits to the scope of this cover. The term all risks does not mean every risk but only risks insured against and the risk must be accidental or fortuitous. Therefore, it does not cover inherent vice or ordinary wear and tear of the cargo. In British & Foreign Marine Insurance v Gaunt (1921), the House of Lords explained all risks cover,
“There are of course limits to ‘all risks.’ There are risks and risks insured against. Accordingly the expression does not cover inherent vice or mere wear and tear or British capture. It covers a risk, not a certainty; it is something, which happens to the subject-matter from without, not the natural behavior of that subject-matter, being what it is, in the circumstances under which it is carried.”

3.5 A carrier who seeks to rely upon the inherent vice exception to exclude liability must prove that it was not negligent. In Volcafe v Compania Sud Americana de Vapores SA (2018), a cargo of coffee beans was shipped from Colombia to Germany on bills of lading which incorporated the Hague Rules. The cargo was received in good order and condition and the carrier was responsible for preparing the containers for the voyage. Upon delivery, it was discovered that the cargo had suffered wet damage as a result of condensation. The cargo interest argued that the carrier had negligently breached its obligation under Article III.2 Hague Rules to properly and carefully load, handle, stow, carry and discharge the cargo but the carrier relied upon the inherent vice exception in Article IV.2. The Supreme Court of England held that the carrier had the burden of disproving negligence under both Article III.2 and Article IV.2 Hague Rules but they failed to prove the exercise of reasonable care in the preparation of the cargo and were therefore liable for the damage. See also, Soya GMBH v Whyte HL (1983), Global Process Systems Inc v. Syarikat Takaful Malaysia Berhad UKSC (2011).

4. The Exclusions
4.1 There are the five main statutory exclusions in marine insurance. Section 56 MIA states that an insurer shall be liable for any loss proximately caused by a peril insured against but shall not be liable for any loss caused by; (i) the willful misconduct on the part of master or crew; (ii) any loss caused by delay, including delay caused by an insured peril; (iii) the ordinary wear and tear of the cargo; (iv) inherent vice of the cargo; and (v) lack of due diligence of the insured or managers.

4.2 The ICC cargo clauses A, B and C incorporate the statutory exclusions and also contain four major exclusions which are common to all the Clauses. Clause 4 is the cargo exclusions clause and provides that, the policy will not cover loss or damage or expense due to ordinary wear and tear, inherent vice, poor packing of the cargo, etc. The inherent vice exception is discussed in clause 3.5 above. The packing exclusion will apply when the packing is done by the insured or carried out prior to attachment of the risk. Clause 5 is the seaworthiness exclusions clause and provides that the policy will not cover loss or damage to the cargo due to unseaworthiness or unfitness of the vessel, etc. This exclusion will apply if the insured is aware of the unseaworthiness or unfitness of the vessel at the time of loading, or if the container is unfit for safe carriage of the goods.

4.3 Clause 6 is the war exclusions clause and provides that, the policy will not cover loss or damage or expense caused by, military action or civil strife, capture or seizure of the vessel or goods. Only the ICC Clause A uses the words ‘piracy excepted’ and piracy is therefore covered under the Clause A but not under the ICC Clauses B and C. Clause 7 is the strikes exclusions clause and provides that, the policy will not cover loss or damage or expense caused by strikes or labor unrest or terrorism etc. The insured can buy back the cover with the Institute Strikes Clauses but only for physical loss or damage and not delay caused by strike action or terrorism.

5. Delay, Deviation & Change of Voyage
5.1 A voyage must be prosecuted with reasonable dispatch otherwise the insurer shall be discharged from liability as from the time when the delay became unreasonable. See section 49 MIA. A change of voyage occurs where the destination of the ship is voluntarily changed from the destination contemplated by the policy and where there is a change of voyage the insurer is discharged from liability as from the time of change. See section 46 MIA. There is a difference between a change of voyage and deviation. A deviation from the voyage occurs where the course of the voyage is specifically designated by the policy and the course is departed from without lawful excuse and where there is deviation the insurer is discharged from liability as from the time of deviation. See section 47(1) MIA.

5.2 Where the place of departure is specified by the policy and the ship, instead of sailing from that place sails from any other place, the risk shall not attach. See section 44 MIA. In Edokpolor v Bendel insurance (1997), the vessel sailed with the cargo from Seville, Spain to Koko, Nigeria contrary to the port of loading in Hamburg, Germany stated in the insurance policy. The Supreme Court relied on section 44 MIA and held that the insurance policy did not cover the shipment and there was no liability on the insurer.

6. Actual Total Loss & Constructive Total Loss
A loss may be either an actual total loss or a constructive total loss (CTL) and any other loss is a partial loss. A particular average loss is a partial loss of the goods caused by an insured peril and which is not a general average loss. See section 65(1) MIA. Where the cargo insured is completely destroyed, or is so damaged as to cease to be a thing of the kind insured, or where the assured is irretrievably deprived of the goods, there is an actual total loss. See section 58 MIA. A constructive total loss occurs where the cargo insured is abandoned because an actual total loss is not avoidable, or because the cargo could not be preserved from actual total loss without expenditure which would exceed the value of the goods, or it is not practicable to recover or restore the goods to their original condition. See section 61 MIA. See, Swedish Club v Connect Shipping (MV Renos) UKSC (2019).

7. Liability of Carrier
7.1 The common law rule is that a ship must deliver the goods in the condition they were received unless relieved by excluded perils. It is a settled principle of marine cargo claims that the carrier is prima facie liable for loss or damage to cargo received in good condition and which is later lost in transit or short landed or delivered in bad condition unless the carrier can prove that they took reasonable care and were not negligent in the carriage and handling of the goods. This rule is preserved by Article III.8 of the Rules in the Schedule to the Carriage of Goods by Sea Act 1924 which state that, “Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship for loss or damage to or in connection with goods arising from negligence, fault or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in these rules, shall be null and of no effect.”

7.2 In MV Caroline Maersk v Nokoy Investment (2002), the insured shipped a cargo of frozen shrimps from Lagos to Algeciras, Spain. The cargo was in good condition and containerized. At the port in Spain the authorities reported that the shrimps were in bad condition and the question was when the shrimps deteriorated. The insured claimed that it happened during the carriage by sea but the shipowner asserted that the shrimps deteriorated after their arrival in Spain because the cargo was collected more than 30 days after arrival. The Supreme Court considered the provisions of Article III Rule 8 of the Rules in the Schedule to the Carriage of Goods by Sea Act and said that that a carrier cannot contract out of liability for negligence. Ayoola JSC said,
“It is the first principle of marine cargo claim that the carrier is prima facie liable for loss or damage to cargo received in good order and out-turned short or in bad order. The carrier having received the goods in good order under a clean bill of lading and having received bad order receipts on delivery is prima facie liable for the loss or damage.”
See also, Owners MV Gongola Hope v Smurfit Cases Ltd (2007).

8. Claims
Notification
8.1 Where there is loss or damage to the cargo, the broker or consignee must promptly notify the insurer of the loss or damage. In Leadway Assurance v Zeco Nig. (2014), the Supreme Court held that oral notification of loss or damage is sufficient except where written notification is expressly required.

Documentation
8.2 Where a claim is made for cargo which is lost in transit or short landed or delivered in bad condition the broker will submit the relevant documents along with the claims form of the insurer. These usually include; (i) the insurance policy or certificate; (ii) the commercial invoice; (iii) the bill of lading; (iv) the packing list of the cargo; (v) the surveyors report of lost or damaged cargo. The necessary parties i.e the broker, the shipping agent, consignee agent, surveyor/adjuster and ports authority must all co-operate in the investigation of the claim.

Limitation of Time
8.3 The time limit within which the consignee (or the insurer in exercise of subrogation rights) can bring claims against the carrier or agents for loss or damage to the cargo is one year. This limitation of time is determined by the International Conventions applicable to bills of lading (the Hague Rules) and the Rules in the Schedule to the Carriage of Goods by Sea Act. The case of JFS Investment v Brawal Line (2010), was a contract of carriage of goods by sea of cargo from Hambrg, Germany to Apapa, Lagos. The cargo arrived short landed and damaged in September 1992 but the claimant did not commence action until February 1995, about 3 years later. The trial court held that the action was time barred since it was not brought within one year. On further appeal the Supreme Court held that the action was time barred. Adekeye JSC said,
“Further, it must be stated clearly that since this shipment was an inward one, the Hague Rules 1924 is applicable and not the Carriage of Goods by Sea Act which deals with outward shipment of goods. See, Leventis Technical v Petrojessica (1999). ………. Article 3 Rule 6 of the Hague Rules 1924 provides; In any event, the carrier and the ship shall be discharged from all liability in respect of loss or damage unless the suit is brought within one year after delivery of the goods or the dates when the goods should have been delivered.”

Applicable Law
8.4 One important matter is the applicable law for cargo marine insurance claims disputes. Marine insurance policies incorporate ICC Clauses which state that “This insurance is subject to English law and practice.” The question therefore is whether Nigerian claimants are bound to commence their actions in England. The matter was settled by the enactment of the Admiralty Jurisdiction Act 1991. Section 20 of the Admiralty Jurisdiction Act states that; any agreement which seeks to oust the jurisdiction of the court shall be null and void if the place of performance, execution, delivery, act or default takes place in Nigeria, or any of the parties reside in Nigeria or has resided in Nigeria, or the payment is made or is to be made in Nigeria, under any convention for the time being in force to which Nigeria is a Party, or in the opinion of the court, the cause, matter or action should be adjudicated upon in Nigeria. See, JFS Investment v Brawal Line (2010). Therefore, the foreign jurisdiction clause in the ICC clauses cannot prevent an insured from bringing an action in Nigeria.

9. Subrogation
The insurer after settling the claim can bring an action against the negligent shipowner and agent in exercise of their subrogation rights. In the Midland Galvanising Products v Comet Shipping Agencies (2014), the insurer commenced an action in the name of the insured against the shipping agent of the negligent carrier in exercise of their subrogation rights. The trial court held that the insured having already been compensated by the insurer was not entitled to pursue compensation for the same loss in its own name. On appeal the Court of Appeal held that an insurer could bring an action in the name of the insured. Iyizoba JCA referred to following passage from Templeman on Marine Insurance 6ed. on the meaning of subrogation,
“Subrogation is the right by which an underwriter, having settled a loss, is entitled to place himself in the position of the assured, to the extent of acquiring all rights and remedies in respect of the loss which the assured may have possessed, either in the nature of proceedings for compensation or recovery in The Name of the Assured against third parties, or in obtaining general average contribution.”
See, Yorkshire Insurance v Nisbet Shipping (1962).

10. Conclusion
10.1 An insured who seeks to import cargo by sea will first determine the type of marine policy, whether voyage or open and then the scope of cover and which of the ICC A, B or C is best suited for the type of cargo including any policy extensions for special cargo or extraneous risks.

10.2 The insured must be mindful of the statutory exclusions in the Marine Insurance Act and the policy exclusions in clauses 4, 5, 6 & 7 of the ICC clauses.

10.3 Where the cargo is lost in transit or short landed or delivered in bad condition the carrier is prima facie liable unless it can prove that it was not negligent in the handling and carriage of the cargo.

10.4 The loss or damage to the cargo, whether actual total loss or a constructive total loss or partial loss, must be proved by documentation and investigation by the surveyor for an insurance claim to succeed.

10.5 The vessel must proceed with dispatch and keep to the designated voyage as any delay or deviation or change of voyage may absolve the insurer of liability.

10.6 The insurer after settling the claim can bring an action against the negligent carrier or agent in exercise of their subrogation rights.