We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Friday, 23 September 16
"COLLATERAL LIES" DO NOT NECESSARILY UNDERMINE AN INSURANCE CLAIM
 KNOWLEDGE TO ELEVATE
An insured was not precluded from recovering under an insurance policy even though it had made a false statement during the claims process with a view to strengthening its claim. The Supreme Court in Versloot Dredging BV & anr v HDI Gerling Industrie Versicherung AG [2016] UKSC 45 considered the extent of the fraudulent claims rule which applies to insurance contracts and prevents an insured recovering under an insurance policy where the claim is fabricated or exaggerated. The Supreme Court held (Lord Mance dissenting) that this rule does not apply to false statements that are immaterial to an insured’s right to recovery under the policy. Insurers have expressed their concern at the decision.
The claimant ship owners suffered irreparable damage of a vessel’s engine after the engine room was flooded, causing a loss of EUR 3,241 million, which they sought to recover from the defendant insurers. The ship owners had falsely stated, in response to inquiries made by the insurers, that an alarm had sounded but that no action had been taken by the crew as the alarm was attributed to the ship rolling in heavy seas. In actual fact no alarm had sounded. The ship owners had been frustrated by the insurers’ delay in recognising the claim and this statement was intended to reassure the insurers that the ship was seaworthy with fully operational alarm systems. They believed that this statement would fortify the claim and accelerate payment.
The alarm statement was later discovered to be false, but was irrelevant to the validity of the claim. Although the alarm had not sounded, it was tested shortly after the incident and found to be working. Even if it had not been working, Popplewell J at first instance held that this would not assist the insurers as the alarm’s failure to sound would not have been the proximate cause of the loss. Popplewell J concluded that the loss was caused by a peril of the seas covered by the insurance policy. Nevertheless, Popplewell J held that the insurers were entitled to repudiate the entire claim under the ship owners’ insurance policy as a result of this false statement. The ship owners appealed, with the Court of Appeal upholding the decision.
Fraudulent and exaggerated claims
At common law it is well established that if an insured makes a fraudulent or exaggerated claim on its insurer, the insured loses the right to recover the entirety of that claim, including any genuine losses it would have obtained. The law refuses to sever the honest part of the claim from the invented part.1 This is commonly referred to as the “fraudulent claims rule”.
Section 12 of the Insurance Act 2015 (which came into force on 12 August 2016) has preserved this rule. It does not, however, define what constitutes a fraudulent claim and does not refer to a situation where a valid claim is supported by a false statement.
Collateral lies and fraudulent devices
The extension of the common law rule to justified claims supported by false statements is more recent and controversial. Lord Sumption referred to Agapitos v Agnew (The Aegeon) [2003] QB 556, where Lord Mance had considered, obiter, whether the fraudulent claims rule could apply to a lie made in the presentation of a claim which does not affect the merits of, or the amount of, the claim. This has been generally termed a “fraudulent device” (or, adopting Lord Sumption’s expression, a “collateral lie”). Lord Mance considered that such collateral lies were also subject to the fraudulent claims rule.
The majority of the Supreme Court, with Lord Sumption giving the lead judgment, disagreed with this approach. Lord Sumption distinguished between a fraudulent exaggerated claim, which is designed to enable the insured to gain something which it is not entitled to, and a justified claim supported by a collateral lie. Where the lie is irrelevant to the existence or the amount the insured is entitled to, the insured gains nothing from the lie which he was not already entitled to by law and the insurer loses nothing from meeting a liability it already had (having crystallised at the moment of loss). The lie is therefore dishonest but the claim is not.
Lord Sumption concluded that it was disproportionately harsh to the insured and would go further than any legitimate commercial interest for the fraudulent claim rule to extend to collateral lies. The policy of deterrence did not justify such an extension of the rule.
COMMENT
The historic justification for the fraudulent claim rule was as a clear deterrent to fraudulent claims, recognising that insurers can be dependant on the insured for information, both at the formation of the contract and in the processing of claims. Honest policyholders would otherwise bear the financial burden of costs incurred by the insurers due to fraudulent or exaggerated claims, through increased premiums. As the judges recognised, fraudulent insurance claims are a serious issue, with insurance fraud widely perceived as victimless (a perception the judges emphasised was quite false).
However, this judgment prevents any extension of this rule and limits an insurer’s right to reject a claim. Although the decision has raised concerns within the insurance industry, it is far from being an invitation for an insured to embellish an insurance claim without fear of any consequences. Any attempt to enhance a claim which would result in increasing the amount recoverable will lead to forfeiture of the entirety of the claim if discovered. Even where a false statement is wholly collateral to a justified claim, an insured may be penalised for that statement if exposed. In the context of a contested claim, any settlement agreement induced by the false statement could be set aside. Moreover, there could be cost orders in any proceedings, increased premiums and difficulty in obtaining future insurance policies after the requirement to disclose the insured’s claims history in any insurance proposal is met. Insureds will also want to avoid litigation concerning whether a false statement is collateral or not to a justified claim.
Finally, insurers can consider including clauses in insurance contracts precluding the recovery of any claims supported by collateral lies. It is likely that going forward insurers will seek legal advice as to the merits of doing so.
Source: Allen & Overy
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Monday, 19 September 16
AFTER YEARS OF COMA, COAL BECOMES THE MOST ATTRACTIVE COMMODITY RIGHT NOW
COALspot.com: China boosted coal imports in recent months. The Chinese government’s drive to cut over capacity pushed up the demand for therm ...
Monday, 19 September 16
THE CAPE INDEX WAS UP 7.28% WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities declined and ending in a slightly negative note this past ...
Friday, 16 September 16
GLOBAL SHIPBUILDING: THE CHALLENGE TO REMAIN 'ACTIVE' - CHRISTOPHER PEARCE, CLARKSONS
The number of ‘active’ shipyards globally has more than halved since the start of 2009, falling to around 400 shipyards at the start of ...
Friday, 16 September 16
U.S. WEEKLY COAL OUTPUT DECLINED 6.2% TO 15.1 MMST, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.1 million short ton ...
Thursday, 15 September 16
INDONESIA MAY FACE A COAL CRISIS BY 2035!
COALspot.com: Indonesia is the world’s fourth-largest coal producer and the world’s largest thermal coal exporter may face a coal crisi ...
|
|
|
Showing 2281 to 2285 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Uttam Galva Steels Limited - India
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Bhatia International Limited - India
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Central Electricity Authority - India
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- SMG Consultants - Indonesia
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Semirara Mining Corp, Philippines
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
|
| |
| |
|
