Sakura Ferroalloys Sdn Bhd v Allianz General Insurance Company (Malaysia) Berhad

Case Significance

Illustrates the construction of survey warranties in marine cargo insurance: a certified-survey clause is not read as prescribing one exclusive technique unless it says so, and the assured complies by using the same or an equivalent method at both ports.

This High Court decision, in the Commercial Division at Kuala Lumpur and framed as an admiralty action in personam, concerns the interpretation of a Bulk Shipment Clause in a Marine Open Cover policy, and in particular whether the insured was obliged to procure a specific type of survey at both the loading and discharge ports. The plaintiff, a ferroalloys producer, was the assured under the marine cover issued by the defendant insurer. Both parties are companies and are named. Under the Bulk Shipment Clause, the assured had warranted to procure certified surveys of the cargo at both the loading and the discharge ports; the dispute was over whether those surveys had to be draught surveys — a method of measuring cargo quantity from the vessel's draft — and whether the same or an equivalent method of calculation had to be used at each end.

The court construed the clause according to its terms. It held that there was no requirement that the survey of the cargoes at the loading and discharge ports be conducted by draught survey only; what mattered was that the assured procured a certified survey using the same or an equivalent method of calculation at both ports. On the facts, for certain shipments the assured's surveyors had used a weighbridge at both the loading port and the discharge port, so the same method was used at each end. For other shipments, the assured had used a weighbridge at loading but was prevented, by customary practice and the absence of a weighbridge at the discharge port, from using the identical method there.

The judgment is a useful illustration of how the courts approach the construction of survey and measurement warranties in marine cargo insurance: a clause requiring certified surveys is not to be read as prescribing one exclusive technique unless it says so, and the assured discharges its obligation by procuring a certified survey using the same or an equivalent method at both ports, allowance being made where customary practice or port facilities make identical methods impossible.