Key words: marine insurance, insurable event, causation.

Introduction

Causality is one of the three necessary components of an insured event. Without establishing causality, it is impossible to confirm the occurrence of the latter.¹

The same applies to marine insurance, where, given its specific nature, establishing causality is complicated, including by the nature of shipping and the encountering of a number of maritime hazards.²

Furthermore, establishing causality is not subject to any general rules that apply to all jurisdictions, as will be demonstrated later in this paper.

A Review of Causality in Russian Academic Literature

To begin with, let us examine Russian academic literature. It should be noted that the body of literature devoted to the issue under consideration is relatively small and often based on the presentation of positions that are represented in foreign legal systems. Meanwhile, questions of causality are usually analyzed within the framework of insurance in general.

For example, Fogelson Y.B., referring to English law, examines the rules of application of the doctrine of proximate cause. In his analysis, the scholar identifies three types of connection between the peril insured against and the damage: a) the peril is the last in time among the causes of damage, b) the peril, which is not the last in time, precedes one or more causes of damage, c) joint causation of damage by events that do not follow one another.

Let us consider these variants in more detail. The first one is based on the assumption that peril constitutes the cause of damage, since it was the last of all possible events that contributed to it.

The second option is divided into two cases. The first concerns a situation where the causes of damage are a sequential and continuous chain of cause and effect, i.e., each cause of damage is a consequence of the previous and subsequent causes. In this context, there is an example of death during an operation, the necessity of which was caused by an accident. The latter will be the proximate cause. The second case represents a situation in which the chain of causality is interrupted by an extraneous circumstance. The latter affects the chain even before the damage is caused and becomes the proximate cause of such damage. The same situation with surgery and an accident is given as an example, with one change: the person dies due to the lack of the necessary amount of blood for transfusion, which should be available under normal circumstances. That is, in the case cited, the proximate cause of death was the lack of blood for transfusion.

The third type of causation arises from two causes occurring in parallel. In such a situation, if one of these causes is the peril against which the insurance was taken out, it will be the proximate cause regardless of the existence of the second parallel cause.³

Other studies refer to the existence of similar and other concepts and principles, but they are not described in sufficient detail. In particular, reference is made to the rule of direct causality, which the authors identify with the doctrine of proximate causality,⁴ and to the principle of closest causality (with reference to the works of Estonian authors).⁵

In the context of marine insurance, causation is mentioned in an article by Levushkin A.N. and Kuzmina I.K., which refers to the application of the concept of proximate cause existing in English law.⁶

Thus, in attempting to define the type of causality that is most found in domestic literature, it is most likely that this would be the doctrine of proximate cause, which is based on English law.

A Review of Causality in Foreign Academic Literature

Moving on to the analysis of foreign literature, including trends in judicial practice, we will examine issues of causality in England, Scandinavia, and People’s Republic of China (PRC).

A. England

Section 55(1) of the Marine Insurance Act 1906, as well as sections 55⁷ and 65⁸ of the corresponding laws of New Zealand and Australia, establish the principle of proximate cause to determine the insurer’s liability.⁹ However, the question of what specifically constitutes proximate cause remains unanswered.

Initially, English case law proceeded from the assumption that the proximate cause was the cause closest in time to the occurrence of the damage.¹⁰ This concept persisted until the case Leyland Shipping CO Ltd v Norwich Union Fire Insurance Society Ltd,¹¹ which established the “test of efficiency,” whereby the proximate cause was the one that was proximate in terms of its effectiveness. This implied, among other things, that such actual effectiveness must be maintained regardless of the occurrence of other causes. The case also emphasized that causation is not a chain of events, but a network of events. The reason for this is that a combination of circumstances is often not just a chain of sequential events.¹²

Subsequently, due to criticism related to arbitrary decisions in determining the proximate cause, the commonsense test was additionally applied to the aforementioned effectiveness test. This test, as noted in Humber Oil Terminal Trustee Ltd v Owners of the Sivand¹³ involves resolving the issue in accordance with the thought processes of a normal person, as well as knowledge of all the relevant circumstances of the case.¹⁴

English case law also regonises cases of concurrent causes. These imply the possibility of establishing several simultaneous proximate causes, as, for example, in the case JJ Lloyd instruments Ltd v Northern Star Insurance Co Ltd.¹⁵ A similar conclusion was also reached in the case Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corporation Ltd.¹⁶ In the decision on this case, it was emphasized that there is no need to look for a dominant cause when there are two causes that can be Characterised as effective.¹⁷

At the same time, the latter case is also an important precedent for situations where one of these perils is an excluded risk for insurance purposes. If damage arises in connection with an excluded risk, the insurer is not liable for it. Accordingly, if the excluded risk is predominant, the insurer will not be held liable.¹⁸

Thus, English law recognizes the concept of proximate cause, which must be interpreted considering tests of effectiveness and common sense. At the same time, the possibility of the existence of simultaneous proximate causes is also allowed.

B. Scandinavian countries

Moving on to the issue of causality in Scandinavian countries. In this context, Scandinavian countries refer to Denmark, Finland, Norway, and Sweden. Although historically each of these countries had its own marine insurance terms and conditions, insurers and their clients gradually transitioned to using pan-Scandinavian insurance terms and conditions based on the Norwegian Marine Insurance Plans.¹⁹ Thus, the current Nordic Marine Insurance

Plan 2023 is based on the latter.²⁰ This Plan combines the legislative and contractual provisions of the Scandinavian countries, as well as materials from judicial practice.²¹ The Plan also addresses issues of causality with references to the specified provisions and materials.

Thus, in accordance with clause 2-13 of the Plan, if the damage was caused by a combination of several perils, and one or more of them are not covered by insurance, the damage is distributed among the individual perils according to their influence on the occurrence of such damage and its amount.²²

In accordance with the commentary on this clause, it is noted that when various perils not related to military risks are combined (as described in clause 2-14 of the Plan), the rule of apportionment applies. There are a number of arguments in favour of this solution. Firstly, the amount of the insurance premium will be in the “correct” proportion to the insurance coverage, since the insurer will not be liable for perils that go beyond such coverage but have an impact on the damage. Secondly, proportional distribution is consistent with the principle of fairness, since the insurance premium is paid in relation to the agreed risks, and the insured person cannot claim compensation if the damage was caused by uninsured perils. In addition, the approach is consistent with the Nordic Insurance Contracts Acts, according to which insurance compensation is subject to reduction if the insured person has breached their obligations.

According to the commentary, the rule of apportionment is based on several principles. Firstly, perils are classified as relevant or non-relevant. It is not sufficient for a peril to be a condition for the occurrence of damage. If the consequences of the peril are not significant, it can be assigned a weight of 0. In this regard, it is permissible to assign a weight of 0 to one consequence of the peril and a weight of 100 to another. In this case, the insurer is liable as if the damage had been caused solely by the peril with a weight of 100.

In the case of a combination of two perils, one of which arose later, it is assumed that the latter peril should be given greater weight. The significance of the initial peril is assessed depending on the probability of damage occurring.

In a situation where a new cause intervenes in the course of events after the damage has already occurred, merely increasing it, it is considered that the damage is distributed according to the assessment of the probability that the first cause provoked the second.²³

Clause 2-14 of the Plan concerns the combination of military and marine risks and establishes that damage is considered to be caused by the peril that is the dominant cause. However, if there were several perils and it is impossible to establish the dominant one, it is considered that such perils had an equal influence on the occurrence of the damage.²⁴ As can be seen from the wording of clause 2-14, the rule is generally based on the dominant-cause doctrine. That is, damage is considered to be caused entirely by the type of peril that is predominant.²⁵

It should be noted that, in accordance with paragraph 2-15 of the Plan, a group of military risks is identified which, in any case, will be the dominant cause. For example, this includes damage caused by damage to a vessel as a result of the use of weapons during military maneuvers in peacetime.²⁶

Additionally, the distribution of military and maritime risks remains a significant issue for a number of countries. However, regulation is not always consistent. For example, unlike the regulations in Scandinavian countries, Article L172-17 of the French Insurance Code expressly provides that, in case of doubt, damage is considered to have been caused by a maritime risk.²⁷

To sum up this section, in Scandinavian countries, unlike England, the rule of apportionment is predominantly applied, where the consequence of each peril is assessed separately.

C. PRC

PRC legislation does not explicitly mention the rules applicable to the assessment of causation.²⁸ However, recent case law indicates a shift from the concept of proximate cause to the concept of apportionable liability.²⁹ The latter takes into account all contributing causes of damage, including uninsured and excluded risks.³⁰

Thus, questions of causation in the three legal systems considered are currently resolved in different ways. It is not possible to identify a single dominant concept of causation for them.

A Review of Causality in Russian Judicial Practice

In Russian judicial practice, questions of causality are often resolved with the help of expert opinions and conclusions from various entities and bodies that identify the link between peril and damage.³¹ For example, in the case brought by OJSC SAK Energogarant, the “actual” cause of the ship’s sinking was the navigational errors made by the ship’s captain, as established by court-appointed and non-court experts.³² Judicial practice does not contain any independent detailed studies of the causal link and its types.

At the same time, a number of cases are related to factual circumstances in which the courts are forced to analyse the impact of several causes on the damage incurred. For example, in the case brought by PJSC LORP, the violation of the terms and conditions of the permits issued for navigation in the Northern Sea Route was essentially recognized as the main cause of the casualty. At the same time, the aforementioned negligence on the part of the insured could not be “offset” by the failure of the Maritime Operations Headquarters to take appropriate measures.³³

Issues involving the analysis of multiple causes can also be found in the case brought by SAO VSK. Specifically, the court, with the assistance of Rostransnadzor’s expert opinion, determined that it was the captain’s actions that caused the casualty on the vessel. The defendant’s arguments regarding the pilot’s actions as the cause of the accident were rejected by the court. The justification was that there was no evidence that the accident would have occurred due to the pilot’s actions if the captain had properly complied with all established requirements.³⁴ These cases demonstrate the application of rules similar to the doctrine of proximate causation, as the courts determined the main cause, which did not imply the possibility of two separate causes jointly causing the damage.

However, given the incomplete justification of the causal link in the court decisions, it is not possible to draw any definitive conclusions regarding such a link. Nevertheless, questions of causation are raised in maritime insurance disputes and, in a number of cases, are resolved by analogy with the doctrine of proximate cause.

Conclusion

An analysis of domestic academic literature indicates a lack of scientific interest in determining causation in the context of marine insurance. The issue is often mentioned only in the context of insurance in general, with references to foreign regulations and doctrinal sources.

At the same time, based on a review of the latter, it is impossible to identify any overriding principle for determining causation, since, in particular, in England, the doctrine of proximate cause is enshrined in law, in the Scandinavian countries, outside the context of military and marine risks, the rule of apportionment is applied, and the practice of the PRC at this stage is based exclusively on the principle of apportionable liability.

In addition, in the context of insufficient interest in causation in Russian literature, it is worth noting that the relatively few cases in Russian court practice show that there are still matters whose resolution is not limited to the examination of prepared court-appointed and non-court expert opinions. On such occasions, the courts use arguments similar to the doctrine of proximate cause. ■