Lloyd's Maritime and Commercial Law Quarterly
THE ANGLO-AMERICAN SCENE
R. D. Margo.
The recent case of Edinburgh Assurance Company v. R. L. Burns Corp.1 underlines the extent of co-operation and interdependence which characterizes international insurance transactions, and illustrates the kind of legal problems which may arise.
In early 1975 American Pacific International (API), a Nevada corporation with its principal place of business in Los Angeles, California, became interested in purchasing an off-shore mobile drilling platform,2 called the Gatto Selvatico (“Gatto”) from SAIPEM, a subsidiary of ENI, the Italian national petroleum industry. The Gatto had been built in Italy in 1960–1961 by SAIPEM and another company, and had become disabled in June, 1974, in the Mozambique channel approximately 102 miles west of the port of Majunga, Madagascar (Malagasy). API’s intention was to salve the drilling platform, and in anticipation of a proposed salvage operation, an attempt was made to obtain appropriate insurance cover.
In the summer of 1975 a representative of Emett & Chandler, a licensed surplus line insurance broker3 with its principal place of business in Los Angeles, learned of API’s quest, and on June 3, 1975, this representative and a representative of a London insurance brokerage, Hogg Robinson-Gardner Mountain Ltd. (“Hogg Robinson”), met a representative of API in Los Angeles. After the nature of the proposed salvage operation was explained, and the desired terms and limits of cover indicated to the brokers, the material information was transmitted to the London office of Hogg Robinson. After the preparation of a placing slip, a representative of Hogg Robinson in London entered the insurance market and attempted to obtain the necessary coverage. The usual exchange of telexes took place, and Hogg Robinson confirmed in early July, 1975, that coverage had been placed in the London market against “Actual Total Loss Only”, for the whole of the salvage operation until the arrival of the vessel in a port of repair.
On July 8, 1975, Hogg Robinson sent to Emett & Chandler “cover notes”, indicating that it had placed insurance for API “Against Actual Total Loss of Vessel Only”. On July 18 Emett & Chandler completed and mailed to API a document described as an insurance binder, which indicated that coverage was for “Total Loss Only”.
1 479 F. Supp. 138 (1979), U.S. Dist. Ct., Central Dist. of California.
2 While the terms “platform” and “rig” really apply to separate portions of the entire vessel, they are used synonymously here, and were so used by the court, to refer to the Gatto.
3 In the U.S., insurers that are licensed by the insurance regulatory authorities of a State to transact insurance business in that State are referred to as “admitted” insurers, whether they be domestic companies (organised in that State) or foreign (organised in another State). In view of the number of risks which, because of their size or complexity, cannot be placed with admitted insurers, insured are permitted to seek cover with insurers in other States if a prescrbed procedure is complied with, i.e. the risks are first offered to admitted insurers. Insurers in these other States are known as “non-admitted” or “surplus line” insurers. A broker who is authorised to deal in surplus line risks is called a surplus line broker.
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