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CHAPTER 3 Issues arising from delay in delivery of cargo

Insurance Law Implications of Delay in Maritime Transport


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CHAPTER 3

Issues arising from delay in delivery of cargo

Introduction

3.1 A delay during sea transit together with a delay in delivery may result mainly in three types of losses. These are physical damage to or loss of goods;1 economic loss as a result of the decrease in the market value of cargo between the time of the expected delivery and actual delivery; and pure economic loss where, by way of example, an industrial plant cannot operate given that parts of an essential machine are delivered after the date of delivery2 or where a cargo owner loses his sale contract. Whereas the first category of loss results from delay in transit, the second and third categories rather arise in consequence of delay in delivery. The third category of loss may or may not be covered under marine delay in start-up insurance or business interruption policies depending on their respective wordings. This being said, there is a general view based on pre-MIA case law that the loss of market value caused by delay in delivery is not recoverable under cargo policies on the ground that mere delay in a voyage does not result in loss of the adventure insured and that this type of loss is consequential to cargo policies. This chapter will look at the pre-MIA authorities and assess whether they could survive the enactment of the Act. It will further elaborate on the meaning of delay in delivery in the context of insurance contracts; on whether the assured can claim for a total loss of goods where the delivery of goods is delayed and whether the generic exclusion of delay would strike out such claim; and on the scope of loss of market and loss of market value caused by delay.

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