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2025 MarsdenLR 3030
HIGH COURT MALAYA KUALA LUMPUR
SAKURA FERROALLOYS SDN BHD – Appellant
Versus
ALLIANZ GENERAL INSURANCE COMPANY (MALAYSIA) BERHAD – Respondent
[Admiralty Action In Personam No: WA-27NCC-52-11/2022]
The Bulk Shipment Clause in marine insurance does not mandate draught surveys exclusively; compliance can be established through equivalent methods justified by customary practices.
Headnote:(A) Marine Insurance Act - Bulk Shipment Clause - Interpretation of survey requirements for cargo shipment - The assured warranted to procure certified surveys of cargo at loading and discharge ports. The court found that the clause did not mandate draught surveys exclusively, and customary practices justified the methods used. (Paras 11, 43, 68)
(B) All-risk policy - Coverage for cargo shortages due to theft or loss during transit - The court ruled that the insurance policies covered losses occurring between the warehouse and final destinations, affirming the principle that the burden of proof lies with the insurer to disprove claims. (Paras 23, 68)
Facts of the case:
The case involved a claim by the insured for cargo shortages of HCFeMn during shipment to the USA and Japan, with Allianz denying liability based on alleged breaches of the Bulk Shipment Clause. (Paras 4-12)
Findings of Court:
The court found that the insured had complied with the Bulk Shipment Clause and that Allianz was liable for the cargo shortages. (Paras 68)
Issues: The main issues were the interpretation of the Bulk Shipment Clause and whether the insured had breached it by not conducting draught surveys. (Paras 11, 68)
Ratio Decidendi: The court held that the Bulk Shipment Clause did not require draught surveys exclusively and that customary practices justified the methods used for calculating cargo weight. (Paras 43, 68)
Result: Claim allowed; Allianz ordered to pay USD1,589,881.61 with interest and costs.
JUDGMENT
Introduction
[1] This judgment deals with the interpretation to be given to a Bulk Shipment Clause in a Marine Open Cover where the assured had warranted to procure certified surveys of the cargo for shipment at both the loading and the discharge ports.
[2] The dispute concerned the use of draught survey which is a process used in the marine industry to measure and verify the quantity of cargo loaded or unloaded from a vessel, typically bulk cargo. The survey involves measuring the vessel's draft, namely, the vertical distance between the waterline and the bottom of the hull before and after loading or unloading.
[3] The issues for determination were whether the forms of certified surveys at both the loading and discharged ports must be by draught surveys only and if not, whether the same or equivalent method of calculation should be used at both the port of loading and discharge port. Further, since the method of survey at the port of discharge differed from the loading port, whether there was any customary practice that had prevented the same or equivalent method of survey calculation to be procured.
Background Facts
[4] Allianz General Company Insurance (Malaysia) Berhad ("Allianz") issued a Marine Open Cover (reference No Allianz/MR2043/19) dated 13 September 2019 ("Open Cover") in favour of Sakura Ferroalloys Sdn Bhd ("Sakura"), covering the exports / imports of High Carbon Ferro-Manganese ("HCFeMn / Cargos").
[5] Subsequently, Sakura entered into agreements with third parties for the export of HCFeMn. The details are as follows:
(1) agreements with one Minerais US LLC for the sale of 3 shipments of HCFeMn to New Orleans Port, USA, with the final destination at Inland Warehouses, USA, namely:
(a) 6500.03 MT of HCFeMn to be shipped by vessel named MV Alam Madu ("Alam Madu Cargo");
(b) 5200.03 MT of HCFeMn to be shipped by vessel named MV Ikan Pulas ("Ikan Pulas Cargo"); and
(c) 5200.30 MT of HCFM and 6500.09 MT of HCFeMn, among others, to be shipped by vessel MV Alam Mutiara ("Alam Mutiara Cargo").
(2) agreement with Sumitomo Corporation for the sale of 2500.87 MT of HCFeMn to Kawasaki Port in Japan ("Thailine 5 Cargo").
[6] Allianz provided insurance to Sakura for the export of the Cargos, in that:
(1) a total of three certificates of insurances were issued under the Open Cover and to be read together with the Open Cover:
(a) Marine Cargo Certificate of Insurance No.
ALLIANZ/MR2043/19-20022 dated 30 August 2020 for the exports of Alam Madu Cargo (referred together with the Open Cover as "Alam Madu Policy");
(b) Marine Cargo Certificate of Insurance No.
ALLIANZ/MR2043/19-200261 dated 13 October 2020 for the exports of Ikan Pulas Cargo (referred together with the Open Cover as "Ikan Pulas Policy") and
(c) Marine Cargo Certificate of Insurance No ALLIANZ/MR2043/19-200323 dated 21 November 2020 for the exports of Thailine 5 Cargo (referred together with the Open Cover as "Thailine 5 Policy").
(2) Separately, Allianz also issued a separate Marine Policy No 20MMR0000381-00 in favour of Sakura on or about 9 December 2020, for the exports of Alam Mutiara Cargo ("Alam Mutiara Policy").
[7] At all material times, Sakura was the insured entity under the Alam Madu Policy, Ikan Pulas Policy, Thailine 5 Policy and Alam Mutiara Policy ("the Insurance Policies").
[8] When the Cargos arrived at the respective destinations, it was found that the quantity of the Cargos delivered to the final destinations was less than the quantity delivered from Sakura's warehouse. As a result, Sakura had suffered total losses of 1,812.81MT of HCFeMn with the breakdown as follows:
(1) 286.03 MT for Alam Madu Cargo;
(2) 481.32 MT for Ikan Pulas Cargo;
(3) 239.48 MT for Thailine 5 Cargo; and
(4) 805.98 MT for Alam Mutiara Cargo.
[9] The extent of Sakura's Cargo shortage is supported by the documentary evidence and has never been disputed by Allianz.
[10] On or around January 2021, Sakura notified Allianz of the losses in relation to the Cargos and provided the n
