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2025 MarsdenLR 4622
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 court confirmed that an insurance clause does not necessitate draught surveys exclusively; compliant methods can vary based on customary practices, validating the insured's claim for cargo shortages.
Headnote:(A) Marine Insurance - Bulk Shipment Clause - Insurance Act 2015 (UK) - Claim for cargo shortage - Court determines that requirement for certified surveys does not mandate use of draught surveys; compliance achieved through weighbridge use as customary practice allowed differential methods - The insured's claim of USD1,589,881.61 was justified by evidence of loss during coverage - Insurance company is liable. (Paras 2, 12, 44, 68-69)
(B) Interpretation of Contracts - Ordinary meaning of contract words must be given effect; terms must be construed in accordance with common usage and context - Here, terms of coated insurance not violated as long as approved surveying method was utilized. (Paras 43, 65)
Facts of the case:
The dispute arose between an insurance company and the insured regarding cargo shortages during international shipments, with the insurance company denying liability based on alleged policy violations linked to the method of surveying cargo weights at loading and discharge ports.
Findings of Court:
The insured demonstrated compliance with the survey requirements established in the policy despite contention regarding the method of measurement.
Issues: The central issues were the interpretation of the policy's Bulk Shipment Clause and whether the insured fulfilled its obligations in terms of surveying cargo weights at both loading and discharge points.
Ratio Decidendi: The court found that the insured had met the requirements of the policy and established that customary practices validly accounted for the difference in survey methods at the loading and discharge ports.
Result: Claim allowed in favor of the insured, insurance company ordered to pay the claim amount plus interest.
| Table of Content |
|---|
| 1. interpretation of bulk shipment clause (Para 1 , 2 , 3) |
| 2. insurance policies and cargo details (Para 4 , 5 , 6 , 7 , 9 , 10 , 11 , 12) |
| 3. allianz's claim of breach of bulk shipment clause (Para 13 , 14) |
| 4. assessment of cargo shortages and proof of loss (Para 15 , 16 , 17 , 18 , 19 , 20 , 23 , 24 , 27 , 28 , 40) |
| 5. analysis of draught survey and customary practices (Para 25 , 26 , 29 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 41 , 42 , 44 , 46 , 49 , 50 , 51) |
| 6. compliance with survey requirements under bulk shipment clause (Para 43 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64) |
| 7. liability under the all-risk policy (Para 65 , 66 , 67) |
| 8. judgment and order for payment (Para 68) |
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 from being 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 / Cargoes").
[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 Cargoes, 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 Mutia
