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AIG Europe Limited v. Shanghai HEMING Shipping Service Co., Ltd. Tianjin Branch & Shanghai HEMING Shipping Service Co., Ltd.

 

The major insurers in the maritime co-insurance contract shall have the right to exercise subrogation claims within the framework agreed upon under the insurance contract after fulfilling all the indemnity obligations agreed in the insurance contract in accordance with the contract, without having to bear more burden of proof for subrogation claims.

 

FACTS

In June 2012, the Plaintiff's insured Ion Beam Applications S.A Beijing (hereafter “IBA Beijing”) commissioned the Defendant Shanghai HEMING Shipping Service Co., Ltd. Tianjin Branch (hereafter “HEMING Tianjin”) to transport a set of particle cyclotrons from Tianjin, China to Montreal, Canada. On June 24th, 2012, the frame container on which the equipment was loaded was damaged after the trailer overturned due to the truck turned at the container cargo dispatching station, resulting in damage to an accelerator assembly (the main component of the particle cyclotron). After the inspection, due to the regarding overturned equipment host was seriously damaged which was unable to repair, the assessment report estimated that the loss reserve shall be €32656.96.

 

The Plaintiff AIG Europe Limited (hereafter “AIG Europe”) and IBA S.A signed a maritime underwriting policy agreed by the original policy of the parties, and IBA Beijing had been identified as one of the co-insured. The policy was insured by the Plaintiff and the other three insurance corporations, and the Plaintiff's insurance share was 50% when the other three corporations accounted for another 50%. According to article 7. 1. 1 of the policy with regard to the terms of the main insurers, the joint insurance corporations undertook to comply with any decisions made by the principal insurer, and all of them agreed that the term "main insurer" applied not only to the corporations or the principal insurer, but also to their agents or representatives. Any decisions made by the principal insurer were an irrevocable constraint to the co-insurance corporations. The co-insurance corporations must recognize that these decisions were made by themselves and they shall not object to them in any way. According to article 8 of the policy, the maximum coverage for each of the means of transport was €.5 million. Article 8.10 of the policy stipulated that the deductible for cargo damage was 5% of the amount of the loss which was up to € 12,500.

 

After the accident, the Plaintiff made the insurance compensation as recommended by the insurance assessment report after deducting the deductible amount of the insurance and the insurance brokerage. On October 29th, 2012, the IBA Beijing issued a subrogation letter to the Plaintiff confirming that the insurer had paid the loss of the cyclotron C18-9 involved, at a loss of € 332656.96. IBA Beijing agreed to the Plaintiff to exercise all its rights and remedies.

 

On July 8, 2012, IBA Beijing exported a set of models for the C18-9 particle cyclotron by HEMING Tianjin and the declaration amount was €15847.07. The destination was Montreal according to the bill of lading. IBA Beijing confirmed that the goods involved were damaged, so it replaced a set of the same type of particle cyclotron.

 

On May 10th, and May 13th, 2013, according to the Plaintiff’s & Defendants’ agents’ email records, both defendants claimed that the total weight of the goods damaged in the container was 26,860kg, and in accordance with the amount of liability, the amount of compensation shall be 81212.82 US dollars. The Plaintiff's agent claimed that the total weight of liability to limit the amount of compensation shall be 29,500kg which was recorded by the bill of lading. During the trial, the Plaintiff confirmed that the amount of compensation for the limit of liability could be calculated by the weight of the individual container cargo submitted by the two Defendants and the amount of compensation was $ 81212.82 (26860kg * 2SDR * $ 1.51178 / SDR).

 

REASONING

The Plaintiff in this case was the cargo insurer who was involved in the carriage of goods by sea, and after the occurrence of the insured accident, it had paid the insured person all the loss and damage recognized by the assessment report. According to the policy, the Plaintiff’s coverage in the insurance contract was 50%, so it was the main insurer. At the same time the policy also stipulated that any decisions made by the primary insurer had an irrevocable constraint on the joint insurance corporations, and the co-insurer must recognize that the decisions were made by themselves and that they shall not object to them in any way. Therefore, that the Plaintiff obtained all the subrogation claims after it made the actual payment and obtained the transfer of interest issued by the insured IBA Beijing was in line with the contract, and that furthermore was not in violation of the law. As a result, that the two Defendants claimed that the Plaintiff did not have the subrogation claims and that the right to claim subrogation was limited to a 50% share of the claims lacked the facts and the basis of the law, so the court cannot support the Defendants’ claims.

 

RULING

Shanghai Maritime Court made the (2014) Hu Hai Fa Shang Chu Zi No. 116 Civil Judgment on January 15th, 2015 that the Defendant HEMING Tianjin shall compensate the Plaintiff for cargo loss 81212.82 US dollars. And the Defendant Shanghai HEMING Shipping Service Co., Ltd. shall bear the additional liability to its branch. After the verdict, the parties did not appeal, and the Civil Judgment had been effective.