Windfall in the Law of Subrogation: Marine
Insurance in Motion
Proshanto K. Mukherjee
Abstract The doctrine of subrogation is germane to the law of marine insurance and
is intimately associated with the centrality of the principle of indemnity under which
the assured is entitled to be fully indemnified by the insurer under the insurance
policy but not beyond that amount so that the assured does not profit from his loss. In
juxtaposition to indemnity, subrogation allows the insurer to “step into the shoes” of
the assured after indemnifying his loss, and bring action against the responsible
third-party to recoup what he has paid to the assured and prevent the latter from
“double-dipping” or getting paid twice; once by the insurer and then by the perpetrator of the loss, which is in line with the principle of indemnity. But on occasion
subrogation may engender a windfall. This chapter examines how such circumstances are treated by reference to English and American case law and relevant
scholarly literature. It provides a critique of the leading cases and concludes that they
are inconsistent, lacking in any definitive pronouncement of the law within the ambit
of insurance, marine or otherwise.
1 Introduction
Marine insurance is old law that is still very much in motion. Its progenitor is the
practice of bottomry or pledging of a ship against a loan and its cargo counterpart
known as respondentia. It is a practice of ancient vintage, recorded in the annals of
maritime history as dating back to the period of the Babylonian Code of Hammurabi
(1600–2000 B.C.), and the Hindu Code Manu Samhita (900 B.C.).
1 There is
evidence of a similar practice known as foenus nauticum in the Greek maritime
law of the times inherited from the Rhodian Sea Law.
2 In bottomry, if the ship sank,
P. K. Mukherjee (*)
School of Law, Dalian Maritime University, Dalian, China
e-mail: pkm@wmu.se
1 Mukherjee (2002), pp. 11–12; Gold et al. (2003). See also Reddie (1841), pp. 482 and 493.
2 Mukherjee (2002), p. 12.
© Springer Nature Switzerland AG 2020
P. K. Mukherjee et al. (eds.), Maritime Law in Motion, WMU Studies in Maritime
Affairs 8, https://doi.org/10.1007/978-3-030-31749-2_26
563
Insurance in Motion
Proshanto K. Mukherjee
Abstract The doctrine of subrogation is germane to the law of marine insurance and
is intimately associated with the centrality of the principle of indemnity under which
the assured is entitled to be fully indemnified by the insurer under the insurance
policy but not beyond that amount so that the assured does not profit from his loss. In
juxtaposition to indemnity, subrogation allows the insurer to “step into the shoes” of
the assured after indemnifying his loss, and bring action against the responsible
third-party to recoup what he has paid to the assured and prevent the latter from
“double-dipping” or getting paid twice; once by the insurer and then by the perpetrator of the loss, which is in line with the principle of indemnity. But on occasion
subrogation may engender a windfall. This chapter examines how such circumstances are treated by reference to English and American case law and relevant
scholarly literature. It provides a critique of the leading cases and concludes that they
are inconsistent, lacking in any definitive pronouncement of the law within the ambit
of insurance, marine or otherwise.
1 Introduction
Marine insurance is old law that is still very much in motion. Its progenitor is the
practice of bottomry or pledging of a ship against a loan and its cargo counterpart
known as respondentia. It is a practice of ancient vintage, recorded in the annals of
maritime history as dating back to the period of the Babylonian Code of Hammurabi
(1600–2000 B.C.), and the Hindu Code Manu Samhita (900 B.C.).
1 There is
evidence of a similar practice known as foenus nauticum in the Greek maritime
law of the times inherited from the Rhodian Sea Law.
2 In bottomry, if the ship sank,
P. K. Mukherjee (*)
School of Law, Dalian Maritime University, Dalian, China
e-mail: pkm@wmu.se
1 Mukherjee (2002), pp. 11–12; Gold et al. (2003). See also Reddie (1841), pp. 482 and 493.
2 Mukherjee (2002), p. 12.
© Springer Nature Switzerland AG 2020
P. K. Mukherjee et al. (eds.), Maritime Law in Motion, WMU Studies in Maritime
Affairs 8, https://doi.org/10.1007/978-3-030-31749-2_26
563