party if the assured was found to be in breach of an express or implied warranty in
the policy.
38
In The Fanti/The Padre Island,
39 the House of Lords held that a third party
claimant stepping into the shoes of an assured pursuant to the 1930 Act could not
recover from a P&I Club if the assured had failed to comply with the Club’s Rules.
Thus, the third party’s rights under the legislation would be subject to the contractual
provisions of the insurance. In this regard it has been opined that while on the one
hand the liability insurer’s rights might have been unintentionally prejudiced by
Article 1(6) of the LLMC 1976/1996 Convention, given the requirement for compliance with the express terms of the insurance policy or s. 55(2) of the Marine
Insurance Act 1906, on the other hand, the Convention having the force of law in the
United Kingdom by virtue of s. 185 of the Merchant Shipping Act 1995, the insurer
has, under the convention, the same right to limit his liability as the assured.
40
5.3 The Independent or Separate Identity Mode
In contrast to the conventions and domestic legislation exemplifying the application
of the methodology exemplified by Article 1(6) of the LLMC 1976/1996 Convention, otherwise referred to as the parasitical method, the so-called independent mode
of application of limitation in respect of the liability insurer, which gives him an
identity separate from his assured regarding the right to limit liability, operates under
an opposite premise.
41 An important observation in this regard is that the independent mode is compatible with compulsory insurance which is mainly provided for in
the ship-source pollution conventions and corresponding legislation giving effect to
them. This modality, first demonstrated by Article VII (8) of the CLC 1969 repeated
in its 1992 Protocol, provides that any claim for compensation for pollution damage
may be brought directly against the insurer for the owner’s liability for pollution
damage, and in such case, the insurer may, irrespective of the actual fault or privity
of the owner, avail himself of the limits of liability prescribed in Article 5 (1) of the
Convention. In other words, unlike in the case of the parasitical mode, the liability
insurer does not lose his right to limit liability even if his assured is deprived of that
right by reason of some legal roadblock.
The CLC has the distinction of being the first international convention where the
liability insurer gained the benefit of limitation. Others, as we shall see, followed
suit. This provision is characterized by its independent entitlement to limitation,
separate from that of his assured, meaning that the insurer of liability is entitled to
limit his liability in his own right without being affected by his assured’s right or lack
38 Griggs et al. (2005), supra, note 31, p. 15.
39 [1992] Lloyd’s Rep 191.
40 See Griggs et al. (2005), supra, note 31, p. 15.
41 To describe this modality, the term “independent” is used in this chapter.
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Y. Xia
the policy.
38
In The Fanti/The Padre Island,
39 the House of Lords held that a third party
claimant stepping into the shoes of an assured pursuant to the 1930 Act could not
recover from a P&I Club if the assured had failed to comply with the Club’s Rules.
Thus, the third party’s rights under the legislation would be subject to the contractual
provisions of the insurance. In this regard it has been opined that while on the one
hand the liability insurer’s rights might have been unintentionally prejudiced by
Article 1(6) of the LLMC 1976/1996 Convention, given the requirement for compliance with the express terms of the insurance policy or s. 55(2) of the Marine
Insurance Act 1906, on the other hand, the Convention having the force of law in the
United Kingdom by virtue of s. 185 of the Merchant Shipping Act 1995, the insurer
has, under the convention, the same right to limit his liability as the assured.
40
5.3 The Independent or Separate Identity Mode
In contrast to the conventions and domestic legislation exemplifying the application
of the methodology exemplified by Article 1(6) of the LLMC 1976/1996 Convention, otherwise referred to as the parasitical method, the so-called independent mode
of application of limitation in respect of the liability insurer, which gives him an
identity separate from his assured regarding the right to limit liability, operates under
an opposite premise.
41 An important observation in this regard is that the independent mode is compatible with compulsory insurance which is mainly provided for in
the ship-source pollution conventions and corresponding legislation giving effect to
them. This modality, first demonstrated by Article VII (8) of the CLC 1969 repeated
in its 1992 Protocol, provides that any claim for compensation for pollution damage
may be brought directly against the insurer for the owner’s liability for pollution
damage, and in such case, the insurer may, irrespective of the actual fault or privity
of the owner, avail himself of the limits of liability prescribed in Article 5 (1) of the
Convention. In other words, unlike in the case of the parasitical mode, the liability
insurer does not lose his right to limit liability even if his assured is deprived of that
right by reason of some legal roadblock.
The CLC has the distinction of being the first international convention where the
liability insurer gained the benefit of limitation. Others, as we shall see, followed
suit. This provision is characterized by its independent entitlement to limitation,
separate from that of his assured, meaning that the insurer of liability is entitled to
limit his liability in his own right without being affected by his assured’s right or lack
38 Griggs et al. (2005), supra, note 31, p. 15.
39 [1992] Lloyd’s Rep 191.
40 See Griggs et al. (2005), supra, note 31, p. 15.
41 To describe this modality, the term “independent” is used in this chapter.
664
Y. Xia