Secondly, the parasitical mode is self-contradictory. As mentioned above, the key
point of the duo of English scholars referred to previously supporting the parasitical
mode is its conformity with the principle of indemnity under which the insurer of
liability is not entitled to invoke limitation and should pay in full to the third-party
claimant if the assured loses his right to limit. Nevertheless, as to the question
whether the liability insurer has the right to limit liability where the assured has
failed in a plea for limitation, to which he was originally entitled, at the time when
the claim brought against him by the injured third party was adjudicated, the answer
given by the authors mentioned above, is surprisingly in the affirmative based on the
following grounds: (1) the assured should reap as he has sown irrespective of
whatever reasons and the insurer need not carry the can for the assured; (2) the
LLMC 1976 does not require the assured to first plead limitation before his insurer
does, in other words, the insurer should not be affected by whether or not the assured
is entitled to limit; (3) the third party stands in no better position than the assured
under the insurance policy because his claim is assigned from the assured.
Thus, if the insurer is allowed to invoke limitation against the assured, the same
right should be exercisable against the third party as well, which does not make the
third party lose anything more than he should.
49 It is apparent that there is a
contradiction within the parasitical mode in this respect. In light of the principle of
indemnity, the answer to the above question should be in the negative; namely, the
insurer should not be entitled to invoke limitation and should pay in full to the third
party claimant if his assured has failed in his plea for limitation to which he is
entitled, because the assured in such circumstance does not actually enjoy the right
of limitation though he has it on the surface, and the aim of the principle of
indemnity is to indemnify the actual loss of the assured. Essentially, it is the principle
of indemnity that leads to a false choice of the mode of entitlement to limitation of
liability.
The contradiction is also apparent from the viewpoint of legal interpretation.
According to the parasitical mode, the insurer of liability is entitled to invoke
limitation despite the fact that his assured, who is originally allowed the benefit of
limitation, has failed to assert the benefit; but the insurer is not entitled to invoke
limitation where his assured has committed an intentional or reckless act or omission
with knowledge that the loss would probably result. In the former case, the assured’s
culpability is little or even none and the insurer’s right of limitation is not affected;
whereas in the latter case, the assured’s culpability is obviously large and by logic,
the insurer’s right of limitation should have been kept to be unaffected. In the view of
the present authors, the actual result, however, is that the insurer is denied the right of
limitation, which is entirely against common sense and is totally unfair.
Third, it is a fundamental attribute of the modern law of limitation of liability that
only if it is due to his conduct should the person liable be subjected to forfeit of his
right of limitation. It should be emphasized further that the conduct barring limitation should be of the person liable himself if he is a natural person, and should be of
49 See Hodges and Hill (2001), supra note 32, p. 254.
668
Y. Xia
point of the duo of English scholars referred to previously supporting the parasitical
mode is its conformity with the principle of indemnity under which the insurer of
liability is not entitled to invoke limitation and should pay in full to the third-party
claimant if the assured loses his right to limit. Nevertheless, as to the question
whether the liability insurer has the right to limit liability where the assured has
failed in a plea for limitation, to which he was originally entitled, at the time when
the claim brought against him by the injured third party was adjudicated, the answer
given by the authors mentioned above, is surprisingly in the affirmative based on the
following grounds: (1) the assured should reap as he has sown irrespective of
whatever reasons and the insurer need not carry the can for the assured; (2) the
LLMC 1976 does not require the assured to first plead limitation before his insurer
does, in other words, the insurer should not be affected by whether or not the assured
is entitled to limit; (3) the third party stands in no better position than the assured
under the insurance policy because his claim is assigned from the assured.
Thus, if the insurer is allowed to invoke limitation against the assured, the same
right should be exercisable against the third party as well, which does not make the
third party lose anything more than he should.
49 It is apparent that there is a
contradiction within the parasitical mode in this respect. In light of the principle of
indemnity, the answer to the above question should be in the negative; namely, the
insurer should not be entitled to invoke limitation and should pay in full to the third
party claimant if his assured has failed in his plea for limitation to which he is
entitled, because the assured in such circumstance does not actually enjoy the right
of limitation though he has it on the surface, and the aim of the principle of
indemnity is to indemnify the actual loss of the assured. Essentially, it is the principle
of indemnity that leads to a false choice of the mode of entitlement to limitation of
liability.
The contradiction is also apparent from the viewpoint of legal interpretation.
According to the parasitical mode, the insurer of liability is entitled to invoke
limitation despite the fact that his assured, who is originally allowed the benefit of
limitation, has failed to assert the benefit; but the insurer is not entitled to invoke
limitation where his assured has committed an intentional or reckless act or omission
with knowledge that the loss would probably result. In the former case, the assured’s
culpability is little or even none and the insurer’s right of limitation is not affected;
whereas in the latter case, the assured’s culpability is obviously large and by logic,
the insurer’s right of limitation should have been kept to be unaffected. In the view of
the present authors, the actual result, however, is that the insurer is denied the right of
limitation, which is entirely against common sense and is totally unfair.
Third, it is a fundamental attribute of the modern law of limitation of liability that
only if it is due to his conduct should the person liable be subjected to forfeit of his
right of limitation. It should be emphasized further that the conduct barring limitation should be of the person liable himself if he is a natural person, and should be of
49 See Hodges and Hill (2001), supra note 32, p. 254.
668
Y. Xia