1) Global Process Systems Inc (2) Global Process Systems (Asia Pacific) Sdn Bhd V Syarikat Takaful Malaysia Berhad (2009)

The claimant insured held an ‘all risks’ policy with the defendant insurer. The insured claimed for a loss which it incurred when three legs from one of its oil rigs fell off as the rig was being towed from Texas to Malaysia.

Under the ‘all risks’ policy, the insured had only to prove that the loss had occurred as a result of an accident or casualty, without specifying the exact nature of the accident. The insurer was then left with the burden of proving that the loss fell within one of the exclusions in the policy.

The insurer claimed that the loss was due to ‘inherent vice’, which, as in many carriage by sea or marine cargo policies, was excluded. Inherent vice is an exclusion which states that the insurer is not liable if the cause of the loss is an inherent problem (or vice) with the cargo itself and not a ‘peril of the sea’ (see s.55 of the Marine Insurance Act 1906).

The court said that inherent inability to withstand the ordinary incidents of a voyage was clearly an appropriate test of inherent vice. As a question of fact, the rig was fundamentally unable to withstand the perils of the voyage undertaken. The cause of the loss was therefore inherent vice and the claim was dismissed.

The court also provided useful commentary on the principle of inherent vice and clarified that it was not a rule of evidence that if it was proved that exceptional weather conditions did not occur during the voyage, then the loss had to be attributed to inherent vice.