Constructive Total Loss - Essay Example

Constructive Total Loss Introduction The Marine Insurance Act 1906 offers a detailed ification of total losses but gives little information concerning the relationship with other definitions such as piracy. This is because of the development of new waves of crimes and losses as the world remains dynamic considering the changes in information and communication technology. Identifying the complexity in evaluating whether seizure of case cargo, an important component of insurance by criminals involved in piracy and demanding ransom before release results in a genuine and legal claim for a total loss appeared in two cases. The first was in the United Kingdom Court of Appeal in two thousand and eleven namely; EWCA Civ 24 and the second was the judgment in the case of Masefield v. Amlin delivered by Lord Steel in two thousand and ten namely; Lloyd’s Rep. IR 345. The definition of Constructive Total Loss provided by the Marine Insurance of 1906 leaves gaps and raises many questions when applied in modern cases that did not exist during enactment of the law more than one hundred years ago. Complexity arises when the complainant argues that ignoring a ransom payment amounts to asserting that a total loss claim is genuine and legal. This explanation means that it is not possible to retrieve deprivation according to the Marine Insurance Act of 1906 section fifty-seven subsection one. In this case, it is against public policy to claim a ransom. It is at this point that the definition provided by the 1906 Act creates difficulties regarding finding a solution to such situations. The definition generates crucial questions covering both legal aspects and public policy formulation processes. This discourse examines the difficulties raised by defining a total loss on the background of English definition given in the marine Insurance Policy of 1906. Highlighted examples include the new wave of crimes such as piracy Definition and Difficulty The introduction of the constructive total loss aimed at codifying regulations touching on marine insurance. This formed the basis of introducing section sixty of in Marine Insurance Act of 19061. A constructive total loss during reasonable abandonment of the insured property regarding the unavoidability of occurrence of a total loss depending on any direct offering in the public policy. Alternatively it occurs if it was difficult to prevent the occurrence of a total loss. The legislative Act of 19062 covering marine policy further specifies that it is not possible for the owner of the property to recover viewing the position of the case and that the expense to incur in re[possessing the ship or goods may well exceed the it value when someone else deprives the owner of the possession. The second specification offered concerns the damage to the property. A constructive total loss occurs when the cost of repairing the property such as the ship would go in excess of the value of the ship. The situation becomes worse when the case involves irretrievable deprivation. The case involves among others seizure also referred to as capture. In this example the law acknowledges the existence of an insurance against a particular loss and that the owner of the property may never regain ownership. Scholars supporting this analogy point at the enemy seizing something during war and condemn it as his lawfully. This is when the destroyer damages the ship or the good3. Authorities do allow deduction to the overall contributions to the repairs released by other parties when carrying out estimates covering the cost of repairs. However, the reverse is true when salvaging activities for future contributions. Section sixty-two of the 1906 Act elaborates on procedures of laying claim on a constructive total loss. Section 57(1) 4defines a constructive total loss. In the Marine Insurance provision; Where the subject-matter insured is destroyed, or so damaged as to cease to be a thing of the kind insured, or where the assured is irretrievably deprived thereof, there is an actual total loss (). Many examples fall in this category. They include among others sinking in deep water after two ships collide, fire destroying the cargo or ship5, as well as breaking down in a hurricane by ocean. Continuous developments in information and communication technology develop more complexities in stating or defining with certainty that particular occurrences warrant a genuine claim of a total loss6. This is more when there is lack of full and absolute destruction that a subject matter entails a constructive total loss indeed. This definition makes it difficult for anyone including those in the legal fraternity to distinguish between constructive total loses and actual total losses in circumstances involving destroyed subject matters but with technical capacity of reconstitution. The situation becomes worse when the case involves irretrievable deprivation. This case involves among others seizure also referred to as capture7. In this example the law acknowledges the existence of an insurance against a particular loss and that the owner of the property may never regain ownership. Scholars supporting this analogy point at the enemy seizing something during war and condemn it as his lawfully8. Court of Appeal judges presiding over the case of Masefield AG v. Amlin Corporate Member gave insights into whether a loss by piracy could result in a constructive loss. Judge Rix LJ9 delivered the leading judgment in the case giving insights into the chances of a constructive total loss emanating from activities of pirates for ransom becoming a reality. As much as the judgment carried the likelihood of compensation, it can only mature into the same. According to the leading judge changing the subject-matter is out of question from the perspective of the rule of law. This is a question of fact10. Difficulties brought by the Marine Insurance Act of 1906 appeared in this ruling where the judge ruled that typical seizure does not amount to a constructive loss. However, he pointed out that it could as well mature into one. On the other hand, practical capture carries some weight to warrant a constructive total loss claim. When the pirate runs away with their seizure or prize for use and those prospects of the owner regaining ownership or chances of recapture remain minimal does not result in a legal claim of a constructive total loss. Complexity arises when the complainant argues that ignoring a ransom payment amounts to asserting that a total loss claim is genuine and legal. This explanation means that it is not possible to retrieve deprivation according to the Marine Insurance Act of 190611 section fifty-seven subsection one. In this case, it is against public policy to claim a ransom. It is at this point that the definition provided by the 1906 Act creates difficulties regarding finding a solution to such situations. Professionals in the legal fraternity concur it is only necessary to invoke the principle of public policy in precise ways that includes a loss to the public substantially remains incontestable. At the same time, it should not rely on individual inferences of selected professionals in judicial matters. Furthermore, they hold that it is not illegal in the present society to pay ransom. By reaching at this agreement, judges point at the existence of authority admitting that payment of ransom constitutes taking legal action and labor cost. Any form of payment not legal is applicable in securing the property back to the owner. It is acceptable legally even if the person demanding payment is doing so unlawfully. In this case, payment of a ransom to a pirate to secure the release of property is recoverable. Some judicial minds however, still aver doubts in such definitions. During delivery of other judgments, judges opt out of setting precedence they presume are dangerous based on the contemporary nature of circumstance. Judgment in the Masefield case offers little insight into the exact differences between public policy and illegality. However, it holds based on the fact that it upheld the value that piracy puts lives of people and their property at the risk of annihilation. The 1906 Act still leaves vague alternatives presently and in future regarding facts covering cargo and ship with each being at risk separately12. The Marine Act ventures into details covering the relationship between the requirements and meaning for claim for total losses. However, definitions offered in this Act leave many issues unattended to including new waves of crimes such as piracy. Various sections of the legal Act including section fifty-six, fifty-seven, sixty, through to sixty-three. The sections cover both constructive and actual total loss. Difficulties brought by the Marine Insurance Act of 1906 appeared in this ruling where the judge ruled that typical seizure does not amount to a constructive loss. However, he pointed out that it could as well mature into one. On the other hand, practical capture carries some weight to warrant a constructive total loss claim. Conclusion The Act considers a constructive total loss from the perspective of a total loss in fact while the actual total loss appears in view of both law and fact. Based on this, the law offers direct and simple definition and translation of the actual total loss and leaves the constructive total loss with unfinished interpretations. No wonder, most cases in the corridors of justice regard a constructive total loss. It is important to note that the concept of a constructive total loss applies beyond the boundaries of submarine. The case in point includes a situation entailing a serious but incomplete loss results in compensation to the owner of the property by the insurer. The insurer proceeds to own all the rights of whatever remains from the loss. A case of litigation constituting a non-marine policy involving Mitsui v. Mumford was a perfect example. It is right to consider eligible issues when dealing with matters relating to Works Cited Birnie P, Boyle A, Redgwell C. 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