Revisiting the South African (Marine) Insurance Warranty against the English Insurance Act 2015 and the Nordic Marine Insurance Pan of 2013: Viking Inshore Shipping (Pty) Ltd v Mutual and Federal Insurance Company

Warranties are a contentious aspect of insurance law and remain one of the core differences between marine insurance law in common law and continental jurisdictions and one of the core issues that will require reconciliation if international harmonisation of marine insurance is to ever become a reality. In assessing insurance coverage, warranties function as a means for insurers to properly rate and circumscribe the risk and to guard against an alteration of the risk that would render it materially different from the risk assumed by the insurer. Warranties are of two types: an affirmative warranty regulates the past or present state of affairs whereby the insured states unequivocally that a certain state of affairs exists at the time of making the warranty. Such a warranty would state, for example, that a vessel has been surveyed in the last 12 months and has complied with the recommendations of that survey (Soyer, ‘Beginning of a new era for insurance warranties?’ (2013) 3 Lloyd’s Maritime and Commercial Law Quarterly 384 at 388). A promissory warranty, on the other hand, regulates what an insured may or may not do during the currency of the policy so as not to increase the risk undertaken: for example, the Merchant Shipping Act (MA) warranty where a proposer warrants that his vessel shall at all times comply with the Merchant Shipping Act 57 of 1951 and its Regulations. The South African High Court in Viking Inshore Fishing (Pty) Ltd v Mutual & Federal Insurance Company Limited (unreported case no AC 22/07) [2014] ZAWCHC 154 (17 October 2014)) had an opportunity to revisit the consequences of a breach of a promissory warranty, in particular the MSA warranty, which is commonly found in hull and machinery policies written in the South African market