In the case of Pan-United Shipyard v India International Insurance, a Singapore court considered the scope of an insurance policy and whether it covered the plaintiff's liability as the repairer of a vessel.
The plaintiff, a ship-building and repairing company, entered into a contract with Ranger Shipping to carry out work on a vessel. To indemnify itself against liability arising from accidents during the course of the work, the plaintiff took out a collective policy of insurance with its insurer, the defendant. In the policy, the 'assured' was stated to be the plaintiff "and/or Petro Ships Pte Ltd, Ranger Shipping Pte Ltd and/or Asian Lift Pte Ltd for their respective rights and interest".
Under Clause 19.1 of the policy, the defendant was to indemnify the assured if the assured became liable as owner of the vessel for, (among other things), loss or damage to any property, other than the vessel itself, arising from any cause. Also, under Clause 19.2.5, the defendant was to indemnify the assured in respect of legal costs incurred as a result of any accident during the period of insurance.
In an earlier suit, Suit 1627 of 1996, the plaintiff was sued by the owners of a ship (El Corsario) for damage allegedly caused by the work carried out on the vessel. The defendant refused to indemnify the plaintiff under the policy on the ground that the plaintiff was being sued not as the owner, but as the repairer of the vessel. The plaintiff then commenced the present proceedings for a declaration that in the event of it being held liable to the owners of El Corsario in Suit 1627, it was entitled to be indemnified by the defendant under Clause 19 of the policy. Suit 1627 was subsequently settled. The plaintiff then amended its claim in these proceedings to one for a declaration that it was entitled to be indemnified by the defendant for its legal costs in defending Suit 1627.
The court held that it was clear that the indemnity set out in Clause 19.1 of the policy was against liability incurred by the plaintiff as owner of the vessel. The other sub-clauses of Clause 19 also related to the liability of the owners of the vessel or other persons in possession of the vessel as operators. The words 'as owners' described the character of the liability itself, and not merely the capacity of the assured or the history of the liability. The status of the assured as an owner was an integral part of the cause of action against the plaintiff. Since the policy covered only the plaintiff's liability as owner, and not as repairer, of the vessel, its claim was dismissed.
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