On 22 February 2018 the Federal Court of Justice ruled on two risk exclusion clauses in transport insurance policies that are especially relevant for the export and import industries.(1)
Undertakings regularly take out transport insurance for both domestic and cross-border modes of transport. Especially with cross-border transports, the customs authorities repeatedly open and inspect transported goods.
The Federal Court of Justice recently ruled on a case in which the customs authorities damaged transported goods during inspection.
The transport insurer refused cover because the damage had been caused by a sovereign intervention of customs authorities and thus fell under the risk exclusion clause.(2) The insurer also argued that a lack of packaging – albeit possibly caused by the customs authorities – caused the damage. Both could not be recovered under the insurance policy.
The Federal Court of Justice ruled that the transport insurer could not refer to the exclusion clause of inadequate packaging. An average policyholder can assume that the relevant event for damages – due to missing or defective packaging – depends solely on whether the insured goods were adequately packed when provided to the carrier. Therefore, a packaging defect that occurs during the insured transport does not lead to the exclusion of insurance coverage. The purpose of transport insurance is to protect the goods against all risks of transport.
Second, the court ruled that the transport insurer could not invoke the exclusion of other intervention by public authorities. An average policyholder does not assume that this exclusion clause covers damage to transported goods caused merely by improper control by the customs authorities. In the view of an average policyholder, the list of other interventions, in addition to the facts of seizure and withdrawal, must be understood in such a way that only such risks fall under the exclusive event for which the order of the official measure itself is the cause for the damage. However, this does not include a breach of due diligence committed by the customs authorities which has no sovereign character.
The Austrian Court of Justice also dealt with the question of whether the exclusion clause of intervention by public authorities should be applied in a similar case – the court affirmed this question and came to the opposite conclusion. However, German literature broadly rejects this verdict.(3)
The Federal Court of Justice's latest decision clarifies German law, which should also be respected outside Germany. The decision corresponds to the opinion unanimously expressed in the literature. Therefore, the interpretation of general insurance conditions is based on the view of the so-called 'average policyholder'. As far as risk exclusion clauses are concerned, the court has made it clear that exclusion clauses should be interpreted restrictively.
While the decision has resolved some of the legal uncertainty surrounding transport insurance, it will likely apply to all types of insurance. Risk exclusion clauses that are not clearly and unambiguously formulated should therefore be viewed critically in practice.
For further information on this topic please contact Felix Goebel or Marco G Remiorz at Arnecke Sibeth Dabelstein by telephone (+49 40 31 779 70) or email (firstname.lastname@example.org or rm. email@example.com). The Arnecke Sibeth Dabelstein website can be accessed at www.asd-law.com.
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