3.1 Development and overview
The historical starting point was that marine insurance against marine perils covered all perils to which the insured interest was exposed.(1) NMIP 1930 § 4 subparagraph 1, see also Nordic ICA 1930 § 60. This included political risks to the extent that this risk resulted in loss covered by the insurance. Except for P&I insurance, however, marine insurance with this wide scope of cover was not, in practice, used. Instead, the scope of cover was divided between insurance against marine perils and insurance against war perils. In formal terms, this distinction was made in two steps. The insurance against marine perils was based on the all-risk principle, which stated that the insurance covered all perils to which the interest was exposed, unless the peril was especially excluded. Perils covered under the war risk insurance were then excluded from the marine risk cover.(2) Commentary NMIP 1964 p. 11. Interventions by a war-faring state were regulated as a war risk and were thus excluded from the marine risk cover.(3) NMIP 1930 § 42 no. 2.
The war risk insurance did not cover interventions from non war-faring countries, and nor were such interventions excluded from the marine insurance cover in NMIP 1930. Such exclusion was, however, inserted in NMIP 1964 for Norwegian or allied state power, to avoid these interventions being covered through the all-risk principle,(4) NMIP 1964 § 15 (b), Commentary NMIP 1964 p. 15. and this was extended in the 1996 revision of the NMIP to apply to all state interventions. The central approach was thus that the cover for marine risks is based on the all-risk principle, with exclusions both for war risks and for interventions arising from state power that are not covered under the war risk insurance. However, a more detailed approach to political risk was established in the NP revision in 2019.(5) The revision is described further in Trine-Lise Wilhelmsen, “Cover for intervention by state power in the Nordic Plan from 2019. A fair and timely compromise?”, Journal of international Maritime Law, vol. 24 (2018) p. 354-368 and “Marine insurance for intervention by State power”, Marius no 519 (2019), p. 151-198 (Simply 2018). In the NP today, the marine risk and war risk are regulated as follows:
Clause 2-8. Perils covered by an insurance against marine perils
An insurance against marine perils covers all perils to which the interest may be exposed, with the exception of:
perils covered by an insurance against war perils in accordance with Cl. 2-9,
capture at sea, confiscation, expropriation and other similar interventions by own State power provided any such intervention is made for the furtherance of an overriding national political objective. Own State power is understood to mean the State power in the vessel’s State of registration or in the State where the major ownership interests are located. Own State power does not include individuals or organisations exercising supranational authority,
requisition by State power,
insolvency or lack of liquidity of the assured or the operation of ordinary legal process to enforce payment of any fine, penalty, debt or right to security unrelated to a claim or liability covered by the insurance,
…
Clause 2-9. Perils covered by an insurance against war perils
An insurance against war perils covers:
war or war-like conditions, including civil war or the use of arms or other implements of war in the course of military exercises in peacetime or in guarding against infringements of neutrality,
capture at sea, confiscation, expropriation and other similar interventions by a foreign State power, provided any such intervention is made for the furtherance of an overriding national or supranational political objective. Foreign State power is understood to mean any State power other than own State power as defined in Cl. 2-8 (b), second sentence, as well as organisations and individuals exercising supranational authority or who unlawfully purport to exercise public or supranational authority,
riots, sabotage, acts of terrorism or other social, religious or politically motivated use of violence or threats of the use of violence, strikes or lockouts,
piracy and mutiny,
…
The insurance does not cover:
insolvency or lack of liquidity of the assured or the operation of ordinary legal process to enforce payment of any fine, penalty, debt or right to security unrelated to a claim or liability covered by the insurance,
…
requisition by State power.
The starting point, according to NP Cl. 2-8 sub-clause 1, is that insurance against marine risks covers all perils, including thereunder political risks created by own or foreign state power, or by groups purporting to have such power, or military groups opposing the country’s government. However, to the extent that such political risks are covered by the named perils cover in NP Cl. 2-9, this risk is excluded from the marine insurance cover, according to NP Cl. 2-8 letter a. Since NP Cl. 2-9 letter b covers “capture at sea, confiscation, expropriation and other similar interventions by a foreign State power, provided any such intervention is made for the furtherance of an overriding national or supranational political objective”, these interventions will not be covered under marine risk insurance. Foreign state power in this context means any state power “other than own State power as defined in Cl. 2-8 (b), second sentence, as well as organisations and individuals exercising supranational authority or who unlawfully purport to exercise public or supranational authority”. Broadly speaking, therefore, the war risk insurance covers interventions made for the furtherance of an overriding political objective made by foreign state power and by organisations “who unlawfully purport to exercise public or supranational authority”.
Furthermore, NP Cl. 2-8 letter b excludes “capture at sea, confiscation, expropriation and other similar interventions by own State power provided any such intervention is made for the furtherance of an overriding national political objective”. These interventions are not covered under NP Cl. 2-9. Thus, political risks in the form of such interventions made by own state power against the vessel are not insurable under NP.
Neither NP Cl. 2-9 letter b nor NP Cl. 2-8 letter b apply to military groups opposing the existing regime but without purporting to exercise public or supranational authority, and this risk has not been much discussed under the revisions. However, Cl. 2-9 letter c covers “acts of terrorism or other social, religious or politically motivated use of violence or threats of the use of violence”. To the extent an attacking military group is listed as a terrorist group, it will therefore be covered, and the same is true for military groups using violence or threats of violence against the vessel for political purposes.
On the other hand, interventions that do not have “an overriding national political objective” made by own or foreign state power, or by organisations who unlawfully purport to exercise public authority, are covered by the all-risk principle. Typical examples are arrest or detention of the vessel due to breaches of customs or trade regulations.
There are however two common exclusions from this cover. The first exclusion is “Insolvency or lack of liquidity of the assured or the operation of ordinary legal process to enforce payment of any fine, penalty, debt or right to security unrelated to a claim or liability covered by the insurance”, cf. NP Cl. 2-8 letter d and Cl. 2-9 sub-clause 2 letter a. Since NP Cl. 2-8 letter b is now limited to interventions for the furtherance of overriding national political objectives, any other intervention would, as a starting point, be covered by the all-risk principle. This is a very wide scope of cover, and it was necessary to restrict it through an exclusion for legal proceedings to enforce a debt or obtain security for a debt. The exclusion does not apply to e.g. proceedings relating to public law matters, such as the enforcement of customs or trading regulations. Such cases are governed by the rules in Cl. 3-16.(6) Commentary 2023 p. 49 to Cl. 2-8 letter d. It should also be noted that the exclusion has a rather limited application, as it is unlikely that the operation of ordinary legal processes will be the direct cause of physical damage to a vessel or lead to the owner being deprived of the vessel without any prospect of recovery. Even so, it was necessary to avoid insurance cover if damage were to trigger a delay or legal costs for enforcing the payment of debts or other legal rights against the assured or the vessel.(7) Commentary 2023 p. 49 to Cl. 2-8 letter d.
The second exclusion is requisition, cf. NP Cl. 2-8 letter c and Cl. 2-9 sub-clause 2 letter b.
The exclusion is absolute and applies to requisition by any state power, regardless of whether it is for ownership or other use. Even if it is argued that a state only has authority to requisition vessels under its own flag, requisition by a foreign state is also excluded. There is no court decision providing a definition of the concept of requisition, and the concept is not clear in Nordic marine insurance. However, according to the Commentary, the typical characteristics are that the state will “requisition” the vessel for ownership or use according to legislation and in national interest and that the relevant legislation provides a formal procedure to be followed. Requisition is typically limited in time, and the intention is that the vessel shall be redelivered to the owner after a certain period. The rule is also that the state should compensate for the use of the vessel and pay for any damage incurred during the period of use, but this is not a requirement for the exclusion to apply.(8) Commentary 2023 p. 47 to Cl. 2-8 letter c.