Liability of Parties in International Trade Law: A Case Study of Blase, Tahai, and Mingshan Insurance

a ) Is Blase entitled to seek reimbursement in respect of the premium that it paid in procuring the
second insurance policy? (6 marks)
The case mentioned that Blase insured an additional RM400,000 for the goods and asked Tahai to
reimburse the premium if the second insurance policy. The issue is whether Blase is entitled to seek the
reimbursement of the premium paid. Stim (2021) explained that a governing law allows parties to agree
that a certain state's laws will be used to interpret the agreement and resolve disputes. However, when an
international sale contract does not contain a choice of law clause but adopts a specific Incoterm, any
dispute arising from the sale contract can be resolved in accordance with the provisions set forth by that
Incoterm.1 Icecargo (2020) pointed out that under CIF (carriage, insurance, freight) terms, the sellers are
the ones who assume the responsibility for the goods and insurance up until the goods reach the
destination port. For CIF, the costs and freight is covered by the seller until the goods arrive at the buyer’s
port of destination. Once reached, the buyer assumes the responsibility. Besides, transfer of risk happens
from the point where the seller loaded the goods on the vessel. Additionally, the seller must supply the
goods according to the description in the contract of sale and also to acquire as well as prepare the
necessary documents. Whereas the buyer must provide relevant information that enables the seller to
insure the goods. For instance, ensuring a document about bill of lading had covered the contract goods,
so that the buyer could claim at the destination point. The buyer bears the risks of all loss or damages to
the goods after passing the shipment port, the goods must be duly appropriated to the contract. In
addition, the buyer will bear the cost if additional insurance was requested .Referring to the case, Tahai
was required to insure the TVs according to CIF contract and later on entered a contract with Marine
Insurance. The additional cost of premium worth RM400,000 should be procured at Blase’s own cost if
deemed necessary. Blase is only entitled for the premium if Tahai asked Blase to take additional cover for
the goods, and not Blase’s decision alone. As a result, Blase as the buyer is therefore advised that is not
entitled to seek a refund for the amount paid for the second insurance policy.
1 Gan Joo Ee, International Sale Of Goods:The Vienna Convention on the International Sale of Goods 1980 (CISG) – Part 1
,lecture notes in Moodle for BTW3201 International Trade Law at Monash University Malaysia, Subang Jaya (n.d.)
<https://lms.monash.edu/my/>

b) Is Mingshan Insurance under an obligation to compensate in respect of the loss of Container B?
(7 marks)
According to the case, Container B contained 20,000 monitor screens were damaged and washed
overbroad due to a heavy storm. The issue is whether Mingshan Insurance is responsible to compensate
for the loss of Container B. The person insured could be the seller or buyer. 2 Icecargo (2020) pointed out
that under CIF (carriage, insurance, freight) terms, the sellers are the ones who assume the responsibility
for the goods and insurance up until the goods reach the destination port. 3 Institute cargo clauses in
marine insurance policy are clauses which specify what kind of items in the cargo is covered in case of
any loss or damage to the shipment (Dhoot, 2021). 4 The clauses were classified into 3 sets, in this case,
Clause C is highlighted. According to ACIS (1982), Clause C is known to be the most restrictive
coverage and has the lowest premiums. Clause C only covers accidental damage of cargo due to ship
malfunction which includes sinking, collision, explosion, stranding or discharge of cargo. 5 The incident
occured to Container B whereby the cargo being washed overboard was not included under these clauses.
In accordance with Cargo Clause 4.1, under general exclusion clause of Institute Clause C, which stated
that the insurance cover would not be covering any risks that associated with any loss damage, expenses
attributable to wilful misconduct of the Assured (ASIC, 1982). By referring to the given scenario, Tahai is
the insured, also known as the seller who is responsible for the goods under the Incoterm CIF contract as
mentioned above. Mingshan Insurance, the corporation from which Blase had taken a contract of marine
insurance, has incorporated the institute of Cargo Clause C as per Tahai’s policy. The policy stated in the
contract has clearly specified the route needed to be taken by the carrier throughout the journey, which is
5 Cargo Underwriting Agency Ltd, Institute Cargo Clauses ©- CL254( Web page, 1 January 1982)
<https://www.aciscargo.com/Library/ICC%20C%201982%20CL254.pdf>
4 Dhoot, What are Institute Cargo Clauses in Marine Cargo Insurance?(Web Page, 18 June 2021)
<https://securenow.in/insuropedia/institute-cargo-clauses-marine-cargo-insurance/>
3 International Cargo Express, Incoterms Insurance Responsibilities Explained: Who Insures What and Are You Covered?( Web
page, 27 February 2020) <https://www.icecargo.com.au/incoterms-insurance-responsibilities/>
2 Gan Joo Ee, International Transport: Marine Insurance,lecture notes in Moodle for BTW3201 International Trade Law at
Monash University Malaysia, Subang Jaya (n.d.) <https://lms.monash.edu/my/>

from Port of Shanghai to Port Klang. However, Serenity did not follow the route according to the
contract, as the ship had deviated from the usual route to another path to save the passengers, hence
leading to the damage of goods (Container B). As per the insurance company, it was the insurer’s
responsibility to prioritize the attempt in saving the transmitted goods and proceed in following the
directed path in order to fulfill the conditions stated in the contract, so that compensation can be claimed
if any casualty happened. Instead, the directed steps were not followed which caused damages due to
carelessness and mishandling issues. To answer the question, no, Mingshan Insurance Corporation is not
under the obligation to compensate for the loss that happened to Container B which was damaged due to
being washed away onboard. Besides, it was mentioned that there was misconduct held by the crew
member from the shipping company. The crew member stocked Container B on deck, instead of securing
the goods below the deck as mentioned in the contract with Lotus Shipping Corp. Tahai made a contract
with Lotus Shipping Corporation, the contract specified that the items are fragile and are needed to be
stored below the deck. The contractual terms were not followed by the shipping agency. Lotus Shipping
Corporation should be the one held liable for the damages pertaining to Container B, due to negligence of
contract details. Thus, with the rule Clause 4.1applied to the case regarding general exclusions of the
marine insurance cover of the Institute of Cargo Clause C, Mingshan Corporation the insurance company
is not obligated to compensate for the loss of Container B. This is due to the fact that Cargo Clause 4.1
covers the misconduct on the behalf of the insured.
c ) Is Tahai liable in respect of the damaged TVs? (7 marks)
According to the case, Tahai made a contract with Blase which is for the supply of 10,000 plasma
televisions (Container A), required to be shipped from Port of Shanghai to Port Klang. However, due to a