|
Newsletters
> January 2011
View/Download
this newsletter in PDF
In this issue:
1. Firm and Industry News
2. Interpretation and Effect of Unattended Vehicle Excluslion Clause
in Jewellers' Block Insurance Policies
3. Update on Piracy
4. Update on Piracy Part II: Special Courts and /or Special Forces
5. City Bylaw Requiring Life Jackets to be Worn is Valid
1. Firm and Industry News
- February 2-3, 2011 Quebec City: Marine Oil Pollution
Seminar
- May 11-14 Las Vegas: Transportation Lawyers Assoc.
Annual Meeting
- May 25-26 2011 Collingwood: CBMU Semi-Annual Dinner
- June 3rd 2011 Quebec City: CMLA Annual Meeting
Gordon Hearn spoke at the Transportation Lawyers Association
annual Chicago Regional Seminar on January 21, 2011
Rui Fernandes will be speaking at the Institut maritime
du Quebec's conference on Marine Oil Pollution Prevention and Combating:
Where do we stand? being held February 2-3, 2011 in Quebec City.
On February 5th he will be participating on a panel on piracy at
the University of Toronto Law School's International Law Day.
2. Interpretation
and Effect of Unattended Vehicle Excluslion Clause in Jewellers'
Block Insurance Policies
A Jewellers' Block Policy is a type of insurance policy
commonly structured and designed to cater to the risk profile and
needs of jewellery retailers, wholesalers, and, sometimes, jewellery
manufacturers, dealers, and collectors against various forms of
losses. This type of policy ordinarily affords the insured "all
risks" coverage, wherein, typically, the insurer specifies
a list of exclusions that are outside the ambit of what is otherwise
covered by the policy. The risks covered vary by policy but
commonly include theft, burglary, robbery (often including armed
hold-up instances), trick loss, "snatch and run" incidents,
substitutions, losses during transportation and manufacturing and
events such as exhibitions, trade fairs and special events, entrustments,
customers goods, outdoor representatives and travelers or travel,
consequential losses such as business interruption, and other risks,
which, as in the case of some of the preceding enumeration, are
available as a function of extensions to the policy in question.
For the purposes of this note on the subject, I draw
the reader's attention to one of the traditional areas of coverage
included in most Jewellers' Block policies: coverage for sales people
who carry and/or transport jewellery, precious stones and/or precious
metals. Accordingly, one of the common exclusions present in such
policies concerns unattended vehicles.
The Clause in Question
Most Jewellers' Block policies contain an exclusion
from coverage for unattended vehicles subject to an exception requiring
the insured (or, if permitted by the policy in question, the insured's
duly authorized representative) to be actually "in or upon"
the vehicle at the time of the loss. A typical example of such provision
reads as follows:
"This Policy does not insure loss or damage
to property;
(i) while in or upon any automobile, motorcycle, or any other
vehicle unless, at the time of the loss or damage occurs, there
is actually in or upon such vehicle, the Insured, or a permanent
employee of the Insured, or a person whose sole duty it is to
attend the vehicle."
Some insurers will offer coverage in this regard but
this ordinarily requires a clear, explicit request by the insured
and concomitant unequivocal agreement by the insurer following a
specific definition of coverage tailored to the immediate circumstances
of the insured. In this regard, some products appear to offer coverage
ranging from "full 24 hour cover" to coverage limited
to pre-specified hours or limited to specific circumstances (e.g.
leaving the insured subject matter unattended at gas stations under
certain pre-stipulated circumstances, etc.).
Common Fact Pattern and Issues for Legal Redress
In a common fact pattern culminating with legal redress
before the courts respecting the interpretation and effect of the
provision in question, the following developments are invariably
present: (a) the insured experiences a loss of the insured subject
matter; (b) the insured subject matter was stolen from the insured's
vehicle while the insured (or its representative) was outside the
vehicle; (c) the insured files a claim under the insurance policy
in question for stolen jewelry (the insured subject matter); (d)
the insurer, in turn, relies on a form of the aforementioned unattended
vehicle exclusion to maintain that the policy does not respond to
such loss in the circumstances; (e) the insured retorts by seeking
to rely on a form of the last sentence in the aforementioned exclusion,
which contains an exception to the exclusion, as support for the
position that the loss is not excluded in the circumstances.
Consequently, in such instances, courts are called
to adjudicate the proper interpretation, construction, and effect
of this unattended vehicle exclusion provision. The principal issue
in such instances is whether the aforementioned exclusion applies
in circumstances where the insured or its duly authorized representative
is not inside the vehicle but is merely in close proximity to the
vehicle. In such cases, courts are called to evaluate whether the
phrase "in or upon the vehicle" and the purportedly or
ostensibly more precise formulation "actually in or upon the
vehicle" in the exception at hand, is ambiguous as a matter
of law, i.e. whether it is equally capable of supporting both literal
and constructive presence and whether, "constructive presence"
satisfies the wording of the policy in the circumstances thus affording
coverage for the loss in question.
With only few reported exceptions across North America,
the language of the clause in question has been held to be unambiguous
as a matter of law across North American jurisdictions. The literal
interpretation of the phrase in question (i.e. excluding constructive
presence) has been espoused by the overwhelming majority of published
cases in North American jurisdictions that have examined the issue.
The very few outliers that have interpreted the clause
to include "constructive presence" have done so subject
to stringent qualifications designed to accommodate instances where
the insured exits his vehicle to tend to the insured property in
the back seat or trunk, change a tire, or refuel the vehicle while
being at all times physically adjacent to and effectively attending
to the vehicle. In the few cases that deviated from the literal
interpretation of the disjunctive phrase "actually in or upon",
which cases have been either rejected or confined to their unusual
facts by other courts reviewing the issue, the person contemplated
by the policy was within a few inches of the vehicle and effectively
attending to it. Some of the governing criteria for elucidation
as to whether the insured (or its duly authorized representative,
if permitted by the language of the policy in question) is attending
to the vehicle include:
a) whether the person was actually in the car at
the time of theft;
b) if not inside the car or upon it (i.e. touching it or within
very close proximity of a few feet away), the distance and length
of time away from the vehicle (e.g. the insured exits the car
and leaves the insured subject matter in the car to go inside
a jewelry store 100 feet away from the car and remains inside
that store for 10 minutes - does this constitute being "upon
the vehicle"? while inside the jewelry store in question
he keeps an intermittent eye on the vehicle - does this constitute
"attending to the vehicle"?);
c) whether the insured or its duly authorized representative left
the car unattended for a voluntary and optional reason (as opposed
to being forced or lured to exit the car by criminal elements
or exogenous forces outside the ambit of control of the insured
and/or of its duly authorized representative);
d) whether he/she effectively abandoned the vehicle retaining
neither custody nor control of the insured property;
e) the effectiveness of the level of effort at precaution taken
in the circumstances when exiting the car (e.g. was he/she able
to observe the theft of the property? Was he/she so placed as
to have any reasonable prospect to prevent any unauthorized interference
with the car and/or the insured property inside the car?);
f) whether the vehicle in question was temporarily abandoned by
the insured and/or its duly authorized representative.
The Juridical Treatment of the Provision in Question:
Canadian Case Law
There are not that many Canadian cases on point. The
few Canadian cases that considered this exact issue (i.e. the interpretation,
construction, and effect of the terms "in or upon the vehicle"
and "actually in or upon the vehicle"), even though they
cover the point at issue herein presented, were not ultimately decided
on a clear and pure application of this point.
In D.C. Gem Craft Inc. v. Pafco Insurance Co. Limited,
[1998] I.L.R. I-3576 (Ont. C.A.) ("Gem Craft"),
for instance, an appeal from a judgment dismissing the plaintiff's
claim against the insurer for a loss of $161,228.94 arising from
theft of jewellery from the plaintiff's employee's vehicle, the
characterization of the time of theft, and the fact that the loss
was the result of a continuous, premeditated criminal transaction
designed to displace the insured from the car (i.e. the car was
"unattended" on account of an exogenous factor and not
on account of a purely voluntary and optional reason), proved to
be the dispositive consideration in adjudicating this matter.
In Gem Craft, the plaintiff's employee had
put a case of jewels into his van at the end of a trade show. On
his way to have dinner, he was attempting to parallel park when
his van was struck by another vehicle. He parked his van, locked
it, and chased the offending vehicle on foot. When he was about
30 or 40 feet away from his van, he heard the sound of smashing
glass, and turned to discover that his van was being robbed of the
jewels. The trial judge dismissed the claim on the basis of the
aforementioned clause (herein discussed), which excluded coverage
of property left in a vehicle unless the insured was "actually
in or upon the vehicle" at the time that the theft occurred.
Nevertheless, the plaintiff appealed and the Ontario Court of Appeal
allowed the appeal setting aside the judgment of the trial court
and entering judgment for the plaintiff appellant for his insurance
loss (quantified at $161,228.94).
The appellate court in Gem Craft found that
the plaintiff's employee's evidence supported the theory that he
had been set up for the break-in, and that the criminal process
commenced when the van that he was traveling in was struck by the
passing vehicle and was concluded when the jewellery was stolen,
a time period of less than one minute. The appellate court found
that the trial judge had made no ruling adverse to the credibility
of the plaintiff's employee, and accepted as fact all the elements
of the incident comprising the alleged set-up. Accordingly, following
the appellate judges' reasoning, the trial judge should not have
arbitrarily rejected the uncontradicted evidence of the set-up without
giving a reason for doing so. Finlayson, JA, for the majority of
the Court, ruled that in the circumstances, "where it appears
that a sequence of events was one single premeditated criminal operation,
then the court interpreting the insurance policy should look to
the whole operation, and not just the concluding act. Taking this
approach, the court should conclude that at the time the loss occurred,
Mr. Wu [the insured's representative] was [constructively] "in
or upon" the appellant's van [at the time that the theft occurred],
and the loss was covered by the policy of insurance". [brackets
added]
The reasoning of the appellate court in Gem Craft
adds an additional layer of complexity in evaluating the construction
and effect of the provision in question: a policy consideration
aimed at nullifying or vitiating the effect of criminal activity
that would otherwise attract the practical consequence of dislodging
the insured from invoking the protection afforded by the exception
to the exclusion in question, e.g. a criminal transaction designed
to lure or trick the insured / the insured's representative from
occupying and effectively attending to the vehicle in question whilst
the insured subject matter is in it. Two important intertwined thought
deposits emanate from the appellate court's verdict in Gem Craft:
(1) a single transaction of a premeditated criminal process (e.g.
a set-up) that results in depriving the insured the ability to punctiliously
assert that its representatives were "actually" or "literally"
inside or "in or upon" the vehicle will not engage the
exclusion in question because (2) taking this approach, the insured's
representative is considered (at law) to be "in or upon"
the vehicle at the time that the loss occurred, and the loss is
therefore covered by the policy of insurance. In other words, the
court in Gen Craft has effectively introduced a "constructive
presence" or "extended presence" interpretation to
the words "actually in or upon the vehicle" in
the exception to the unattended vehicle exclusion in jewellers'
block policies.
The policy consideration underlying this interpretation
could have been logically introduced in two main ways: (a) by reading-in
an implied term in the wording of the policy to cure the effect
of the type of premeditated criminal transaction envisioned and
considered in the circumstances on coverage, i.e. without resorting
to the tortuous jargon of legal forms to interpret the phrase "actually
in or upon the vehicle" to import "constructive presence"
or (b) by doing exactly what the court elected to do in this case,
i.e. interpreting the phrase in question to cover circumstances
where the insured (or its representative, as the case may be) is
not literally, physically within the physical confines of or inside
the vehicle in question.
Both approaches could be characterized, all else equal
(i.e. without any explicit language in the policy in question excluding
coverage for "single premeditated criminal transaction",
etc.) to be ultimately sustainable from a public policy perspective
and from the point of view of what the parties, following an objective
theory of assent, would likely have agreed to by way of allocation
of risk. The first approach, however, may lead to the perception
that the court was explicitly re-writing the contract of
insurance (and concomitant allocation of risk) between the parties,
whereas by following the second approach the court appears to do
so indirectly (perhaps even implicitly) by stretching the boundaries
of literal ordinary usage of terms (the court having found that
Mr. Wu was 30 to 40 feet away from the vehicle in question, Mr.
Wu was not "actually in" or "actually upon"
the vehicle even in an extended sense) in aid of what it perceives
as desirable public policy in the circumstances.
Accordingly, I would submit that the second approach
is somewhat more problematic if not properly corralled by sound
qualifications: is the consideration respecting a sequence of events
leading to the insured exiting the vehicle being "one single
premeditated criminal operation" limited, affected, or modulated
in any way by the duration of such transaction or operation or by
the physical proximity of the insured to the vehicle in question
and/or by the reasonableness of the actions of the insured in the
circumstances?
First, in Gem Craft the transaction in question
was a "continuum of less than a minute" and the insured's
representative was 30 to 40 feet away from the vehicle at the time
of loss / theft, would the court in Gem Craft have been disinclined
to find "constructive presence" had the transaction taken
longer? (e.g. the insured chasing on foot after the offending vehicle
for a few minutes -and 100 yards away- before returning to his van?).
Second, consider as well the effect of reasonableness
of conduct or comportment adduced or exhibited by the insured or
its representative in framing his or her reactions to the criminal
transaction in question: was he or she easily duped where a person
of average intelligence and experience would have realized in the
circumstances that he or she was about to be the victim of some
type of set-up or subterfuge? Was the insured / its representative
courting the risk or ruse in the circumstances?
Third, the policy consideration of moral hazard was
not fully expatiated on (if at all) by the court. Moral hazard refers
to the effect of insurance in causing the insured to relax the care
he or she takes to safeguard the property on account of the perception
that such loss would be borne in whole or in part by the insurance
company. The court in Gem Craft did not fully relate the
meaning of the phrase in question to its purpose (minimize risk
of theft and moral hazard) focusing principally on finding a way
to interpret the provision to accommodate the special circumstances
of the case.
In Italia Jewelry Imports v. Gan General Insurance
Co., [1999] B.C.J. No. 1189 (B.C.C.A.) ("Italia Jewelry"),
the presiding court held that the exclusion at hand was unambiguous:
"in my view, [the disjunctive phrase "actually in or upon"]
is as plain as can be" [brackets added]. This was an appeal
by the defendant insurance company. The lower court had found that
the insured's loss came within the terms of Italia Jewelry's Jewellers'
Block Form Policy. The relevant facts were relayed as follows: a
permanent employee of Italia went to Los Angeles to purchase some
jewellery. He left $68,000 worth of jewellery in the trunk of his
rental car. He stopped at a friend's place and while he was at the
front door, approximately 25 to 50 feet away from the car, another
vehicle drove by, smashed the window, and an occupant of the offending
vehicle got into the trunk and stole the jewellery. The insurance
company claimed that the employee was not "actually in or upon
the vehicle", and therefore the loss in question was not covered.
The insured argued that the loss fell within the provisions of the
policy. On appeal, the court found that the stipulation respecting
the excluded property was clear and unambiguous. The effect of the
words "in or upon", however, was not contested and the
issue was ultimately decided on the appropriateness of a warranty
clause and that clause's proper interpretation in light of the entire
policy: "[the insured's employee] was not in or upon the
vehicle, and counsel for the respondent does not truly quarrel
with the proposition that the position in which the employee was
at the relevant time was within the words of the exclusion. His
argument is founded on a construction of the warranty clause which
appealed to the learned judge below who ultimately decided this
case on the footing that this was not an "unattended"
vehicle but an attended one." [brackets and emphasis added]
The appellate court in Italia Jewelry disagreed
with the relevance of the warranty in question adding that "with
respect, the warranty clause has nothing to do with the issue before
us" and that the only issue is 'whether the insured has brought
itself within the exclusion [the unattended vehicle exclusion].
In my view, the insurer has clearly brought itself within the exclusion
and the appeal must be allowed". [brackets added]\
As alluded to before, other jurisdictions, most notably
in the United Sates, have extensively examined unattended vehicle
exclusion clauses with virtually identical language to the one herein
presented. I intend to focus on some of those notable decisions
in the remainder of this note prior to presenting an overall analysis
of the provision in question.
United Sates Jurisdictions: Judicial Treatment
of the Phrase(s) "in or upon the vehicle" / "actually
in or upon the vehicle"
The exclusion clause in question, has been repeatedly
the subject of judicial scrutiny by several U.S. state and federal
appellate courts. On the whole, courts across the U.S. have interpreted
the exclusion's disjunctive phrase "in or upon the vehicle"
(and the ostensibly more precise construction "actually in
or upon the vehicle") to require physical, literal presence
of the insured within the confines of the vehicle: the insured must
be literally spatially occupying the vehicle (including touching
any part thereof) at the time of the loss.
The following section focuses on an overview of the
most germane exponents of the jurisprudence on the interpretation
of unattended exclusion clauses in jewellers' block policies in
the U.S. The selection herein presented is somewhat deliberate:
it is based on factual relevance, court level, and more importantly,
semantic and syntactic consonance with the herein presented policy
wording.
In Gem East Corporation v. Jewelers Mutual Insurance
Company 2006 U.S. App. LEXIS 28546, the United States Court
of Appeals for the Ninth Circuit unanimously affirmed the lower
district court's judgment ruling that the defendant insurer properly
denied the plaintiff insured its insurance claim on the basis of
the plain and ordinary meaning of the policy's unattended vehicle
exclusion. The court held that the insured "was not in or
physically touching any part of his car when the thieves stole the
jewelry" [emphasis added]. He therefore was not "actually
in or on the vehicle", in the ordinary understanding of that
phrase, when the theft occurred" and the loss was accordingly
properly excluded from coverage in the circumstances.
The United States Court of Appeals for the Seventh
Circuit in A.M.I. Diamonds Company v. Hanover Insurance Company
No. 04-3152 (2005) ("A.M.I.") did also pronounce
itself on this matter. It characterized attempts to infer constructive
presence from the disjunctive "actually in or upon" in
an exclusion with virtually identical language to the one at hand
to be a "parade of absurdities". The court relied on a
sequential application of the plain meaning of the words as a reflection
of the purpose and intent of such policy exclusion. The purpose,
Judge Richard Posner explained, is twofold: "to curb what is
called "moral hazard" and to limit coverage in high risk
settings even when there is no such moral hazard.
In A.M.I., the insured's employee, a jewellery
salesman, stopped at a gas station to use a phone booth to contact
his office. He left his car door open while he attempted to assist
a woman with directions. The woman's accomplice stole the diamonds
that the employee kept in the car. The court embraced a literal
interpretation of the wording in question: by leaving the vehicle
as he did, even if only a few feet away, the court concluded, the
employee was no longer "actually in" the vehicle even
in an extended sense and he no longer had personal custody of the
diamonds. The court held that "his effort to keep his eye
on the car was a pathetic effort at precaution" [emphasis
added]. Leaving the car with the property inside it created exactly
the type of "high risk setting" that the policy purposely
sought to exclude. The insured's argument of constructive presence
was rejected by the court: "[T]o read "upon" to mean
"near", the court reasoned, "would open a large loophole
of uncertain limits, something the cases cited [principally American
Stone Diamond, Inc. v. Lloyds of London (S.D.Tex. 1996) 934
F. Supp. 839 and the respective cases relied on by that court, infra],
and others as well, such as Thomas Noe, Inc. v. Homestead Ins.
Co., 173 F.3d 581, 583 (6th Circ.1999); Equity Diamond Brokers,
Inc. v. Transnational Ins. Co., 151 Ohio App. 3d 747, 2003 Ohio
1024, 785 N.E.2d 816, 819-20 (Ohio App. 20030, and Nissel v.
Certain Underwriters at Lloyds of London, 62 Cal. App. 4th 1103,
73 Cal. Rptr.2d 174, 181 (App. 1998) have refused to do." [brackets
added]
The court also held that interpreting "upon"
to mean "near" would lead to an absurd result when consistently
applied within the entire exclusion. Just as in the example under
consideration in this note, in A.M.I., the use of the disjunctive
"in or upon" appears twice in the exclusion policy, "once
with the diamonds as a subject (the diamonds must be "in or
upon" the vehicle) and once with the salesman as the subject.
If "in or upon" is given the same meaning in both places,
and [if] "upon" means "near", then the exclusion
[as a whole] is inapplicable if the diamonds are merely near the
vehicle, and not in it -which would be preposterous."
The American court in A.M.I. treated the set-up
situation (the criminal subterfuge purportedly orchestrated by the
thieves to cause the jewellery salesman to abandon the vehicle wherein
the insured subject matter was located) in a different manner than
its Ontario counterpart (the Ontario Court of Appeal) did in Gem
Craft, above, years before. While the court in A.M.I.
did consider public policy arguments (the "moral hazard"
argument), unlike the Ontario Court of Appeal in Gem Craft,
it appeared to have considered them only to the extent that these
public policy arguments supported a particular purposive interpretation
of the wording of the clause in question and the rationale behind
its drafting respecting commercial / mercantile and risk allocation
considerations underlying the purported bargain between the parties.
As an analytical exercise in constructivism in contractual interpretation
of the provision in question, the analysis expatiated by Judge Posner
in A.M.I. is particularly helpful. The court in A.M.I.
also referred to EMMI Inc. v. Zurich American Ins. Co., 32
Cal. 4th 465, 9 Cal. Rptr. 3d 701, 84 P.3d 385 (Cal. 2004), a case
examined in another section of this note, below, as one of the very
few -but most notorious- cases to uphold "constructive presence"
when interpreting this provision in U.S. jurisprudence. Judge Posner
added the following in this regard: "The salesman in that case
was driving with the [jewellery] in the trunk when he heard a clanking
sound in the rear of the car. He stopped without locking the car
or turning off the engine, got out, walked to the rear, crouched
down to inspect the exhaust pipe -and as he did so someone got in
and drove the car away. The court thought the policy ambiguous because
of [the disjunctive phrase] "or upon", missing the
point that the phrase is a vestige of an era of open vehicles.
The court may also have been influenced by the fact that it was
an unusual case, in which both the element of moral hazard and the
risk of theft were minimal. In this case they were not." [brackets
and emphasis added]
Nevertheless, the court in A.M.I., like the
Ontario Court of Appeal in Gem Craft, missed the opportunity
to formulate a competing interest analysis respecting the balancing
of public policy considerations such as moral hazard and genuine
criminal interference with the insured's ability to comply with
the wording of the policy as (ostensibly) in the case of Gem
Craft (assuming no wording to the contrary in the policy) within
the context of the policy exclusion's purported purpose to limit
coverage in high risks settings. This, as in the case of the Gem
Craft, presented a unique opportunity to articulate and integrate
a cogent judicial approach to these considerations within standard
canons of contractual interpretation.
In Equity Diamond Brokers, Inc. v. Transnational
Insurance Co., No. C-010554 (Ohio App. Dist.1 03/07/2003), one
of the cases cited and relied on by A.M.I., the Ohio Court
of Appeal upheld an "unattended vehicle" exclusion virtually
identical to the one at hand, denying coverage in cases of "[l]oss
or damage to property while in or upon any automobile, motorcycle
or any other vehicle unless, at the time of loss or damage occurs,
there is actually in or upon such vehicle, the Insured, or a Permanent
Employee of the Insured, or a person whose sole duty is to attend
the vehicle, except as may be endorsed hereon."
The facts of this case were relayed in the following
manner: the salesperson left the insured subject matter (bags of
jewellery) in his car while he proceeded to have a meal at a restaurant
in close proximity. He allegedly ate at a table by the restaurant's
front windows so that he could keep an eye on the vehicle at all
times. He claimed to have "kept an eye on the vehicle"
at all times. As he was about to pay his check, an unidentified
individual purportedly pointed out that the salesperson had dropped
money on the floor. The salesperson became suspicious and ran out
to the parking lot where he saw a minivan positioned perpendicular
to his vehicle. The minivan drove away shortly thereafter and the
salesperson ran after it as it exited the parking lot. The salesperson
noticed that his rear driver's side window had been "punched
out" and that the bags of jewellery were missing.
Upholding the exclusion the Court of Appeal accepted
the conclusion of other courts that the clause was unambiguous and
found that under the circumstances of the case the insured's salesperson
was not "actually in or upon the vehicle".
In American Stone Diamond, Inc. v. Lloyds of London
(S.D.Tex. 1996) 934 F.Supp. 839, a case that articulated the most
comprehensive and most often cited review of the jurisprudence,
the insured was transporting jewelry in the trunk of his vehicle.
He drove into a gas station, proceeded to refuel the car, and then
went inside the station to pay. He returned to his vehicle within
minutes to find that the jewellery had been stolen from the trunk.
The federal district court found that the insured was not literally,
physically, in or upon the car at the time of the theft. The federal
court stated:
"Courts have consistently held nearly
identical policy language ["actually in or upon"] to
be unambiguous and, based upon such exclusions, have denied coverage
to insureds who were not literally in or upon their vehicles at
the time of the losses, even though the insureds may have been
only a short distance away from the vehicle, watching the vehicle,
or absent from the vehicle for only a short period of time. See,
e.g., Williams v. Fallaize Ins. Agency, Inc., 220 Ga. App.
411, 469 S.e. 2d 752 (1996) (exclusion applicable where insured
was in store 25 feet from vehicle at time of theft); Wideband
Jewelry Corp. v. Sun Ins. Co. of N.Y., 210 A.D. 2d 220, 619
N.Y.S. 2d 339 (1994) (exclusion applicable where insured's employee
was six feet from the vehicle at time of theft); Jerome I.
Silverman, Inc. v. Lloyd's Underwriters, 422 F.Supp. 89 (S.D.N.Y.
1976)(exclusion applicable where insured was temporarily away
from vehicle at time of theft); Revesz v. Excess Ins. Co.,
30 Cal.App.3d 125, 106 Cal.Rptr. 166 (1973) (exclusion applicable
where insured was getting directions a few feet from vehicle at
time of theft); Royce Furs, Inc. v. Home Ins. Co., 30 A.D.2d.
238, 291 N.Y.S. 2d 529 (1969) (exclusion applicable where insured
was registering inside hotel for a few minutes while vehicle was
six to ten feet outside hotel at time of theft); American Charm
Corp. v. St. Paul Fire & Marine Ins. Co., 56 Misc.2d 574,
289 N.Y.S 2d 383 (1968) (exclusion applicable where insured was
in his home with vehicle locked in adjacent garage at time of
theft); Phil G. Ruvelson, Inc. v. St. Paul Fire 7 Marine Ins.
Co., 235 Minn. 243, 50 N.W.2d 629 91951) (exclusion applicable
where insured was away from vehicle for a few minutes to use bathroom
and drink cup of coffee at time of theft). See especially JPM
Associates, Inc. v. St. Paul Fire & Marine Ins. Co., 109
Md. App. 343 674 A.2d 562 (1996) (exclusion applicable where insured
was inside service station paying for gasoline at time of theft)."
In Royce Furs, Inc. v. Home Insurance Co. (1968)
291 N.Y.S.2d 529, a case cited with approval by several U.S. courts
that examined the issue, the insured's representative, a fur salesman,
parked and locked his vehicle and entered a hotel to register. The
vehicle, which contained furs locked in the trunk, and which were
subject of an insurance policy with an "unattended vehicle"
exclusion identical to the one at hand, was parked six to ten feet
from the hotel entrance and was purportedly visible from inside
the hotel through a large window. As the salesman returned to his
vehicle, a man broke into the car and went away. The New York Supreme
Court Appellate Division denied coverage because the insured's representative
was not "actually in or upon" the vehicle when the theft
occurred, pointing out that the insured's "representative was
not in the automobile, but was far enough from it to have given
the thief the opportunity to enter the car." The court held
that "where the clause is clear and unambiguous, we must give
it the interpretation that is indicated by its plain language. We
may not rewrite the contract entered into by the parties. We find
no ambiguity in the clause. It clearly calls for no liability unless
at the time the theft occurs there is actually in or upon such vehicle
the insured or a permanent employee of the insured or a person whose
sole duty it is to attend such vehicle." The court explicitly
rejected the insured's argument that he had the car under surveillance
at the time of the theft as immaterial, emphasizing the choice of
the adverb "actually" in the language of the exclusion
as denoting literal presence: "[I]t should be noted that the
language provides for the necessity of having a person in or upon
such vehicle is prefixed by the word "actually". That
word must be given a meaning. The best we can gather from plaintiff's
position is that its representative was in constructive possession
of the vehicle and not actually in or upon the vehicle."
Constructive Presence: EMMI Inc. v. Zurich American
Ins. Co
There are two notable cases that have a holding contrary
to the authority cited thus far in this note: The California Supreme
Court Decision in EMMI Inc. v. Zurich American Ins. Co.,
32 Cal. 4th 465, 9 Cal. Rptr. 3d 701, 84 P.3d 385 (Cal. 2004), ("EMMI"),
which was referred to by the court in A.M.I., supra, and
Star Diamond, Inc. v. Underwriters at Lloyds, London, 965
F. Supp. 763, 767-768 (E.D. Va. 1997); 1997 U.S. Dist. LEXIS 8227
("Star Diamond").
The facts of EMMI are aptly summarized in Judge
Posner's decision in AMI, above: "The salesman was driving
with the [jewellery] in the trunk when he heard a clanking sound
in the rear of the car. He stopped without locking the car or turning
off the engine, got out, walked to the rear, crouched down to inspect
the exhaust pipe -and as he did so someone got in and drove the
car away." The provision at issue exempted from coverage property
stolen from a vehicle unless the insured was "actually in or
upon such vehicle at the time of the theft." The question presented
to the California Supreme Court was whether the exception to that
exclusion applies when the insured is not in the vehicle but is
in close proximity to the vehicle and is attending to it when the
theft occurs. The California Supreme Court concluded that the vehicle
theft exclusion, as a whole, is ambiguous and fails to plainly and
clearly alert insureds that there is no coverage if a theft occurs
when the insured has stepped out of the vehicle "but remains
in close proximity and is attending to it." [brackets
and emphasis added]
The ambiguity found by the court resided in the use
of the preposition "upon" to refer to a vehicle, so that
"a reasonable insured would likely interpret the exception
to mean that the insured must be either inside the vehicle, or
in some other location relative to the vehicle." [Emphasis
added].
One may argue, as Judge Posner in AMI, supra,
that the focus on the preposition "upon" suggests that
the court is "missing the point that the phrase is a vestige
of an era of open vehicles" [see AMI, supra]. Nevertheless,
the court went on to state that "[h]ad the insurer intended
the disjunctive phrase "or upon" to apply solely to the
use of motorcycles or other means of transportations such as ships
and trains, it could, and should, have made this intention clear
to the insured." Since the court found the vehicle theft exclusion
and its exception ambiguous, it resolved the ambiguity in favour
of the insured consistent with the insured's reasonable expectations
according to the principle that where the provisions of an insurance
policy are reasonably susceptible of more than one interpretation
(ambiguity), courts must construe them strictly against the insurer
and liberally in favour of the insured (doctrine of "contra
proferentem").
In Star Diamond the insured's representative
had exited his vehicle allegedly solely to refuel it. The insured's
representative was allegedly standing no more than nine inches from
the vehicle attempting to refuel it when the loss occurred. The
court held that the language of the phrase in question was unambiguous
as a matter of law, however, as a matter of law, the "[the
word] "upon" should thus include instances where the insured
exits his vehicle to tend to the insured property in the back seat
or trunk, change a tire or refuel his vehicle, and is physically
adjacent to and attending to the vehicle." [Emphasis added].
The court added that "under this definition it is clear that
[plaintiff] was "actually upon" his vehicle when the loss
occurred. He had exited his vehicle solely to refuel it and was
standing no more than nine inches from his vehicle attempting to
refuel it when the loss occurred".
Analysis and Discussion: The Distributive Application
of the Adverb "Actually" in the Phrase "Actually
In Or Upon" Avoids Any Ambiguity
With the notable exception of EMMI (and a few
minor cases), the jurisprudence is clear and consistent in finding
that the phrase "actually in or upon" is clear and unambiguous.
The question with respect to the issue of ambiguity can be reduced
to this formulation: Would a reasonable insured understand the statement
that "a person is upon a vehicle" to mean that the person
was standing in close proximity to it?
Insurance policies are construed and interpreted as
any other contracts. The interpretation of a contract must give
effect to the mutual intention of the parties, as objectively assessed.
Where an insurance policy's provisions are clear and unambiguous,
courts must apply the terms as written subject defined (juridically
recognized exceptions) concerning mainly public policy / legality
exceptions. Ambiguity is a question of law for a court to determine:
the mere fact that a provision gives rise to competing interpretations
contained in the parties' positions does not necessarily, all else
equal, render a text ambiguous.
The preposition "upon" is often interchangeable
with the preposition "on": Merriam Webster Online Dictionary
and Webster's Ninth New Collegiate Dictionary. In this sense, it
can be a function word to indicate position in close proximity with
and as a function word to indicate the location of something. It
would include meanings such as: "near to", "along",
and "adjacent to".
One argument is to maintain that the disjunctive phrase
"in or upon" denotes not a spatial disjunction relative
to the location of the vehicle but rather a disjunction contemplating
alternative means or forms of transportation (e.g. "open vehicles",
carriages, motorcycles, etc. vs. modern cars) and as such employs
two distinct prepositions to preserve grammatical decorum and correctness
with respect to the chosen form of carriage (i.e. upon a train,
upon a motorcycle, upon a horseless carriage, etc.). This was Judge
Posner's argument in AMI, above, when opining on the California
Supreme Court holding in EMMI.
The counter argument is that the disjunctive "or",
given the sentence's syntax and rhythm, may plausibly suggest to
a reasonable insured a spatial alternative to the antecedent "actually
in" (which one reasonably would purport to mean "inside")
which has the effect of contrasting an understanding of "inside"
with some other location relative to the vehicle. That alternative
location could likely be taken to mean, by a reasonable insured
in the context of this policy, to be in the proximity of the vehicle
or near the vehicle, the other possible and acceptable meanings
of the prepositions "upon" and/or "on". This
was, after all, the key thought deposit that guided the holding
of California's highest court in EMMI, above.
Nevertheless, the foregoing positions or conjectures,
I would submit, dissolve once the adverb 'actually" modifies
the phrase, as in the example subject of the herein note. Any possible
meaning of "upon" to signify "near or in the vicinity
of" is completely vitiated when the adverb "actually"
applies to it, for otherwise such deliberate usage of this word
(the word means "literally") would be meaningless and
specious; it unmistakably preempts any constructive, extended, or
figurative interpretation of the preposition that it qualifies.
The analytical contention and the only issue to clarify
then (for those that insist on considering a constructive interpretation
of the phrase " actually in or upon"), is this: does the
adverb "actually" apply distributively in the sentence
at hand or does it merely qualify one side of the disjunction only?
That is, does the adverb "actually" qualify both
words, the preposition "in" and the preposition
"upon"? I would submit that the word "actually"
does unmistakably apply distributively. I would argue the point
thus:
First, the meaning of the word "in" admits
of no possible ambiguity, let alone a plausible one. Therefore,
the choice of "actually", objectively assessed, must have
been added precisely to preempt any ambiguity as to the only word
that could possibly (though not necessarily plausibly) admit of
more than one meaning, i.e. the preposition "upon". The
adverb "actually" must therefore be understood to distribute
over the disjunction.
Second, the use of the word "actually" is
also deliberate. This is evident from the drafter's use of the phrase
"in or upon the vehicle" twice in exclusion subject of
review (see page 1 of this note) but only once qualified by the
adverb. At first instance, the phrase is employed with respect to
the property; the second time, it is used with respect to the insured
within the exception to the exclusion. When the phrase refers to
the property it is not qualified by the adverb "actually".
When the phrase refers to the insured, it is qualified by the adverb
"actually": the language discloses that the insured be
"actually in or upon the vehicle". This choice
of language is to any reasonable individual of ordinary intelligence
and average experience authoritatively clear and deliberate; the
particular wording of the policy at hand in its totality reflects
an awareness of the possible sources of ambiguity that could compromise
the effect of such exclusion. The language preemptively and peremptorily
eradicates any possible confusion by emphasizing actual, literal
presence where it matters most, i.e. where it seeks to define the
type of risk the insurer is not contracting to assume: only actual,
literal, physical presence by the insured or its representative
in the vehicle or actually upon the vehicle (the disjunctive is
an unmistakable reference to the means of transportation as evidenced
by the careful illustration and examples contained in the exclusion's
first sentence of the main vehicles explicitly contemplated by the
policy, such as automobiles and motorcycles) at the time of loss
or damage to property will exempt the insured from the application
of the exclusion clause in question.
The word "actually" does therefore vitiate
any interpretation of constructive presence or constructive possession;
to ignore the effect of such word would render a pivotal contractual
term meaningless and be equivalent to re-writing a contract by judicial
fiat. It must therefore be accorded its meaning and natural effect
and thus be allowed to impress a literal quality to the phrase "actually
in or upon".
Martin Abadi
3. Update on Piracy
As at September 9th 2010 19 ships and 383 crew members
were being held by Somali pirates. It is known that in 2008 alone
more than $80 million was paid by way of ransom to Somali pirates
(*1)
There is a public perception that piracy is exclusively
a Somali problem. This is far from the case. The Commercial Crime
Service of the International Chamber of Commerce issues a regular
" Piracy Prone Area" bulletin. The current Bulletin includes
Bangladesh, Indonesia, Malacca Straits, Malaysia, South China Sea,
Vietnam, Nigeria, Guinea, Cameroon, Brazil and Peru. Nor do the
Somali pirates restrict themselves to home waters. Backed by sophisticated
"mother" ships they have extended their area of operations
to include waters off Kenya, Tanzania, the Seychelles, Madagascar,
the Maldives, Oman, Southern Red Sea, Gulf of Aden and generally
throughout the Indian Ocean. (*2)
In Somalia the pirates were, initially, fishermen
who were seeking to frighten off foreign fishermen raiding their
precious fish stocks. Local militias controlled by warlords then
joined in. (There are thought to be four main groups of pirates
operating out of Somalia. The National Volunteer Coast Guard, the
Marka Group, the Puntland Group and the Somali Marines - the last
has a military structure and is headed by a fleet admiral.) As the
need for more weapons and better equipment developed funding started
to flow in from abroad and more and more of the ransom money flowed
back out to those funding the activities of the pirates. (In 2008
it is estimated that 80% of ransom money paid ended up abroad.)
And so this multi-million $ industry has developed in a relatively
short space of time. (*3)
Piracy is one of those human endeavours where the
law offers no easy legal solutions.
Under international law, Part VII of UNCLOS is entitled
High Seas and includes provisions relating to piracy. These provisions
are generally considered to reflect customary international law
on piracy.
Art. 101 defines piracy as "any illegal acts
of violence or detention, or any act of depredation" committed
on the high seas for private ends against another vessel or persons
or property on board. This certainly covers the attacks on merchant
shipping off the coast of Somalia.
Art. 92 re-states the general rule that ships on the
high seas are exclusively subject to the jurisdiction of their flag
state. However, Arts. 105, 106, 107, 110 and 111 allow warships
and other authorized ships on government service to stop, search
and seize any vessel on the high seas that they have reasonable
grounds for suspecting to be engaged in piracy. Some warships may
be constrained by national laws which restrict their right of arrest.
Thus a warship from country A may only be able to arrest pirates
from country A or where an attack has been made on a ship flying
the flag of country A. A right of hot pursuit onto the high seas
from territorial waters is also granted to sovereign states.(*4)
The high seas are those waters which lie beyond the
seaward limit (generally 12 miles) of the territorial sea. Acts
within the territorial sea which would be regarded as piracy if
committed on the high sea are treated as 'armed robbery at sea'
and are subject to the primary jurisdiction of the coastal state
in which the act takes place.
"Piracy is a crime of universal jurisdiction
and pirates are, by definition, criminals. However, they are not
per se 'individuals taking a direct part in hostilities' in an
armed conflict. This means that they cannot be targeted with lethal
force and this explains the reluctance of members of the multinational
Combined Task Force to use firearms. (People find this difficult
to understand - "Why not shoot them? Well, that in itself
would amount to a crime under international law.)"(*5)
UNCLOS does not permit seizure of a pirate ship and
arrest of the pirates in the territorial sea unless the ship flies
the flag of that state.
Rights to board, search and seize foreign ships and
persons on board exist under UNCLOS. However, prosecutions are subject
to national law. It is therefore essential that the rights given
under international law are implemented by national legislation
so that national courts are able to deal efficiently with those
arrested and accused of crimes at sea. If the national law has not
been updated, this can result in the national court having difficulty
in finding an "act of piracy" has taken place. Two recent
decisions in the U.S.A. reflect the difficulty faced.
In August 2010 a judge dismissed piracy charges against
six Somali nationals accused of attacking a Navy ship off the coast
of Africa, concluding the U.S. government failed to make the case
their alleged actions amounted to piracy.(*6)
The dismissal of the piracy count tossed the most
serious charge against the men, but left intact seven other charges
related to the alleged April 10 attack on the USS Ashland in the
Gulf of Aden. A piracy conviction carries a mandatory life term
in the United States. Justice Jackson stated:(*7)
The court finds that the government has failed to
establish that any unauthorized acts of violence or aggression
committed on the high seas constitutes piracy as defined by the
law of nations.
Attorneys for the six men had argued that the men
did not seize or rob the Ashland, falling short of the centuries-old
definition of piracy.
Jackson, who issued the ruling from Norfolk, wrote
that the government was attempting to use "an enormously broad
standard under a novel construction of the statute" that would
contradict a nearly 200-year-old Supreme Court decision. The six
allegedly attacked the Ashland in a skiff, which was destroyed by
25mm fire from the Ashland. The men claimed they were ferrying refugees.(*8)
In November 2010, a second group of Somali men stood
trial accused of attacking a U.S. Navy ship off Africa's coast.
They were convicted on federal piracy charges in what experts said
was the first trial of its kind in America in more than a century.
They face mandatory life terms at a sentencing hearing set for March
14 in Norfolk.(*9)
Defense lawyers had argued the men were innocent fishermen
who had been abducted by pirates and forced to fire their weapons
at the ship.
Federal prosecutors argued during trial that the five had confessed
to attacking the USS Nicholas on April 1 after mistaking it for
a merchant ship.
In this recent decision the court commented on the
definition of piracy and how the definition of piracy can and does
evolve based on what the world perceives it to be, and the court
ruled accordingly. Courts must interpret, perhaps on an ad hoc basis,
whether a particular event constitutes a piratical act. That doesn't
mean judges get to create new law as they go along, a notion the
law rejects. The court commented:
Instead, it means only that courts are recognizing
that which has already been accepted by an overwhelming majority
of countries as the definition of piracy, and courts must be careful
to do so only when it is, in fact, clear that an overwhelming
majority of countries have definitively accepted such a definition."
This is embodied in the somewhat nebulous concept of "customary
international law," which includes rules and precepts the
world must "universally abide by, or accede to, out of a
sense of legal obligation and mutual concern." Trends in
treaties (such as UNCLOS), as well as the activities of courts
and other tribunals the world over, suggest the world wants a
vessel assault with intent to commit robbery to be an act of piracy
even if nothing is taken. UNCLOS's adoption by Somalia and all
countries bordering it strongly supports this conclusion in the
context of those accused.
The CMI (Comite Maritime International) is a non-governmental
not-for-profit international organization established in Antwerp
in 1897, the object of which is to contribute by all appropriate
means and activities to the unification of maritime law in all its
aspects. Its members are national associations of maritime lawyers.
The Canadian Maritime Law Association represents Canada at the CMI.
The CMI has been working on developing a new international
treaty on piracy since 1998. That year the Joint International Working
Group on Uniformity of Law Concerning Acts of Piracy and Maritime
Violence was established
In February 2001 - A Model National Law was approved
at the CMI Singapore conference.
In 12 April 2005 the preliminary considerations were
established for amendment and re-formulation of the Model National
Law. CMI circulated a questionnaire to all national associations.
In 2007 the idea of a model law was subsequently abandoned by the
CMI to be replaced by guidelines. In August 2007 the International
Working Group completed its work and CMI submitted the text of a
set of Draft Guidelines to the IMO Legal Committee. This document
can be found under reference LEG 93/12/1 on the IMO website http://comitemaritime.org/Acts-of-Piracy-and-Maritime-Violence/0,2734,13432,00.html.
CMI President Patrick Griggs' commented on the Draft
Guidelines: "In other words this is a document which national
legislators would want to have on their desks when drafting national
laws in accordance with the UNCLOS mandate. It must also be emphasized
that the Guidelines are a first draft only and organizations, such
as the IMO Legal Committee, are encouraged to take them, review
them and improve them."
In January 2009 The Code of Conduct Concerning the
Repression of Piracy was established by the IMO (otherwise known
as the Djibouti Code). Article 11 of the Code is entitled Review
of National Legislation and requires all Participating States to
"…review its national legislation with a view towards
ensuring that there are national laws in place to criminalize piracy
and armed robbery against ships, and adequate guidelines for the
exercise of jurisdiction, conduct of investigations, and prosecutions
of alleged offenders".
At this stage the Djibouti Code is "non-binding"
but it is hoped to convert the Code into a full international treaty
within two years. The review of national laws will then become obligatory
for States parties to the treaty.
Another interesting case in this area deals with the
payment of ransom money to pirates for release of ships and crew.
Such payments may be illegal under national laws. On April 13th
2010 a U.S. Presidential Executive Order was issued making it an
offence under U.S. law to pay ransoms to three specific groups of
pirates. Shortly before, in February 2010, in a case involving the
"Melati Dua", the English High Court decided that the
payment of a ransom for the release of the cargo on a hijacked ship
was not illegal under English law. Given the U.S. Presidential Executive
Order American shipowners and insurers need to be careful in this
regard.
Rui Fernandes
Endnotes
1. Griggs, Patrick "Piracy today"
Speech presented October 2010 at the CMI Buenos Aires Colloquium
2. Ibid
3. Ibid
4. Ibid
5. Ibid
6. United States v. Said
7. Ibid
8. This decision is presently under appeal.
9. See United States v. Hasan, et al., 2010 WL 4281892 (E.D.
Va. 2010)
4. Update on Piracy Part II: Special Courts and
/or Special Forces
Since January 1, 2011, the Commercial Crime Services
department of the International Chamber of Commerce, a non-governmental
and non-profit organization funded purely on voluntary contributions
that contributes to the response process of dealing with worldwide
piracy and armed robbery, has tracked the incidents of piracy off
of Somalia (as of January 29, 2011):(*1)
Incidents:
- Total Incidents: 35
- Total Hijackings: 7
- Total Hostages : 148
Current vessels held by Somali pirates:
- Vessels: 33
- Hostages: 758
Considering that these figures reflect only the first
twenty-nine days of the year, the number of incidents is staggering
in breadth and a reminder that this massive international problem
requires immediate and decisive action.
According to a Baltic and International Maritime Council
("BIMCO") 2011 press release, the situation changed radically
in recent weeks. Not only is the number of ships and seafarers in
captivity rising, the pirates are employing new tactics including
greater use of mother ships, some of them large hijacked vessels,
which has vastly expanded their range of operation in recent weeks.
Further, use of increased firepower to attack has been reported
and there are reports of worsening conditions for captured seafarers.(*2)
Of awe-inspiring significance, over 40% of the world's
seaborne oil supply now passes through waters at high risk from
pirate attack at a time when studies are indicating that piracy
is costing the global economy somewhere between $5 and 12 billion
per year.(*3)
With stakes too high to ignore, the international
community has kicked off 2011 by intensifying the diplomatic approach
while rolling up its proverbial sleeves and getting its hands dirty.
Special Courts: United Nations Envoy Proposes Special
Piracy Courts
On January 25 of this year, Jack Lang, the United
Nations ("U.N.") special envoy on maritime piracy off
the coast of Somalia, proposed the setting up of two special courts
inside the country and one in Tanzania to try suspected pirates,
saying the problem in the Indian Ocean was getting out of hand and
required "strong and decisive action."(*4)
Mr. Lang said the international community should work
towards "Somaliazation" of responses to piracy by helping
local authorities in the regions of Puntland and Somaliland to enhance
their judicial and prison capacities in order to prosecute and jail
captured pirates.
In his report to the Security Council, Mr. Lang also
proposed the establishment, for a transitional period, of a Somali
"extraterritorial jurisdiction court' in the northern Tanzania
town of Arusha to deal with piracy cases.(*5)
The cost of the measures he has proposed is estimated
at about $25 million, a "relatively modest" expense compared
to the estimated $7 billion, which he said was the cost of piracy.(*6)
Up to now, one of the main obstacles in combating
piracy has been the procedural and juridical difficulty in dealing
with acts of piracy under the respective laws of a ship's flag as
many nation's legal systems are hesitant to try captured pirates
and, specifically, unsure how to navigate such incidents legally.
As a result, many captured pirates are ultimately released without
trial or incident.
If the U.N. succeeds in establishing permanent piracy
courts on the African continent, the international community would
have access to trained and experienced courts that could deal with
the prisoners effectively and would be confident that the process
would accord with recognized international law. For now the proposal
remains just that: a proposal. However, it is hoped that broad support
for the plan is given by the international community and that its
development will be worth watching for during the year ahead.
Special Forces: South Korea and Malaysia Responds
to Firepower with Firepower
On January 21st of this year, South Korean Navy commandos
stormed the Samho Jewelry, a 11,500-ton freighter hijacked
on January 15 in the Arabian Sea, and rescued all 21 crew members.
Eight pirates were killed and five seized, with no
casualties among the troops sent from the Choi Young destroyer that
was pursuing the pirates.
Immediately following the capture of the pirates,
South Korean diplomats tried to find a court in the region that
would try the prisoners but were refused by several African countries.
On January 29th, five of the Somali pirates who hijacked
the Samho Jewelry landed in Sourt Korea and the Busan District
Court issued arrest warrants for the men in what will be the Korean
legal system's first case involving Somali pirates.
The above situation is unique and sets a somewhat
troubling precedent; while they are trying the five prisoners, more
than that number were killed during their capture. Nonetheless,
many are lauding the Korean's approach as being a pragmatic and
effective way to combat a problem for which there is currently no
other effective recourse.
On January 20th, the MT Bunga Laurel, a Malaysian
chemical tanker headed to Singapore with a cargo of lubricating
oil worth more than $10 million, was boarded by pirates armed with
AK-47 assault rifles, and then took control of the ship.
Malaysian naval commandos, who were manning a vessel
protecting shipping in the area, along with a navy attack helicopter,
responded to the distress call and captured the pirates after a
brief firefight. Seven pirates were captured and no casualties were
reported, although three were injured.
Immediately following the incident, the Malaysian
government announced that the case was being studied by Malaysian
legal authorities to determine how to deal with the seven pirates
who were captured in the lawless region more than 7,000 kilometres
(4,350 miles) from Malaysia.
On January 26th, Attorney-General Tan Sri Abdul Gani
Patail announced that the pirates would be treated like any other
criminal case, where fair investigation will be carried out and
followed by a fair trial and prosecution, providing there is sufficient
evidence. The world will be watching with interest as this proceeding
moves forward and potentially reaffirms the capacity of individual
countries to capture and try international pirates.
On January 25th, BIMCO, the International Chamber
of Shipping, INTERCARGO and INTERTANKO issued their formal congratulations
to the governments of the Republic of Korea and of Malaysia for
their recent actions. Quoting the release: "[w]e respect and
value the bravery of the special operations teams involved and the
risks they took."(*7) In the face of the death of eight pirates
without due process, such endorsement can be seen as a reflection
of the shipping community's keen desire to clamp down on the desperate
and worsening problem that Somali piracy currently poses.
Going Forward:
The whirlwind of developments related to Somali piracy
in 2011 is a strong indicator that the situation is nearing critical
mass. On one hand there is the U.N. proposal that permanent special
courts, tasked with the prosecution of piracy, be established in
and near Somalia and, on the other hand, there is a movement towards
individual nations trying pirates in their native courts.
While the two solutions are not mutually exclusive,
there are risks attached to both. The special courts face the difficulty
of overcoming institutional corruption and threat of political and
criminal persuasion incumbent with their establishment locally on
African soil. On the other hand, the risk associated with having
individual countries try pirates in their native legal systems is
that the legal standard will vary depending on the country and subject
to the legal failings of each system, a process, which may hinder
the development of effective, normative legal practices and standards
in the law.
Additionally, as the Samho Jewelry incident
resulted in the death of eight pirates without due process, aggression
levels need to be held in check - despite the practical difficulties
involved - if the phrase "due process" is to keep its
meaning and we are to solve the problem within the confines of justice.
Additionally, neither solutions acknowledge the fundamental enabling
aspect of the problem: the instability of the political situation
in Somalia, which, at present, seems to be getting the least amount
of international attention, which is focused narrowly on the commercial
ramifications of the piracy enabled by the instability.
Nonetheless, both developments are overwhelmingly
positive insomuch that they represent the world's intolerance of
an activity that has gone untreated for too long. Going forward,
while there may be missteps as the various players in the international
arena test different solutions and approaches to the problem, the
end result is bound to be positive and result in a reduction in
the commercially disruptiveness of piracy.
James Lea
Endnotes
1.International Chamber of Commerce: ICC
Commercial Crime Services "Piracy News and Figures" online:
<http://www.icc-ccs.org/home/piracy-reporting-centre/piracynewsafigures>.
2. BIMCO, News Release (January 25, 2011) "Shipping industry
reacts to successful action against pirate hijackers" online:
<https://www.bimco.org/Corporate/About/Press/Press_Releases/2011/2011
_01_25_Shipping_industry_reacts.aspx>.
3. International Chamber of Commerce: ICC Commercial Crime Services
"Piracy Reporting Centre" online: <http://www.icc-ccs.org/home/piracy-reporting-centre>.
4. U.N. News Centre, News Release (January 25, 2011) "UN envoy
proposes special courts to try suspected pirates" online: <http://www.un.org/apps/news/story.asp?NewsID=37378&Cr=piracy&Cr1>.
5. U.N. Security Council SC/10164, 6473rd Meeting (AM) "In
Race between Pirates and International Community, Pirates Clearly
Winning, Secretary-General's Top Legal Adviser on Piracy Warns Security
Council" online: <http://www.un.org/News/Press/docs//2011/sc10164.doc.htm>.
6. Ibid, note 4.
7. Ibid, note 2.
5. City Bylaw Requiring Life Jackets to be Worn
is Valid
To all recreational boaters, jet skiers, water
enthusiasts, etc., the following case may make you think twice about
leaving your life jacket stowed away.
In the summer of 2009, two Calgarians sought to beat
the heat, as many do in the Stampede City, by rafting down the Elbow
River. Unfortunately for Cory and Brittiany Latouche, they did so
without wearing a life jacket and therefore, in violation of Calgary
Bylaw No. 9084, requiring anyone aboard an inflatable raft within
the city to wear a life jacket. The offence carried with it a $500
fine.
In response, the Latouches filed a Notice of Constitutional
Question with the Court. They sought to challenge both the life
jacket bylaw and its enabling legislation as unconstitutional and
beyond the authority of the City of Calgary and the Province.
Their case, R. v. Latouche, was heard last
summer - in the end, Judge Judith Shriar of the Alberta Provincial
Court found that the Latouches were sunk.
The Latouches argued that neither the City nor the
Province had the authority to enact the life jacket bylaw because
Navigation and Shipping is an area specifically assigned to the
federal government by virtue of s. 91(10) of the Constitution
Act 1867 and the bylaw therefore infringed upon Parliament's
exclusive authority. In addition, they argued that the Canada
Shipping Act and its regulations already provide laws concerning
life jacket laws.
In response, the City and Province conceded that the
life jacket bylaw "at least incidentally affects navigation
and shipping" and thus infringes on the Federal government's
jurisdiction. However, the two respondents also urged the court
to find that in the circumstances, the infringement was not unlawful.
The City and Province argued that under Alberta's
Municipal Government Act, Calgary is given broad authority
to control, direct and manage matters of local nature, including
any waterways situated within the municipality's boundaries and
that two levels of government can, in appropriate cases, regulate
concurrently.
Judge Shirar was persuaded by the respondents' arguments
and noted that a provincial scheme of regulation may validly apply
even in the case of activities otherwise subject to federal legislative
authority. At paragraph 54 of her decision, she quoted from Professor
Joseph Eliot Magnet:
…the federal undertaking is of course subject
to provincial laws which incidentally affect it. The provincial
laws can even harm it (as all provincial taxation laws do, for
example). But the provincial laws cannot significantly invade
this protected constitutional sphere. To use another metaphor,
the province cannot take significant blood from the jugular of
the federal thing, person or undertaking; it may, however, remove
some of the blood from the capillaries.
In this case, the Court had to determine whether the
life jacket bylaw was inconsistent with either the provisions or
the core purposes of federal law.
After considering the life jacket bylaw and its enabling
legislation, Judge Shriar found that the pith and substance of the
bylaw is to promote the safety and welfare of Calgarians involved
in boating type activities on the Elbow River and that under the
Canada Shipping Act and its regulations, the essential elements
of the federal power of navigation and shipping similarly encompass
the promotion of health and safety of individuals engaged in recreational
boating. In other words, the two regulatory schemes were consistent
in purpose.
Next, the Court had to determine whether the life
jacket bylaw impaired federal authority over navigation and shipping.
Where an otherwise valid provincial law affects matters
within local competence (in this case, to promote, develop and maintain
safe and viable communities) a law will generally be upheld unless
it is shown to impair essential and vital elements of a federal
power, as opposed to merely affecting it.
In this case the Canada Shipping Act regulations
require merely that pleasure vessels carry personal protection equipment
such as a life jacket or floatation device aboard and accessible
for each person on the watercraft whereas the Calgary life jacket
bylaw requires that all persons aboard a vessel actually wear a
life jacket at all times.
The difference in the two laws was minimal. Judge
Shriar found that the life jacket bylaw did not impair any vital
aspect of the core competence of the federal government jurisdiction
over navigation and shipping and was not inconsistent with the federal
laws. Therefore it was valid.
Ultimately, there was no real incompatibility between
the provisions of the federal and local laws because Calgarians
were not simultaneously required to do inconsistent things. The
absence of a federal obligation to wear a life jacket is not inconsistent
with the Calgary bylaw requiring it.
Therefore, boaters should be aware of any similar
local bylaws prior to setting sail.
Sonny Ingram
Endnotes
1. 2010 ABPC 166 (CanLII)
This newsletter is published to keep our clients and friends informed
of new and important legal developments. It is intended for information
purposes only and does not constitute legal advice. You should not
act or fail to act on anything based on any of the material contained
herein without first consulting with a lawyer. The reading, sending
or receiving of information from or via the newsletter does not
create a lawyer-client relationship. Unless otherwise noted, all
content on this newsletter (the "Content") including images,
illustrations, designs, icons, photographs, and written and other
materials are copyrights, trade-marks and/or other intellectual
properties owned, controlled or licensed by Fernandes Hearn LLP.
The Content may not be otherwise used, reproduced, broadcast, published,or
retransmitted without the prior written permission of Fernandes
Hearn LLP.
|
