APPROFONDIMENTI

(free translation)

Supreme Court
Judgment n. 25735/2014
d. Sept. 25th 2014 filed dec. 5th 2014
Omissis

Reasons for the decision

1- [...]
2- The Milan Court of Appeal has found that appendix n.8 to the insurance contract contains a "classification clause" ("this insurance-cover as well as premium rates are valid only for merchandise and/or other goods carried on board of steel vessels mechanically propelled classified by a classification society which should be a) titulary member or associated to the International Association of Classification Societies – IACS)" and provides also – under art. 6 – that "this insurance is subject to English law and customs" ; having said that the Court of Appeal has confirmed the rejection of the insured' claim for the following reasons: Art. 6 amounts to s.c. "depeçage" in as much as while the insurance contract falls under the Italian law, English law governs the classification clause as per art 3 – 1 of the Rome Convention of June 19th 1980 (referred to under art. 5 – 7 of the Rome Convention law 218/1995 and the CE Second Directive 88/357). Indeed "the reference to English law allows the construction of the "classification clause" as a promissory warranty, as defined under the Marine Insurance Art. 1906, with the consequence that "the aforesaid classification clause (notwithstanding that the word "warranty" ought to be literally translated "guarantee") as a matter of fact stands for "condition" so that it cannot be construed as a clause restrictive of the insurer's liability but rather delimiting the object of the contract i.e. the risk covered against and its extension, and its unfulfilment therefore made the insurance policy unenforceable upon goods carried by unfit vessels lacking the minimum requirements provided for by classification societies pertaining to IACS.
The bare indication that the ship was entered with the Croatian Register (associated to IASC) does not entail per se compliance with the classification clause because "the scope of the classification societies ... is to classify the fitness' degree of ships and crafts given their function and in particular the ship' suitableness to the navigation"; thus the Plaintiff's case according to which the class' requirement should be held granted due to the mere entry of the ship in the Croatian Register, without any other qualification as to class and its limitations, must fail because otherwise such clauses would be deprived of any significance. Since the Croatian Register classified the ship under the 100 A 2 code, involving severe restrictions to navigation ("vessels steaming no more than 50 miles from sheltered port and sea conditions not exceeding force 4") and the ship was wrecked "in sea condition force 10" and the restrictions laid down by the Croatian Register and referred to in the classification clause had been abundantly infringed, there has been therefore a breach of warranty making the insurance cover of no effect", irrespective of any causative connection between such infringement and the accident and any fault on the part of the insured or carrier.
3- The first complaint centers about "erratic enforcement of the classification clause, infringement and wrong enforcement of art. 360/3 of the Italian Code of Procedure as well as artt. 1362, 1363 and 1370; inconsistency of the motivation in the light of art. 360-5 of the It. code of procedure".
It is T. S**l' case that "the classification of the ship "Medtrader", though not "complete" was nevertheless "sufficient" and "suitable" for the voyage that the vessel was about to effect" in as much as both the limitations could have been complied with either the geographical one concerning the distance from the coast (the voyage being not a transatlantic cruise but a passage from the Black Sea to the Adriatic Sea) and that concerning the sea conditions (in view of the possibility for the ship to take shelter in a coastal port as soon as meteorological forecast would give advance notice of expected worsening of the weather condition").
T. S*** adds that (effective from January 1st 2001) the prevailing classification clause had replaced a prior clause (dating back to 1997) which expressly provided that the vessel should comply with particular classification requirements established by certain particular authorities. Moreover T. S** emphasises that "the literal meaning of the expressions used is not in doubt" because the wording of the classification clause in force since January 1st 2001 "does not make any distinction among the various types of class but simply states that the ship must be "classed" with one of the various classification societies listed therein", so that "any classification whatsoever would make the insurance cover effective". Art. 1363 It. civil code, pointing to construction of covenants as a whole, would support this conclusion because the comparison between the 2001 and 1997 clauses "clearly demonstrates that the latter "only establishes that the vessel must be classified" while the former "provided that the insurance cover would be effective only if the ship ... were ... classified as follows" and referred not only to particular classification societies but also to the highest classification conferred" by each of them, thus making it clear, on the basis of "a contrariis" interpretation and of the behaviour of the parties even subsequent to the contract' conclusion, that while in the past the insurers imposed that "goods insured by them be shipped on vessels endowed with the highest classification", effective from January 2001 insurers would be content with ships simply classified". The petitioner further contends that the lower Court made a serious error in judgment in that "it confuses the purpose of the classification clause, delimiting the insurance cover to goods shipped on vessels with certain characteristics with the behaviour of a third party (the master on command of the vessel where the goods had been loaded); such behaviour would be an insured risk because ... the insurance policy covered all risks and the fault on the Master was not an excluded risk".
4 - The second reason for the appeal – introduced in a subordinate way – complains about the alleged breach of artt. 3 and 4 of the Rome Convention dated June 19th 1980 and of artt. 2697 and 1906 of the civil code as well as "erratic identification of the applicable law and of the notion of "warranty" instead of the Italian notion of "delimitation of risk" and "failure to take into consideration the necessity for the claimant to prove a causative relation between the asserted infringement of the clause delimiting the risk and the accident".
More precisely the petitioner denies the enforceability of English law (because the depeçage "might be resorted to only when, inside a contract, different phases of the parties' activity and different independent rights and duties "might be isolated in such a way as to allow framing the classification clause within warranties and not within clauses delimiting the risk; "the important consequence – according to the claimant – being that the infringement of the clause would not entail the automatic termination of the insurance cover, it being also necessary to establish the existence of a causation nexus between the breach of the clause and the accident with the further consequence that "the burden of proof as to the derivation of the wreckage ... and of the loss of the insured goods from the failure to adopt the prescribed measures (i.e. loading cargo on a ship not fully classed) laid on the insured pursuant to art. 2697 of the civil code has not been discharged during the proceedings before the lower Courts".
5 –Being intimately connected the reasons for the appeal are to be perused together but are all groundless.
5.1 The submissions introduced with the second complain relevant to the applicability of a foreign law have no merits. Art. 3 and 4 of the Rome Convention of June 19th 1980 regarding contractual obligations and art. 57 of the Reform of the Italian Private International Law (law n. 218/1995) expressly lay down that "the parties can designate the law applicable to the whole contract or to a part only of it" and thus the resort to voluntary fractioning (or depeçage) is admissible, allowing the submission of a separable obligation to a foreign law (ex multis Cass. N. 23933/2010; Cass. N. 15822/2002; Cass. 10549/2007): art. 4 is not at issue because it may come into play only when the parties do not make any choice as to the applicable law.
In that connection it is worth outlining that, having admitted the applicability of a foreign law, the lower Court has rightly construed English law "according to its own canons of interpretation" as provided for under art. 15 of l. n. 218/1995 (see Cass. N. 2791/2002) and applied the notions of promissory warranty (as ruled under the Marine Insurance Act 1906) and the notion of breach of warranty taking into consideration the objective consequentiality between the non-compliance of the condition on the part of the assured and the consequent insurer's release as held in the judgment. Art. 1906 Civil Code (regarding the case – not at issue – of "damages caused by inherent vice" not reported to the insurer was equally not pertinent and the same is with art. 2697 Civil Code. Its alleged misconstruction was based by the petitioner on the assumption – rightly rejected by the Courts of the merits – that the warranty was not in operation.
5.2 The canons of interpretation referred to under the chief complaint have not been disregarded. Not those laid down under art. 1362 Civil Code because the Court of Appeal has construed such provision in accordance with its literal meaning and the common intention of the parties and thus in full accordance with the law provisions.
Clearly the petitioner's main complaint is the result of such a misconstruction devised to deny that the classification clause included restrictions.
Art. 1362-(2) Civil Code has been wrongly invoked (see points 59 and 60 of the petition) because "the parties' behaviour even after the conclusion of the contract may reveal a different common intention only in presence of factual activity attesting so, no matter the bare modification of the covenant leading to the clause to be interpreted.
In any event the sequence of the two classification clauses does not necessarily imply the construction put forward by T S***, in as much as the full classification, restrictions included, should be taken in account, if the clause so requires.
There is no breach of the criterion established under art. 1363 Civil Code because, to say the minimum, the petitioner claims to take in account provisions replaced in 2001 whilst contractual clauses "to be construed one after the other" can be but the clauses presently in force.
5.3 The inconsistency complained off under points 72/83 of the petition does not exist. According to T S*** the lower Court would have given "a confused account of the classification clause, delimiting the insurance cover by requiring shipment of the goods on board of vessels of a certain characteristics, and the behaviour of a third individual (the master) after the conclusion of the insurance contract"; the asserted mistaking is, in fact, the logic consequence of an optional construction of the classification clause arrived at, by the Court of Appeal, according to which, if, at the time of the wreckage, the ship had lost the lowest seaworthiness requisites imposed the classification clause, there would be a breach of warranty causing the termination of the insurance cover. (Omissis)

Rome , September 29th 2014