Marine insurance law in Greece

The Greek shipping industry has traditionally had a real need for insurance cover which the local market has not been able to satisfy. Unavoidably, Greek shipowners have sought insurance abroad - mainly in the London insurance market. As a consequence, English marine insurance law and practice, on the basis of which English underwriters provided cover by incorporating the same in the insurance policies, has had a great influence on Greek insurance law.

Another important development is the recent adoption by Greece of a number of EU directives issued with the intention of harmonising the legal framework of the EU states. One of the main characteristics of the new legislation is the strengthening of the position of the insured against the insurer - traditionally the insured has been considered to be the weaker party to the insurance contract.

Categorisation of an insurance as a marine risk may have important consequences, as far as it concerns both the substantive and the procedural law. Marine insurance is specifically regulated by the provisions of chapter XIV of the Code of Private Maritime Law (Articles 257 to 288), while the provisions of the general insurance law may apply in a supplementary way and only to the extent they are consistent with the provisions regarding marine insurance.

In this way, a time bar for claims under a marine policy is two years, while a claim under an ordinary policy becomes time-barred after four years. An insurance claim which would normally be subject to the jurisdiction of either the Athens or Piraeus civil court should, if it is considered to be of a marine nature, be brought before the admiralty department of the Piraeus court.

The perils insured

The term 'peril of the sea' is interpreted broadly and includes all the risks of a voyage even if they do not arise directly from the sea (e.g., a fire in the engineroom). If the parties do not specify the perils against which insurance is provided, it is accepted that all possible risks are covered apart from war risks and third party liability, for which special cover has to be agreed. However, in cases of collision, the damage caused to the third party is covered, even if no insurance for third party liability has been taken out.

The policy

The insurance policy should by law contain a minimum of particulars such as the names of the parties, the amount insured, the period, the risks covered, any exemptions, explicit reference to any terms applicable etc.

The amount insured is determined on the basis of the value of the insured object, and the parties are bound by the agreed valuation. The courts have found that the agreed valuation cannot be substantially higher than the market value of the insured object, otherwise the insurance contract would become a lottery. If the object has been overvalued, either of the parties can ask for a reduction of the insured amount to the market value. If the overvaluation was caused intentionally by the insured, the policy is null and void.

Obligations and rights of the insured

The insured is obliged to disclose to the insurer all those facts and circumstances which are objectively material to the appraisal of the risk. The consequences of failure to comply with this obligation may vary depending on whether it was due to ignorance, negligence or intention. The said obligation continues through to the conclusion of the insurance contract.

The insured is entitled to abandon the vessel or the cargo to the insurer and demand the whole insured amount in certain cases. Such is the case where, for example, the vessel becomes unseaworthy and cannot be repaired, or where the cost of repair would exceed three-fourths of the insured value, or where three months have elapsed since the receipt of any information about the ship. The right of abandonment should be exercised within three months of the time the insured was informed of the casualty.

The position of the insurer

Insurers who compensate their insureds in respect of loss or damage are automatically subrogated, and can sue in their own name the person or entity responsible for the loss or damage. Insurers can pursue judicially the collection of premiums due although, according to the Brussels Convention of 1952 on the arrest on ships, they cannot arrest a ship in Greece for premiums due by a shipowner who is domiciled in a state which is a signatory to that convention. It should be noted, however, that this will change in time because the recently agreed text of the International Convention on Arrest of Ships 1999 explicitly allows arrest for premiums, including mutual insurance calls.

In connection with the insurance of third party liabilities, indemnity claims cannot be brought directly against insurers by third parties, with the exception of claims for pollution damage in line with the International Convention on Civil Liability for Oil Pollution Damage.

Applicable law

The law applicable to a marine insurance contract shall be the law of Greece in cases when both the residence of the insured and the risk to be insured are situated in Greece. If this is not the case, then the contract shall be governed by the law of the country with which it is most closely connected. The parties can freely choose the applicable law, with the restriction that, if all the elements of the contract are connected with Greece, the application of the mandatory rules of Greek law cannot be deviated from.

Jurisdiction

A distinction should be made between contracts which are entered into between Greeks and persons residing in countries which have ratified the Brussels Jurisdiction Convention of 1968 as henceforth amended (signatories are all the EU states) and contracts which are entered into between Greeks or Greeks and residents of a country which is not signatory to the above convention.

In the first case, the jurisdiction should be decided on the basis of the Brussels Jurisdiction Convention of 1968, by virtue of which the insured can bring a claim against the insurer either before the courts of the insurer's residence or before the courts of the insured's residence. The parties are allowed to agree on another jurisdiction, except when the insurance is in respect of vessels which are used for private pleasure purposes.

In the second case, where the Brussels Convention does not apply, jurisdiction will be decided on the basis of Greek procedural law, according to which an insurer could be sued either before the courts of its residence or before the courts of the place where the insurance contract was entered into.