Reform meets resistance in Australia

THE Australian Law Reform Commission (ALRC) has been asked by the federal attorney general to review the Marine Insurance Act 1909. The ALRC is required to report by the end of this year. With regard to the terms of reference the ALRC is required to take into account the following:

• Any parts of the legislation which restrict competition should only be retained if the benefits to the community as a whole outweigh the costs - and if the objectives of the legislation can only be achieved by restricting competition.
• It is desirable to have a regime consistent with international practice in the marine insurance industry, noting in particular that the Act is based very closely on the Marine Insurance Act 1906 (UK), and whether any change in the Act result in a competitive disadvantage for the Australian insurance industry?
• The effects on the environment, welfare and equity, occupational health and safety, economic and regional development, consumer interests, the competitiveness of business, including small business and efficient resource allocation.
• Compliance costs and the paperwork burden on small business should be reduced where feasible.

The Marine Insurance Act 1909 is in all relevant respects the same as the Marine Insurance Act 1906 (UK). It has been a marvellous piece of legislation which codified the law as it was at the end of the 19th century and the beginning of the 20th century. As Donald O'May said in his book O'May on Marine Insurance, the survival of marine insurance into the 20th century, "can be attributed to its immortalisation in the Marine Insurance Act 1906". The question now is, can it survive largely intact into the 21st century?

In a letter of March 9, 2000, the president of the ALRC has noted that the commission has already identified some priority areas for review of the Marine Insurance Act 1909. He has referred to the following:

• Whether any change to the Act might result in a competitive disadvantage for the Australian insurance industry in view of the close association between the Australian Act and the United Kingdom legislation, the dominance of the London marine insurance market and the industry practice of using standard wordings.
• The differences in Australian law between the Insurance Contracts Act 1984, which covers insurance of risks in relation to air and land transport (unless they are incidental to marine insurance) and the insurance of pleasure craft, and the Marine Insurance Act.
• The fact that transportation is often performed by more than one means of carriage which might be covered by different legislative regimes.
• The areas of insurable interest, non-disclosure and breach of warranty have all been reformed significantly in non?marine insurance, and their retention, unreformed, in the Marine Insurance Act is the subject of some criticism.
• There are obsolete terms and concepts in the Marine Insurance Act.

There are undoubtedly areas of the Marine Insurance Act which could usefully be reformed, but there is no sign that the UK is likely to reform the 1906 Act. It is noteworthy also that the Comite Maritime International (CMI), the parent body of the Maritime Law Association of Australia and New Zealand, has looked at this question (firstly at its conference in Sydney in 1994 and more recently in a symposium in 1998 in Oslo) and has declined to treat it as an appropriate topic worthy of the formulation of a standard wording for an international convention.

The CMI has instead embarked upon a co-operative study of key areas. These interestingly include insurable interest, the duty of disclosure and warranties (areas also identified by the ALRC) and marine insurance in a number of countries. This is with a view to identifying, at the conclusion of each topic, how the majority of countries deal with a particular problem. The CMI hopes by this means to engender greater uniformity in the law of marine insurance worldwide.

The ALRC has clearly recognised from the outset that there is considerable resistance within the industry to any significant reform in view of the internationalisation of marine insurance. It remains crucial to the Australian industry that it is able to assure those in other countries who obtain policies of insurance from Australian organisations that their terms, and their interpretation by Australian courts, will be consistent with the Marine Insurance Act 1906 (UK). Where non-Australians buy goods on CIF terms from Australians, it is more than likely that they will be provided with an insurance certificate issued by an Australian insurer which is subject to Australian law and practice.

The ALRC therefore has a difficult task ahead of it. Unless it is able to identify areas in which the Act restricts competition or has an adverse impact on consumers, it is difficult to see the ALRC being able to justify wholesale reform. The codification of marine insurance law by Sir Mackenzie Chalmers in the 1906 Act is therefore liable to remain largely intact as we enter the 21st century.