TAYLOR

Reflective Journal

          Exemption clause can be defined as a provision in a contract under which one party is protected from being sued by the other party for damages, loss, negligence, non-performance or its liabilities are severely restricted. As we had mentioned in the previous article about exemption clauses that the Malaysia is still relying on the English common law and there were no provision contained in the Malaysian Contracts Act 1950. It is sad that Malaysia’s courts is still relying on the English law in this particular aspect because it will affect the judgments of the cases of exemption clauses in the courts by the judgers.

          Based on the articles of cases about exemption clauses in Malaysia that I had read. I found out that one of the cases of exemption clause in Malaysia was interesting, Global Process System Inc and another (Respondents) v. Syarikat Takaful Malaysia Berhad (Appellant) [2011] UKSC 5. The appellant appeals to the supreme court of the United Kingdom about the concerns the scope of the exclusion in a marine insurance policy for loss caused by “inherent vice” in the subject matter insured. The oil rig “Cendor MOPU” had been laid up in Galveston, Texas. In May 2005, it was purchased by the respondents for conversion into a mobile offshore production unit for use off the coast of Malaysia. The respondents obtained insurance from the Appellant for the carriage of the oil rig on the towed barge from Texas to Malaysia. The policy on the contract had covered “all risk of loss or damage to the subject-matter insured except as provided in Clauses 4…”. Clauses 4.4 excluded “loss, damage or expense caused by inherent vice or nature of the subject matter insured”.

          The oil rig consisted of a platform and three legs extending down to the seabed. The legs were massive tubular structures, made of welded steel and cylindrically shaped, with a diameter of 12 feet and a length of 312 feet. Each weighed 404 tons. The rig was carried on the barge with its legs in place above the platform, so that the legs extended some 300 feet into the air. The tug and barge set off from Galveston in August 2005 and arrived at Saldanha Bay, just north of Cape Town, in October 2005 where some repairs were made to the legs. The voyage then resumed but on the evening of 4 November 2005 one leg broke off and fell into the sea. The following evening the other two legs fell off. The breakages were the result of metal fatigue caused by the motion of the waves. In addition, the impact of a “leg breaking wave” was required to generate the final fracture. The weather experienced on the voyage was within the range that could reasonably have been contemplated. The respondent then make a claim for the loss of the three legs but rejected by the appellant and the matter came for trial before the Commercial Court.The judge held that the proximate cause of the loss was the facty that the legs were not capable of withstanding the normal incidents of the insured voyage, including the weather reasonably to be expected. Therefore, the appellant appealed to the Supreme Court.

          The Supreme Court unanimously dismisses the appeal with the reasons according to the 1906 Act:[17]-[23];[80];[19];[46];[65];[84];[35] and the previus cases ofSoya GmbH Mainz Kommanditgesellschft v. White [1983] and T M Noten BV v. Harding [1990].

           In light of the above discussion, it appears that generally an exemption clause is only effective when it is properly incorporated into the contract and the parties affected are aware of it and understand the scope it covers. However, there is still hope for the victims in cases involving gross negligence where the courts will definitely strive to uphold justice in any way they can.