Abstract
The doctrine of subrogation is germane to the law of marine insurance and is intimately associated with the centrality of the principle of indemnity under which the assured is entitled to be fully indemnified by the insurer under the insurance policy but not beyond that amount so that the assured does not profit from his loss. In juxtaposition to indemnity, subrogation allows the insurer to “step into the shoes” of the assured after indemnifying his loss, and bring action against the responsible third-party to recoup what he has paid to the assured and prevent the latter from “double-dipping” or getting paid twice; once by the insurer and then by the perpetrator of the loss, which is in line with the principle of indemnity. But on occasion subrogation may engender a windfall. This chapter examines how such circumstances are treated by reference to English and American case law and relevant scholarly literature. It provides a critique of the leading cases and concludes that they are inconsistent, lacking in any definitive pronouncement of the law within the ambit of insurance, marine or otherwise.
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- 1.
- 2.
Mukherjee (2002), p. 12.
- 3.
Gaskell et al. (1987), pp. 519–520.
- 4.
(1883), 11 QBD 380.
- 5.
Ibid. at p. 386.
- 6.
Khurram (1994), pp. 114–115.
- 7.
Gold et al. (2003), p. 327. See also https://www.oxbridgenotes.co.uk/revisionnotes/law-aspects-of-obligations/samples/6-dot-subrogation.
- 8.
See Bybee (1979), p. 154.
- 9.
(1870), L.R. 5 Q.B. 244.
- 10.
Horn (1964), p. 24.
- 11.
Rose (2012), p. 561.
- 12.
6 Edw 7 c 41.
- 13.
Supra, note 4.
- 14.
Ibid. at p. 388.
- 15.
Bybee (1979), pp. 146–147.
- 16.
Supra, note 4 at p. 386.
- 17.
- 18.
Khurram (1994), p. 115.
- 19.
See Marine Insurance Act 1906, sections 60-63.
- 20.
infra, note 21.
- 21.
(1930), 37 Ll. L. R. 55 (HL).
- 22.
[1961] 1 Lloyd’s Rep 479 (Comm Ct).
- 23.
Ibid at pp. 481–482.
- 24.
Ibid.
- 25.
Ibid. at p. 482.
- 26.
Supra, note 4.
- 27.
Ibid. at p. 483 referring to the Castellain v. Preston judgment at p. 386.
- 28.
Ibid at p. 483.
- 29.
Ibid at p. 484.
- 30.
Ibid. at p. 485.
- 31.
[1896] A.C. 250.
- 32.
See Gaskell et al. (1987)), pp. 520–521.
- 33.
130 F. 746 (2nd Cir.), 194 U.S. 637 (1904).
- 34.
See Bybee (1979), p. 148.
- 35.
Supra, note 33 at p. 749.
- 36.
Ibid at p. 751.
- 37.
Bybee (1979), p. 148.
- 38.
101 F. 469.
- 39.
Ibid. at pp. 474–475.
- 40.
See supra, note 22 at p. 486.
- 41.
136 F Supp. 941 (N.D. Ala. 1956).
- 42.
See Bybee (1979), p. 152 where the author remarks that the rule regarding indemnity comes from cases such as The Livingstone where the assured obtained only partial indemnification from the insurer.
- 43.
No. C 75-0342 L(A) (WD Ky, (1978).
- 44.
See commentary of the author in Bybee (1979), p. 153.
- 45.
Burnand v. Rodocanachi supra, note 17 at p. 339.
- 46.
See Bybee (1979), p. 148, in particular, footnote 16 at that page.
- 47.
L. Lucas Ltd. v. Export Credits, [1973] 2 All E.R. 984 (C.A.); [1974] 2 All E.R. 889 (HL).
- 48.
Ibid.
- 49.
See Bybee (1979), p. 150.
- 50.
Bybee (1979), p. 151.
- 51.
Ibid.
- 52.
Ibid; see specifically footnote 28 at p. 151.
- 53.
Supra, note, 9.
- 54.
Ibid. at p. 250.
- 55.
See Bybee (1979), footnote 47 at pp. 154–155.
- 56.
(1877), 3 App Cas. 279.
- 57.
See Bybee (1979), footnote 51 at p. 156.
- 58.
See Bybee (1979), p. 155, in particular, footnote 49 at that page where several federal court cases are mentioned.
- 59.
- 60.
Bybee (1979), p. 158.
- 61.
Ibid.
- 62.
Supra, note 22 at p. 338.
- 63.
Odeke (2017), pp. 22–23.
- 64.
Ibid, at p. 27.
- 65.
Bybee (1979), p. 160.
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Cases
Attorney General v. Glen Line Ltd. and the Liverpool & London War Risks Insurance Association, Ltd., (1930), 37 Ll. L. R. 55 (HL)
Burnand v. Rodocanachi (1882), 7 App. Cas. 333 4 Asp. M.L.C. 576
Carolina Casualty Insurance Co. v. Local 612, International Brotherhood of Teamsters, 136 F Supp. 941 (N.D. Ala. 1956)
Castellain v. Preston (1883), 11 QBD 380
Flannary v. Utley, (1887), 3 S.W. 412 at p. 413 and Bybee (1979) at p. 157
King v. Victoria Insurance Co., [1896] A.C. 250
L. Lucas Ltd. v. Export Credits, [1973] 2 All E.R. 984 (C.A.); [1974] 2 All E.R. 889 (HL)
North of England Iron S.S. Insurance Association v. Armstrong (1870), L.R. 5 Q.B. 244
Simpson & Co. v. Thomson, (1877), 3 App Cas. 279
The Livingstone, 130 F. 746 (2nd Cir.), 194 U.S. 637 (1904)
The St. Johns, 101 F. 469
Urban Industries, Inc. and Others v. Thevis, No. C 75-0342 L(A) (WD Ky, (1978)
Yorkshire Insurance Co. Ltd. v. Nisbett Shipping Co. Ltd., [1961] 1 Lloyd’s Rep 479 (Comm Ct)
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Mukherjee, P.K. (2020). Windfall in the Law of Subrogation: Marine Insurance in Motion. In: Mukherjee, P.K., Mejia, M.Q., Xu, J. (eds) Maritime Law in Motion. WMU Studies in Maritime Affairs, vol 8. Springer, Cham. https://doi.org/10.1007/978-3-030-31749-2_26
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