People working with letters of credit and others working with marine cargo insurance are familiar with the abbreviation SRCC. Not so many people are knowledgeable of the actual coverage these Institute Strikes Clauses (Cargo) 1/1/2009 (later Strikes Clauses) actually grant. In this article I shall concentrate on the actual cover for strikes perils and leave other perils (Riots, Civil Commotions and Terrorism) for upcoming newsletters.
Strikers - who are they?
Prior jumping to the actual coverage issues it is useful to shed light on the definitions of strikers and locked-out workmen as well as labour disturbances. A striker is an employee who has withdrawn his labour – be it a dispute over their own demands towards their employer or due to employer’s demands towards employees. A locked-out workman is a person whose access to work is being prevented by an employer.
Persons taking part in labour disturbances is more vague and obviously cover strikers and locked-out workmen, but it adds something to the group namely persons who for example for sympathy and support reasons join the actual employees. If the level of violence exceeds the boundaries of “ordinary” dispute we would end up discussing about riot or civil commotion (which are also included in Strikes Clauses).
Institute Cargo Clauses (A), (B) and (C)
Excluding strikes perils has been marine underwriters’ practice since industrial disputes became more common. So-called FSR & CC – free of strikes riots and civil commotions – clause has been incorporated in cargo policies since 1912 when introducing the standard cargo clauses.
Our starting point is of course the Institute Cargo Clauses (A), (B) and (C) – later Institute Cargo Clauses – after their latest revision in 2009. Exclusion 7.1 states, “In no case shall the insurance cover loss damage or expense:
7.1 caused by strikers, locked-out workmen, or persons taking part in labour disturbances…
7.2 resulting from strikes, lock-outs, labour disturbances…”
This exclusion excludes not only loss or damage but also expenses. And – as indirect consequences of strikes are also excluded – basically all aspects of strikes perils are excluded.
Strikes clause and possible surprises
The essence of the cover provided by the Strikes Clauses can be found in clause 1 and more precisely in clause 1.1:
“1. This insurance covers, except as excluded by provisions of Clauses 3 and 4 below, loss of or damage to the subject-matter insured caused by 1.1 strikers, locked-out workmen or persons taking part in labour disturbances….”
There are now two issues worth noticing. Firstly, the exclusion in Institute Cargo Clauses excludes loss damage and expense. Strikes Clauses cover only loss of or damage to the subject matter insured, thus expenses are not covered.
Strikes Clauses contain exclusions specifically related to the costs and indirect losses arising from strikes. Clause 3.5 excludes loss damage and expense arising from delay caused by a risk insured against. Clause 3.7 further excludes “loss damage or expense arising from the absence shortage or withholding of labour of any description whatsoever resulting from any strike, lockout, labour disturbance…” Also loss or frustration of adventure is excluded (Clause 3.8).
If striker’s burn down a warehouse area and cargo is destroyed, there is clearly a damage directly caused to the cargo by the strikers - Strikes Clauses cover this. Then again if perishable goods – typically food stuff – arrives to a port, but due to strike there is nobody unloading the goods or taking care of the thermo transit boxes and the goods rot or melt or freeze, it is not covered by Strikes Clauses.
Should there be a delay in unloading seasonal goods and the owner of the cargo loses market or has to buy replacement from somewhere else none of this is something that can be claimed under the Strikes Clauses.
To summarize, one cannot go much wrong when saying that not all risks excluded in Institute Cargo Clauses are covered with Strikes Clauses. On the contrary: Strikes Clauses indemnify only physical loss of or damage to the cargo caused by strikers.
Please remember also that Strikes Clauses might not be applicable for transports to/from/through high-risk areas and if so desired this is something which needs to be agreed upon prior commencement of a conveyance with your insurer.