At times we may be requested to issue a Contractors’ All Risks policy in Malaysia to insure an overseas’ risk, either the risk being an incidental part of the main risk or it is the main risk itself. Usually is more incline to the latter.
Under such circumstance, it is important to take note of the policy jurisdiction from two aspects as it is normal for underwriters to forget about section II in respect of third party liability:
1. Jurisdiction in respect of the policy contract
This aspect is in regards to possible policy contractual dispute, where the Insured parties would be able to sue on a jurisdiction of the country where the risk is located if in the absence of any wordings clearly stating dispute is to be on jurisdiction of the Malaysian courts.
Although it is recogniseable if the policy is issued in Malaysia, jurisdiction to be applied in any contractual dispute is that of Malaysian courts BUT because the property being insured is located in a foreign land, there will be conflict. And, more than often the insurer may ends up dealing with jurisdiction that they are not familiar….
If the Insured parties wanted to sue over the policy contractual dispute, then it has to be Malaysian jurisdiction, which must be clearly spelt out.
2. Jurisdiction in respect of a judgement obtained by a third party
However there may be situation a third party claimant file a claim against the Insured parties in respect of third party property damage or bodily injury then jurisdiction is naturally that of the country where the risk is located.…(it would be really unfair for underwriters to insist on Malaysian jurisdiction…). If an aggrieved third party sues any of the Insured parties….. in the foreign courts’ then policy liability (Section 2) should trigger.
It is not fair for us to limit jurisdiction in any such tortious pursue by insisting the third party claimant filing a claim (or enforce a foreign judgement) in Malaysian courts or in other words denying the Insured(s) coverage where the third party claimant pursue a claim in the normal course of any litigation process.
Enforcing a foreign judgement in Malaysian courts…. On the other hand you may get a situation where third party claimant filing a claim in a court of another foreign country (i.e. US or Canadian courts) despite the accident or loss having occurred in the risk location as defined in the insurance policy. Thereafter have it enforced over in the foreign courts where the risk is located, this we do not want…. thus it is important underwriters limit the jurisdiction in respect of Section 2 to Malaysian and/or the relevant foreign country where risk is located. Perhaps inserting the following wordings do make sense for Section II of the Contractors’ All Risks policy….
“The policy shall not cover any form of compensation for samages in respect of judgement(s) not in the first instance delivered or obtained from a court of competent jurisdiction within Malaysia and/or (that designated) foreign country where insurance was provided…..”
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