Institute Strikes Clauses (Cargo) — Scope of Strike-Risk Coverage and Application

What Are the Institute Strikes Clauses (Cargo)?

The Institute Strikes Clauses (Cargo) are association strike clauses in marine cargo insurance for overseas cargo that provide coverage for strikes, lockouts, labor disputes, riots, civil commotions, certain terrorist acts, and acts motivated by political, ideological, or religious reasons—risks that are generally excluded under the standard Institute Cargo Clauses.

Under the usual ICC(A), ICC(B), and ICC(C), these risks are categorized as strike exclusions. Therefore, to include coverage for strikes, riots, and terrorism-related perils, it is necessary to confirm not only the use of the basic ICC(A) conditions but also whether the Institute Strikes Clauses (Cargo) are attached.

However, this clause does not cover all damages, costs, or delays related to strikes.

The core of the clause is loss or damage directly caused to the insured cargo by persons participating in a strike, those involved in labor disputes or riots, certain terrorists, or individuals acting on political, ideological, or religious motives.

Issues such as cargo handling stoppages due to port strikes, labor shortages, port congestion, storage fees, Demurrage, Detention, transshipment costs, delivery delays, and loss of sales opportunities should be distinguished from physical damage to the cargo itself and assessed separately.

Scope Covered in This Article

Purpose and Background of the System

In ordinary cargo transportation, damage or loss may occur not only due to accidents such as fire, collision, capsizing, seawater exposure, or cargo shifting, but also due to strikes, lockouts, riots, civil commotion, terrorist acts, and others.

However, strikes and terrorism-related risks are normally excluded under standard ICC(A), ICC(B), and ICC(C) clauses. Therefore, the Institute Strikes Clauses (Cargo) are attached separately to cover loss or damage caused by these risks.

The background for the necessity of this clause includes the possibility that ports, airports, warehouses, CFS, CY, terminals, and inland transport hubs may be affected by labor disputes, riots, political incidents, and terrorist acts.

On the other hand, in practice, the most frequent issues are not only direct damage to cargo. Additional problems such as work stoppages, labor shortages, port closures, prolonged detention, additional storage fees, route changes, and delivery delays also arise.

The Institute Strikes Clauses (Cargo) require a clear distinction and confirmation between the loss or damage to cargo covered, and delays, labor shortages, abandonment of voyage, and commercial additional charges.

Basic Structure of the Clauses

Situations Where Institute Strikes Clauses (Cargo) Become an Issue

Application Requirements and Exclusions

Main Covered Risks

Under the Institute Strikes Clauses (Cargo), loss or damage to insured cargo caused by the following acts may be covered, except where excluded by exemption provisions.

How to Confirm Political, Ideological, or Religious Motives

Political, ideological, or religious motives cannot be determined solely from the condition of the damaged cargo.

Similarly, it is not appropriate to identify the motives based only on the nationality, ethnicity, religion, attire of the actors, or the country or region where the incident occurred.

In practice, multiple objective sources are combined to verify who acted, with what purpose, and what statements or actions were made.

Even if the motive has not been established at the initial claim stage, it is important to notify the insurer of the cargo damage, cargo location, incident date/time, authorities’ announcements, photographs, and other evidence without delay. It is critical not to postpone the first report while waiting for the final determination of motive.

Comparison with Standard ICC, War Clauses, and Malicious Damage Clause

Comparison of Covered Risks and Exclusions/Non-Covered Items

Damage Due to Labor Shortage or Absence

A key point in the Institute Strikes Clauses (Cargo) is the exemption of liability for damages and costs caused by the absence, shortage, or withdrawal of labor resulting from strikes or similar events.

In port strikes, situations where cargo handling stops and cargo cannot be moved out, resulting in increased storage charges, Demurrage, Detention, and forwarding costs, are more common than direct physical damage to cargo.

However, simply having insufficient workers, no personnel to operate port facilities, or closed gates does not qualify as direct loss or damage to cargo caused by strike participants or related parties.

When organizing costs, the following items should be separated:

Delay, Loss or Interruption of the Voyage or Voyage Operations

Loss, damage, or expenses resulting from delays are generally excluded, even if the delay arises from insured perils.

Claims based on the loss or interruption of the voyage or voyage operations are treated separately from physical damage to the cargo.

For example, if unloading is delayed due to a port strike, causing production line stoppages, lost sales opportunities, depreciation of seasonal goods, penalties, or costs for purchasing substitutes, these losses are not directly covered by the Institute Strikes Clauses (Cargo).

It is important to distinguish whether physical loss or damage has occurred to the cargo itself or whether the losses arise as economic consequences of the transportation delay.

Relationship with General Average and Salvage Charges

Under the Institute Strikes Clauses (Cargo), general average and salvage charges that arise from actions taken to avoid losses from the insured risks under this Clause, or in connection with such avoidance, may be subject to adjustment or determination according to the contract of carriage or the applicable law and customs.

The mere declaration of general average does not automatically guarantee payment under the Strikes Clause. It is necessary to confirm whether the general average act was performed to avoid risks covered by the Institute Strikes Clauses (Cargo).

Typical Case: Diversion to an Alternative Port to Avoid Riots and Strikes Risks

Consider a scenario where a major riot breaks out at the port of destination, threatening common danger to the vessel, crew, and cargo on board, resulting in the vessel being diverted to a safe alternative port, where emergency unloading, additional port charges, fuel costs, and other expenses are incurred.

In this case, the shipowner may declare general average. However, whether this will actually be accepted as general average depends on confirming factors such as the contract of carriage, applicable law, the York-Antwerp Rules, and whether the act involved extraordinary sacrifice or expenditure for the common safety.

From the cargo side, the general average declaration, General Average Bond, General Average Guarantee, notification from the general average adjuster, detailed expenses, and the carrier’s incident report should be promptly submitted to the insurer.

Insurance Period, Termination of the Contract of Carriage, and Destination Change Decision Flow

The insurance period, termination of the contract of carriage, and destination change under the Institute Strikes Clauses (Cargo) are confirmed with the same structure as the ICC2009 main clauses.

Documents to Verify Cost Responsibility Between NVOCC and Freight Forwarder

Whether costs are covered by cargo insurance and who bears additional charges among the shipper, carrier, NVOCC, and freight forwarder are separate matters.

Even if certain costs are not covered under the Institute Strikes Clauses (Cargo), it does not mean that NVOCCs or freight forwarders automatically bear those costs. Conversely, partial coverage by insurance does not extinguish contractual transport liabilities or cost claims.

Common Practical Issues

Scope of Freight Forwarder Involvement

Practical Scenario 1: Storage Charges Incurred Due to Inability to Unload Caused by Port Strike

Assume that a port strike occurs at the destination port, and although the vessel has arrived, unloading and gate-out operations cannot be performed, resulting in storage charges, Demurrage, and Detention.

Even if Institute Strikes Clauses (Cargo) are attached, these costs are not automatically covered by the marine cargo insurance.

First, confirm whether the cargo has sustained any direct loss or damage. If there is no cargo damage and costs have only arisen due to a shortage of labor or suspension of cargo handling, the relationship with labor shortage and delay exemptions must be considered.

Next, review the Master B/L, House B/L, Booking Confirmation, carrier tariff, Free Time notification, and quotation terms to clarify which party is contractually responsible for bearing the additional charges.

Practical Scenario 2: Cargo Damage in Warehouse Caused by Riot

Assume a riot breaks out near the warehouse at the transshipment port, and rioters intrude into the warehouse and damage the cargo.

If the Institute Strikes Clauses (Cargo) are attached, the cargo damage caused by persons participating in the riot or civil commotion may be covered.

Records from the police and port authorities, the warehouse accident report, surveillance footage, cargo photographs, and survey reports should be secured to confirm the direct connection between the actions of the rioters and the cargo damage.

Damages arising from poor packaging, moisture, or the inherent nature of the cargo existing before the riot occurred should be separately identified and organized.

Practical Scenario 3: Port Closure Due to Terrorism

Assume that a terrorist act occurs at the transshipment port, causing the port to temporarily close and preventing the transfer of cargo as originally scheduled.

The treatment under insurance differs depending on whether the cargo is directly damaged by explosion or fire, or if there is no cargo damage but only delay, storage charges, and rerouting costs due to the port closure.

When there is no direct damage, additional charges are not necessarily payable under the Institute Strikes Clauses (Cargo).

However, issues such as termination of the contract of carriage, change of destination, transshipment, and expiry of the insurance period become relevant. It is important to notify the insurer of the cargo’s location and transport status and to confirm the continuation of coverage, additional premium, and conditions for alternative routing.

Practical Scenario 4: Reefer Cargo Deterioration during Extended Storage

Assume a reefer container has been detained for an extended period due to a port strike, resulting in temperature deviation and deterioration of the cargo.

Even if the strike is the underlying cause, it is necessary to determine whether the direct cause of deterioration was destruction of the power supply equipment by strike participants, mere delay, power connection failure, malfunction of the reefer unit, or the inherent nature of the cargo.

Secure reefer logs, pre-trip inspection (PTI) reports, terminal power records, alarm logs, set temperature, thermometer data, and survey reports.

Additionally, verify the timeline to confirm whether the cargo remained under normal transportation conditions, was subject to the 60-day clause, whether the Contracting Carrier terminated the contract of carriage, or if storage outside the normal transportation process was involved.

Practical Scenario 5: Cargo Damage Caused by Politically Motivated Acts of Destruction

Assume that cargo inside a terminal has been set on fire, and political statements or slogans were left at the scene.

In this case, the issue is which clause among the Institute Strikes Clauses (Cargo), Institute War Clauses (Cargo), and Institute Malicious Damage Clause should be the primary focus.

Do not conclude political motivation based solely on the slogans at the scene. Confirm the official statements from authorities, the authenticity of any claim of responsibility, the relationship between the perpetrators and organizations, investigation information, and the situation in the affected area.

If the incident qualifies as war, civil war, or hostile acts, the Institute War Clauses (Cargo) should apply. If the specific motive cannot be confirmed and the damage appears to be general malicious damage, consider the relevance of the Institute Malicious Damage Clause as well.

Common Misunderstandings

Checklist for Decision Making

Documents to Verify in Practice

Summary

The Institute Strikes Clauses (Cargo) are Association strike clauses designed to provide separate coverage for strikes, lockouts, labor disputes, riots, civil commotions, certain terrorist acts, and acts motivated by political, ideological, or religious reasons, which are typically excluded under the standard ICC(A), ICC(B), and ICC(C) clauses.

The core focus of these clauses is on loss or damage directly sustained by the insured cargo as a result of the insured perils. Merely the occurrence of a strike does not automatically entitle compensation for storage charges, Demurrage, Detention, transshipment costs, delivery delays, or business interruption losses.

When verifying acts motivated by political, ideological, or religious reasons, assumptions should not be made based solely on the actor’s attributes or the region of occurrence. Instead, objective evidence such as government or police announcements, perpetrator claims, investigation materials, or on-site footage should be considered collectively.

Regarding general average and salvage charges, it is essential to verify whether they were incurred to prevent or minimize loss from covered perils. The declaration of general average alone does not guarantee payment; the terms of the contract of carriage, governing law and applicable practice, and the purpose of the expenditures are significant factors.

In cases where transport is interrupted due to strikes, riots, terrorism, etc., the insurance period, the usual transport process, the 60-day clause, termination of the contract of carriage, and changes in destination should be reviewed chronologically. If the contract of carriage is terminated, timely notification to the insurer and an explicit request for continuation of coverage are necessary.

Furthermore, whether cargo insurance covers particular losses is separate from which party among the shipper, carrier, NVOCC, and freight forwarder is responsible for storage charges, transshipment costs, Demurrage, Detention, and similar fees. Cross-checking across Master B/L, House B/L, standard trading conditions, Booking Confirmations, carrier tariffs, Free Time notices, and quotation terms is required.

In actual cases, it is important to review not only the Institute Strikes Clauses (Cargo) but also the base ICC clauses, Institute War Clauses (Cargo), Institute Malicious Damage Clause, insurance period clauses, B/L back clauses, and NVOCC terms of contract in combination.