Exemption Clauses in Institute War Clauses (Cargo)

What Are the Exclusion Provisions in the Institute War Clauses (Cargo)?

The exclusion provisions in the Institute War Clauses (Cargo) define the types of damage and costs that are not covered by insurance even when these war risk clauses are attached.

The Institute War Clauses (Cargo) are clauses providing separate coverage for war risks such as war, civil war, hostile acts, capture, seizure, restraint, detention, and abandoned mines—risks that are typically excluded under the standard ICC(A), ICC(B), and ICC(C) clauses.

However, the mere fact that war or an armed conflict is the background cause of an incident does not automatically entitle compensation for cargo damage, delay losses, additional charges, storage fees, transshipment costs, or losses under the contract of carriage.

In practice, the following factors are sequentially examined:

• Whether the Institute War Clauses (Cargo) are attached to the insurance contract
• Whether the cause of loss falls under the insured perils in Article 1
• Whether the incident occurred within the insurance period specified in Article 5
• Whether the loss falls under the general exclusions of Article 3
• Whether the loss is subject to the unseaworthiness and unsuitability exclusion in Article 4
• Whether the costs are separately covered as general average or salvage charges under Article 2
• Whether the priority provisions of Article 7 apply
• Whether insurance exclusions are distinguished from cost liabilities under B/Ls, House B/Ls, or standard trading conditions

Having war risks coverage does not necessarily mean that insurance indemnity will be paid for each individual loss.

Scope Covered in This Article

Item	Content Covered in This Article	Content Covered in Other Articles in Detail
Article 3 General Exclusions	Intentional acts, usual wear and tear, inadequate packing, inherent nature, delay, insolvency, loss or interruption of the voyage business, nuclear-related weapons	Establishment requirements of specific insured risks in Article 1
Article 4 Unseaworthiness and Unsuitability	Exclusion requirements and insured’s recognition regarding the vessel, barge, container, and transport equipment	Technical seaworthiness of vessels, classification societies, and inspection systems
Intentional Acts	Damages and costs attributable to the insured’s intentional unlawful or fraudulent acts	Criminal liability, legal responsibility of officers and employees personally
Usual Wear and Tear / Inherent Nature	Natural weight loss, normal deterioration, decay, rust, sweat, self-heating, and causal relationship with war risks	Detailed quality standards and shelf life for each cargo
Packing, Preparation, and Stowage	Persons subject to inadequate packing exclusions, timing of implementation, stowage inside containers, distinction from independent contractors	Individual liability of packers, warehouse operators, and freight forwarders
Delay	Damages and costs generally excluded for delays caused by war risks, distinction from costs under Article 2	Contractual penalties under sales contracts, ultimate claimability of lost profits
Insolvency and Monetary Obligations Default	Insolvency of shipowners, managers, charterers, operators and the insured’s recognition, special provisions for bona fide purchasers	Shipping Line bankruptcy procedures, claim filings, cargo recovery procedures
Loss or Inability to Achieve Voyage or Voyage Business	Assessment factors in Article 3.7, distinction from termination of the contract of carriage, distinction between cargo damage and commercial loss	Final legal evaluation of frustration under UK law
Nuclear-Related Weapons, etc.	Hostile use of weapons or devices using nuclear fission, fusion, radioactive materials, and borderline cases	Nuclear damage compensation system, radiation measurement and decontamination standards
General Average and Salvage Charges	Costs potentially covered under Article 2 and borderline with exclusions for delay and voyage interruption	General average contribution amounts, General Average Bond, General Average Guarantee
Insurance Period and Priority Clause	Coverage period under Article 5 and the scope where Article 7 takes precedence	15-day rule, changes in voyage, resumption of coverage after termination of the contract of carriage
NVOCC and Freight Forwarder	Document collection, insurer notification, B/L conditions, additional charges, protection of rights against third parties	NVOCC liability, freight forwarder liability, limitation of liability, statute of limitations

Purpose and Background of the System

Marine cargo insurance primarily covers the loss or damage of cargo caused by external and accidental incidents.

When war risks occur, not only cargo damage but also route changes, port closures, detention, transshipment delays, transport interruptions, lost sales opportunities, additional storage charges, and substitute transportation costs are likely to arise simultaneously.

However, if all these are covered under war risks insurance, the boundary between physical damage to cargo and losses arising under contracts of carriage or commercial transactions becomes unclear.

Article 3 explicitly specifies, in addition to the general exclusions common to standard cargo insurance, the war risks clause-specific exclusions of “loss of voyage or failure to accomplish the purpose of the voyage” and “hostile use of nuclear-related weapons, etc.”

Article 4 stipulates the handling of cases where cargo damage arises not from war risks but from the unseaworthiness or unsuitability of the ship, barge, container, or transport equipment.

Therefore, this article examines not only whether war risks have occurred but also confirms “what damage or costs form the basis of the insurance claim.”

Basic Structure of Exclusion Provisions

Article	Grounds for Exclusion	Key Judgment Points	Main References	Practical Considerations
Article 3.1	Intentional fraud by the insured	Whether the damage or costs are attributable to the insured’s intent	Instruction records, internal communications, accident reports	Must be distinguished from mere negligence or errors in judgment
Article 3.2	Ordinary leakage, usual decrease in weight or volume, normal wear and tear	Whether the loss is ordinarily expected depletion or caused by an external accident	Weighing records, quality standards, pre- and post-transport records	Normal depletion is judged separately even if war risks are involved
Article 3.3	Insufficient or improper packing or preparation	Who performed the packing or container stowage, when, and how	Packing list, packing specifications, stowage photographs	Independent contractors are not considered employees under the Clause
Article 3.4	Inherent defects or characteristics of the cargo	Whether the damage normally arises from the nature of the cargo itself	Product specifications, temperature and humidity records, inspection reports	Check for combined causes such as delay, storage environment, or packing
Article 3.5	Delay	Whether the damage or costs resulted from the delay	Transport timeline, delivery schedules, itemized damage details	General average and salvage charges payable under Article 2 are handled separately
Article 3.6	Insolvency or financial default of shipowner, etc.	Awareness at loading and impact on normal voyage execution	Credit information, shipping line notices, booking documents	Check for special provisions for bona fide purchasers
Article 3.7	Claims based on loss or failure of the voyage or inability to achieve its purpose	Whether the claim is based on actual cargo damage or on the failure of the voyage itself	Notice of termination of the contract of carriage, cost details, B/L, shipper instructions	The issue may arise even without formal notice of termination of the contract of carriage
Article 3.8	Hostile use of weapons or devices employing nuclear fission, fusion, radioactive forces, or materials	Direct or indirect causal relationship with the damage	Official announcements, weapon reports, radiation measurement records	Do not judge solely based on the fact that a nuclear facility was targeted
Article 4.1.1	Unseaworthiness of vessel or barge, or unsuitability for safe transport	Whether the insured was aware at the time of loading	Classification society records, inspection reports, incident history	The special provision for bona fide purchasers applies to this item
Article 4.1.2	Unsuitability of container or transport equipment	Timing of loading, responsible party, insured’s awareness	EIR, container inspection reports, stowage records	The bona fide purchaser provision in Article 4.2 does not directly apply
Article 4.3	Waiver of implied warranty of seaworthiness	Distinguish breach of warranty from the individual exclusions under Article 4.1	Policy, vessel data, loading records	The exclusion under Article 4.1 itself does not disappear

Main Situations Where Exclusion Clauses Become an Issue

Situation	Reason for Confirmation	Key Issues	Main Documents	Other Matters to Confirm
Long-term delay due to war risks	Possible applicability of delay exclusions	Physical damage or loss of delivery time / commercial loss	Transport timeline, damage details, sales contract	General average and salvage charges
Additional charges incurred after discharge at an alternative port	Potential claims based on loss or abandonment of the sea voyage business	Cause of cost occurrence and basis for claim	Shipping Line notices, B/L, invoices	Cost liability under the contract of carriage
Termination of the Contract of Carriage	Need to separately confirm insurance period and Article 3.7	Distinction of cargo damage, voyage failure, and onward shipment costs	Termination notice, cargo location, insurer notification	Resumption of coverage under Article 5.3
Delivery delayed due to capture or detention	Delay damages are a separate issue even if covered risks apply	Existence of physical damage, nature of delay damages	Detention orders, shipping line notices, cargo inspection	Carrier liability under the B/L
Rust, mildew, or decay occurring during long storage	Delay, inherent nature of goods, and insufficient packaging compete	Direct cause and contributing factors	Temperature and humidity records, photos, survey reports	Insurance period
Voyage not continued due to carrier’s insolvency	Article 3.6 becomes relevant	Knowledge at loading and impact on normal voyage	Credit information, loading records, bankruptcy notices	Bona fide transferee
Cargo damaged inside unsuitable container	Conflict between Article 3.3 and Article 4.1(2)	Packing and stowage vs. container inadequacy	EIR, stowage photos, container inspection records	Responsible party for loading and knowledge
Cargo loaded on an unseaworthy vessel	Article 4.1(1) becomes relevant	Insured’s knowledge and timing of loading	Class records, Port State Control reports, internal correspondence	Bona fide transferee special provisions
General average declared to avoid war risks	May be covered under Article 2	General safety and causal relationship with covered risks	General average declaration, master’s report, adjuster’s notification	Distinction from Articles 3.5 and 3.7
Cargo damaged by military attack on nuclear facilities	Complex causal relationship with Article 3.8	Explosion by conventional weapons or damage by nuclear/radioactive forces	Official reports, radiation measurement, accident cause documents	Other nuclear/radioactivity-related exclusions

Application Requirements and Exclusions Overview

Verification Item	Requirements for Exclusion	Facts Insufficient on Their Own	Outside the Scope of This Article	Practical Measures
Intentional Act	Loss or cost is attributable to the insured’s intentional misconduct	Mere carelessness, misjudgment, or ordinary negligence	Final judgment on criminal liability	Clarify instructions, purpose, awareness, and foreseeability of outcome
Ordinary Wear and Tear	Can be explained as normal leakage, natural shrinkage, or typical abrasion	Only the fact that quantity or weight was reduced after transport	Final commercial judgment on industry-accepted tolerances	Compare weighing results and product specifications before and after transport
Insufficient Packing	Packing or preparation unable to withstand normal insured transport events, involving the specified responsible party and timing	Only the fact of deformation or damage to outer packaging	Final compensation claims against packing contractor	Check packing specifications, stowage, responsible party, and date carried out
Intrinsic Nature	Damage caused by the inherent nature of the cargo itself	Only the occurrence of phenomena such as rot, rust, or mold	Product and quality warranty liabilities	Consider temperature, humidity, duration, packaging, and external accident forces comprehensively
Delay	Loss or cost arises from delay	Only the fact that arrival was late after an incident	Final responsibility for liquidated damages under sales contracts	Separate physical cargo damage from commercial loss
Insolvency	At loading, the insured recognized or should have normally known, causing potential obstruction to safe voyage	Only the fact of subsequent carrier insolvency	Claims recovery in insolvency proceedings	Preserve credit information and internal recognition at time of loading
Loss or Abandonment of Voyage Enterprise	The basis of claim is not physical cargo damage but failure of the voyage or transport venture, or inability to achieve its purpose	Only temporary delays, route changes, or port call alterations	Final judgment on frustration under UK law	Organize basis and causality for each claim item
Nuclear and Related Weapons, etc.	Loss or cost arises directly or indirectly from hostile use of weapons or devices involving nuclear fission, fusion, similar reactions, or radioactive force or material	Only the fact of an accident at nuclear facilities or related areas	Specialized causality assessment for nuclear incidents and radiation damage	Confirm weapons or devices, mechanism of action, radioactive materials, and damage pathways
Unseaworthiness of Ship or Barge	At loading, the insured recognized unseaworthiness or unsuitability	Only the fact that vessel defects were found after the incident	Final responsibility of shipowner	Check recognition records at loading
Container or Transport Equipment Unsuitability	Loaded before insurance began, or the insured or their employees recognized unsuitability at loading	Only the fact that container defects existed	Liability of leasing company or terminal	Confirm loading party and insurance commencement timing
Bona Fide Purchaser	Purchased or agreed to purchase cargo in good faith under a binding sales contract and received transfer of the insurance contract	Only holding the B/L	Final legal determination of rights transfer	Verify sales contract, transfer, and awareness at acquisition
General Average and Salvage Charges	Incurred to avoid loss from covered risks, calculated according to contract, governing law, and practice	Only the fact that a general average declaration was made	Final settlement of apportionments and accepted items	Verify reasons for declaration and causal link to covered risks

Comparison with ICC2009 Main Body

Comparison Item	Standard ICC2009 Main Body	Institute War Clauses (Cargo)	Main Differences	Practical Response
Intentional Act	Exclusion	Exclusion	Basic structure is common	Distinguish between intent and negligence
Ordinary Wear and Tear	Exclusion	Exclusion	Basic structure is common	Confirm causal relationship with external accidents
Inadequate Packing	Exclusion	Exclusion	Common definitions for responsible party, timing, and stowage inside container	Confirm distinction from independent contractors
Inherent Nature	Exclusion	Exclusion	Basic structure is common	Judge separately even if war risks are involved
Delay	Principally excluded	Principally excluded	Separate confirmation of General Average and salvage charges clauses	Separate delay itself from covered costs
Insolvency	Exclusion with specified knowledge requirement	Exclusion with specified knowledge requirement	Common exception for bona fide transferee	Confirm knowledge status at time of loading
Unseaworthiness / Unsuitability	Exclusion under specified conditions	Exclusion under specified conditions	Basic structure is common	Differentiate between vessel or barge and container or transport equipment
Loss or Interruption of Voyage Business	No separate exclusion in the form of Article 3.7 of War Clauses	Independent significant exclusion	Specific to war risks clauses	Distinguish claims based on cargo damage and voyage failure
Nuclear-Related Weapons, etc.	Excludes use of weapons or devices employing nuclear fission or fusion	Explicitly excludes hostile use	War Clauses distinctly differentiate within war risks	Confirm weapons or devices and cause of damage
Insurance Period	Generally judged from warehouse to warehouse	Generally judged by loading on ocean-going vessel, discharge, 15 days, etc.	Period may not match for the same cargo	Check War Clauses period before exclusion judgment

Basic Flow for Determining Exclusions

Step	Check Items	Decision Branch	Practical Actions
1	Identify the applicable insurance contract	Which Policy, Certificate, and Clause version applies	Match insurance number with the insured cargo
2	Confirm attachment of War Clauses	Whether war risks coverage is included	Obtain Schedule and Endorsements
3	Check covered risks	Whether it falls under war risks per Article 1	Collect official announcements, master’s reports, and incident records
4	Verify physical damage to cargo	Whether it is total loss or damage, or only delay, costs, or commercial loss	Conduct survey, take photos, and perform inspections
5	Confirm insurance period	Whether the incident occurred after loading on board and before the applicable discharge or 15-day termination point	Chronologically organize loading, arrival, and unloading records
6	Check for wilful misconduct or ordinary wear and tear	Whether Article 3.1 or 3.2 applies	Review instruction and weighing records
7	Verify packing, preparation, and stowage	Whether the criteria of Article 3.3 regarding party, timing, and insufficiency are met	Review packing specifications, photos, and subcontracting documentation
8	Confirm inherent vice	Whether damage was caused by the inherent nature of the cargo itself	Check quality data and temperature or humidity records
9	Check for delay	Whether damage or costs arose due to delay	Separate physical damage from delivery deadlines and loss of profits
10	Verify insolvency	Whether there was knowledge at loading and an impact on the normal prosecution of the voyage	Preserve credit information and internal awareness records
11	Confirm loss or interruption of the voyage or venture	Whether the claim is based directly on voyage failure	Organize causes and legal basis by claim item
12	Check nuclear-related weapons, etc.	Whether there is a direct or indirect causal relationship with Article 3.8	Consult authorities, specialized agencies, and insurers
13	Check unseaworthiness or unsuitability	Whether related to vessel or barge, or container or transport equipment	Separate loading party, timing, and awareness
14	Confirm General Average and salvage charges	Whether costs may be separately covered under Article 2	Submit declaration reasons and adjustment documents to insurer
15	Check priority relationships under Article 7	Whether other conditions conflict with Article 3.7, 3.8, or Article 5	Cross-check contract wording, including Endorsements
16	Confirm responsibility under the contract of carriage	Whether insurance exclusions and carrier or NVOCC responsibilities are clearly distinguished	Check B/L, standard trading conditions, and tariff

Intentional Acts, Normal Wear and Tear, and Inherent Nature of the Cargo

Insured's Intentional Acts

Article 3.1 excludes losses and expenses attributable to the insured's intentional fraudulent acts.

A mere error in judgment, ordinary negligence, or an incorrect forecast does not automatically result in exclusion due to intentional acts.

It is necessary to verify who recognized what, for what purpose instructions were given, and to what extent the loss was foreseeable.

Normal Wear and Tear

Normal leakage, ordinary weight or volume reductions, and standard wear and tear are excluded under Article 3.2.

Even if war risks cause longer transportation times, claims related solely to naturally expected shrinkage or time-related wear are assessed separately from cargo damage caused by war risks.

Inherent Nature of the Cargo

Article 3.4 excludes losses and expenses arising from inherent defects or characteristics of the cargo.

It is important to determine whether issues such as spoilage, spontaneous combustion, natural fermentation, sweating, moisture absorption, rust, discoloration, and similar conditions were caused by external forces due to war risks or originated from the cargo's own nature.

In practice, since war risks, delay, temperature and humidity, packaging, ventilation, refrigeration equipment, storage environment, and other factors often cause damage in combination, the mere fact that transport was delayed due to conflict is not alone sufficient for assessment.

Exclusion for Inadequate Packing

Article 3.3 excludes loss or expense caused by packing or preparation that is insufficient or improper to the extent that the insured cargo cannot withstand incidents usually expected during the insured transit.

Packing under the Clause also includes stowage within a container.

However, the exclusion does not automatically apply solely because packing is inadequate; the responsible party and timing should be confirmed as follows.

Verification Item	Treatment under the Clause	Main Evidence	Points to Note
Packing or preparation by the insured	Could be subject to exclusion	Work records, internal instructions, photos	Confirm packing specifications and resistance to normal transport
Packing or preparation by the insured’s employees	Could be subject to exclusion	Worker records, employment relationships	Needs distinction from independent contractors
Packing or preparation done before commencement of insurance	Exclusion could apply regardless of responsible party	Packing date, insurance inception, work order	The War Clauses’ insurance period begins at loading on board
Packing by an independent packing contractor	Not considered an employee under the Clause	Service contracts, invoices	However, the exclusion may arise separately if packing was completed before insurance commenced
Container stowage	Treated as packing	Stuffing Report, stowage photos	Distinguish from container unsuitability under Article 4

Even if route changes or extended delays occur to avoid war risks, Article 3.3 may apply if the direct cause of cargo damage is inadequate securing, insufficient outer packaging strength, lack of moisture protection, or poor stowage.

Delay Exclusion

Article 3.5 generally excludes loss or expenses caused by delay, even if the delay results from a covered risk.

Claim Item	Basic Viewpoint	Main Points for Verification	Related Clauses for Further Confirmation
Penalty for Delivery Delay	Exclusion may apply as delay or commercial loss	Sales contract, penalty clause	B/L, sales contract
Loss of Sales Opportunity or Profit	Considered as delay or consequential loss	Sales plan, damage assessment	Business interruption insurance outside marine cargo insurance
Production Line Shutdown	Separate issue from physical cargo damage	Operation records, alternative sourcing	Sales contract, business insurance
Decay or Deterioration during Prolonged Delay	Judged comprehensively by delay, inherent nature, packing, and temperature control	Temperature and humidity, product characteristics, storage records	Article 3.3 and 3.4
General Average Contribution	Not treated simply as delay cost; confirm Article 2	General Average declaration, adjuster documents	Article 2
Salvage Charges	Check relation to avoidance of covered risks under Article 2	Salvage contract, arbitration and adjustment documents	Article 2

Article 3.5 treats expenses paid under Article 2 as exceptions.

Therefore, even expenses arising after some time has passed following an accident should be distinguished according to whether they constitute general average or salvage charges, or mere delay, storage, or commercial expenses.

Insolvency or Monetary Default of the Shipowner, Manager, Charterer, or Operator

Article 3.6 excludes losses or expenses arising from the insolvency or monetary default of the shipowner, manager, charterer, or operator under specified conditions.

The critical point is when the cargo is loaded onto the vessel.

It is necessary to confirm whether the insured was aware, or should reasonably have been aware in the ordinary course of business, of such insolvency or monetary default, and whether that condition could have hindered the proper prosecution of the voyage.

The mere fact that the shipping line went bankrupt after the voyage, or that insolvency was discovered later, does not automatically trigger the exclusion.

Special Provision for Bona Fide Transferees

Where the claimant acquired the benefit of the insurance through a binding sales contract, acting in good faith to purchase or agree to purchase the cargo, the exclusion under Article 3.6 may not apply.

Documents to be reviewed include the sales contract, transfer of the insurance contract, Bill of Lading, invoice, knowledge at acquisition, and relationships with relevant parties.

Loss of Voyage or Venture Failure

Article 3.7 excludes claims based on loss of the voyage or failure to achieve the purpose of the venture.

The original text deals not with physical damage to the cargo itself, but with cases where the basis of the claim is that the voyage or transport venture has failed, cannot continue, or cannot achieve its original purpose.

This exclusion is not necessarily limited to situations where the contract of carriage has been formally terminated.

Conversely, the mere existence of a notice of termination of the contract of carriage does not automatically exclude claims for physical damage to the cargo.

Main Facts Used for Assessment

Fact / Document	Significance in Assessment	Reasons Why Not Conclusive Alone	Practical Response
Official notice of termination of the contract of carriage from the shipping line or NVOCC	Key document indicating that the original carriage has contractually ended	This does not automatically exclude claims including cargo damage or general average	Verify the reason for the notice, effective date, and cargo location
Request for cargo pickup	Suggests that responsibility for further carriage may have shifted to the shipper	Could be a temporary storage or pickup arrangement	Check B/L conditions and subsequent carriage instructions
Carrier refusal to continue carriage	Indicates inability to continue the original voyage or carriage	Alternative carriage may be arranged within the same contract	Confirm the scope of refusal, available alternatives, and additional cost conditions
Prolonged port closure or military blockade	May indicate practical failure to achieve the purpose	May amount only to temporary interruption or delay	Continuously monitor duration, prospects of resumption, and official announcements
Discharge or storage at an alternative port	Indicates a change to the original voyage	Could also constitute treatment as an intermediate or refuge port under Article 5	Confirm whether the situation constitutes termination of the contract of carriage or discharge for transshipment
Claims for transshipment or onward shipment costs	May indicate cost claims arising from voyage failure	Could be covered under Article 2, loss mitigation costs, or specific endorsements	Separate each cost item according to its legal and contractual basis
No physical damage to cargo	Claims are likely to focus on voyage failure, delays, or additional charges	General average and salvage charges may apply even without physical damage	Confirm costs under Article 2 separately

Relation to Termination of the Contract of Carriage

“Termination of the Contract of Carriage” refers to the treatment of the insurance period under Article 5.3.

In contrast, Article 3.7 is an exclusion used to determine whether the insurance claim is based on loss of the voyage or failure to achieve the purpose of the voyage or venture itself.

Comparison Item	Termination of the Contract of Carriage	Loss or Interruption of Voyage or Venture Exclusion	Practical Notes
Main Relevant Clause	Article 5.3	Article 3.7	Do not confuse the insurance period clause with the exclusion clause
Core Issue	Where coverage ends and when it resumes upon reloading for onward shipment	What the claim is based on	Check both issues for the same incident
Formal Notice	Important for assessment	Important but not always mandatory	Document practical inability to continue as well
Physical Damage to Cargo	Confirm whether the damage occurred within the coverage period	Confirm the possibility of a separate claim if damage was caused by an insured peril	Separate claims based solely on voyage failure
Additional Charges	Notification before onward shipment and additional premium become relevant	Costs arising from voyage failure may be excluded	Confirm Articles 2 and 11 and any special endorsements as well

The final legal evaluation of Article 3.7 should be made based on the individual contract wording, factual circumstances, and interpretation under English law.

Hostile Use of Nuclear Weapons, etc.

Article 3.8 excludes damages and costs directly or indirectly arising from the hostile use of weapons or devices involving nuclear fission, nuclear fusion, similar reactions, radioactive force, or radioactive substances.

Even if war risks coverage is attached, this exclusion must be confirmed separately.

Borderline Cases

Case	Relation to Article 3.8	Points to Confirm	Practical Response
Cargo damage caused by nuclear weapon explosion	Typically an issue under Article 3.8	Type of weapon, cause of explosion, radioactive effect	Immediately notify authorities and insurer
Hostile use of a device dispersing radioactive substances	The exclusion may apply as a device using radioactive substances	Device structure, purpose of use, contamination pathway	Restrict site access and preserve measurement records
Attack on nuclear facility with conventional weapons causing cargo damage by explosion or fire	The mere fact that the target was a nuclear facility is inconclusive	Whether damage arose from conventional weapon blast or fire, or from nuclear or radioactive force	Separate the damage causes and submit information to the insurer
Radioactive contamination of cargo following release after an attack on a nuclear facility	Issues arise regarding direct or indirect causation under Article 3.8 and other nuclear-related exclusions	Cause of release, weapon or device involved, contamination route, radiation measurements	Conduct an individual evaluation with experts and the insurer
Delivery delay due to evacuation orders around a nuclear facility	If no physical damage occurs, the delay exclusion may be relevant	Presence or absence of cargo damage, breakdown of delay costs	Confirm Article 3.5 and Article 3.8 separately

Do not base judgments solely on the name or location of nuclear facilities, radioactive substances, or nuclear-related areas. Confirm the causal relationship between the damaging effect and the weapon or device described in Article 3.8.

Article 4 Unseaworthiness and Unsuitability Exclusions

Unseaworthiness or Unsuitability of Vessel or Lighter

Article 4.1.1 excludes loss or expense arising from the unseaworthiness of the vessel or lighter, or their unsuitability for safely carrying the insured cargo, if the insured was aware of that condition at the time of loading.

It is not sufficient that a defect in the vessel is discovered only after the incident. The relevant issue is whether the insured knew of the unseaworthiness or unsuitability at the time the cargo was loaded.

Unsuitability of Container or Transport Equipment

Article 4.1.2 addresses loss or expense resulting from a container or transport equipment being unsuitable for the safe carriage of the insured cargo.

Either of the following becomes relevant:

• Loading into the container or transport equipment occurred before the insurance commenced
• The insured or their employees performed the loading and knew of the unsuitability at that time

Issues such as container holes, faulty door seals, floor damage, inadequate ventilation, unsuitable reefer equipment, or material incompatibility with the cargo are checked through EIRs, photos, pre-trip inspection records, temperature logs, and other records before and after loading.

Scope of the Bona Fide Transferee Exception

Article 4.2 stipulates that the exclusion in Article 4.1.1 does not apply to an insured transferee who, in good faith, purchased or agreed to purchase the cargo under a binding sales contract.

This exception explicitly applies only to the unseaworthiness or unsuitability of the vessel or lighter under Article 4.1.1.

It does not state that the same exception automatically applies to the unsuitability of containers or transport equipment under Article 4.1.2.

Exclusion	Bona Fide Transferee Exception	Verification Items	Notes
Article 4.1.1 Unseaworthiness or Unsuitability of Vessel or Lighter	The exclusion may be disapplied under Article 4.2	Binding sales contract, bona fide acquisition, assignment of insurance policy	Possession of the Bill of Lading alone is insufficient
Article 4.1.2 Unsuitability of Container or Transport Equipment	Not explicitly covered by Article 4.2	Timing of loading, party performing loading, knowledge of unsuitability	Should not be treated in the same manner as vessel unseaworthiness

Waiver of Implied Warranty of Seaworthiness

Article 4.3 provides that the insurer waives the implied warranty regarding the seaworthiness of the vessel and its fitness to carry the cargo to the destination.

However, this provision does not nullify the specific exclusions in Article 4.1.

If the requirements of Article 4.1 are met, such as the insured’s knowledge of unseaworthiness or unsuitability at loading, the corresponding exclusion must still be considered separately.

Relationship with General Average and Salvage Charges

Article 2 covers general average and salvage charges incurred to avoid, or in connection with avoiding, loss caused by covered war risks, where those charges are adjusted or determined according to the contract of carriage, governing law, or practice.

The delay exclusion in Article 3.5 and the voyage or venture failure exclusion in Article 3.7 do not mean that all general average or salvage charges are excluded.

Typical Example: Deviating to an Alternative Port to Avoid Mine Danger

Suppose the vessel avoids mine risks along the intended route and deviates to a safe alternative port to ensure the common safety of the vessel, crew, and cargo.

As a result, extraordinary additional fuel costs, refuge port expenses, emergency unloading costs, and other expenses may arise, leading the shipping line to declare general average.

In this case, it is necessary to confirm that these costs were incurred for the common safety to avoid loss caused by a covered war risk, rather than simply because transportation was delayed.

Required documents include the general average declaration, master’s report, reasons for route deviation, official mine warnings, General Average Bond, General Average Guarantee, and communications from the general average adjuster.

Costs / Claims	Relevant Article	Key Judgment Point	Practical Response
General Average Contribution	Article 2	Relationship with avoidance of a covered risk and calculation under the contract, applicable law, and practice	Submit the adjuster’s documents to the insurer
Salvage Charges	Article 2	Relationship with avoidance of loss caused by a covered risk	Submit the salvage contract and arbitration documents
Pure Storage Charges	Article 3.5, Article 3.7, Individual Endorsements	Whether the costs arise from delay or voyage failure	Check cost responsibility under the B/L
Ordinary Transshipment or Onward Shipment Costs	Article 3.7, Individual Endorsements	Whether the claim is based on loss or interruption of the voyage	Separate from claims under the contract of carriage
Reasonable Loss Mitigation Expenses	Article 11	Whether expenses were reasonably incurred to avoid or reduce covered loss	Retain prior notice and documentation supporting the expense

Situations Where Coverage Seems Available under the Standard ICC but May Be Excluded by the War Clauses

Situation	Reason It May Seem Covered at First Glance	Points to Confirm in the War Clauses	Practical Handling
War risk damage occurs more than 15 days after arrival at the final port	Under the standard ICC, it may appear to fall within the period due to the 60-day provision	Article 5’s 15-day rule	Calculate the coverage periods of both Clauses separately
Storage and transshipment charges arise after voyage interruption	Costs were incurred because of war risks	Article 3.7, Article 2, Article 11	Separate the basis for each cost item
Delay in delivery caused by capture or detention	Capture and detention could be insured perils	Article 3.5’s delay exclusion	Confirm physical damage to the cargo
Extra freight incurred due to a route deviation to avoid war risks	The expense was incurred to avoid war risks	Whether the extra freight arises under the contract of carriage or constitutes General Average or another covered expense	Check B/L, tariff, and General Average documents
Cargo spoils after prolonged detention	Port closure caused by conflict is the underlying reason	Delay, inherent nature, packing, temperature control	Conduct a cause-specific survey
Cargo contamination due to an attack on nuclear-related facilities	Damage was caused by hostile acts	Article 3.8 and other nuclear or radiation exclusions	Confirm the contamination pathway and mechanism

Common Practical Issues

Case	Main Disputes	Reference Documents	Initial Response
Delay due to war risks without cargo damage	Article 3.5, commercial loss	Cargo inspection, delivery schedule documents, damage details	Separate physical damage from delay loss
Storage charges incurred after discharge at an alternative port	Article 3.7, cost liability under the B/L	Shipping Line notice, B/L, invoice	Separate insurance claims from claims under the contract of carriage
Onward shipment costs incurred after termination of the contract of carriage	Article 3.7, Article 5.3	Termination notice, insurer notification, Booking	Distinguish between resumption of the insurance period and coverage of costs
Mold developed during long-term storage	Article 3.3, Article 3.4, Article 3.5	Packing, temperature and humidity records, storage logs, survey	Separate the multiple potential causes
Credit uncertainty of the shipping line identified before loading	Knowledge requirement of Article 3.6	Credit information, internal communications, loading date and time	Fix the insured’s knowledge status at the time of loading
Water damage due to an unsuitable container	Article 4.1(2) and Article 3.3	EIR, photos, Stuffing Report	Separate container defects from improper stowage
Accident involving an unseaworthy vessel	Article 4.1(1), insured’s knowledge	Classification society records, inspection reports, internal information	Confirm knowledge at the time of loading
Bona fide purchaser claiming under the insurance	Application of Article 3.6 and Article 4.2	Sales contract, insurance assignment, B/L	Identify precisely which exclusion is subject to the exception
General average declared to avoid mine risk	Article 2, Article 3.5, and Article 3.7	General average declaration, master’s report, warnings	Confirm the causal relationship with avoidance of a covered risk
Cargo contaminated after an attack on a nuclear facility	Article 3.8, direct and indirect causation	Official announcements, radiation measurement, accident cause	Notify experts and insurers immediately

Scope of Freight Forwarder Involvement

Operational Scenario	What the Freight Forwarder Can Support	What the Freight Forwarder Should Not Decide	Main Parties to Confirm With	Practical Handling
Applicable Clause Confirmation	Collection of Policy, Certificate, and Endorsement	Final determination of insurance claim payment	Shipper, Insurer, Insurance Broker	Separate the standard ICC and War Clauses
Clarification of Accident Cause	Gathering materials from authorities, shipping lines, ports, and warehouses	Final determination of insured peril and exclusion	Shipping Line, Insurer, Surveyor	Report facts separately from evaluations
Cargo Damage Confirmation	Coordination of photos, inspections, surveys, and temperature and humidity data	Final judgment on cause and amount of damage	Shipper, Warehouse, Surveyor	Separate physical damage and consequential loss
Packing and Stowage Confirmation	Collection of packing specifications, operator records, photos, and Stuffing Reports	Legal responsibility of packing contractors	Shipper, Packing Contractor, Warehouse	Distinguish between independent contractors and employees
Delay and Additional Charges	Organizing cost details, duration, claimants, and reasons for occurrence	Determination that all additional charges are covered by insurance	Shipper, Shipping Line, NVOCC, Insurer	Separate Article 2, Article 3, and B/L issues
Termination of the Contract of Carriage	Coordination of the official notice, cargo location, and onward shipment plan	Final interpretation of Article 3.7 or Article 5	Shipping Line, NVOCC, Insurer	Assess the insurance period and exclusion separately
Unseaworthiness and Unsuitability	Collection of classification society records, EIR, container inspection, and loading documents	Final judgment of the insured’s knowledge	Shipping Line, Terminal, Insurer	Fix the relevant point in time at loading
General Average	Coordination of declarations, guarantees, and adjuster notifications	Final decision on accepted items and contribution amounts	Shipping Line, General Average Adjuster, Insurer	Complete guarantee procedures before the cargo pickup deadline
Nuclear and Radioactive Incidents	Collection of authority announcements, measurements, and access restriction information	Final application of Article 3.8	Authorities, Experts, Insurer	Prioritize safety and preserve original data
Protection of Rights Against Third Parties	Support for Claim Letters, notification deadlines, and evidence collection	Legal responsibility of shipping lines, NVOCCs, warehouses, and other parties	Shipping Line, NVOCC, Warehouse, Experts	Proceed in parallel with notification to the insurer

Practical Scenario 1: Voyage Interrupted Due to War Risks, Resulting in Additional Charges

Suppose the vessel deviates from its scheduled route to avoid a conflict zone, unloads cargo at an alternative port, and incurs storage and transshipment charges.

Not all these costs are necessarily covered under the War Clauses solely because there is an underlying war risk.

First, confirm whether physical damage has occurred to the cargo.

Next, determine whether the costs fall under Article 2 for General Average and salvage charges, Article 11 for reasonable expenses to prevent or minimize loss, specific additional clauses, claims under Article 3.7 for loss or interruption of the voyage, or whether they are simply expenses under the contract of carriage.

Organize the shipping line’s notices, general average declarations, B/L, tariffs, insurer notifications, and detailed expense statements in a consistent chronological order.

Practical Scenario 2: Delay in Cargo Delivery Due to Capture or Detention

Suppose the vessel is captured or detained as a result of a covered war risk, leading to a significant delay in cargo delivery.

Capture or detention itself may fall under the war risks covered in Article 1.

However, if there is no physical loss or damage to the cargo and the claim concerns only delayed delivery, loss of sales opportunity, penalty charges, or inventory shortages, Article 3.5’s delay exclusion becomes relevant.

The cargo’s physical condition, detention orders, cargo location, insurance period, sales contract, and responsibilities under the Bill of Lading should be reviewed separately.

Practical Scenario 3: Cargo Deterioration during Long-Term Storage

Assume that cargo remains in a warehouse for an extended period due to port closure, during which mold, rust, decay, or quality degradation occurs.

In this case, it is necessary not only to treat war risks as the underlying cause but also to verify Article 3.3 on inadequate packing, Article 3.4 on the inherent nature of the cargo, and Article 3.5 on delay individually.

Check temperature and humidity records, packing specifications, ventilation, reefer logs, power outages, storage duration, and quality inspections before and after the incident.

When multiple causes intervene between war risks and cargo deterioration, a causal analysis by a surveyor becomes crucial.

Practical Scenario 4: Cargo Damage Following a Military Attack on a Nuclear Facility

Suppose cargo in nearby warehouses is damaged by blast, fire, or radioactive substances following an attack on a nuclear facility using conventional weapons.

The mere fact that the target was a nuclear facility does not automatically trigger Article 3.8.

It must be determined whether the physical damage was caused by the blast or fire from conventional weapons, or whether it resulted directly or indirectly from the hostile use of weapons or devices involving nuclear fission, nuclear fusion, radioactive force, or radioactive substances.

If radioactive release or contamination is involved, it is necessary to check not only Article 3.8 but also other nuclear and radiation-related exclusions and any specific Endorsements.

Practical Scenario 5: Unsuitable Containers Combined with War Risks

Suppose a route change and extended delay occur to avoid war risks, during which the cargo inside the container suffers water damage or deterioration.

Even if the cargo damage appears related to war risks, if the direct cause is a hole in the container, defective door seals, insufficient ventilation, poor temperature control, or improper stowage, Article 4.1.2 or Article 3.3 becomes relevant.

The unsuitability of the container itself and the improper packing or stowage of the cargo should be verified separately.

Organize the EIR, PTI records, stowage photos, identity of the party selecting the container, loading party, insurance commencement, and the insured’s knowledge.

Common Misunderstandings

Common Misunderstandings	Actual Considerations	Practical Points to Note
All war-related costs are covered if War Clauses apply	Distinguish between physical damage to cargo, general average, salvage charges, delay expenses, and voyage interruption costs	Check the specific clause supporting each cost item
If the risk is covered, there is no need to check exclusion clauses	Even if Article 1 applies, exclusions under Articles 3 and 4 may still apply	Verify the insured peril, insurance period, and exclusions in that order
Delay caused by war risks automatically covers delay damages	Article 3.5 generally excludes loss or expense caused by delay, even where the delay results from a covered peril	Separately confirm general average and salvage charges under Article 2
If the contract of carriage is terminated, everything is excluded under Article 3.7	Physical damage, general average, and other claims must be checked separately	Differentiate between the insurance period treatment in Article 5 and the exclusion in Article 3.7
Article 3.7 does not apply without a formal notice of termination of the contract of carriage	The key issue is whether the claim is based on loss of the voyage or failure of the venture	Confirm practical impossibility of continuation and the individual claim items
A general average declaration automatically triggers payment under the War Clauses	A causal relationship with avoidance of a covered war risk is necessary	Check the reason for declaration and settlement documents
If the shipping line goes bankrupt, the insolvency exclusion always applies	The insured’s knowledge at loading and the effect on the normal prosecution of the voyage are required	Check credit information available at the time of loading
The bona fide transferee provision removes all exclusions	The scope of application differs by clause	Article 4.2 applies specifically to Article 4.1.1
Article 4.2 automatically applies to unsuitable containers	Article 4.2 explicitly addresses only Article 4.1.1	Article 4.1.2 must be considered separately
An unseaworthy vessel results in exclusion regardless of the insured’s knowledge	Under Article 4.1.1, the insured’s knowledge at loading is material	Discovery of the defect after the incident alone is insufficient
If a nuclear facility is attacked, all resulting losses fall under the nuclear weapons exclusion	Direct and indirect causation between the weapon or device and the damage must be confirmed	Distinguish blast or fire from conventional weapons from nuclear or radioactive damage
If insurance excludes the loss, the NVOCC or freight forwarder must bear the cost	An insurance exclusion and contractual liability under the contract of carriage are separate issues	Confirm B/L terms, standard trading conditions, and quotation terms
If covered under the standard ICC, the same conclusion applies under the War Clauses	The War Clauses contain their own insurance period and the specific exclusions in Articles 3.7 and 3.8	Assess both sets of Clauses separately

Decision Checklist

Check Point	Party to Confirm	Items to Confirm	Action if Issues Are Found
Identification of Insurance Contract	Policyholder, Insurer, Insurance Broker	Policy, Certificate, Clause Version, Endorsement	Obtain the complete set of applicable documents
Attachment of War Clauses	Insurer, Insurance Broker	Presence or absence, applicable version, special conditions	Obtain written confirmation
Covered Risks	Insurer, Shipping Line, Authorities	War, hostilities, capture, detention, abandoned weapons, etc.	Collect multiple objective source materials
Physical Damage to Cargo	Cargo Owner, Warehouse, Surveyor	Loss or damage, occurrence timing, immediate cause	Preserve the site, take photographs, and conduct a survey
Insurance Period	Shipping Line, Terminal, Insurer	Loading on board, arrival, discharge, 15-day period	Calculate the insurance period specific to the War Clauses
Packing and Stowage	Cargo Owner, Packer, Warehouse	Specifications, operators, work date, container stowage	Confirm the responsible party and timing under Article 3.3
Cargo-Specific Characteristics	Cargo Owner, Manufacturer, Surveyor	Putrefaction, rust, self-heating, moisture absorption, etc.	Analyze causation involving external forces, delay, and environment
Delay Damage	Cargo Owner, Insurer, Buyer and Seller	Delivery delay, lost profits, penalties, physical damage	Separate Article 3.5 and Article 2 issues
Insolvency	Cargo Owner, Shipping Line, NVOCC, Insurer	Credit information at loading, knowledge, impact on voyage	Fix the evidence of knowledge and loading date or time
Loss or Failure of Voyage or Venture	Shipping Line, NVOCC, Insurer, Experts as needed	Notice of termination of the contract of carriage, feasibility of continuation, claim items	Separate claims based on cargo damage from claims based on voyage failure
Nuclear-Related Weapons, etc.	Authorities, Experts, Insurer	Weapons or devices, radioactive effects, damage pathways	Secure specialized materials and conduct an individual evaluation
Unseaworthiness of Vessel or Lighter	Shipping Line, Classification Society, Insurer	Condition at loading, insured’s knowledge	Preserve classification, inspection, and internal records
Unsuitability of Container or Transport Equipment	Shipping Line, Terminal, Warehouse, Cargo Owner	EIR, PTI, loading party, knowledge	Assess the separate requirements of Article 4.1.2
Bona Fide Transferee	Buyer and Seller, Insurer, Experts as needed	Binding sales contract, good faith, transfer of the insurance contract	Identify the precise exclusion to which the exception applies
General Average and Salvage Charges	Shipping Line, General Average Adjuster, Insurer	Reason for declaration, covered risk, guarantees, contribution claim	Submit the claim under Article 2
Claims Against Third Parties	Shipping Line, NVOCC, Warehouse, Experts	Claim Letter, notification deadlines, liability limits, limitation period	Preserve rights concurrently with the insurance claim

Documents to Be Verified in Practice

Document Category	Specific Documents	Information to Confirm	Source	Notes
Insurance Contract	Policy, Certificate, Schedule, Endorsement	War Clauses, version, exclusion amendments, special terms	Policyholder, Insurer	Separate the standard ICC and War Clauses
Insured Risks	Announcements from government, military, and maritime authorities; master’s reports	War risks, responsible parties, incident background	Authorities, shipping line	Save the announcement date and update history
Insurance Period	Stowage Plan, Port Log, AIS, Discharge Report	Loading, arrival, unloading, 15 days	Shipping Line, port, terminal	Check separately for each part of the cargo
Cargo Damage	Photos, survey reports, inspection records	Damage condition, cause, timing of occurrence	Shipper, warehouse, surveyor	Preserve originals and metadata
Packing and Stowage	Packing List, packing specifications, Stuffing Report, photos	Packing method, operator, work date	Shipper, packer, warehouse	Confirm the relationship with independent contractors
Container	EIR, PTI, repair history, temperature records	Unsuitability, damage, equipment condition	Shipping Line, terminal, depot	Compare conditions before and after loading
Delay	Transport timeline, Arrival Notice, delivery schedule documents	Delay period, cause, commercial loss	Shipping Line, NVOCC, trading parties	Separate from physical damage
Insolvency	Credit information, bankruptcy notifications, Booking, loading records	Knowledge at loading and impact on voyage	Shipping Line, NVOCC, credit information agencies	Distinguish from information discovered later
Termination of the Contract of Carriage	Official notice, B/L, cargo pickup notice, onward shipment instructions	End of the voyage or carriage, cargo location	Shipping Line, NVOCC	Separate Article 5 from Article 3.7
General Average	Declaration, General Average Bond, General Average Guarantee	Reasons for declaration, guarantee, contribution claim	Shipping Line, General Average Adjuster	Confirm the causal relationship with the insured risk
Nuclear and Radioactive Incidents	Authority announcements, radiation measurements, contamination analysis, weapon information	Mechanism of action, contamination pathway, causation	Authorities, specialized agencies	Obtain the materials in accordance with safety regulations
Contract of Carriage	Master B/L, House B/L, standard trading conditions, tariff	Exclusions, additional charges, termination rights, liability limitations	Shipping Line, NVOCC, freight forwarder	Do not confuse contractual exclusions with insurance exclusions
Preservation of Rights	Claim Letter, receipt records, notification deadline management sheet	Preservation of claims against third parties	Shipping Line, NVOCC, warehouse	Proceed separately from notification to the insurer

Summary

The exclusions under the Institute War Clauses (Cargo) specify damage and costs not covered by insurance, even when the war risks clauses are attached.

Article 3 lists exclusions including wilful misconduct by the insured, ordinary leakage, natural loss, normal wear and tear, inadequate packing or preparation, the inherent nature of the cargo, delay, insolvency or financial default of shipowners, loss of the voyage or failure to achieve the purpose of the voyage or venture, and hostile use of nuclear weapons or related devices.

Article 3.7 requires confirmation not only of whether the contract of carriage was terminated, but also of whether the insurance claim is based on failure or frustration of the voyage or carriage venture itself, rather than on physical damage to the cargo.

Since termination of the contract of carriage also relates to the insurance period under Article 5.3, the exclusion under Article 3.7 must be reviewed separately from the insurance-period issue.

Article 3.8 excludes damage or costs arising directly or indirectly from the hostile use of weapons or devices employing nuclear fission, nuclear fusion, similar reactions, radioactive force, or radioactive materials.

The mere fact that a nuclear facility was attacked should not lead to an immediate conclusion. It must be confirmed whether the damage resulted from conventional weapons, such as blast or fire, or from nuclear or radioactive forces.

Article 4 separately regulates the unseaworthiness or unsuitability of vessels and barges and the unsuitability of containers and transport equipment under distinct conditions.

The special provision regarding bona fide transferees in Article 4.2 applies specifically to the unseaworthiness or unsuitability of vessels and barges under Article 4.1.1 and does not apply uniformly to container or transport equipment unsuitability under Article 4.1.2.

Damage or costs caused by delay are generally excluded. However, general average contributions and salvage charges incurred to avoid loss caused by a covered war risk must be considered separately under Article 2.

The existence of a general average declaration alone is insufficient. Confirmation of the avoided insured peril, the contract of carriage, governing law, applicable practice, and settlement documents is required.

Whether damage or additional charges are borne by the shipowner, NVOCC, freight forwarder, warehouse, or cargo owner is a separate issue from whether coverage is excluded under cargo insurance.

In practice, the insurance policy, applicable clauses, loading and unloading records, B/L, notices of termination of the contract of carriage, packing and stowage records, EIR, temperature and humidity logs, general average documentation, cost breakdowns, insurer notifications, and Claim Letters should be organized chronologically to distinguish insured perils, insurance periods, exclusions, coverage of costs, and contractual liability under the contract of carriage.