Cargo movement by Air within India

When cargo is moved between two cities/towns within India by Air and an underwriter is approached for issuing a policy, what are the insuring clauses the policy should have? Immediately one may think of the following:

• Institute Cargo Clauses (Air) ( excluding sendings by Post – CL 387-01/01/2009
• Institute Strikes Clauses (Air Cargo) – CL 389-01/01/2009

Absolutely right, but there is an alternative too. The latest version of the Inland Transit clauses – A (2009/2010) covers movements within India by Rail, Road, Air or courier. Usually, this is accompanied by the SRCC clause. ( Note for overseas readers: A separate set of clauses styled Inland Transit Clauses are used for insuring cargo movements within India. These clauses broadly mirror the Institute clauses but there are minor variations)

So the question arises which option is better for insuring cargo movements by Air within India? – ITC-A +SRCC or Institute Cargo clauses(Air) + Institute Strikes clauses ( Air Cargo). There is no simple answer for this but it must be remembered that in normal open policies/Sales Turnover policies, all modes of transport are intended to be covered and hence all of the above stated clauses will figure in the policies. This can lead to confusion in claim scenarios, as to which of the clauses was intended to be applicable for the Air transit within India.

Let us examine the differences in cover offered by these two sets of clauses:

1. If the ITC-A clauses are used, the time limitation under the Duration clause is 7 days from the date of unloading of the cargo from the aircraft at the final place of discharge. On the contrary, if the Institute Cargo clauses ( Air) are used, the same time limitation under the Duration clause will be 30 days.
2. The Institute Cargo clauses(Air) specifically state that Salvage charges incurred for avoidance of any loss, (except those falling under exclusions) are covered. In case of ITC-A, there is no specific mention, though one may argue that it is implied,as a loss control/loss minimization measure.
3. Loss, damage or expense arising out of the insolvency or financial default of the owner, manager, charterer or operator of the aircraft stands excluded under the Institute Cargo clauses (Air), whereas this exclusion does not figure under ITC-A. When many airlines reeling under financial pressure, this aspect becomes crucial.
4. Comparing the SRCC clause with the Institute Strikes clauses ( Air Cargo), it may be noted that the latter has an added exclusion for ‘ claims based upon loss of or frustration of the transit or adventure. Perhaps, it was felt by the drafters of the SRCC clause that within India, frustration of a transit or adventure was impossible and hence this exclusion does not find place under the SRCC clause.
5. Loss/damage caused due to strikes, riots, civil commotions or Terrorism are excluded both from ITC-A and Institute Cargo clauses (Air) and these exclusions get covered by the addition of the SRCC clause & Institute Strikes clauses ( Air Cargo) respectively. Catch is that, ITC-A has an added exclusion of loss damage or expense caused by Government agencies in attempting to prevent any of the exclusions spelt out. Ideally with the addition of the SRCC clause, this exclusion should have got nullified but there is no specific mention of this in the Risks clause of the SRCC clause. On the other hand, this added exclusion does not figure under the Institute Cargo clauses(Air).
6. Needless to add,ITC-A & SRCC clauses are subject to Indian Law & practice while the Institute clauses are subject to English Law.
7. Last but not the least is the question whether War risks need to be covered for air transits even if the movement is between two cities/towns in India. Looking at both ITC-A & Institute Cargo clauses ( Air),the war group of perils are clearly excluded.This includes ‘any hostile act by or against a belligerent power’. This would mean that even if retaliatory action is taken by India against an enemy and this causes damage to the cargo in the aircraft or an enemy missile hits the aircraft over Indian airspace, damaging the cargo, the claim would not be tenable because of this exclusion. Along with ITC-A, War clauses cannot be added, since war on land could be an issue. However, it is felt that if Institute Cargo clauses ( Air) is used, Institute War clauses ( Air) – CL 388-01/01/2009 can be attached.

Underwriters, take your pick! Make sure there is Contract Certainty as this has all the potential for confusion in the future.