Institute R.A.C.E. clause CL 370-10/11/03

Every marine cargo practitioner knows that among the exclusions under the Institute cargo clauses ( A,B or C) are the nuclear group of perils.Confusion prevails in the following areas:

• By adding the Institute War clauses (cargo) to the policy, are the losses caused to cargo by nuclear weapons covered?
• What are the nuclear group of perils ?
• What is the relevance of the Institute R.A.C.E. Clause CL 370?

If Institute War clauses( cargo) is attached to the policy, Exclusion 6 of ICC relating to war group of perils ( war, civil war, rebellion, revolution, hostile acts by a belligerent power, etc) get covered. However if it is a nuclear war or if the damage to cargo is caused by use of a nuclear weapon, the addition of the Institute War clauses ( cargo) does not help.Why? General exclusion 4.7 specifically excludes losses of this nature.

“loss damage or expense arising from the use of any weapon of war employing 
employing atomic or nuclear fission and/or fusion or other like reaction or
radioactive force or matter. “

The relevance of the Institute Radioactive Contamination, Chemical, Biological, Biochemical & Electromagnetic Weapons exclusion clause CL 370 (10/11/2003) stems from the fact that this is a ‘clause paramount’, which will override anything contrary stated anywhere else in the policy. This clause also recognizes the fact that losses/damages to cargo can be caused not only by nuclear weapons during a war but by other nuclear-related accidents/incidents too and seeks to exclude them absolutely from the scope of coverage under the policy. Furthermore, the exclusion is for ‘loss,damage, liability or expense directly or indirectly caused by the nuclear group of perils’.

The nuclear group of perils which are considered here and excluded are:

• Any weapon or device using atomic/nuclear fission/fusion or other similar reaction or radioactive force or matter. Sounds similar to exclusion 4.7 of ICC? Yes, but not quite. This is wider. The word ‘ device’ is added along with weapon but again the phrase omitted is ‘weapon of war’. The interpretation would be that even if there is no war, but a nuclear weapon which is being carried/stored goes off accidentally causing damage/loss to the insured cargo, the claim would not be tenable.
• Radiation from or contamination to the cargo caused by radioactive material from nuclear fuel/nuclear waste or burning of nuclear fuel. So, if  nuclear fuel like uranium & plutonium or nuclear waste being carried/stored causes damage to the insured cargo, this too would be an exclusion under the policy.
• Damages to the cargo caused by the radioactive/ toxic/ explosive or contaminating properties of any nuclear reactor or installation. If in a Fukushima type of situation when there was an accident in a nuclear power plant on land, had the radioactive materials leaked causing damages to cargo in transit in the vicinity, such claims would be excluded from the scope of coverage. Not too many nuclear-powered cargo vessels, but even cargo damage caused by any emissions from the ship’s reactor would constitute an exclusion.
• Damages to the cargo caused by the radioactive/ toxic/ explosive or contaminating properties of any radioactive matter carried, stored or prepared other than isotopes used for peaceful purposes.
• Last but not the least, recognizing the latest trends in warfare, loss/damages to cargo caused by the use of any chemical, biological, bio-chemical, or electromagnetic weapon will also be an exclusion.

This clause figures in all insurance and reinsurance contracts. One can only hope that none of the situations contemplated should arise as the extent of devastation in terms of commercial value and more importantly human life could be mind-boggling.