In a September 2025 judgment a US Appeals Court confidently proclaimed the matter as being a “straightforward contract interpretation case”. It is.
The insured claimed under a Marine Open Cargo Policy for damage to blood plasma that underwent a harmful temperature variation due to a delay in shipment. As a result of a “FDA hold” on the shipment, the blood plasma was not properly maintained at the requisite temperature and spoiled, rendering it unusable.
The relevant Certificate of Insurance, including Endorsement provided: “[c]overage specifically includes deterioration/decay of or damage to the goods insured, including spoilage, from any cause which shall arise during the insured voyage.”
Included, however, in a Paramount Warranties, was a Delay Warranty:
“Warranted free of claim for loss of market or for loss, damage or deterioration arising from delay, whether such delay be caused by a peril insured against or otherwise.”
The insured argued that the Endorsement took precedence over the Delay Warranty.
The court said that the problem for the insured was that the Endorsement and the Delay Warranty do not conflict. The relevant rules of contract construction “require [us] to consider the policy as a whole . . . and to interpret each provision to harmonize with each other.” The court said that the Paramount Warranties provision unambiguously provides that the Delay Warranty could not be “superseded by any other provision . . . unless such other provision refers specifically to the risk excluded by these warranties and expressly assumes the said risks.”
The Endorsement made no specific reference to delay and nowhere expressly assumes the risks caused by delayed shipment and therefore did not supersede the Delay Warranty.
The court held that in harmonising the Endorsement with the Delay Warranty the only possible interpretation of the general “from any cause” language is that it impliedly excepts damage specifically caused by delays including during the insured voyage. The Endorsement did not specifically reference the Delay Warranty, and so it was the plain language of the provisions that binds the parties and evidences their intentions.
The court approved of previous judgments holding “Where the language of the contract is plain, unambiguous, and capable of only one reasonable interpretation, no other construction is permissible.” It was not reasonable for the insured to read the Endorsement as extending coverage to damage caused by delayed shipment.
The court rejected what it termed a third “creative” argument of the insured, which could not be squared with a reasonable interpretation of the policy. Because the risk excluded from coverage is damage or deterioration from a delayed shipment, it made good sense for the Delay Warranty to clarify that the exclusion applied no matter how the delay manifests. The Endorsement did not specifically include the excluded risk of delay and so did not supersede the plain terms of the Delay Warranty.
The insurer’s rejection of the claim was upheld.
South African principles of insurance interpretation would produce the same result.