Korean firm loses insurance battle

The Colombo Commercial High Court has dismissed a US $ 2 million insurance claim by a BOI approved Korean exporter from the National Insurance Corporation for a fire that broke out at its warehouse.

The claim was dismissed on the basis that the company had taken out policies with other insurance agencies and not kept the National Insurance Corporation informed of these other policies prior to the fire. The High Court Judge A.W.A. Salam disposed of the entire claim when he held that the exporter, Jingwoong Lanka (pvt.) Ltd., forfeited its rights under the policy which required the insurer to give notification of other policies it had entered into, prior to the fire taking place, and held that such notification was not given.

The case was dismissed solely on the cross-examination of the company's witnesses. The defendant insurance corporation was not called upon to lead evidence other than to produce certain documents. "Assuming that the plaintiff has proved the damages caused to the properties in question by fire and that it is covered by the policy marked as P5, it is pertinent to consider as to whether the claim of the plaintiff can be successfully maintained by reason of the allegation made by the defendant that several conditions of the policy of insurance have been violated by the plaintiff, thus forfeiting its right under the policy. It is convenient to examine the merits of the defence raised by the defendant, since any finding adverse to the Plaintiff in that respect, is capable of disposing of the entire case", Judge Salam held.

The judge however dismissed the Defendant's allegation that the damage to the warehouse was caused deliberately or by neglect on the part of the Plaintiff. Jingwoong Lanka (pvt.) Ltd., are manufacturers and exporters of tents, luggage bags and backpacks, exported largely to retail stores in the USA, Canada and Australia. The company which had a total investment of US $ 20 million employed 2,300 workers in four factories. Its turnover for the year ending March 31, 1999 in Sri Lanka alone was US $ 66 Million.

The judge pointed out that the Korean firm had taken insurance policies for the goods at the warehouse with Union Assurance and Ceylinco Insurance, the latter having already settled a claim for the fire on the payment of US $ 350,000. Jingwoong Lanka (pvt.) Ltd., has, in a separate claim sued for a sum of US $ 5.4 million from Union Assurance.

The insurance policy with the National Insurance Corporation was for the sum of US Dollars 2 million against damage or destruction of the properties mentioned in the schedule of the policy. The fire occurred on 1 July,1998 at Temple Road, Ekala, Ja-ela.K. Kanag-Isvaran PC with N. Bartholomeusz instructed by V.W. Kularatne Associates appeared for Jingwoong (pvt.) Ltd., while S.A. Parathalingam PC with Avindra Rodrigo instructed by Preethi Abeysekera appeared for the National Insurance Corporation.