Landmark Ruling in China’s Maritime Wind Power Insurance Case
In a significant development within China’s rapidly expanding offshore wind power industry, the Guangzhou Maritime Court recently concluded the country’s first maritime wind power insurance case. The case revolved around a mishap involving newly acquired equipment valued at 41 million yuan ($6.3 million) that fell into the sea less than four months after procurement and just two months into its usage for project construction.
The defendant in the case complied with the initial verdict handed down by the first trial, which mandated them to compensate for a series of losses arising from the wind power equipment’s submersion. In addition to these payments, they were also obligated to continue repaying bank loans. This outcome placed considerable financial pressure on the plaintiff.
After mediation efforts fell short, presiding Judge Tan Xuewen meticulously dissected the case’s various points of contention and authored a comprehensive draft judgment of nearly 25,000 words. This judgment was signed and issued in October 2022. Upon the defendant’s appeal, the parties reached a settlement during the second trial, with the plaintiff conceding on interest payments, and the defendant withdrawing their appeal.
China’s offshore wind power sector has witnessed rapid development in recent years, transitioning into a phase of substantial growth. This progress has been accompanied by safety incidents during project construction, raising concerns over potential risks. Going forward, the Guangzhou Maritime Court aims to facilitate the establishment of a maritime powerhouse by meticulously addressing cases involving offshore wind power, ensuring quality judicial support for the high-quality development of the maritime economy, sustainable marine resource utilization, and the protection of marine ecological environments.
The case in question unfolded in July 2021 at the construction site of a wind power project in Huizhou Port. A wind power installation platform encountered an accident during pile-driving operations, causing one of the platform’s legs to pierce the hull of a crawler crane stationed on it, resulting in the platform tilting and the crane sinking into the sea. The plaintiff had insured the crawler crane with a construction machinery insurance policy from a certain insurance company.
During the trial, the defendant contested the classification of the sunken equipment as an insurance subject, arguing that the plaintiff lacked insurable interest. However, the Guangzhou Maritime Court meticulously investigated the equipment’s specifications, product and factory numbers, as well as transportation and installation details, ultimately concluding that the sunken equipment did indeed qualify as an insurance subject and that the plaintiff held insurable interest.
Given the heightened risk of insuring equipment used in offshore wind power projects as opposed to land-based operations, the issue of whether the policyholder fulfilled their duty of utmost good faith during the insurance application process was a pivotal point. The court found that since the plaintiff had included details in the purchase contract regarding the equipment’s use for “offshore wind power” of 132 meters, the defendant should have been aware of the potential application and thus inquired about it during the underwriting process. Consequently, the court ruled that the plaintiff had fulfilled their duty of utmost good faith, and the insurer was liable for the insurance claim.
