American National Fire Insurance Co. v. Mirasco, Inc case brief summary
Facts: Mirasco shipped meat that it got from IBP Corp. to Egypt. While the meat was en route the Egyptian Government passed Decree #6 which stated that as of January 14, 1999 there would be no more imports from IBP Corp as well as any company with which it is associated. Mirasco sent an order of beef liver to Egypt on December 31, 1998, 60.5% of which consisted of meat that the Egyptian government had rejected in the past. The decree had gone into effect after the vessel’s departure but prior to the vessel’s arrival. Mirasco unsuccessfully attempted to convince the Egyptian authorities that the IBP cargo of the vessel should be exempted from the Decree because the shipment sailed prior to the issuance thereof. The Egyptian government still rejected the meat and as a result Mirasco had to ship all of the meat back to its place of origin. Consequently, Mirasco wants to recover from its insurance company under the “Rejection Cover,” although the “Rejection Coverage” does not cover government embargoes. Insurer argues that the goods were rejected because Egypt issued an embargo against IBP and government embargoes are not covered by the rejection policy. They further argue that even if this was not a rejection because of a government embargo, there still must be proof that the goods were rejected at the foreign port and in this case Egypt did not officially issue a “rejection” letter. The insurance company and Mirasco moved for summary judgment
Issue: Does the government embargo (i.e. Decree #6) apply although the goods were shipped prior to the embargo?
Holding: Since the ship had set sail before the embargo was announced, the goods are still covered by the rejection policy.
-The rejection of the sale resulted in loss of market value, not loss of market, and therefore it was covered by the “rejection” coverage
-Loss of market means that there is an actual change in supply and demand.
-Insurance company argues: Loss of market in this type of contract means that you lost your market in the place you were shipping, not that there was a loss of market in the U.S., where the goods had to be re-sold.