Article 354 of the Saudi Commercial Maritime Law
المادة 354 من النظام البحري التجاري · الفصل الخامس: التأمين من المسؤولية
The article provides that in liability insurance the insurer is bound to compensate only if the injured third party directs an amicable or judicial claim to the insured, and within the limits of what the insured is bound to pay.
Official text (Arabic)
This article has not been amended since the law was issued.
في حالة التأمين من المسؤولية, لا يلتزم المؤمِّن بدفع التعويض عند وقوع الحادث المذكور في وثيقة التأمين, إلا إذا وجه الغير الذي أصابه الضرر مطالبة ودية أو قضائية إلى المؤمن له, ويكون التزام المؤمِّن في حدود ما يلتزم المؤمن له بأدائه من تعويض.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 354 explained in plain English
This article regulates when the insurer is bound to pay in liability insurance, which is insurance that covers the compensation the insured may be claimed for by third parties.
The condition for the obligation: the insurer is not bound to pay compensation merely because the incident stated in the policy occurred; rather, the third party who suffered the damage must direct a claim to the insured, and this claim is:
- amicable, or
- judicial.
If the incident occurs and the injured person does not claim anything from the insured, the insurer is not bound to pay.
The limit of the obligation: the insurer's obligation is within the limits of the compensation the insured is bound to pay. So the insurer does not pay more than the insured must pay the injured person.
Note that an amicable claim is enough; the injured person is not required to file a lawsuit.
Article 353 requires the insured to notify the insurer of damage to goods within fifteen days of receiving them, while Article 355 provides that liability insurance for damage to third parties caused by the ship under Article 331 has effect only if the sum insured on the ship is not enough to compensate for the damage. Anyone facing a claim from a third party can consult a lawyer specialized in insurance and maritime cases.
Practical example
A ship owned by a company in Jeddah, insured for liability, damages another company's equipment at the port. The injured company sends a letter of amicable claim for compensation. The insurer is then bound to pay compensation within the limits of what the insured company is bound to pay.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 354 of the Saudi Commercial Maritime Law
When does the insurance company pay in liability insurance?
The insurer is bound to pay compensation only if the third party who suffered the damage directs an amicable or judicial claim to the insured.
Must the injured person file a lawsuit?
No, an amicable or a judicial claim is enough.
How much does the insurer pay?
Within the limits of the compensation the insured is bound to pay.
More articles on Marine Insurance
- Article 139
Ships carrying the Kingdom's nationality are not permitted to sail to areas dominated by the dangers of war, piracy or armed robbery until proof of insurance of their crew against these dangers is provided.
لا يصرح للسفن التي تحمل جنسية المملكة بالسفر إلى المناطق التي تغلب عليها أخطار الحرب, أو أعمال القرصنة أو السطو المسلح, إلا بعد تقديم مالكها أو مجهزها أو مستأجر
- Article 215
Any agreement made before the incident that exempts the carrier from liability for loss of or damage to the goods, alters the burden of proof placed on him, or assigns to him the rights arising from cargo insurance is void.
يقع باطلاً كل اتفاق يتم قبل وقوع الحادث الذي نشأ عنه الضرر, ويكون موضوعه أحد الأمور الآتية: 1- إعفاء الناقل من المسؤولية عن هلاك البضائع أو تلفها. 2- تعديل عبء
- Article 236
The carrier must hold insurance or a guarantee from a recognized body covering its liability for death and bodily injury, and the injured party may claim directly against the insurer or guarantor.
يجب أن يكون لدى الناقل تأمين أو ضمان من جهة معترف بها، لتغطية مسؤوليته عن الوفاة والإصابات البدنية. وفي هذه الحالة يجوز للمتضرر الرجوع المباشر على المؤمن أو الض
- Article 293
The article provides that the maritime insurance provisions apply to an insurance contract covering maritime risks, without prejudice to the Law on Supervision of Cooperative Insurance Companies.
دون إخلال بالأحكام الواردة في نظام مراقبة شركات التأمين التعاوني, تسري أحكام هذا الباب على عقد التأمين الذي يكون موضوعه تغطية الأخطار البحرية.
- Article 294
The article requires a maritime insurance contract and any change to it to be proved in writing, sets the particulars of the insurance policy, and makes a provisional policy binding on both parties until the final policy is issued.
1- لا يثبت عقد التأمين وكل ما يطرأ عليه إلاَّ بالكتابة. 2- يصدر بموجب عقد التأمين وثيقة تأمين تتضمن البيانات الآتية: أ- تاريخ عقد التأمين ومكانه. ب- اسم المؤمِّ
- Article 295
The article allows a maritime insurance policy to be issued in the name of the insured, to his order or to bearer, and gives its lawful holder the right to claim compensation, subject to the insurer's defenses against the insured.
1- تكون وثيقة التأمين باسم المؤمن له أو لأمره، أو لحاملها. 2- يكون لحامل الوثيقة الشرعي الحق في المطالبة بالتعويض, وللمؤمِّن أن يحتج في مواجهته بالدفوع التي يجو
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.