TRANSLATION ISSUES
being translated into “ Urgent Business Interruption ’’ or “ Conditional Business Interruption ”. Again a literal translation into Arabic results in a very different meaning for a concept that is in any event likely to be poorly understood in KSA .
Reinstatement provisions Basis of loss settlement clauses also give rise to translation issues . By way of example , it is common for an indemnity payable to be calculated on the basis of the cost of the “ reinstatement of the damage ”, which is commonly translated into Arabic as “ i ’ ada ila almansib alasli ”, which means “ returning to the original status ”.
The intention behind the use of the phrase “ reinstatement of damage ” in most market wordings is to confirm that the indemnity payable is no more than would otherwise be payable for ensuring the damaged item , when repaired , is in a similar condition to what it was immediately before an incident . However , the KSA courts on the basis of literal translations have on occasion considered the “ original ” position to be the “ as new ” cost . Accordingly , in circumstances where say machinery has been in operation for a number of years , this can lead to significant differences between the indemnity that was intended , and the indemnity that may be awarded by the Insurance Disputes Committee . means “ undertaking ”, and clearly does not have the same meaning in an insurance context . The result is that , if a literal translation is applied , then the breach of a warranty will simply have the same effect as the breach of any other condition .
Contingent business interruption Another well-known phrase in the insurance context that causes translation difficulties is “ Contingent Business Interruption ’’. Literal translations we have seen have resulted in the Arabic meaning
Concluding comments It should be apparent from the issues noted above that obtaining contract certainty in KSA involves a lot more than simply relying on market wordings , even if well tested in other jurisdictions . The KSA insurance regulatory regime has both a direct and indirect effect on how policies may be interpreted and underwriters will be well advised to consider such matters to avoid surprises .
There are solutions to many of the issues we have noted . However , to achieve contract certainty requires underwriters to consider solutions at the time the cover is written , rather than when a claim or dispute arises . ■
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