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Club Rules
2021
THE SHIPOWNERS’ CLUB
1
THE SHIPOWNERS’ CLUB
Amendments to the rules for 2021
Members’ attention is drawn to the changes in the Rules for 2021. Amendments have been
made to:
Rule 2 Standard Cover
Section 12: Wreck Liabilities
Section 13: Quarantine Expenses
Section 15: Unrecoverable General Average Contributions
Section 19: Fines
Rule 25 Liability Excluded for War Risks and Marine Cyber Risks
Rule 41 Joint Entries and Co-Assureds
Section 1
Section 2
NOTES TO THE RULES
Full details of changes are set out in the circular Notice of Extraordinary General Meeting
andRule Changes 2021 issued on 4th December 2020, and in the circular Notice of
Extraordinary General Meeting – additional Rule Change (Rule 25) issued on 18th
December2020. These can be viewed on our website: www.shipownersclub.com
Image credit:
Piet Sinke
www.maasmondmaritime.com
2
3
Contact details
Contact details I 3
3
4 I Rules 2020 I www.shipownersclub.com
4
LUXEMBOURG
16, Rue Notre-Dame
L–2240 Luxembourg
E: info@shipowners.lu
F: +352 22 97 10 22 2
T: +352 22 97 10 1
W: www.shipownersclub.com
General Manager
Pascal Herrmann
M: +352 621 298 102
E: pascal.herrmann@shipowners.lu
GREECE
18 Skouze street
Piraeus 185 36, Greece
E: info@shipownersclub.com
F: +30 210 428 6856
T: +30 210 453 0794
W: www.shipownersclub.com
General Manager
Dimitris Batalis
M: +30 6942 281535
E: dimitris.batalis@shipownersclub.com
BOARD OF DIRECTORS
Chairman
Philip Orme
Dubai
Vice Chairman
Donald A. MacLeod
Canada
Directors
Ali Gürün
Turkey
Dr. David Ho, JP
Hong Kong
Richard Knight
United Kingdom
Kathy Meads
New Zealand
Rev. Canon Stephen M. Miller
Hong Kong
Peter Sydenham
United Kingdom
Jan Vermeij
Chile
Dr. Yves Wagner
Luxembourg
Mark Whitaker
United Kingdom
Contact details I 5
5
MANAGEMENT TEAM
Chief Executive
Simon Swallow
M: +44 7917 275798
E: simon.swallow@shipownersclub.com
Underwriting Director
Ian Edwards
M: +44 7917 725415
E: ian.edwards@shipownersclub.com
Director – Business
Development Asia
Steve Randall
M: +65 9221 6826
E: steve.randall@shipownersclub.com
Director – Loss Prevention/
Corporate Responsibility
Louise Hall
M: +44 7771 665655
E: louise.hall@shipownersclub.com
Chief Financial Ocer
Simon Peacock
M: +44 7464 546122
E: simon.peacock@shipownersclub.com
Claims & Legal Director
Britt Pickering
M: +44 7703 254282
E: britt.pickering@shipownersclub.com
Director & Chief Actuary
Marcus Tarrant
M: +44 7790 679336
E: marcus.tarrant@shipownersclub.com
Chief Information Ocer
Mark Hamblin
M: +44 7867 330210
E: mark.hamblin@shipownersclub.com
6 I Rules 2020 I www.shipownersclub.com
6
LONDON BRANCH
The Shipowners’ Protection Limited
White Chapel Building, 2nd Floor
10 Whitechapel High Street
London
E1 8QS
E: info@shipownersclub.com
F: +44 207 480 5806
T: +44 207 488 0911
Head of Underwriting
Mark Harrington
M: +44 7876 252359
E: mark.harrington@shipownersclub.com
Head of Claims
Ben Harris
M: +44 7825 333367
E: ben.harris@shipownersclub.com
AMERICAS SYNDICATE
Underwriting
Darren Webb
M: +44 7469 852202
E: darren.webb@shipownersclub.com
Philip Thompson
M: +44 7780 956171
E: philip.thompson@shipownersclub.com
Oliver Shelmerdine
M: +44 7795 598322
E: oliver.shelmerdine@shipownersclub.com
Susana Ruiz
M: +44 7917 096346
E: susana.ruiz@shipownersclub.com
Claims
Nathaniel Harding
M: +44 7467 147146
E: nathaniel.harding@shipownersclub.com
Georgia Maltezou
M: +44 7392 081 230
E: georgia.maltezou@shipownersclub.com
Giselle Villanueva
M: +44 7769 112986
E: giselle.villanueva@shipownersclub.com
Robert Shearer
M: +44 7788 318398
E: robert.shearer@shipownersclub.com
Emma Thompson
M: +44 7788 238696
E: emma.thompson@shipownersclub.com
Contact details I 7
7
EUROPE & AFRICA SYNDICATE
Underwriting
Adam Howe
M: +44 7917 133671
E: adam.howe@shipownersclub.com
Rupert Carey
M: +44 7876 234455
E: rupert.carey@shipownersclub.com
Mark Greenland
M: +44 7554 016106
E: mark.greenland@shipownersclub.com
Bertie Duke
M: +44 7469 851937
E: bertie.duke@shipownersclub.com
Charlie Weatherill
M: +44 7387 023734
E: charlie.weatherill@shipownersclub.com
James Gargrave
M: +44 7585 793633
E: james.gargrave@shipownersclub.com
Claims
Daisy Rayner
M: +44 7788 318401
E: daisy.rayner@shipownersclub.com
Shev Algama
M: +44 7384 257914
E: shev.algama@shipownersclub.com
Cameron Shepherd
M: +44 7464 545437
E: cameron.shepherd@shipownersclub.com
Ali Kielany
M: +44 7741 310843
E: ali.kielany@shipownersclub.com
Agapi Terzi
M: +44 7802 813486
E: agapi.terzi@shipownersclub.com
James White
M: +44 7464 546217
E: james.white@shipownersclub.com
Elena Prokopiou
M: +44 207 423 7151
E: Elena.Prokopiou@shipownersclub.com
8 I Rules 2020 I www.shipownersclub.com
OFFSHORE SYNDICATE
Underwriting
Rob Cook
M: +44 7725 731804
E: rob.cook@shipownersclub.com
Carl Glover
M: +44 7733 234308
E: carl.glover@shipownersclub.com
Gabriel Pickering
M: +44 7393 765927
E: gabriel.pickering@shipownersclub.com
Harry Wathen
E: harry.wathen@shipownersclub.com
Andrew Meech
M: +44 7876 347782
E: andrew.meech@shipownersclub.com
Alice Wakeley
M: +44 7770 085935
E: alice.wakeley@shipownersclub.com
Andreina Facello
M: +44 7786 476332
E: andreina.facello@shipownersclub.com
Claims
Alexander McCooke
M: +44 7798 747876
E: alex.mccooke@shipownersclub.com
Rebecca Penn-Chambers
M: +44 7880 350865
E: rebecca.penn-chambers@shipownersclub.com
Stella Kounakou
M: +44 7795 807361
E: stella.kounakou@shipownersclub.com
Nicola Dyer
M: +44 7384 256700
E: nicola.dyer@shipownersclub.com
Alexandra Vella
M: +44 7788 232114
E: alexandra.vella@shipownersclub.com
YACHT SYNDICATE
Underwriting
Nicola Kingman
M: +44 7736 129220
E: nicola.kingman@shipownersclub.com
Susannah Manseld
M: +44 7435 556848
E: susannah.manseld@shipownersclub.com
Victoria Kirkby
M: +44 7387 023081
E: victoria.kirkby@shipownersclub.com
Claims
Shev Algama
M: +44 7384 257914
E: shev.algama@shipownersclub.com
Nicola Dyer
M: +44 7384 256700
E: nicola.dyer@shipownersclub.com
Emma Thompson
M: +44 7788 238696
E: emma.thompson@shipownersclub.com
Agapi Terzi
M: +44 7802 813486
E: agapi.terzi@shipownersclub.com
Ali Kielany
M: +44 7741 310843
E: ali.kielany@shipownersclub.com
Contact details I 9
9
INJURY
Claims
Steven John
M: +44 7467 147719
E: steven.john@shipownersclub.com
Jo Goodall
M: +44 7469 851707
E: jo.goodall@shipownersclub.com
Louise Wright
M: +44 7769 112942
E: louise.wright@shipownersclub.com
Anne-Marie Moore
M: +44 7392 090527
E: anne-marie.moore@shipownersclub.com
LOSS PREVENTION
Director – Loss Prevention/
Corporate Responsibility
Louise Hall
M: +44 7771 665655
E: louise.hall@shipownersclub.com
Carri Woodburn
M: +44 7392 081278
E: carri.woodburn@shipownersclub.com
Charlie Cooper
M: +44 7867 369892
E: charlie.cooper@shipownersclub.com
Ian Grainger
M: +44 7584 575198
E: ian.grainger@shipownersclub.com
Hayley Gill
M: +44 7823 776200
E: hayley.gill@shipownersclub.com
LEGAL
Claims & Legal Director
Britt Pickering
M: +44 7703 254282
E: britt.pickering@shipownersclub.com
LCC Manager
Georgia Maltezou
M: +44 7392 081 230
E: georgia.maltezou@shipownersclub.com
Head of Legal
Camilla Slater
M: +44 7788 318242
E: camilla.slater@shipownersclub.com
10 I Rules 2020 I www.shipownersclub.com
10
SINGAPORE BRANCH
9 Temasek Boulevard
Suntec Tower Two, #22–02
Singapore 038989
E: info@shipownersclub.com.sg
F: +65 6593 0449
T: +65 6593 0420
Chief Executive
Darren Mison
M: +65 9324 6188
E: darren.mison@shipownersclub.com
Director – Business Development Asia
Steve Randall
M: +65 9221 6826
E: steve.randall@shipownersclub.com
Head of Underwriting
Jeremy Slater
M: +65 8366 0768
E: jeremy.slater@shipownersclub.com
Underwriting
Robert Hunt
M: +65 8500 9528
E: robert.hunt@shipownersclub.com
Neville Seet
M: +65 8666 8441
E: neville.seet@shipownersclub.com
Brian Liew
M: +65 8666 8445
E: brian.liew@shipownersclub.com
Celinne Lim
M: +65 8666 8443
E: celinne.lim@shipownersclub.com
Dolf Ng
M: +65 9687 6135
E: dolf.ng@shipownersclub.com
Gary Machin
M: +65 8444 6211
E: gary.machin@shipownersclub.com
Shayne Tan
M: +65 8683 6277
E: shayne.tan@shipownersclub.com
Vivian Lin
M: +65 8715 8500
E: vivian.lin@shipownersclub.com
Head of Claims
Paul Smit
M: +65 8500 9532
E: paul.smit@shipownersclub.com
Claims
Gho Sze Kee
M: +65 8366 6302
E: sze.kee.gho@shipownersclub.com
Maggie-Jo McGregor
M: +65 9099 8601
E: maggie.jo@shipownersclub.com
Surani de Mel
M: +65 8666 8440
E: surani.demel@shipownersclub.com
Danielle Pereira
M: +65 9325 8697
E: danielle.pereira@shipownersclub.com
Fazlina Sapuan
M: +65 8368 8224
E: fazlina.sapuan@shipownersclub.com
Indu Chitran
M: +65 8444 6212
E: indu.chitran@shipownersclub.com
Madhavi Arya
M: +65 8666 8442
E: madhavi.arya@shipownersclub.com
Serene Ong
M: +65 8484 8732
E: serene.ong@shipownersclub.com
Regional Head – ePEME & Business Relations
Hari Subramaniam
M: +65 9320 8728
E: hari.subramaniam@shipownersclub.com
Contact details I 11
11
CORRESPONDENTS
Our Members and brokers are supported by a global network of Correspondents who are
available to provide practical, local advice and support. Contact details for all the Club’s
Correspondents can be found online at www.shipownersclub.com/correspondents
CLAIMS EMERGENCY
The claims response service is available 24 hours a day, 7 days a week and provides
immediate global assistance to all of our Members.
Calling the emergency contact number provides a quick and eective way to speak
directly to a duty Shipowners’ claims handler in the event of an incident or casualty
involving an entered vessel.
During oce hours the emergency number will redirect to the relevant
corresponding oce switchboard.
London Branch
+44 203 829 5858
Singapore Branch/Hong Kong Branch
+65 8683 3190
LOSS PREVENTION
Director – Loss Prevention/
Corporate Responsibility
Louise Hall
M: +44 7771 665655
E: louise.hall@shipownersclub.com
Ashish Acharya
M: +65 8683 5840
E: ashish.acharya@shipownersclub.com
Bhaskar Nigam
M: +65 8500 9531
E: bhaskar.nigam@shipownersclub.com
HONG KONG BRANCH
Suite 1612 Lippo Centre Tower 2
89 Queensway Admiralty
Hong Kong
Chief Executive
Andrew Law
M: +852 9289 0198 (HK)
M: +86 159 8989 7382 (PRC)
E: andrew.law@shipownersclub.com
E: info.hk@shipownersclub.com
F: +852 2522 0977
T: +852 2522 2118
Claims
Sherry Chen
M: +852 9090 1153
E: sherry.chen@shipownersclub.com
12 I Rules 2020 I www.shipownersclub.com
12
1313
ContentsContents
Contents I 13
14 I Rules 2021 I www.shipownersclub.com
14
PART 1: INTRODUCTORY 19
Rule 1 Basis of Cover 20
PART 2: P&I RISKS COVERED 23
Rule 2 Standard Cover 24
1 Liabilities in respect of seafarers 24
2 Liabilities in respect of passengers 25
3 Liabilities in respect of persons other than seafarers or passengers 26
4 Diversion expenses 26
5 Liabilities and expenses in relation to deserters, stowaways and refugees 27
6 Liabilities for life salvage 27
7 Collision with other vessels 27
8 Loss of or damage to property 29
9 Pollution 29
10 Towage 31
11 Liability arising under certain indemnities and contracts 32
12 Wreck liabilities 32
13 Quarantine expenses 33
14 Cargo liabilities 34
15 Unrecoverable general average contributions 37
16 Ship’s proportion of general average 37
17 Property on board the insured vessel 37
18 Special compensation to salvors 37
19 Fines 38
20 Inquiries and criminal proceedings 39
21 Liabilities and expenses incurred by direction of the Managers 39
22 Sue and labour and legal costs 40
Rule 3 Special Cover 40
Rule 4 Special Cover for Salvors, Charterers and SpecialistOperations 40
1 Salvors 40
2 Charterers 41
3 Specialist operations 41
Rule 5 Omnibus Rule 42
RULES 2021
Contents
Index
Contents I 15
15
RULES 2021
Contents
PART 3: LEGAL COSTS COVER 43
Rule 6 Legal Costs Cover 44
PART 4: CLAIMS PROCEDURES 47
Rule 7 Obligation to Sue and Labour 48
Rule 8 Notication of Claims 48
Rule 9 Time Bar 48
Rule 10 Admission of Liability 49
Rule 11 Eect of Breaches of Obligations in Rules 7, 8, 9 AND 10 49
Rule 12 Appointment of Lawyers and Other Persons 49
Rule 13 Basis of Appointment 49
Rule 14 Powers of the Managers Relating to the Handling
and Settlement of Claims 50
Rule 15 Bail 50
PART 5: ELIMINATIONS AND EXCLUSIONS 51
Rule 16 Payment First by the Member 52
Rule 17 No Liability Until Calls or premium Paid 52
Rule 18 Interest and Consequential Loss 52
Rule 19 Set-o 52
Rule 20 Deductibles 52
Rule 21A Limit of the Association’s Liability for Oil Pollution 52
Rule 21B Limit of the Association’s Liability for Overspill Claims 53
Rule 21C Limit of the Association’s Liability for Legal Costs cover 53
Rule 21D Limit of the Association’s Liability in Connection
with Passengers, Seafarers and Other Persons 53
Rule 21E Limit of the Association’s Liability to Charterers 54
Rule 22 Other Limitations of the Association’s Liability 54
1 General limitation 54
2 Limitations for persons other than vessel owners 54
Rule 23 Double Insurance 55
Rule 24 Exclusion of Sums Insurable under Hull Policies 55
Rule 25 Liability Excluded for War Risks and Marine Cyber Risks 56
Rule 26 Liability Excluded for Certain Nuclear Risks 57
Rule 27 Miscellaneous Exclusions 58
Rule 28 Liabilities Excluded in Respect of Salvage Vessels, Drilling Vessels,
Dredgers and Other Specialist Operations 59
Rule 29 Liabilities Excluded in Respect of Non-marine Personnel 60
16 I Rules 2021 I www.shipownersclub.com
16
Rule 30 Liabilities Excluded if as a Result of Wilful Misconduct 61
Rule 31 Liabilities Excluded if Adventure Illegal, Hazardous
or Improper 61
Rule 32 Liabilities Excluded if Unrecoverable from reinsurers 61
Rule 33 Classication and Statutory Certication of Vessel 61
Rule 34 Survey of Vessels and Management Audit 62
Rule 35 Survey of Vessels Aer Lay-up 63
PART 6: ENTRY FOR AND CESSER OF INSURANCE 65
Rule 36A
Application for Entry 66
Rule 36B
Entry 66
Rule 37 Entered Tonnage: Base Rate of Contribution 66
Rule 38 Certicate of Insurance and Endorsement Slip 67
Rule 39 Period of Insurance 67
Rule 40 Inception of Membership 67
Rule 41 Joint Entries and Co-assureds 67
Rule 42 Reinsurance 70
Rule 43 Assignment and Subrogation 71
Rule 44 Variation or Renewal of Terms 71
Rule 45 Termination by Notice 72
Rule 46 Cesser of Insurance 72
Rule 47 Eects of Cesser of Insurance 74
Rule 48 Cancellation of Insurance 75
Rule 49 Eects of Cancellation of Insurance 75
PART 7: CALLS, PREMIUM AND FINANCE 77
Rule 50 Liability for Calls 78
Rule 51 Mutual Calls 78
Rule 52 Additional Calls 78
Rule 53 Overspill Calls, Claims and Guarantees 79
1 Introductory 79
2 Recoverability of overspill claims 79
3 Payment of overspill claims 80
4 Overspill claims – expert determinations 81
5 Levying of overspill calls 82
6 Closing of policy years for overspill calls 83
7 Security for overspill calls on termination or cesser 83
Rule 54 Payment of Calls and Premium 84
Contents I 17
17
Rule 55 Releases 85
Rule 56 Laid-up Returns 85
Rule 57 Reserves 86
Rule 58 Closing of Policy Years 86
Rule 59 Investment 88
PART 8: ADMINISTRATIVE PROCEDURES 89
Rule 60 Regulations 90
Rule 61 Notices 90
Rule
62 Cooperation with Authorities in Relation to BBreaches ofSanctions
and Financial Crime 91
Rule 63 Membership of National and International Organisations 91
Rule 64 Settlement of Claims 91
Rule 65 Delegation 91
Rule 66 Disputes Procedures 92
Rule 67 Denitions 92
APPENDICES 97
War Risk Extension Clause 98
Bio-Chemical Extension Clause 100
Maritime Labour Convention (MLC) Extension Clause 2016 102
NOTES TO THE RULES 105
INDEX TO THE RULES 121
18 I Rules 2021 I www.shipownersclub.com
18
19
Part 1
Introductory
Rule Page
1 Basis of Cover 20
Part 1: Introductory
19
20 I Rules 2021 I www.shipownersclub.com
20
RULE 1 BASIS OF COVER
1 All contracts of insurance aorded by the Association to its Members incorporate
allthe provisions of these Rules and any Regulations made hereunder.
2 The standard cover aorded by the Association to its Members is set out in Rule 2.
3 By virtue of Rules 3 and 4 a Member may be aorded special cover against risks
otherthan those set out in Rule 2 provided that such special cover has been agreed
by the Managers in writing.
4 By virtue of Rule 6 a Member may be aorded Legal Assistance and Defence cover
asspecied in Rule 6 provided that such cover has been agreed by the Managers
inwriting.
5 The cover aorded by the Association under Rules 2, 3, 4 and 6 is always subject
tothe procedures, limitations and exclusions set out in Parts 4 and 5 and in the
remainder of these Rules unless otherwise agreed by the Managers in writing.
6 A Member is only covered against risks which arise:
A out of events occurring during the period of insurance of a vessel in the Association;
B in respect of the Member’s interest in the insured vessel; and
C in connection with the operation of the insured vessel by or on behalf of the Member.
7 The cover aorded by the Association under Rules 2, 3, 4 and 6 is conditional on
payment of calls or premiums in accordance with Rules 50-55, unless otherwise
agreed by the Managers in writing.
8 No act, omission, course of dealing, forbearance, delay or indulgence by the
Association in enforcing any of these Rules or any of the terms or conditions
ofitscontracts with Members nor any granting of time by the Association shall
prejudice or aect the rights and remedies of the Association under these Rules or
under such contracts, and no such matter shall be treated as any evidence of waiver
of the Association’s rights thereunder, nor shall any waiver of a breach bya Member
ofsuch Rules or contracts operate as a waiver of any subsequent breach thereof.
TheAssociation shall at all times and without notice be entitled toinsist on the
strictapplication of these Rules and on the strict enforcement ofits contracts
withMembers.
RULES 2021
Part 1: Introductory
Part 1 I 21
INTRODUCTORY
21
9 Notwithstanding the provisions of Rule 16, where a Member has failed to discharge
alegal liability to pay damages or compensation for personal injury, illness or death
ofa seafarer, the Association shall discharge or pay such claim onthe Member’s
behalf directly to such seafarer or dependant thereof.
Provided always that
i the seafarer or dependant has no enforceable right of recovery against
anyother party and would otherwise be uncompensated,
ii the amount payable by the Association shall under no circumstances exceed
the amount which the Member would have been able to recover from the
Association under the Rules and the Member’s terms of entry,
iii where the Association is under no liability to the Member in respect of the claim
solely by reason of Rule 49 the Association shall nevertheless discharge or pay
the claim but as agent only of the Member, and the Member shall be liable to
reimburse the Association for the full amount of such claim.
10
A All contracts of insurance aorded by the Association to its Members and these
Rulesand Regulations made hereunder shall be governed by and construed in
accordance with English law. In particular they are subject to and incorporate the
Marine Insurance Act 1906 and upon its entry into force the Insurance Act 2015
saveto the extent such Acts are modied or excluded by the Rules or by the
termsofany contracts of insurance.
B The following provisions of the Insurance Act 2015 (‘the Act’) are excluded from
theRules and any contracts of insurance as follows:
i Section 8 of the Act is excluded. As a result any breach of the duty of fair
presentation shall entitle the Association to avoid the policy, regardless
ofwhether the breach of the duty of fair presentation is innocent,
deliberateorreckless.
ii Section 10 of the Act is excluded. As a result all warranties in these Rules or
anycontracts of insurance must be strictly complied with and if the Member
and any joint Member or Co-assured fails to comply with any warranty the
Association shall be discharged from liability from the date of the breach,
regardless of whether the breach is subsequently remedied.
iii Section 11 of the Act is excluded. As a result the Rules and all terms of the
contracts of insurance between the Association and the Member and any joint
Member or Co-assured, including terms which tend to reduce the risk of loss
ofa particular kind, loss at a particular location and/or loss at a particular time,
must be strictly complied with and if the Member and any joint Member
orCo-assured fails to comply with any such term, the Association’s liability
maybeexcluded, limited or discharged in accordance with these Rules
notwithstanding that the breach could not have increased the risk of the
losswhich actually occurred in the circumstances in which it occurred.
22 I Rules 2021 I www.shipownersclub.com
22
iv Section 13 of the Act is excluded. As a result the Association shall be entitled
toexercise its right to terminate the contracts of insurance in respect of the
Member and any joint Member or Co-assured in the event that a fraudulent
claim is submitted by or on behalf of the Member and/or joint Member
and/or Co-assured.
v Section 13A of the Act is excluded. As a result the Rules and all contracts
between the Association and the Member and any insured shall not be subject
to nor shall the Association be in breach of any implied term that it willpay
anysums due in respect of any claim within a reasonable time save where
thebreach is deliberate or reckless and Section 13A of the Act is excluded
tothis extent.
vi Section 14 of the Act is excluded. As a result, the contracts of insurance
between the Association, the Member and any joint Member or Co-assured
shall be deemed to be contracts of the utmost good faith, and any breach
oftheduty of the utmost good faith shall entitle the Association to avoid
thecontract of insurance.
C Save as provided in Rule 1.9, the cover provided by the Association as set out
intheseRules is solely for the benet of the Member. It is not intended, save as
providedin Rule 1.9, that rights should be acquired by any third party through
theoperation of the Contracts (Rights of third Parties) Act 1999 of the United
Kingdom orsimilar legislation.
23
Part 2
P&I risks covered
Rule Page
2 Standard Cover 24
3 Special Cover 40
4 Special Cover for Salvors, Charterers
and Specialist Operations 40
5 Omnibus Rule 42
Part 2: P&I risks covered
23
24 I Rules 2021 I www.shipownersclub.com
24
RULE 2 STANDARD COVER
Unless otherwise agreed by the Managers in writing a Member is covered against
therisks set out in Sections 1 to 22 below in respect of any insured vessel.
1 Liabilities in respect of seafarers
A Illness, injury, death, medical examination
i Liability to pay damages or compensation for personal injury, illness or death
ofany seafarer whether or not on board a vessel and hospital, medical, funeral
or other expenses incurred in relation to such injury, illness or death.
B Repatriation and substitutes’ expenses
i The expense of repatriating a seafarer of the insured vessel who has been
illorinjured or has died or whose repatriation has been necessitated by
acasualty to the insured vessel.
ii The expense of sending out and repatriating a spouse, child or, in the case of
asingle seafarer, parent of a seafarer who has died or is dangerously ill when
thepresence of such spouse, child or parent is essential.
iii The expense of repatriating a seafarer who has been le ashore when there
isastatutory obligation to do so, other than an obligation under the Maritime
Labour Convention 2006.
iv The expense of substituting a seafarer who has been ill, injured or has died.
v The expense of substituting a seafarer who has been le ashore or been
repatriated as a result of illness, injury or pursuant to a statutory obligation
otherthan an obligation under the Maritime Labour Convention 2006.
Provided that
Paragraph B of this Section does not cover expenses which arise out of or are
theconsequence of
a the expiry of the seafarer’s period of service on the insured vessel either
inaccordance with the terms of a crew agreement or by mutual consent
oftheparties to it, or
b breach by a Member of any crew agreement, or
c sale of the vessel.
C Wages and shipwreck unemployment indemnity
vi Liability to pay wages to any seafarer of the insured vessel during medical or
hospital treatment, or during repatriation consequent upon injury or illness,
or,in the case of a seafarer engaged as a substitute, while awaiting and
duringrepatriation.
vii Liability to compensate any seafarer for the loss of his employment caused
inconsequence of the actual or constructive total loss of an insured vessel.
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D Loss of or damage to the eects of seafarer
Liability to pay damages or compensation for loss of or damage to the eects
ofanyseafarers.
Provided that
There shall be no right of recovery in respect of claims relating to cash, negotiable
instruments, precious or rare metals or stones, or objects of a rare or precious nature.
Unless otherwise agreed by the Managers in writing the maximum recovery per
seafarer under this Section 1D will be limited to US$ 5,000.
E Proviso
If any of the liabilities or expenses identied in paragraphs A to D of this Section are
incurred under the terms of a crew agreement, and would not have arisen but for
those terms, there shall be no right of recovery of such liabilities or expenses unless
the terms of the crew agreement have been agreed by the Managers in writing.
2 Liabilities in respect of passengers
A Illness, injury or death
Liability arising under a contract of carriage for reward to pay damages or
compensation for personal injury, illness or death of any passenger and hospital,
medical, funeral or other expenses incurred in relation to such injury, illness
or death.
B Casualty to the insured vessel
Liability arising under a contract of carriage for reward to pay damages or
compensation to passengers on board an insured vessel arising as a consequence
ofa casualty to the insured vessel, including the cost of forwarding passengers
todestination or return to port of embarkation and of maintenance of
passengersashore.
C Loss of or damages to eects
Liability arising under a contract of carriage for reward to pay damages or
compensation for loss of or damage to the eects of any passenger including
vehicles carried under the contract.
Provided that
There shall be no right of recovery in respect of claims relating to cash, negotiable
instruments, precious or rare metals or stones, valuables or objects of a rare or
precious nature.
D Provisos
i There shall be no right of recovery in respect of the liabilities identied
inparagraphs A to C of this Section unless the terms of the contract
ofcarriageforreward have been agreed by the Managers in writing.
ii There shall be no right of recovery in respect of the liabilities identied
inparagraphs A to C of this Section which result from the carriage of any
passenger by air, except when such liability occurs during repatriation by
airofinjured or ill passengers, or of passengers following a casualty to the
insuredvessel.
iii There shall be no right of recovery in respect of the liabilities identied in
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paragraphs A to C of this Section when the passenger is on an excursion
fromthe insured vessel in circumstances where either:
a a separate contract has been entered into by the passenger for the excursion,
whether or not with the Member; or
b the Member has waived any rights of recourse against any sub-contractor
orother third party in respect of the excursion.
3 Liabilities in respect of persons other than seafarers or passengers
A Illness, injury or death
Liability to pay damages or compensation for personal injury, illness or death of any
person and hospital, medical or funeral or other expenses incurred in relation to such
injury, illness or death.
B Loss of or damage to eects
Liability to pay damages or compensation for loss of or damage to the eects ofany
person on board an insured vessel.
Provided that
There shall be no right of recovery in respect of claims relating to cash, negotiable
instruments, precious or rare metals or stones, valuables or objects of a rare or
precious nature.
C Provisos
i Cover under this section shall not extend to liabilities to seafarer or passengers
carried under a contract of carriage for reward which may be covered under
Sections 1 or 2 of this Rule.
ii If any of the liabilities identied in paragraphs A and B of this Section are
incurred under the terms of a contract and would not have arisen but for those
terms, there shall be no right of recovery in respect of such liabilities unless the
terms of the contract have been agreed by the Managers in writing.
iii Cover under paragraphs A and B of this Section is limited to liabilities arising out
of a negligent act or omission on board or in relation to an insured vessel or in
relation to the handling of her cargo from the time of receipt of that cargo at
theport of shipment until delivery of that cargo at the port of discharge.
4 Diversion expenses
Expenses in respect of fuel, insurance, wages, stores, provisions and port charges
incurred as a result of diversion or delay of an insured vessel (over and above the
expenses that would have been incurred but for the diversion or delay) which
wasmade necessary for the following reasons:
A
Securing necessary treatment ashore of sick or injured persons or arranging the
repatriation of dead bodies aboard the insured vessel.
B
Awaiting a substitute for a sick or injured seafarer who has been landed ashore
fortreatment.
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C
Landing stowaways, refugees or persons saved at sea.
D
For the purpose of saving or attempting to save life at sea.
5 Liabilities and expenses in relation to deserters, stowaways and refugees
Liabilities and expenses, other than those covered under Section 4 of this Rule,
incurred by the Member in discharging his obligations towards or making necessary
arrangements for deserters, stowaways and refugees or persons saved at sea,
including rescue expenses, but only if and to the extent that the Member is legally
liable for the expenses or they are incurred with the agreement of the Managers.
6 Liabilities for life salvage
Sums legally due to third parties by reason of the fact that they have saved or
attempted to save the life of any person on or from the insured vessel but only if and
to the extent that such payments are not recoverable under the hull policies of the
insured vessel or from cargo owners or underwriters.
7 Collision with other vessels
Liabilities, costs and expenses incurred as a result of a collision between aninsured
vessel and any other vessel as set out at paragraphs A-D below.
A Contact with other vessels or cargo or property on other vessels
One fourth, or such other proportion as may have been agreed by the Managers in
writing, of the Member’s liabilities costs and expenses not recoverable under clause 8
of the Institute Time Clauses (Hulls) 1/10/83 or under other forms ofhullpolicies on
the insured vessel approved by the Managers in writing.
B Other liabilities
Four-fourths of the Member’s liabilities, costs and expenses relating to:
i the raising, removal, disposal, destruction, lighting or marking of obstructions,
wrecks, cargoes, or any other thing insofar as such liability may be covered
under Rule 2 section 12;
ii any real or personal property or thing whatsoever (except other vessels or
property on other vessels);
iii pollution or contamination of any real or personal property except other vessels
with which the insured vessel is in collision and property on such other vessels;
insofar as such liability may be covered under Rule 2 section 9;
iv the cargo or other property on the insured vessel, or the Member’s liability for
general average contributions, special charges or salvage paid by the owners
ofthat cargo or property insofar as such liability may be covered under Rule 2
sections 14, 15 and 16;
v loss of life, personal injury or illness insofar as such liability may be covered
under Rule 2 Sections 1, 2 and 3.
vi sums paid pursuant to the Special Compensation P&I Club (SCOPIC) Clause
asincorporated into Lloyd’s Open Form of Salvage Agreement in respect
ofsalvage of a vessel in collision with the entered vessel.
C Excess collision liabilities
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That part of the Member’s liabilities, costs and expenses, arising out of the
collision,which exceed the sum recoverable under the hull policies of the insured
vessel solely by reason of the fact that the liability exceeds the valuation of the
vesselin those policies.
D Non-contact damage to vessels
Liabilities which a Member may incur, together with costs and expenses incidental
thereto, as a result of damage caused to another vessel otherwise than by collision
between that other vessel and the insured vessel as follows:
i Liability for loss of or damage to any other vessel, or other cargo or property
therein.
ii Liability for the injury to, or death of, seafarers or others insofar as such liability
may be covered under Rule 2 Sections 1, 2 and 3.
iii Liability in respect of an escape or discharge or threatened escape or
dischargeof oil or any other substance insofar as such liability may be
coveredunder Rule 2 Section 9.
iv Liability for the removal of wrecks insofar as such liability may be covered
underRule 2 Section 12.
E Provisos
i For the purposes of assessing any sum recoverable under paragraph C of
thisSection the Board may determine the value at which the insured vessel
should have been insured if it had been ‘fully insured’ in accordance with
Rule24. There shall be a right of recovery only in respect of the excess, if any,
ofthe amount which would have been recoverable under such policies if
theinsured vessel had been insured thereunder at such value.
ii Unless the Board otherwise determines, there shall be no right of recovery
ofany franchise or deductible borne by the Member under the hull policies
ofthe insured vessel.
iii If the insured vessel shall come into collision with, or cause non-contact
damage to another vessel belonging wholly or in part to the Member,
heshallhave the same right of recovery from the Association, and the
Associationshall have the same rights, as if such other vessel belonged
whollyto dierent owners.
iv If both vessels are to blame, then where the liability of either or both of the
vessels in collision becomes limited by law, claims under this section shall be
settled upon the principle of single liability, but in all other cases claims under
this section shall be settled upon the principle of cross liabilities, as if the
ownerof each vessel had been compelled to pay the owner of the other
vesselsuch proportion of the latter’s damages as may have been properly
allowed in ascertaining the balance or sum payable by or to the Member
inconsequence of the collision.
v For the purposes of assessing any sums recoverable under this Section,
coverissubject always to Rule 21, as applicable.
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8 Loss of or damage to property
Liability to pay damages or compensation for any loss of or damage to any property,
or for infringement of rights, whether on land or water and whether xed or moveable.
Provided that
A There shall be no right of recovery under this Section in respect of:
i liabilities which arise under the terms of any contract or indemnity totheextent
that they would not have arisen but for those terms;
ii liabilities against which cover is available under the following Sections of this Rule:
Section 1D, 2C, 3B: Liabilities in respect of eects
Section 7: Collision with other vessels
Section 9: Pollution
Section 10: Towage
Section 12: Wreck liabilities
Section 14: Cargo liabilities
Section 17: Property on board the insured vessel;
iii liabilities excluded from any of the Sections listed in paragraph ii above by
reason only of some proviso, warranty, condition, exception, limitation or other
like term applying to claims under such Section;
iv any franchise or deductible borne by the Member under the hull policies ofthe
insured vessel.
B If the insured vessel causes loss or damage to property or infringes rights belonging
wholly or in part to the Member, he shall have the same rights of recovery from the
Association and the Association shall have the same rights as if such property or
rights belonged wholly to dierent owners.
9 Pollution
Subject to Rule 21A, the liabilities, losses, damages, costs and expenses set out in
paragraphs A to E below when and to the extent that they are caused or incurred in
consequence of the discharge or escape from the insured vessel of oil or any other
substance, or the threat of such discharge or escape.
A Liability for loss, damage or contamination.
B Any loss, damage or expense which the Member incurs, or for which he is liable, as a
party to any agreement approved by the Board, including the costs and expenses
incurred by the Member in performing his obligations under such agreements.
C The costs of any measures reasonably taken for the purpose of avoiding or
minimising pollution or any resulting loss or damage together with any liability
for loss or damage to property caused by measures so taken.
D The costs of any measures reasonably taken to prevent an imminent danger of
thedischarge or escape from the insured vessel of oil or any other substance.
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E The costs or liabilities incurred as a result of compliance with any order or direction
given by any government or authority for the purpose of preventing or reducing
pollution or the risk of pollution, provided always that such costs or liabilities are
notrecoverable under the hull policies of the insured vessel.
F A Member insured in respect of a vessel which is a ‘relevant ship’ as dened in the
Small Tanker Owners Pollution Indemnication Agreement (STOPIA) 2006 (as
amended 2017) shall, unless the Managers otherwise agree in writing, be a party to
STOPIA 2006 (as amended 2017) for the period of entry of the vessel in the Club.
G A Member insured in respect of a vessel which is a ‘relevant ship’ as dened in
theTanker Oil Pollution Indemnity Agreement (TOPIA) 2006 (as amended 2017)
shall,unless the Managers otherwise agree in writing, be a party to TOPIA 2006
(asamended 2017) for the period of entry of the vessel in the Club.
Unless the Managers have agreed in writing or unless the Directors otherwise
determine there shall be no cover under Rule 2 Section 9 in respect of such a
vesselduring a period the Member is not a party to TOPIA 2006 (as amended 2017).
H Provisos
i If the discharge or escape from the insured vessel causes loss, damage or
contamination to property belonging wholly or in part to the Member, he shall
have the same rights of recovery from the Association and the Association shall
have the same rights as if such property belonged wholly to dierent owners.
ii The value of any vessel or wreck and of any stores and materials, or cargo
orother property, removed and saved as a result of any measures taken as
outlined in this Section shall either be credited to the Association or deducted
from any recovery due from the Association.
iii Unless the Board in its discretion otherwise decides there shall be no right
ofrecovery of any liabilities, losses, damages, costs or expenses arising
asaconsequence of the discharge or escape of any hazardous waste,
previouslycarried on the insured vessel, from any land based dump, storage
ordisposal facility.
iv There shall be no right of recovery from the Association under this
Sectionwhere:
a a claim is otherwise than in respect of general average, and
b either:
i the liability, loss, cost or expense is recoverable in general average under the
terms of the contract of carriage, or
ii the liability, loss, cost or expense is not allowable in general average under the
terms of the contract of carriage but would be so allowable if the contract of
carriage had incorporated any unamended version of the York Antwerp Rules.
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10 Towage
Liabilities arising out of towage of an insured vessel provided that there shall be
no right of recovery from the Association for liabilities arising out of a contract for
towage of an insured vessel except as set out at paragraphs A and B of this section.
A Customary towage of an insured vessel
Liability under the terms of a contract for the customary towage of an insured vessel,
that is to say:
i towage for the purpose of entering or leaving port, or manoeuvring within
theport, during the ordinary course of trading; or
ii towage of such insured vessels as are habitually towed in the ordinary
courseoftrading from port to port or from place to place.
B Towage of an insured vessel other than customary towage
Liability under the terms of a contract for towage of an insured vessel other than the
customary towage covered under paragraph A of this Section but only if and to the
extent that cover has been agreed by the Managers in writing.
Liabilities arising out of towage by an insured vessel as set out at paragraphs C, D
andE of this section.
C Towage by an insured vessel
Liability arising out of towage of another vessel or object by an insured vessel.
Except that
Liability for loss of or damage to or wreck removal of the towed vessel or object
or any cargo or property thereon (together with costs and expenses associated
therewith) is excluded unless:
i such towage was necessary for the purpose of saving life or property at sea, or
ii the insured vessel is towing under an approved contract, or
iii cover has otherwise been agreed by the Managers in writing.
D Where there is a contract with the owner of the tow the following
contracts are approved for the purpose of Section 10C ii:
i the United Kingdom, Netherlands, Scandinavian and German standard
towageconditions;
ii ‘Towcon’ and ‘Towhire’;
iii The current Lloyd’s Standard Form of Salvage Agreement (1980, 1990, 1995,
2000 or 2011, whether or not incorporating SCOPIC) – no cure, no pay;
iv terms as between the owner of the insured vessel on the one part, and the
owner of the tow and the owners of any cargo or other property on board the
tow on the other part, that each shall be responsible for any loss or damage
tohis own vessel, cargo or other property on his own vessel and for loss of life
orpersonal injury of his own employees or contractors, without any recourse
whatsoever against the other.
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v Contracts on terms set out at Section 10D iv above, which are or are likely to
beunenforceable in whole or in part, where the contract does not impose on
the owners of the insured vessel any liability to any person arising out of any
act,neglect or default of the owner of the tow or any other person; and the
contract limits the liability of the owner of the insured vessel under the
contractor otherwise to the maximum extent possible by the law.
E Where there is no direct contractual relationship with the owner of the tow
The Managers may agree in writing to provide cover for the purpose of Section 10C iii
for charters which in their opinion contain:
a Terms as set out at 10 D iv above covering the property of sub-contractors of
the charterers as well as the property of the charterers themselves; or
b A separate clause requiring that all towage be carried out on terms no worse
than as provided for at Section 10 D iv; or
c Charters that otherwise comply with Section 10 D iv.
11 Liability arising under certain indemnities and contracts
Liabilities, costs and expenses under a P&I entry, arising under the terms of an
indemnity or contract given or made by or on behalf of the Member relating
tofacilities or services provided or to be provided to or in connection with an
enteredvessel, but only if and to the extent that:
A Cover has been agreed by the Managers in writing upon such terms as the Managers
may require; or
B The Board in its discretion decides that the Member should be reimbursed.
Note
The Association may be able to cover liabilities arising out of Knock for Knock
agreements. For the purpose of this Note, this includes an agreement that satises
the denition of Knock for Knock save that it contains a reciprocal gross negligence
carve out (i.e. a provision excluding from the Knock for Knock agreement claims
arising out of gross negligence).
12 Wreck liabilities
A Liabilities and expenses relating to the raising, removal, destruction, lighting or
marking of the wreck of the insured vessel or any part thereof; or of any cargo
equipment or other property which is or was carried on board the wreck of the
insured vessel, when such raising, removal, destruction, lighting or marking is
compulsory by law or the costs thereof are legally recoverable from the Member.
B Liabilities and expenses incurred by the Member as the result of any such raising,
removal, destruction, lighting or marking of the wreck of the insured vessel or any
part thereof or of cargo or other property thereon or any attempt thereat.
C Liabilities and expenses incurred by the Member as the result of the presence or
involuntary shiing of the wreck of the insured vessel or any cargo or other property
which is or was carried on board such wreck or as a result of his failure to raise,
remove, destroy, light or mark such wreck or such cargo or other property.
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D Provisos
i Any right of recovery from the Association is to the extent, only, that any
wreckofthe insured vessel or part thereof resulted from a fortuitous event
orcasualty occurring during the vessel’s period of insurance; but in this case
theAssociation shall continue to be liable for the claim notwithstanding
thatinother respects theliability of the Association shall have terminated
pursuantto Rule 46.
ii In respect of a claim under paragraph A of this Section, the value of all vessel’s
stores and materials saved, as well as the value of the wreck itself, the value
ofallcargo orother property saved to which the Member is entitled, salvage
remuneration received by the Member and any sum recovered by the Member
from third parties shall rst be deducted from or set o against such liabilities
orexpenses and only thebalance thereof, if any, shall be recoverable from
theAssociation.
iii There shall be no right of recovery from the Association under this Section
iftheMember, without the agreement of the Managers in writing, shall have
transferred his interest in the wreck (otherwise than by abandonment to his
hulland machinery underwriters) prior to the raising, removal, destruction,
lighting ormarking of the wreck or prior to the incident giving rise to liability.
iv There shall be no right of recovery from the Association under this Section for any
liabilities, costs or expenses resulting from dereliction or neglect of an insured
vessel or parts thereof, or of any cargo, equipment, or property carried on board.
v Where the liabilities arise, or the expenses are incurred, under the terms of any
contract or indemnity and would not have arisen but for those terms, those
liabilities or expenses are only covered if and to the extent that
a those terms have been agreed by the Managers in writing, or
b the Board in its discretion decides that the Member should be reimbursed.
vi Unless the Board in its discretion shall otherwise determine, there shall be no
right of recovery from the Association under this Section where the liabilities,
costs and expenses or any part thereof:
a would not have been incurred had the insured vessel been ‘fully insured’
in accordance with the meaning of these words in Rule 24, or
b are incurred more than two years aer the vessel, cargo, equipment or other
property became a wreck or was lost.
13 Quarantine expenses
Additional extraordinary expenses necessarily and solely incurred by the Member as a
direct consequence of an outbreak of infectious disease on board the entered vessel.
This would include the net loss to the Member (over and above such ordinary expenses
as would have been incurred but for the outbreak) in respect of: quarantine expenses,
disinfection expenses, and fuel, insurance, wages, stores, provisions and port charges.
Provided that
There shall be no cover in respect of additional expenses where, at the time the entered
vessel has been ordered to a port, the Member knew, or it was reasonable to anticipate,
that such additional expenses would be incurred.
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14 Cargo liabilities
The liabilities and expenses set out in paragraphs A to D below when and to the
extentthat they relate to cargo intended to be or being or having been carried
intheinsured vessel.
A Loss, shortage, damage or other responsibility
Liability for loss, shortage, damage or other responsibility arising out of any breach
bythe Member or by any person for whose acts, neglect or default he may be legally
liable, of his obligation properly to load, handle, stow, carry, keep, care for, discharge
ordeliver the cargo or out of unseaworthiness or untness of the insured vessel.
B Disposing of damaged cargo
The additional costs and expenses, over and above those which would have been
incurred by him in any event under the contract of carriage, incurred by the Member
in discharging or disposing of damaged or worthless cargo, but only if and to the
extent that the Member is unable to recover those costs from any other party.
C Failure of consignee to remove cargo
The liabilities and additional costs incurred by a Member, over and above the costs
which would have been incurred by him if the cargo had been collected or removed,
solely by reason of the total failure of a consignee to collect or remove cargo at the
port of discharge or place of delivery, but only if and to the extent that such liabilities
or costs exceed the proceeds of sale of the cargo and the Member has no recourse
torecover those liabilities or costs from any other party.
D Through or transhipment bills of lading
Liability for loss, shortage, damage or other responsibility in respect of cargo carried
byameans of transport other than the insured vessel, when the liability arises under a
through or transhipment bill of lading, or other form of contract approved by the Managers
in writing, which provides for carriage partly to be performed by the insured vessel.
E Provisos
i Hague and Hague-Visby Rules
Unless the Member has previously obtained appropriate special cover
byagreement with the Managers or the Board in its discretion otherwise
determines, there shall be no recovery from the Association in respect of
liabilities which would not have been incurred or sums which would not have
been payable by the Member if the cargo had been carried on terms no less
favourable to the Member than those laid down in the Hague or Hague-Visby
Rules, save where the contract of carriage is on terms less favourable to the
Member than those laid down in the Hague or Hague-Visby Rules solely
because of the relevant terms of carriage being of mandatory application.
ii Regulations as to terms and methods of carriage
The Board shall have power from time to time to make Regulations prescribing
the use of any particular clause or form of contract, either generally or in any
particular trade or in relation to the system and method of carriage, storage,
transport, custody and handling of cargo intended to be, being or having been
carried in an insured vessel. The Board may in its discretion reject or reduce a
claim on the Association arising as a consequence of the failure by a Member
toadhere to the terms of such Regulations.
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iii Deviation
Unless the Board in its discretion shall otherwise determine, or cover has
been agreed by the Managers in writing prior to the deviation, there shall be no
recovery from the Association in respect of liabilities, costs and expenses arising
from a deviation, in the sense of a departure from or delay in prosecution of the
contractually agreed voyage or adventure, or from events occurring during or
aer a deviation, if as a result of such deviation the Member is not entitled to
relyon any defences or rights of limitation which would otherwise have been
available to him to eliminate or reduce his liability.
iv Certain exclusions from cover
Unless the Board in its discretion shall otherwise determine, there shall be no
right of recovery from the Association in respect of any liabilities, costs and
expenses arising from:
a the issue of a bill of lading, waybill or other document containing or evidencing
the contract of carriage, issued with the knowledge of the Member or his
Master with an incorrect description of the cargo or its quantity or its condition.
b the issue of a bill of lading, waybill or other document containing or evidencing
the contract of carriage which contains any fraudulent misrepresentation,
including but not limited to the issue of an ante-dated or post-dated bill of lading.
c delivery of cargo carried under a negotiable bill of lading or similar document
(including an electronic bill of lading) without production of that bill of lading by
the person to whom delivery is made (or the equivalent thereof in the case of an
electronic bill of lading). Except where cargo has been carried on the insured
vessel under the terms of a non-negotiable bill of lading, waybill or other
non-negotiable document, and despite having been properly delivered as
required by that document, liability nevertheless arises under the terms of a
negotiable bill of lading or other similar document of title (issued by or on behalf
of a party other than the Member) providing for carriage in part upon the
insured vessel and in part upon another vessel or by another mode of transport.
d delivery of cargo carried under a waybill or similar non-negotiable document to
a party other than the party nominated by the shipper as the person to whom
delivery should be made.
e discharge of cargo at a port or place other than in accordance with the contract
of carriage.
f late arrival or non-arrival of the insured vessel at a port or place of loading, or
failure to load, or delay in loading any particular cargo, other than liabilities and
expenses arising under a bill of lading already issued.
g any deliberate breach of the contract of carriage on the part of the Member or
his manager.
v Value declared on bill of lading
Where the value of any cargo is declared upon the bill of lading at a gure in
excess of US$ 2,500 (or the equivalent in the currency in which the declared
value is expressed) per unit, piece or package, the right of recovery from the
Association under this Section shall not exceed US$ 2,500 per unit, piece or
package unless otherwise agreed by the Managers in writing.
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vi Rare and valuable cargo
There shall be no right of recovery from the Association in respect of claims
relating to the carriage of specie, bullion, precious metals or stones, plate, works
of art or other objects of a rare or precious nature, bank notes or other forms
ofcurrency, bonds or other negotiable instruments, unless otherwise agreed
bythe Managers in writing.
vii Property of the Member
In the event that any cargo lost or damaged on board the insured vessel
shallbethe property of the Member, he shall be entitled to the same right
ofrecovery from the Association and the Association shall have the same
rightsasif the cargo had belonged to a third party and that third party had
concluded a contract of carriage of the cargo with the Member on terms
atleast as favourable to the Member as the Hague-Visby Rules.
viii Fishing vessel
Where the insured vessel is a shing vessel, there shall be no right of recovery
under this Section for liabilities and expenses relating to the catch of that
vesselor to any sh or sh products carried therein.
ix Paperless trading
There shall be no recovery from the Association for any liability, cost or expense
arising out of or in consequence of a Member’s use of an electronic trading
system, other than an electronic trading system approved by the Managers in
writing, to the extent that such liabilities, losses, costs or expenses would not
(unless in the discretion of the Board) have arisen under a paper trading system.
For the purpose of this paragraph,
a an electronic trading system is any system which replaces or is intended
toreplace paper documents used for the sale of goods and/or their carriage
bysea or partly by sea and other means of transport and which:
i are documents of title; or
ii entitle the holder to delivery or possession of the goods referred to in such
documents; or
iii evidence a contract of carriage under which the rights and obligations
ofeitherof the contracting parties may be transferred to a third party.
b a ‘document’ shall mean anything in which information of any description
isrecorded including, but not limited to, computer or other electronically
generated information.
Provided that
The Board may in its discretion pay a proportion or the whole of any such liability,
costor expense in so far as it determines that it would have arisen and would
havebeen within the cover provided by the Association if the Member had not
participatedin orused a paperless system and any contract of carriage had been
contained in or evidenced by a paper document.
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P&I RISKS COVERED
37
15 Unrecoverable general average contributions
The proportion of general average expenditure, special charges or salvage which the
Member is or would be entitled to claim from cargo or from some other party to the
marine adventure and which is not legally recoverable aer the exhaustion of all legal
remedies, by reason only of a breach of the contract of carriage.
Provided that
i There shall be no right of recovery from the Association in respect of
irrecoverable cargo contributions under this Section where a vessel’s entry
withthe Association excludes Section 14 of this Rule.
ii All the provisos to Section 14 shall also apply to claims under this Section.
iii Unless the Member has previously obtained appropriate special cover by
agreement with the Managers, the proportions of general average expenditure
which the Member is or would be entitled to claim from cargo or from some
other party to the marine adventure shall be deemed to have been adjusted in
accordance with any unamended version of the York/Antwerp Rules and the
Member’s right of recovery from the Association limited accordingly.
16 Ship’s proportion of general average
Ship’s proportion of general average, special charges or salvage not recoverable
under the hull and machinery policies solely by reason of the sound value of an
insured vessel having been assessed for contribution to general average, special
charges or salvage at a value in excess of the amount for which such vessel should
have been insured if it had been ‘fully insured’ in accordance with the meaning of
those words in Rule 24.
17 Property on board the insured vessel
Liability for loss of or damage to any equipment, fuel or other property on board
theinsured vessel, other than cargo and the eects of any person aboard the
insuredvessel.
Provided that
A There shall be no right of recovery under this Section for loss of or damage to any
property which forms part of the insured vessel or which is owned, leased or hired in
by the Member or by any company associated with or under the same management
as the Member; and
B Unless the Member has obtained appropriate special cover by agreement with
theManagers, there shall be no right of recovery from the Association of any liability
which arises under a contract or indemnity entered into by him and would not have
arisen but for such contract or indemnity.
18 Special compensation to salvors
A Liability of the Member to reimburse a salvor of the insured vessel for his ‘reasonably
incurred expenses’ (together with any increment awarded thereon) under the
exception to the principle of ‘no cure – no pay’ contained in Clause 1(a) of the
Lloyd’sStandard Form of Salvage Agreement 1980 (LOF 1980).
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38
B Liability of the Member to pay to a salvor of the insured vessel ‘special compensation’
within the meaning of Article 14 of the International Convention on Salvage 1989
asincorporated into Lloyd’s Standard Form of Salvage Agreement or into any other
standard form of salvage agreement equivalent thereto approved by the Association
for operations to prevent or minimise damage to the environment.
C Liability of the Member to pay to a salvor of the insured vessel special
compensation under the terms of the Special Compensation P&I Club (SCOPIC)
Clause as incorporated into Lloyd’s Open Form of Salvage Agreement or any
other‘No Cure-NoPay’ salvage contract approved by the Association.
Provided that
i In respect of a claim under paragraph C of this Section, in the event of the
salvage of the vessel or any property on board and, in accordance with the
SCOPIC Clause, there is no Article 13 award, the residual value of the vessel
andof any property to which the Member is entitled shall rst be deducted
fromor set o against such liability and only the balance shall be recoverable
from the Association.
ii Unless the Board in its discretion shall otherwise determine, there shall be no
right of recovery from the Association under this Section where the liabilities,
costs and expenses or any part thereof would not have been incurred had the
insured vessel been ‘fully insured’ in accordance with the meaning of these
words in Rule 24.
19 Fines
Fines as set out in paragraphs A to D below when and to the extent that they are
imposed in respect of an insured vessel by any competent court, tribunal or
authorityand are imposed upon the Member or upon any seafarer whom the
Member may be legally liableto reimburse or reasonably reimburses with the
agreement of the Managers.
A For short or over delivery of cargo, or failure to comply with regulations relating to
thedeclaration of goods, or documentation of cargo, (other than nes or penalties
arising from the smuggling of goods or cargo or any attempt thereat), provided that
the Member is covered by the Association for cargo liabilities under Rule 2 Section
14and subject to the provisions of that Rule.
B For breach of any immigration law or immigration regulation.
C In respect of accidental escape or discharge of oil or other substance from the
insured vessel.
D Any other ne or penalty where the Member has satised the Board that it took
suchsteps as appear to the Board reasonable to avoid the event giving rise to such
ne or penalty and which the Board in its discretion decides that the Member
shouldrecover.
Part 2 I 39
P&I RISKS COVERED
39
E Provisos
i Notwithstanding the terms of Rule 27 paragraph 1 the Board in its discretion
may admit claims for loss of an insured vessel following nal conscation of the
vessel by a competent court, tribunal or authority by reason of infringement of
any customs law or customs regulation, to such extent as it shall think t. The
amount recoverable shall not exceed the market value of the insured vessel at
the date of nal conscation, disregarding any charter or other engagements,
towhich the vessel may be committed.
ii There shall be no right of recovery under this Section for nes arising out of
infringements or violations of or non-compliance with the provisions regarding
construction, adaptation and equipment of ships contained in the International
Convention for the Prevention of Pollution from Ships, 1973, as modied by the
Protocol of 1978 and as modied or amended by any subsequent protocol, or
the legislation of any state giving eect to that Convention; but the Board in its
discretion may admit claims for such nes to such extent as it shall think t.
iii There shall be no right of recovery under this Section for nes arising out of
infringements or violations of or non-compliance with the provisions of the ISM
or ISPS Codes; but the Board in its discretion may admit claims for such nes to
such extent as it shall think t.
20 Inquiries and criminal proceedings
A Expenses incurred by the Member in protecting his interests during an
investigationby any government or authority into the loss of or a casualty
involvingthe insured vessel.
B Expenses incurred by the Member in connection with the defence of criminal
proceedings brought against the Master of or a seafarer aboard the insured vessel
orsome other servant or agent of the Member or some other person associated
withthe Member.
C Provisos
No costs or expenses shall be recoverable under this Section unless:
i they were incurred with the agreement of the Managers in writing; or
ii the Board in its discretion decides that they should be recoverable from
theAssociation.
21 Liabilities and expenses incurred by direction of the Managers
Liabilities and expenses reasonably and necessarily incurred or sustained by the
Member for the purpose or as a result of carrying out a specic written direction
ofthe Managers in connection with the insured vessel.
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22 Sue and labour and legal costs
A Extraordinary costs and expenses (other than those set out in paragraph B of this
Section) reasonably incurred on or aer the occurrence of any casualty, event or
matter liable to give rise to a right of recovery from the Association and incurred
solelyfor the purpose of avoiding or minimising any liability or expenditure against
which the Member is wholly or, by reason of a deductible or otherwise, partly
insuredby the Association.
B Legal costs and expenses relating to any liability or expenditure against which the
Member is wholly, or, by reason of a deductible or otherwise, partly insured by the
Association, but only to the extent that those costs and expenses have been incurred
with the agreement of the Managers or to the extent that the Board in its discretion
decides that the Member should recover from the Association.
Provided that
There shall be no right of recovery under this Rule for any cost or expense related
toransom demands, extortion, blackmail, bribery or any illegal payments.
RULE 3 SPECIAL COVER
1
The Managers may accept entries of vessels on special terms as to calls or
premium, or which aord cover against any special or additional risks. The nature
and extent of the risks and the terms and conditions of insurance incorporating
any such special terms shall be as agreed by the Managers in writing.
2
Notwithstanding Rule 1 paragraph 6 a Member may be insured on the special
term that the risks insured may arise otherwise than in respect of the insured
vessel or otherwise than in connection with the operation of the insured vessel
provided that this shall have been agreed by the Managers in writing.
RULE 4 SPECIAL COVER FOR SALVORS, CHARTERERS AND
SPECIALISTOPERATIONS
1 Salvors
Notwithstanding Rule 28, provided that special cover has been agreed by the
Managers in writing and endorsed on the Certicate of Insurance, and provided that
he has paid such calls or premium as may be required by the Managers, a Member
who is the owner or operator of a salvage tug or other vessel intended to be used for
salvage operations (including for the purposes of this Rule 4, wreck removal) may be
covered for the following:
A Liabilities and expenses arising in respect of risks covered under Rule 2.
B Liabilities and expenses caused by oil pollution during salvage operations whether or
not they arise in respect of the Member’s interest in the insured vessel.
Part 2 I 41
P&I RISKS COVERED
41
C Liabilities and expenses, not covered under paragraph 1A or B of this Rule, caused
byevents occurring during salvage operations whether or not they arise in respect
ofthe Member’s interest in the insured vessel. Cover under this paragraph 1C of this
Rule is only available as specically agreed by the Managers in writing and endorsed
on the Certicate of Insurance and on payment of such additional calls as the
Managers may require.
Provided that
i There shall be no right of recovery under this Rule of any liability or expense
which is incurred under the terms of an indemnity or contract unless the terms
of the indemnity or contract have been agreed by the Managers in writing.
ii The cover aorded under this Rule in connection with any salvage or attempted
salvage operations shall be in all respects the same as that aorded under Rule
2 in respect of the operations of the insured vessel save that in the case of
coveraorded under paragraph 1B or 1C of this Rule the liabilities and expenses
need not arise in respect of an insured vessel or out of the operation of an
insured vessel provided that they arise in connection with the Member’s
business asasalvor.
iii It shall be a condition of cover under this Rule that the Member shall apply to
enter for insurance in the Association every vessel intended to be used in
connection with salvage operations at the time when the insurance is given
and, thereaer, at least 30 days before the beginning of each policy year.
2 Charterers
When the entry of an insured vessel in the Association is in the name of or on behalf
of a charterer of the insured vessel or part thereof (other than a demise or bareboat
charter), the following liabilities and expenses may be covered on such terms and
conditions as may be agreed by the Managers in writing.
A Liability of the charterer, together with expenses incidental thereto, to indemnify
theowner or disponent owner of the insured vessel in respect of the risks set out
inRule 2.
B Notwithstanding the provisions of paragraphs 1, 2 and 3 of Rule 27, the charterer’s
liability, together with the costs and expenses incidental thereto, for loss of or
damageto the insured vessel.
C Notwithstanding the provisions of paragraph 2 of Rule 27, the loss incurred by the
charterer as a result of loss of or damage to bunkers, fuel or other property of the
charterer on board the insured vessel.
3 Specialist operations
A Member may be covered against any of the liabilities or expenses which arise out of
or during any of those operations in respect of which cover is excluded or restricted
either under Rule 28 or otherwise under these Rules upon such terms and conditions
as may be agreed by the Managers in writing.
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RULE 5 OMNIBUS RULE
Notwithstanding anything to the contrary contained in these Rules the Board in its
discretion shall have power to admit a right of recovery by a Member in respect of
liabilities or expenses incidental to the business of owning, operating or managing
vessels, which in the opinion of the Board fall within the scope of the cover of Rules 2,
3 or 4.
Provided that
A Any amount claimed under this Rule which but for this Rule would be expressly
excluded by the provisions of any other Rule may only be paid if the decision of those
members of the Board present when the claim is considered is unanimous.
B Any amount claimed under this Rule shall be recoverable to such extent only as the
Board in its discretion may determine.
43
Part 3
Legal costs cover
Rule Page
6 Legal Costs Cover 44
Part 3: Legal costs cover
43
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1
The Managers may accept the entry of a vessel for Legal Costs Cover as provided in
this Rule 6, but no such cover shall be aorded to a Member without the agreement
of the Managers in writing.
2
Subject to paragraphs 6, 7, 8 and 9 of this Rule 6 and to Rule 21C, Legal Costs Cover
isin respect of ‘‘Legal Costs’’, which for the purpose of this Rule means as follows:
A
the costs and expenses incurred in obtaining advice in connection with any claims,
disputes or proceedings which have arisen during the period that a vessel has been
entered with the Association for Legal Costs Cover and that are as described in
paragraph 3 of this Rule;
B
the costs and expenses of or incidental to such claims, disputes or proceedings
including costs which the Member may become liable to pay to any other party
tosuch claims, disputes or proceedings.
3
The Legal Costs Cover aorded by the Association shall apply to claims, disputes
orproceedings:
i under any charterparty, bill of lading, contract of areightment or other
contract, including, but not limited to claims and disputes concerning hire,
o-hire, set-o, freight, deadfreight, laytime, demurrage and/or damages
fordetention, despatch, speed, performance and description of a vessel,
portsafety and orders to an insured vessel;
ii under any charterparty, bill of lading, contract of areightment or other
contract, the exercise or assertion of any rights arising thereunder or generally,
including but not limited to the right of withdrawal, exercise of lien, and claims
arising therefrom;
iii in respect of the cancellation of a charterparty or other contract;
iv in respect of the loss of, damage to or detention of an insured vessel;
v in respect of the supply of inferior, unsatisfactory or unsuitable fuel, materials
orequipment, or other necessaries;
vi for negligent or improper repair of or alteration to an insured vessel;
vii in respect of general and/or particular average contributions or charges;
viii in respect of improper loading, lightering, stowage, trimming or discharge
ofcargo;
ix in respect of and in connection with charges, disbursements, accounts
receivedfrom agents, stevedores, chandlers, brokers, customs, harbour
orother authorities, or others connected with the running, management
andoperation of an insured vessel;
x in respect of amounts due from or to underwriters and any other persons
and/or companies conducting the business of marine insurance, other
thanamounts due to or from the Association;
R
ULES 2021
Part 3: Legal Costs Cover
RULE 6 LEGAL COSTS COVER
Part 3 I 45
LEGAL COSTS COVER
xi in respect of salvage or towage services rendered by an insured vessel
exceptwhere the insured vessel is a salvage tug or other vessel used or
intended to be used for salvage operations and the claim arises as a result
oforduring any salvage operations or attempted salvage operations;
xii by or against passengers intended to be, being or having been carried
onaninsured vessel or their personal representatives or dependants;
xiii by or against ocers, crews, stowaways and other persons on or about
aninsured vessel;
xiv in connection with the mortgage of an insured vessel;
xv in connection with the representation of a Member at ocial investigations,
inquests, or other enquiries whatsoever in relation to an insured vessel.
xvi in connection with the building, purchase or sale of an insured vessel;
Provided that
For the purpose of this Part 3, claims disputes or proceedings are deemed
tohavearisen:
i when arising out of contract (other than a building, purchase or sale
agreement), in tort or under statute, when the cause of action accrues;
ii in connection with the building, purchase or sale of a vessel at the date of the
relevant ship building contract or the contract for the purchase or sale of the
insured vessel or such date as may be agreed by the Managers in writing;
iii in claims for salvage or towage services, when the agreement for the services
was concluded, or the services were concluded, whichever is the earlier.
4
The Board in its discretion shall have power to extend cover to a Member in respect
ofany claims, disputes or proceedings which are either:
i not covered under paragraph 3 of this Rule which in the opinion of the Board
fallwithin the scope of the Legal Costs Cover; or
ii the Managers do not consider have reasonable prospects of success as set
outin paragraph 6 of this Rule.
5
Unless otherwise stated cover under this Rule is subject to the claims procedures
limitations and exclusions set out in Parts 4 and 5 and in the remainder of these Rules.
6
A There shall be no right of recovery from the Association under paragraph 2 of this
Rule unless the Managers decide that the Member’s claims, disputes or proceedings
have reasonable prospects of success.
B When determining reasonable prospects of success for the purposes of this
paragraph, the Managers will take into account any matters that may appear relevant
to them, including but not limited to:
i the merits of the claims or disputes or proceedings in relation to which the
Member seeks to be covered by the Association;
ii the prospects of obtaining security for a Member’s claim and costs;
iii the prospects of enforcing an award or judgement in a Member’s favour;
iv the reasonableness of the Member’s conduct;
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v the size of the sum in dispute versus the legal costs required to resolve
the claim, dispute or proceedings.
7
Unless the Managers otherwise decide, there shall be no right of recovery under
paragraph 3 of this Rule if the principal amount involved in the claim, dispute or
proceedings is less than US$ 5,000.
8 Subject always to Rule 24 right of recovery under Rule 6, Section 3 iv shall be allowed
only to the extent that the amount is:
i not covered by the vessel’s hull policy; or
ii if covered under the vessel’s hull policy, the amount is below the deductible
inthe policy and such deductible shall be deemed not to exceed twenty ve
percent of the vessel’s insured value.
9
Rights of recovery
A In assessing the Members’ rights of recovery from the Association account shall
betaken of any costs paid or set o by the other party to the claim, dispute or
proceedings and the Members’ right of recovery shall be limited to the net costs
payable by the Member.
B In the case of a settlement of a claim, dispute or proceedings in which the other party
does not make any contribution to the Members’ costs, the Board in its discretion
shall decide the sum to which the Members’ right of recovery from the Association
shall be restricted.
47
Part 4
Claims procedures
Rule Page
7 Obligation to Sue and Labour 48
8 Notication of Claims 48
9 Time Bar 48
10 Admission of Liability 49
11 Eect of Breaches of Obligations in
Rules 7, 8, 9 and 10 49
12 Appointment of Lawyers and Other Persons 49
13 Basis of Appointment 49
14 Powers of the Managers Relating to the
Handling and Settlement of Claims 50
15 Bail 50
Part 4: Claims procedures
47
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48
RULE 7 OBLIGATION TO SUE AND LABOUR
1
It shall be the duty of the Member and his agents at all times, whether before, at the
time of, during or aer the occurrence of any event or matter liable to give rise to a
right of recovery by a Member from the Association, to take all such steps, whether in
relation to his business or to the insured vessel or otherwise, as may be reasonable for
the purpose of averting or minimising any expense or liability in respect of which he
may be covered by the Association.
2
The duty imposed on a Member and his agents hereunder shall be to take such steps
as could reasonably be expected to be taken by a competent and prudent uninsured
owner in the same or similar circumstances and no account shall be taken of any
circumstances peculiar to the Member such as his lack of means orinability to
provide the requisite funds for any reasons whatsoever.
RULE 8 NOTIFICATION OF CLAIMS
A Member must:
1 Promptly notify the Managers of every event or matter which is liable to give rise
toaclaim upon the Association and of every event or matter including any legal
orarbitration proceedings commenced against the Member which is liable to
causethe Member to incur liabilities or expenses for which he may be covered
bytheAssociation.
2 Promptly notify the Managers of every survey or opportunity to survey in connection
with such event or matter.
3 At all times promptly notify the Managers of any information documents or reports in
his or his agents’ possession power or knowledge relevant to such event or matter.
4 Whenever so requested by the Managers, promptly produce to the Managers and/or
allow the Managers or their agents to inspect, copy or photograph, all relevant
documents of whatsoever nature in his or his agents’ possession or power.
5 Permit the Managers or their agents to interview any servant, agent or other person
who may have been employed by the Member at any time whom the Managers may
consider likely to have any direct or indirect knowledge of the matter or who may
have been under a duty at any time to report to the Member in connection therewith.
RULE 9 TIME BAR
1 Without prejudice to the duty of prompt notication contained in Rule 8, if a Member:
i fails to notify the Managers of any event or matter referred to in Rule 8 within
one year aer he has knowledge of it (or in the opinion of the Board ought to
have known of it), or
RULES 2021
Part 4: Claims procedures
Part 4 I 49
CLAIMS PROCEDURES
49
ii fails to submit a claim to the Managers for reimbursement of any loss,
damage, liabilities, cost or expenses within one year aer discharging the
same, the Member’s claim against the Association shall be extinguished and
the Association shall be under no further liability in respect of such claim,
unless and to the extent that the Board in its discretion otherwise decides.
2 Without prejudice to paragraph (1) of this Rule, unless and to the extent that the Board
in its discretion otherwise decides, no claim shall in any event be recoverable from the
Association unless written notice of it has been given to the Managers within three
years from the time of the casualty or other event or matter giving rise to the claim.
RULE 10 ADMISSION OF LIABILITY
A Member shall not settle or admit liability for any claim for which or for the expenses
of which he may be covered by the Association without the agreement of the
Managers in writing.
RULE 11 EFFECT OF BREACHES OF OBLIGATIONS IN RULES 7, 8, 9 AND 10
If a Member commits any breach of his obligations in Rules 7, 8, 9 and 10, the Board
may in its discretion reject any claim by him against the Association arising out of
anyevent or matter, or reduce the sum otherwise recoverable from the Association
inrespect thereof by such amount as it may determine.
RULE 12 APPOINTMENT OF LAWYERS AND OTHER PERSONS
Without prejudice to any other provisions of these Rules and without waiving any
ofthe Association’s rights hereunder, the Managers may at any time appoint on
behalf of a Member upon such terms as they may think t lawyers, surveyors or
otherpersons for the purpose of dealing with any matter liable to give rise to a claim
by the Member upon the Association, including, but not limited to, investigating, or
advising upon any such matter and taking or defending legal or other proceedings
inconnection therewith. The Managers may also at any time discontinue such
employment as they may think t.
RULE 13 BASIS OF APPOINTMENT
All lawyers, surveyors and other persons appointed by the Managers on behalf of
aMember or appointed with the prior consent of the Managers shall at all times
bedeemed to be appointed on the terms that they have been instructed by the
Member at all times to give advice and to report to the Managers in connection with
the matter without prior reference to the Member, that they are to produce to the
Managers without reference to the Member any documents or information in their
possession or power relating to such matter as if such person had been appointed
toact and had at all times been acting on behalf of the Association and
notwithstanding that any such advice, reports, documents or information would
otherwise be the subject of legal or any other form of privilege.
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RULE 14 POWERS OF THE MANAGERS RELATING TO THE HANDLING
AND SETTLEMENT OF CLAIMS
1 The Managers shall have the right, but not an obligation, if they so decide to control or
direct the conduct of any claim or legal or other proceedings relating to any liabilities
or expenses in respect of which a Member is or may be covered in whole or in part or
which may give rise to a claim by the Member upon the Association and to require the
Member to settle, compromise or otherwise dispose of such claims or proceedings in
such manner and upon such terms as the Managers see t.
2 If a Member does not settle, compromise, dispose of or take steps in connection with
the handling of a claim or proceedings as required by the Managers in accordance
with paragraph 1 of this Rule, any eventual recovery by the Member from the
Association in respect of such claim or proceedings shall be limited to the amount
hewould have recovered if he had acted as required by the Managers.
3 Unless otherwise agreed by the Managers in writing, when the Association has paid
aclaim to or on behalf of a Member the whole of any recovery from a third party in
respect of that claim shall be credited and paid to the Association up to an amount
corresponding with the sum paid by the Association together with any interest
element on that sum comprised in the recovery, provided, however, that when,
because of a deductible in his terms of entry, the Member has contributed to
settlement of the claim, any such interest element shall be apportioned between
theMember and the Association taking into account the payments made by each
and the dates on which those payments were made.
RULE 15 BAIL
1 The Association shall not be obliged to provide bail or other security in relation
toclaims made against a Member in any circumstances whatsoever. It shall be a
condition precedent of the Managers’ consideration of the provision of such bail
orsecurity that:
A
the Member gives an undertaking to the Association on such terms as the Managers
may require;
B
the Member remits to the Association any deductible that may apply to such claim,
and any call or other amount outstanding due to the Association;
C
the Association shall be entitled to a commission from the Member of 1% on the
amount of bail or security to be provided.
The Association shall in no circumstances provide cash deposits.
2 If the Association does provide bail or other security in relation to claims made
againsta Member it shall be without prejudice to the Member’s obligations and the
Association’s rights under these Rules and shall not constitute any admission of a
right of recovery from the funds of the Association of the claim in respect of which
such bail or other security is provided.
51
Part 5
Limitations and exclusions
Rule Page
16 Payment First by the Member 52
17 No Liability Until Calls or Premium Paid 52
18 Interest and Consequential Loss 52
19 Set-o 52
20 Deductibles 52
21A Limit of the Association’s Liability
for Oil Pollution 52
21B Limit of the Association’s Liability
for Overspill Claims 53
21C Limit of the Association’s Liability
for Legal Costs Cover 53
21D Limit of the Association’s Liability in
Connection with Passengers, Seafarers
and Other Persons 53
21E Limit of the Association’s Liability to Charterers 54
22 Other Limitations of the Association’s Liability 54
23 Double Insurance 55
24 Exclusion of Sums Insurable under Hull Policies 55
25 Liability Excluded for War Risks and
MarineCyberRisks 56
26 Liability Excluded for Certain Nuclear Risks 57
27 Miscellaneous Exclusions 58
28 Liabilities Excluded in Respect of Salvage
Vessels, Drilling Vessels, Dredgers and
Other Specialist Operations 59
29 Liabilities Excluded in Respect of
Non-marine Personnel 60
30 Liabilities Excluded if as a Result of
Wilful Misconduct 61
31 Liabilities Excluded if Adventure Illegal,
Hazardous or Improper 61
32 Liabilities Excluded if Unrecoverable from
reinsurers as a Consequence of Sanctions,
Prohibitions or Restrictions under UN
resolutions or Trade or Economic Sanctions,
Laws or Regulations of the European Union,
UK or United States of America 61
33 Classication and Statutory Certication
of Vessel 61
34 Survey of Vessels and Management Audit 62
35 Survey of Vessels Aer Lay-up 63
Part 5: Eliminations and exclusions
51
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RULE 16 PAYMENT FIRST BY THE MEMBER
Unless the Board in its discretion otherwise decides, it is a condition precedent
of a Member’s right to recover from the funds of the Association in respect of any
liabilities, costs or expenses that he shall rst have discharged or paid the same.
RULE 17 NO LIABILITY UNTIL CALLS OR PREMIUM PAID
Without prejudice to anything elsewhere contained in these Rules it shall be a
condition precedent of a Member’s right to recover from the funds of the Association
in respect of any liabilities, costs or expenses that all such calls or premium and other
amounts whatsoever as shall have become due from the Member to the Association
shall have been paid in full without any set-o or discount.
RULE 18 INTEREST AND CONSEQUENTIAL LOSS
A Member shall have no right to recovery of interest on any claim he may have against
the Association.
Unless the Board in its discretion shall otherwise determine a Member shall have no
right to recover any losses suered as a consequence of delay or failure on the part
ofthe Association to reimburse a Member.
RULE 19 SET-OFF
Without prejudice to anything elsewhere contained in these Rules the Association
shall be entitled to set-o any amount due from a Member against any amount due to
such Member from the Association.
RULE 20 DEDUCTIBLES
The Member’s right of recovery from the Association in respect of any claim shall be
subject to such deductible as may be agreed by the Managers in writing. If a single
incident gives rise to a number of claims with dierent deductibles the aggregate
ofall claims arising from the incident shall be subject to the highest deductible
applicable to any of those claims.
RULE 21A LIMIT OF THE ASSOCIATION’S LIABILITY FOR OIL POLLUTION
1
The Association’s liability for claims in connection with oil pollution shall be limited
toUS$ 1,000 million each accident or occurrence.
RULES 2021
Part 5: Eliminations and exclusions
Part 5 I 53
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53
2
The limit of US$ 1,000 million shall apply irrespective of whether the accident or
occurrence involves the escape of oil from one vessel or more than one vessel and to
all claims brought by the Member or joint Members in relation to an insured vessel in
respect of such accident or occurrence whether under one section of Rule 2 or more
than one section. If the aggregate of such claims exceeds US$ 1,000 million, the
liability of the Association for each claim shall be such proportion of US$ 1,000 million
as such claim bears to the aggregate of all such claims. If and to the extent that a
Member has, in relation to any claim in connection with oil pollution, other insurance
not being solely in respect of the excess of US$ 1,000 million, then the limit of
US$1,000 million shall be reduced by the amount of the stated limit of such other
insurance and there shall be no right of recovery in respect of any such claim to the
extent that it does not exceed the stated limit of such other insurance.
3
When the insured vessel provides salvage or other assistance to another vessel
following a casualty, a claim by the Member in relation to the insured vessel in respect
of oil pollution arising out of the salvage, that assistance or the casualty shall be
aggregated with any liabilities or expenses incurred in respect of oil pollution with the
same casualty when such other vessels are either:
i covered by the Association in respect of oil pollution, or
ii covered for those risks by any other Association which participates in the
Pooling Agreement and the Group excess reinsurance policy.
In these circumstances the limit of the liability of the Association shall be such
proportion of US$ 1,000 million as the claim by the Member in relation to the
insuredvessel bears to the aggregate of all the said claims.
RULE 21B LIMIT OF THE ASSOCIATION’S LIABILITY FOR OVERSPILL CLAIMS
Without prejudice to any other applicable limit, there shall be no right of recovery of
any overspill claim except in accordance with Rule 53.
RULE 21C LIMIT OF THE ASSOCIATION’S LIABILITY FOR LEGAL COSTS COVER
Without prejudice to paragraph 6 of Rule 6, the Association’s liability for claims arising
under Rule 6, paragraph 3 i) to xv) shall in any event be limited to US$ 5 million in the
aggregate in respect of any one claim, dispute, or proceedings.
Without prejudice to paragraph 6 of Rule 6, the Association’s liability for claims
arisingunder Rule 6, paragraph 3 xvi shall in any event be limited to US$ 1 million
inthe aggregate in respect of any one claim, dispute, or proceedings.
RULE 21D LIMIT OF THE ASSOCIATION’S LIABILITY IN CONNECTION
WITH PASSENGERS, SEAFARERS AND OTHER PERSONS
1 The Association’s liability for claims in connection with passengers shall be limited
inthe aggregate to US$ 2,000 million each accident or occurrence.
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2 The Association’s liability for claims in connection with passengers and seafarers
shallbe limited in the aggregate to US$ 3,000 million each accident or occurrence.
Provided that
Where claims are made against any other Association which participates in the
Pooling Agreement, the aggregate of all claims arising out of each accident or
occurrence in respect of liability to passengers or seafarers shall be limited to the
amounts shown above and the liability of each Association shall be limited to such
proportion of those amounts as the claims recoverable by such persons from the
Association bears to the aggregate of all such claims otherwise recoverable from
theAssociation and any other such Association.
For the purpose of this Rule alone ‘Passenger’ shall mean a person carried on
boardavessel under a contract of carriage or who, with the consent of the carrier,
isaccompanying a vehicle or live animals covered by a contract for the carriage
ofgoods and a ‘Seafarer’ shall mean any other person on board a vessel not being
aPassenger.
RULE 21E LIMIT OF THE ASSOCIATION’S LIABILITY TO CHARTERERS
In relation to vessels insured by or on behalf of a Member who is a charterer, other
than abareboat charterer, or by or on behalf of a charterer insured as a joint Member
or as aCo-assured on a Member’s or joint Member’s entry, the Association’s liability
tosuch Member in respect of all claims shall be limited to US$ 350 million each
accident or occurrence. In the event that more than one charterer, other than a
bareboat charterer, isinsured in respect of the same vessel by the Association or by
any other Association which participates in the Pooling Agreement and the Group
excess reinsurance policy, the aggregate recovery in respect of all claims brought
byall such charterers arising out of any one accident or occurrence shall not exceed
the sum of US$ 350 million, and the liability of the Association to each charterer
covered by the Association shall be limited to such proportion of US$ 350 million
asthe claim of such charterer bears to the aggregate of all such claims recoverable
from the Association and any other such Association.
RULE 22 OTHER LIMITATIONS OF THE ASSOCIATION’S LIABILITY
1 General limitation
Subject to these Rules the Association insures the liability of a Member in respect
ofan insured vessel as his liability may ultimately be determined and xed by law,
including laws pertaining to limitation of vessel owners’ liability. The Association
shallin no circumstances be liable for any sum in excess of such legal liability. If less
than the full gross tonnage of a vessel is entered in the Association, the Member
concerned shall be entitled only to recover such proportion of his claim as the
entered tonnage bears to the full gross tonnage.
1 General limitation 2 Limitations for persons other than vessel owners
Part 5 I 55
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55
2 Limitations for persons other than vessel owners
If a Member has entered a vessel in the Association, and he is not the registered
owner, demise charterer, manager or operator of that vessel or an insurer of
protection and indemnity risks of such description of persons, then unless otherwise
agreed by the Managers in writing the liability of the Association in respect of any
claim brought by the Member relating to that vessel shall not exceed the amount to
which he could have limited his liability for the claim if he had been the registered
owner and had not been denied the right to limit.
RULE 23 DOUBLE INSURANCE
1 Unless the Board otherwise determines, there shall be no right of recovery fromthe
Association of any claim in respect of liabilities or expenses which are recoverable
under any other insurance or which would have been so recoverable:
A
apart from any terms in such other insurance excluding or limiting liability on the
ground of double insurance; and
B
if the insured vessel had not been entered in the Association with cover against
therisks set out in these Rules.
2 In no case shall the Association be liable for any franchise, deductible or deduction
ofa similar nature borne by a Member under such other insurance.
RULE 24 EXCLUSION OF SUMS INSURABLE UNDER HULL POLICIES
Unless otherwise agreed by the Managers in writing or the Board otherwise
determines, the Association shall not be liable for any liabilities or expenses
inconnection with an insured vessel:
1 against which a Member would be insured if the insured vessel were, at the date
oftheincident giving rise to such liabilities or expenses, fully insured under hull
policies on terms not less wide than those of the Lloyd’s Marine Policy with the
Institute Time Clauses (Hulls) 1/10/83 attached;
2 which would not be recoverable under such policies by reason of some franchise,
deductible or deduction of a similar nature in such policies.
‘Fully insured’ in paragraph 1 of this Rule means insured at such insured value as
inthediscretion of the Board represents the full market value of the insured vessel,
disregarding any charter or other engagement to which she may be committed.
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RULE 25 LIABILITY EXCLUDED FOR WAR RISKS AND MARINE CYBER RISKS
War Risks Exclusion
There shall be no right of recovery from the Association in respect of any liabilities
orexpenses, whether or not a contributory cause of their being incurred was any
neglect on the part of the Member or the Member’s servant or agents, when the
incident giving rise to the liability or expenses was caused by the following:
1 War, civil war, revolution, rebellion, insurrection or civil strife arising therefrom,
or any hostile act by or against a belligerent power or by any act of terrorism.
2 Capture, seizure, arrest, restraint or detainment (barratry or piracy excepted)
andtheconsequences thereof or any attempt thereat.
3 Mines, torpedoes, bombs, rockets, shells, explosives or similar weapons of war (save
for those liabilities or expenses which arise solely by reason of the transport of such
weapons whether on board the insured vessel or not), provided that this exclusion
shall not apply to the use of such weapons, either as a result of government order
orthrough compliance with a written direction given by the Managers or the Board,
where the reason for such use is the avoidance or mitigation of liabilities, costs or
expenses which would otherwise fall within the cover given by the Association.
Marine Cyber Risks Exclusion
4 Subject only to paragraph 6 below, there shall be no right of recovery from the
Association in respect of loss, damage, liability or expense directly or indirectly caused
by or contributed to by or arising from the use or operation, as a means for inicting
harm, of any computer, computer system, computer soware programme, malicious
code, computer virus, computer process or any other electronic system.
5 Subject to the conditions, limitations and exclusions of these Rules, the indemnity
otherwise recoverable hereunder shall not be prejudiced by the use or operation
ofany computer, computer system, computer soware programme, computer
process or any other electronic system, if such use or operation is not as a means
forinicting harm.
6 Paragraph 4 shall not operate to exclude:
i losses otherwise recoverable under the War Risk Extension Clause arising from
the use of any computer, computer system or computer soware programme
or any other electronic system in the launch and/or guidance system and/or
ring mechanism of any weapon or missile; or
ii losses otherwise recoverable under the Bio-Chemical Extension Clause.
Provided that
i A Member shall be covered in respect of the risks set out in Rule 2 which would
otherwise not be covered by reason of this Rule 25 but only in accordance with
the terms of the War Risk Extension Clause, as appended to these Rules.
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LIMITATIONS AND
EXCLUSIONS
57
ii The exclusions in Rule 25 and Rule 26 shall not apply to liabilities, costs and
expenses of a Member insofar only as they are discharged by the Association
onbehalf of the Member pursuant to a demand made under a guarantee,
undertaking or certicate issued by the Club in accordance with, or pursuant
to,any other law, regulation or international convention coming into force
during the current Policy Year. Where any such guarantee, undertaking or
certicate is provided by the Club on behalf of the owner as guarantor or
otherwise, the owner agrees that:
a any payment by the Club under any guarantee, undertaking or certicate
above, in discharge of the said liabilities, costs and expenses shall, to the extent
of any amount recovered under any other policy of insurance or extension
tothe cover provided by the Association, be by way of loan; and
b there shall be assigned to the Club, to the extent and on the terms that the
Managers determine in their discretion to be practicable, all the rights of the
owner under any such other insurance and against any third party; and
c unless the Managers shall otherwise determine, the owner shall indemnify
theClub to the extent that any payment under any guarantee, undertaking
orcerticate referred to above, in discharge of the said liabilities, costs and
expenses is or would have been recoverable under a standard P&I War Risk
policy of insurance, had the owner complied with all the terms and conditions
thereof, under which the vessel shall be deemed to be insured without
deductible for its full value.
RULE 26 LIABILITY EXCLUDED FOR CERTAIN NUCLEAR RISKS
There shall be no right of recovery from the Association in respect of any liabilities,
costs or expenses (irrespective of whether a contributory cause of them being
incurred was any neglect on the part of the insured owner or his servants or agents)
when the loss or damage, injury, illness or death or other accident in respect of which
such liability arises or cost or expense is incurred, was directly or indirectly caused by
or arises from:
A ionising radiations from or contamination by radioactivity from any nuclear fuel
orfrom any nuclear waste or from the combustion of nuclear fuel
B the radioactive, toxic, explosive or other hazardous or contaminating properties
ofany nuclear installation, reactor or other nuclear assembly or nuclear
componentthereof
C any weapon or device employing atomic or nuclear ssion and/or fusion or
otherlikereaction or radioactive force or matter
D the radioactive, toxic, explosive or other hazardous or contaminating properties
ofany radioactive matter
other than liabilities, costs and expenses arising out of carriage of ‘excepted matter’
(as dened in the Nuclear Installations Act 1965 of the United Kingdom or any
regulations made thereunder) as cargo in an insured vessel.
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RULE 27 MISCELLANEOUS EXCLUSIONS
There shall be no right of recovery from the Association in respect of the following:
1 Loss of or damage to an insured vessel or any part thereof.
2 Loss of or damage to any equipment on board an insured vessel or to any
containers,lashings, stores or fuel thereon, to the extent that they are owned
orleased by the Member or by any company associated with or under the
samemanagement as the Member.
3 The cost of repairs to an insured vessel or any charges or expenses in connection
therewith.
4 Loss of freight or hire or any proportion thereof, unless such loss forms part of a claim
recoverable from the Member for loss in respect of cargo or is, with the agreement
ofthe Managers in writing, included in the settlement of such a claim.
5 Salvage of an insured vessel or services in the nature of salvage provided to an
insured vessel and any costs and expenses in connection therewith.
6 Loss arising out of cancellation of a charter or other engagement of an insured vessel.
7 Loss arising out of unrecoverable debts or out of the insolvency of any person,
including insolvency of agents.
8 Claims relating to demurrage on or detention of an insured vessel unless such
demurrage or detention forms part of a claim otherwise covered by the vessel’s entry
in the Association. In no case shall a Member be entitled to recover sums inexcess of
the vessel’s actual running costs.
Provided that
The foregoing exclusions of liability shall not prevent recovery of claims under
thefollowing Sections of Rule 2:
Section 4: Diversion expenses
Section 6: Liabilities for life salvage
Section 10: Towage
Section 11: Liability arising under certain indemnities and contracts
Section 15: Unrecoverable general average contributions
Section 16: Ship’s proportion of general average
Section 18: Special compensation to salvors
Section 21: Liabilities and expenses incurred by direction of the Managers
Section 22: Sue and labour and legal costs
Part 5 I 59
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EXCLUSIONS
59
RULE 28 LIABILITIES EXCLUDED IN RESPECT OF SALVAGE VESSELS, DRILLING
VESSELS, DREDGERS AND OTHER SPECIALIST OPERATIONS
Unless special cover shall have been agreed by the Managers in writing pursuant
toRules 3 and 4, there shall be no right of recovery from the Association of any
claimrelating to liabilities, costs and expenses incurred by a Member in respect
ofthefollowing:
1 An insured vessel which is a salvage tug or other vessel used or intended to be used
for salvage operations (including wreck removal), when the claim arises as a result of
or during any salvage operations or attempted salvage operations other than salvage
operations conducted by the insured vessel for the purpose ofsaving or attempting
tosave life at sea.
2 An insured vessel being a drilling vessel or barge or any other vessel or barge
employed to carry out drilling or production operations in connection with oil or
gasexploration or production, to the extent that such liabilities and expenses arise
outof or during drilling or production operations.
A An insured vessel shall be deemed to be carrying out production operations if (inter
alia) it is a storage tanker or other vessel engaged in the storage of oil, and either:
i the oil is transferred directly from a producing well to the storage vessel; or
ii the storage vessel has oil and gas separation equipment on board and gas
isbeing separated from oil whilst on board the storage vessel other than
bynatural venting; and
B In respect of any insured vessel employed to carry out production operations
inconnection with oil or gas production, the exclusion shall apply:
i from the time that a connection, whether directly or indirectly, has been
established between the insured vessel and the well until such time that
theinsured vessel has been disconnected from the well as part of a planned
procedure to leave the site for the purpose of navigation to shore or to
anotherproduction site; or
ii where the insured vessel is unintentionally, as well as intentionally as an
emergency response, disconnected from the well; or
iii where the insured vessel remains connected to the well, but the production
isshut down, whether or not as an emergency response.
3 The performance of specialist operations including, but not limited to, dredging,
blasting, pile driving, well-intervention, cable or pipe laying, construction, installation
ormaintenance work, decommissioning, core sampling, depositing of spoil and
power generation to the extent that such liabilities and expenses arise as a
consequence of:
A Claims brought by any party for whose benet the work has been performed, or by
any third party (whether connected with any party for whose benet the work has
been performed or not), in respect of the specialist nature of the operations; or
B The failure to perform such specialist operations by the Member or the tness
forpurpose and quality of the Member’s work, products or services, including
anydefect in the Member’s work, products or services; or
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C any loss of or damage to the contract works.
Provided always that this exclusion shall not apply to liabilities, costs and expenses
incurred by a Member in respect of:
i loss of life, injury or illness of crew and other personnel on board the
insuredvessel; or
ii the wreck removal of the insured vessel; or
iii oil pollution emanating from the insured vessel or the threat thereof,
but only to the extent that such liabilities, costs and expenses are
otherwisecovered by the Association in accordance with the Rules.
4 The activities of professional or commercial divers, when the Member is responsible
for such activities other than
i activities arising out of salvage operations being conducted by an insured
vessel where the divers form part of the crew of that insured vessel (or of
divingbells or other similar equipment or cra operating from the insured
vessel) and where the Member is responsible for the activities of such divers
ii recreational diving activities
iii incidental diving activities carried out in relation to the inspection, repair or
maintenance of the insured vessel or in relation to damage caused by the
insured vessel.
5 Waste incineration or disposal operations carried out by the insured vessel (otherthan
any such operations carried out as an incidental part of other commercial activities).
6 The operations of submarines, mini-submarines, diving bells or remotely operated
vehicles.
7 An insured vessel being a semi-submersible heavy li vessel or other vessel designed
exclusively for the carriage of heavy li cargo where the claim arises out of the loss of
or damage to or wreck removal of cargo, unless the cargo is being carried under a
contract on unamended Heavycon terms or any other contract approved by the
Managers in writing.
RULE 29 LIABILITIES EXCLUDED IN RESPECT OF NON-MARINE PERSONNEL
There shall be no right of recovery from the Association in respect of any liabilities,
costs or expenses incurred in respect of any of the following:
1 Personnel (other than marine crew), on board the insured vessel, being an
accommodation vessel, employed otherwise than by the Member, where either:
i