Circular No. 12/00 - Noting The Interests Of Mortgagees In P&I Entries
NOVEMBER 27, 2000
CIRCULAR NO. 12/00
TO MEMBERS OF THE ASSOCIATION
NOTING THE INTERESTS OF MORTGAGEES IN P&I ENTRIES
It is normally the case that mortgagees of vessels entered in the Club ask that their interests be noted by way of a loss payable clause (LPC) endorsed on relevant certificates of entry, as well as a letter of undertaking (LOU) from the Club acknowledging their involvement and making certain commitments as to the consequences of termination, etc.
Over the past several years it has become clear that a growing lack of standardization of approach has created circumstances where LPCs and LOUs with inappropriate wordings have been requested by mortgagees. In many cases, the language involved has reflected Hull rather than P&I practice creating circumstances not properly reflecting the true intent of the parties involved.
Members might therefore find it useful to have at their disposal standard wordings for LPCs and LOUs which are the most appropriate for use in noting the interests of mortgagees in P&I entries. These are as attached. They reflect wordings in common currency within the International Group of P&I Clubs and should be used whenever possible.
If any Member has any questions in regard to this subject – or generally requires any further elaboration – the Managers will be pleased to respond.
Joseph E.M. Hughes, Chairman & CEO