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Rules
Class I - Protection and Indemnity Insurance
Rule 1 - Introductory: Interpretation Membership : General Provisions
SECTION 1 - INTRODUCTORY PROVISIONS
In these Rules the following words and expressions shall have the following meanings, if not inconsistent with the subject or context thereof: AFFILIATE: Any person who is insured in accordance with Rule 1.3.12. APPLICANT MEMBER: In relation to a vessel which is desired or intended to be insured with the Association (as hereinafter defined) means an owner, operator or charterer (including a bareboat or demise charterer) of such vessel and any other person by whom or on whose behalf an application has been, is being or is to be made for the insurance of such vessel with the Association whether or not he is or is to be a Member (as hereinafter defined) of the Association. ASSOCIATION: American Steamship Owners Mutual Protection and Indemnity Association, Inc. and/or its subsidiary American Steamship Owners Marine Insurance Company (Europe) Ltd. as the context or subject matter may require or allow.
BILL OF LADING: BY-LAWS: The By-Laws of American Steamship Owners Mutual Protection & Indemnity Association, Inc. at the relevant times. CARGO: Goods, including anything used or intended to be used to secure goods, which are subject to a contract of carriage to which the Member is party, but excluding containers or other equipment owned or leased by the Member. CERTIFICATE OF ENTRY: The document issued by the Managers on behalf of the Association evidencing the contract of insurance between a Member and the Association pursuant to the provisions of Rule 1.4.6 to 9 inclusive. The same definition shall apply to the document issued by Shipowners Claims Bureau (Cyprus) Ltd. on behalf of American Steamship Owners Marine Insurance Company (Europe) Ltd. CO-ASSURED: Any person who is insured in accordance with the terms of Rule 1.3.13 to 1.3.18. CONTAINER: A container or similar receptacle, including trailer, flat, pallet or tank, as may have been expressly agreed to be such in writing by the Managers.
CONTRACT OF INSURANCE:
The contract of insurance between the Member and the Association includes the provisions of the Certificate of Entry and any endorsements thereto issued by the Association's Managers to the Member and the provisions of the Association's By-Laws and Rules in effect as of the date the Certificate of Entry was issued. The same definition shall apply to the contract of insurance as evidenced by the Certificate of Entry and any endorsements thereto issued by Shipowners Claims Bureau (Cyprus) Ltd. on behalf of American Steamship Owners Marine Insurance Company (Europe) Ltd. to any Member named therein, and shall also include the provisions of the By-Laws and Rules of American Steamship Owners Mutual Protection and Indemnity Association, Inc. in effect as of the date such Certificate of Entry was issued.
Has the meaning ascribed to it in Rule 4.16. DIRECTORS: The Board of Directors of American Steamship Owners Mutual Protection and Indemnity Association, Inc. at the relevant times. EFFECTS: Personal property, documents, navigational or other technical instruments and tools brought on board, or being taken to or from an insured vessel by a seaman or supernumerary but excluding cash, valuables, or any other article which, in the opinion of the Directors, is not an essential requirement for a seaman. ENDORSEMENT: A document issued by the Managers on behalf of the Association evidencing any variations or additions to the contract of insurance as contained in a Certificate of Entry of which it forms an integral part. The same definition shall apply to a document issued by Shipowners Claims Bureau (Cyprus) Ltd. on behalf of American Steamship Owners Marine Insurance Company (Europe) Ltd. evidencing any additions or variations to the contract of insurance as contained in a relevant Certificate of Entry both as further defined in each case herein. FINES: Fines, penalties and other impositions similar in nature to fines imposed in respect of any insured vessel by any court, tribunal or authority of competent jurisdiction. FIXED PREMIUM: Any premium which is not mutual premium. FLEET: Any two or more vessels insured hereunder having common nominal, or beneficial, ownership, management or control. GROUP EXCESS LOSS CONTRACT: The excess loss reinsurance contract entered into by the parties to the Pooling Agreement. GROUP REINSURANCE LIMIT Has the meaning ascribed to it in Rule 4.16. HULL INSURANCE(S)/HULL POLICY(IES): Insurance in respect of the insured vessel’s hull and machinery, increased value and excess liability and war risks. INSURED VESSEL: A vessel which has been insured with the Association. IN WRITING/WRITTEN: Visibly expressed in any mode of permanently representing or reproducing words including telegram, facsimile transmission and other electronic communication. JOINT MEMBER: Any person who is insured in accordance with the terms of Rule 1.3.5. MANAGERS: Shipowners Claims Bureau, Inc. and/or its subsidiary Shipowners Claims Bureau (Cyprus) Ltd. and/or any of the other subsidiaries of Shipowners Claims Bureau, Inc. as the context or subject matter may require or allow. Provided always that any and all powers, discretions or liberties to agree to any special terms and/or to waive or vary any terms of these Rules and/or any other provisions of a contract of insurance to which the Association and the Member are party, or to agree to, or approve of, any additional insurances in respect thereof, or to determine or approve of any issue as a condition for recovery of a claim, or to extend or restrict cover, or to engage in the adjudication of differences or disputes under Appendix A of these Rules of Class I, which are described in these Rules as vesting in the Managers, shall be vested solely and exclusively in Shipowners Claims Bureau, Inc. MEMBER: An owner, operator or charterer (including a bareboat or demise charterer) of a vessel insured by the Association who according to the By-Laws and these Rules is entitled to membership of the Association, provided that, where the context may require or allow, the term Member shall, in these Rules, include a Joint Member, Co-assured and Affiliate. The same definition shall apply to a party named as an Assured/Member on a Certificate of Entry issued by Shipowners Claims Bureau (Cyprus) Ltd. on behalf of American Steamship Owners Marine Insurance Company (Europe) Ltd. MUTUAL PREMIUM: Premium payable by a Member in consideration of the affording by the Association of mutual insurance and subject to the relevant provisions of Rule 4. NET PREMIUM: Has the meanings ascribed to it in Rule 4.7 or Rule 4.11 as the context requires. OVERSPILL CALL: Has the meaning ascribed to in it Rule 4.17. OVERSPILL CLAIM: Has the meaning ascribed to in it Rule 4.17. OVERSPILL CLAIM DATE: Has the meaning ascribed to in it Rule 4.17. PASSENGER: A person carried on board an insured 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. POLICY YEAR: A year from noon GMT on any February 20 to noon GMT on the next following February 20. POOLING AGREEMENT: The agreement, to which the Association is a party, between certain protection and indemnity associations dated February 20, 1998 and any addendum to, variation or replacement of, the said agreement, or any other agreement of a similar nature or purpose. PREMIUM TO RELEASE: That part of mutual premium capable of being levied and collected under the provisions of Rule 4.8 to 10 inclusive. RULES: These Rules as originally framed or as may from time to time be altered, abrogated or added to and in force at relevant times. SEAMAN: An employee of a Member falling within the categories of person set out in Rule 2.1.B or, solely and exclusively for purposes of the interpretation of Rule 1.4.35, any person on board an insured vessel who is not a passenger. SUPPLEMENTARY PREMIUM: That part of mutual premium capable of being levied and collected under the provisions of Rule 4.5 to 7 inclusive. VESSEL: Any ship, boat, hydrofoil, hovercraft or other description of vessel (including a lighter, barge or similar vessel howsoever propelled but excluding (a) a unit or vessel constructed or adapted for the purpose of carrying out drilling operations in connection with oil or gas exploration or production and (b) a fixed platform or fixed rig) used or intended to be used for any purpose whatsoever in navigation or otherwise on, under, over or in water or any part of such vessel or any proportion of the tonnage thereof or any share therein. Words importing the singular number only shall include the plural number and vice versa.
Words importing the masculine gender only shall include the feminine and neuter genders.
Words importing persons shall include individuals, partnerships, corporations, associations,
joint ventures and any other business entities
SECTION 3 - MEMBERS, JOINT MEMBERS, AFFILIATES AND CO-ASSUREDS
Membership
Cover for Co-assureds and Affiliates
Joint Members, Co-assureds and Affiliates
SECTION 4 - GENERAL INSURANCE PROVISIONS Application for Insurance 1. Any applicant Member who desires to insure a vessel with the Association shall make application for such insurance in such form or manner as may from time to time be required, or which may otherwise satisfy, the Managers. 2. The particulars given by an applicant Member in any form of application, together with any other particulars or information given to the Managers in the course of applying for insurance, or negotiating changes in its terms, shall, if the insurance of the vessel be accepted, be deemed fundamental to the contract of insurance between the Member and the Association. It shall be a condition precedent of such insurance that all the said particulars and information were true so far as the applicant Member knew or could with reasonable diligence have ascertained. 3. The Managers shall be entitled, as a matter of their absolute discretion and without giving any reason, to refuse any application of a vessel for insurance in the Association whether or not the applicant Member of such vessel is already a Member of the Association. Premium Rating and Other Variable or Special Terms 4. Before an application is accepted for the insurance of a vessel either by way of mutual insurance, or by way of fixed premium insurance, the applicant Member and the Managers shall agree the premium rating of the vessel concerned in addition to any other variable or special terms and conditions of insurance as shall be considered appropriate for acceptance of the vessel to be insured. The said premium rating may be expressed as an estimated total premium in the case of mutual insurance or as a fixed premium in the case of fixed premium insurance. In either case, the provisions of Rule 4 below will apply. 5. In deciding upon the premium rating of any vessel, as well as any other variable or special terms and conditions of insurance, the Managers may, in their absolute discretion, take into account all matters which they may regard as relevant including, but not limited to, the level of risk estimated to be involved in the insurance for which application is being made. Certificates of Entry and Endorsements 6. After accepting an application for insurance, the Managers shall issue on behalf of the Association a Certificate of Entry for the vessel concerned, setting out, inter alia: – the dates of commencement and termination of the period of insurance; – such mutual or fixed premium details as may be appropriate and/or necessary; – the gross tonnage of the insured vessel; – the name of the Member and all other insured persons and their respective interests in the insured vessel; and – any special terms of entry, including any special deductibles. 7. If at any time it is mutually agreed between the Member and the Managers to vary the terms of any insurance, the Managers may, on behalf of the Association, issue an Endorsement detailing such variation and the date from which it is to be effective. 8. Fresh Certificates of Entry may be issued setting out the terms effective from noon GMT each successive February 20 for all vessels whose insurances are then continuing. 9. Every Certificate of Entry and every Endorsement issued as aforesaid, together with any other agreement made in writing between a Member and the Managers, shall be conclusive evidence and binding for all purposes as to the commencement and termination of the period of insurance, as to the terms and conditions on which the vessel has been insured, and as to the terms of any variation and the date from which such variation is to be effective; provided however that, in the event that any Certificate of Entry or any Endorsement shall in the opinion of the Managers contain any error or omission, the Managers may in their absolute discretion issue a new Certificate of Entry or a new Endorsement which shall be conclusive evidence and binding as aforesaid. Assignment 10. No insurance provided by the Association and no interest under these Rules or under any contract between the Association and any Member, Joint Member, Co-assured or Affiliate may be assigned without the written consent of the Managers who shall have the right in their absolute discretion to give or refuse such consent without stating any reason, or to give such consent upon any terms or conditions as they may think fit. Any purported assignment made without such consent or without there being due compliance with any terms and conditions as the Managers may impose shall, unless the Managers in their absolute discretion otherwise decide, be void and of no effect. 11. Notwithstanding any written consent of the Managers or specific agreement contained in a Certificate of Entry or Endorsement thereto allowing assignment in accordance with Rule 1.4.10 above, the Association shall be entitled in settling any claim presented by the assignee to deduct or retain such amount as then estimated to be sufficient to discharge any liabilities of the assignor to the Association, whether existing at the time of the assignment or having accrued or being likely to accrue thereafter. Subrogation 12. The Association shall be subrogated to all the rights which the Member may have against any other person or entity, in respect of any payment made in accordance with these Rules, to the extent of such payment, and the Member shall, upon the request of the Association, execute all documents necessary to secure to the Association such rights. 13. The Association shall have the right to sue in the name of the Member, and the Member shall execute all papers and documents in connection therewith, as requested by the Managers, and shall lend all assistance to the prosecution of any suit. The balance of any amount recovered after full reimbursement of the Association for its loss and all expenses incurred shall be paid to the Member. Compliance with this requirement may, in the Managers’ absolute discretion, be made a condition of the payment of a loss. Other Insurances 14. Without prejudice to the provisions of Rule 3, Section 2.5 and Rule I, Section 4.37, every insured vessel shall be deemed to be fully insured without deductible for risks under the terms of a policy written on the American Institute Hull Clauses (June 2, 1977) Form and a policy written on the American Institute Increased Value and Excess Liabilities Clauses (November 3, 1977) Form, or other equally wide form of insurance, whether or not the insured vessel is fully covered under such policies by insurance and excess insurance sufficient in amount to pay in full and without limit all such loss, damage, sacrifice orexpense. Unless and to the extent that the Directors in their sole and absolute discretion otherwise decide, there shall be no recovery for any liabilities, costs and expenses for which the insured vessel is deemed to be insured under this Section 4.14 or which the Member is entitled, or would be entitled, to recover under any other insurance or otherwise howsoever. Classification and Statutory Requirements 15. Unless otherwise expressly agreed in writing between a Member and the Managers, the following conditions are fundamental terms of the insurance of every insured vessel:
cover hereunder shall be null, void and of no effect as of the date of such change, save to the extent that the Managers, in their sole discretion, may otherwise determine. General Conditions in Regard to Claims 16. Without prejudice to any other provision of these Rules and without waiving any of the Association’s rights hereunder, the Managers may at any and all times appoint and employ on behalf of a Member, upon such terms as the Managers may think fit, lawyers, surveyors or other persons for the purpose of dealing with any matter liable to give rise to a claim by a Member upon the Association, including 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 if they think fit. 17. All lawyers, surveyors and other persons appointed by the Managers on behalf of a Member, or appointed by a Member with the prior consent of the Managers, shall at all times be and be deemed to be appointed and employed on the terms that they have been instructed by the Member at all times (both while so acting and after having retired from the matter) to give advice and to report to the Managers in connection with the matter without prior reference to the Member and to produce to the Managers without prior reference to the Member any documents or information in their possession or power relating to such matter, all as if such person had been appointed to act and had at all times been acting on behalf of the Association. Members’ Obligations in Regard to Claims 18. Any happening, occurrence, event or matter (including, but not limited to, any legal or arbitration proceedings commenced against the Member) which may be liable to cause the Member to incur loss, damage, liabilities, costs or expenses for which he may be insured by the Association shall be notified promptly to the Managers by the Member on it being known by him. In so far as there may be any difference of opinion between the Member and the Managers as to whether any happening, occurrence, event or matter is or was such as might be liable to cause the Member to incur loss, damage, liabilities, costs or expenses, or as to whether the Member knew or ought to have known of such happening, occurrence, event, or matter as aforesaid, or as to whether such happening, occurrence, event or matter was notified promptly to the Managers by the Member, the determination of the Managers shall be final. A Member shall take and continue to take all such steps as may be reasonable for the purpose of averting or minimizing any expense or liability in respect whereof he may be insured by the Association. 19. A Member shall disclose and produce to the Managers all information, documents or reports in or coming into his or his agents’ (including lawyers’) possession, power or knowledge relevant to any such casualty, event or claim available at the time of notification and at any other time. 20. Whenever required by the Managers, a Member shall aid in securing information and evidence and in obtaining witnesses and shall cooperate with the Managers in the defense of any claim or suit or in the appeal from any judgment, in respect of any happening or occurrence as herein provided. 21. A Member shall neither settle nor make any admission in respect of liabilities, costs or expenses for which he is insured without the prior written consent of the Managers. 22. If a Member commits any breach of any of his obligations under this Rule 1.4.17 to 20 inclusive, the Managers may reject or reduce any recovery to which such breach may appear to the Managers to be relevant. Powers of the Managers in Regard to Claims 23. The Managers shall have the right if they so decide to control or direct the conduct of any claim or legal or other proceedings relating to any liability, loss or damage in respect whereof a Member is or may be insured in whole or in part, and to require a Member to settle, compromise or otherwise dispose of such claim or proceedings in such manner and upon such terms as the Managers see fit. 24. If a Member does not settle, compromise or dispose of a claim or legal or other proceedings after being required to do so by the Managers in accordance with Rule 1.4.22 above, 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. Powers of the Directors in Regard to Claims 25. The Directors shall meet, or otherwise be consulted by the Managers, as often as may be required for settlement of claims which shall be paid by the Association as the Directors may determine in accordance with these Rules, but the Directors shall have power from time to time to authorize the Managers to effect settlement of claims without prior reference to them. No Director shall act as such in the settlement of any claim in which he is interested. 26. Without prejudice to the generality of Rule 1.4.24 above, the Directors shall have power in their absolute discretion to effect a compromise of any claim made against the Association. Time Bar 27.
Other Provisions in Regard to Claims 28. Unless otherwise expressly agreed in writing by the Managers, where 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 where, 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. 29. 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 first have discharged and paid the same out of funds belonging to him unconditionally and not by way of loan or otherwise.
30. Notwithstanding the provisions of Rule 1.4.28 above and of the first (introductory, unnumbered) paragraph of Rule 2 below, where a Member shall have failed to discharge a legal liability to pay damages or compensation for personal injury, illness, death or repatriation of a seaman, the Association shall discharge or pay such claim on the Member's behalf directly to such seaman or to the legal dependant therof.
31. Notwithstanding anything to the contrary contained elsewhere in these Rules, where:
the Managers may, in their absolute discretion, defer payment of any such other claims, or any part thereof, until the Direct Liabilities, or such part of the Direct Liabilities as the Managers may in their absolute discretion decide, have been discharged. PROVIDED THAT, to the extent that any claims or liabilities (including any Direct Liabilities) discharged by the Association exceed the said limit(s), any payment by the Association in respect thereof shall be by way of loan and the Member shall indemnify the Association promptly upon demand in respect of such payment and shall assign to the Association, to the extent and on the terms that the Managers determine in their discretion to be practicable, all the rights of the Member under any other insurance and against any third party. 32. In the event that more than one class of claims as provided for by these Rules shall arise as the result of any one accident or occurrence, only one deductible shall be made, which deductible shall be the highest deductible of those applying to the classes of claims involved. General Limitations 33. If and when a Member has any interest other than as an owner or bareboat charterer of the insured vessel, in no event shall the Association be liable hereunder to any greater extent than if such Member were the owner or bareboat charterer and were entitled to all the rights of limitation of liability to which a shipowner is entitled. 34. Subject to these Rules and to any special terms and conditions upon which a vessel may be insured, the Association covers the liability of a Member in respect of an insured vessel as this liability may be determined and fixed by law, including any laws pertaining to limitation of liability. The Association shall in no circumstances be liable for any sum in excess of such legal liability. If a Member is entitled to limit his liability, the liability of the Association shall not exceed the amount of such limitation. 35. Notwithstanding the provisions of Rule 1.4.33 and 1.4.34 above, recovery shall be limited to ONE BILLION DOLLARS ($1,000,000,000) any one occurrence in respect of any one insured vessel for oil pollution liability including fines, costs and expenses and clean-up, and damages payable to any other person as may arise in respect of such oil pollution liability, whether under Rule 2.3 or Rule 2.5 or Rule 2.13 or any other section or endorsement or combination thereof; and Provided further that if the aggregate amount of any oil pollution claims against a Member, Co-assured and/or Affiliate exceeds the aforesaid $1,000,000,000, the Association will not be liable to make any payment in respect of that amount by which any such claim exceeds $1,000,000,000; and Provided further that where an insured vessel gives or attempts to give salvage or other assistance to another vessel following a casualty, any oil pollution liability incurred by the insured vessel in consequence thereof shall be aggregated with any oil pollution liability incurred by any other vessels similarly assisting in connection with the same casualty which are insured in respect of oil pollution liability either by the Association or by any other association which participates in the International Group of P&I Clubs’ Pooling Agreement or Excess Reinsurance Policies, and recovery in respect of the oil pollution liability of any insured vessel assisting as aforesaid shall not exceed such proportion of the above $1,000,000,000 limit as that vessel’s oil pollution liability bears to the aggregate of the oil pollution liabilities of all the similarly assisting vessels; and Provided further that where an insured vessel is separately insured on behalf of its owner, demise charterer, manager or operator with the Association or any other association which participates in the International Group of P&I Clubs’ Pooling Agreement or Excess Reinsurance Policies, recovery in respect of all claims for oil pollution liability following any one occurrence brought against the owner, demise charterer, manager or operator of an insured vessel or against the Association or any other association shall be limited to $1,000,000,000. The liability of the Association in respect of such claims shall be limited to that proportion of $1,000,000,000 that each claim recoverable from the Association bears to the aggregate of the claims recoverable against the Association and such other associations, if any. 36. In respect of the risks insured hereunder, to the extent a Member, Co-assured or Affiliate is insured for pollution risks under any other insurance, cover hereunder shall be null, void and of no effect, up to the limits of said other insurance. Above the limits of said other insurance, cover under this insurance shall remain in effect, subject always to the limits herein which are applicable to such risks, to any deductible(s), and to the Rules of the Association. In the event the limits available under such other insurance are the same as or greater than the limits available for pollution losses under this insurance, then this insurance shall be null, void and of no effect with regard to such claims. In the event the limits of said other insurance are less than the limits available hereunder, this insurance shall respond up to the limits set forth herein for pollution losses, but only for the amount by which any such losses exceed the stated limits of such other insurance, and then only up to the limits set forth herein for pollution losses. This insurance shall respond only in excess of the stated limits of the other insurance, whether or not the full amount of such policy limits, or any amount at all, is recoverable thereunder. 37. Unless otherwise limited to a lesser sum, the Association's aggregate liability arising under any one Member's entry shall not exceed
Provided always that:
Where there is more than one Member's entry in respect of the same insured vessel in the Association and/or as provided by any other insurer which participates in the Pooling Agreement
38. If liabilities to passengers arising under a non-war certificate issued by the Club in compliance with either Article IV of the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974 as amended by the Protocol thereto of 2002 or Regulation (EC) No.392/2009 of the European Parliament and of the Council of 23rd April 2009 on the liability of carriers of passengers by sea in the event of accidents ("Athens Convention/EU/EEA Passenger Liabilities") exceed or may exceed in the aggregate the limit of cover specified in Rule 1.4.37: a. the Managers, in their absolute discretion, may defer payment of a Member's indemnity claim in respect of such Athens Convention/EU/EEA Passenger Liabilities or any part thereof until those liabilities or such part thereof as the Managers may decide have been discharged by the Member; and b. if and to the extent any such liabilities discharged by the Club exceed the said limit of cover, any payment by the Club in respect thereof shall be by way of loan and the Member agrees to indemnify the Club in respect of such payment 39. The Association shall not be liable for any loss, damage or expense against which, but for the insurance herein provided, the Member, Co-assured or Affiliate would have been insured under any other existing insurance, except as set forth above in Rule 1.4.36; nor shall the Association provide prorated or allocated cover on the basis of double insurance or otherwise, except as set forth above in Rule 1.4.36; nor will this insurance replace any other insurance where (for whatever reason) that other insurance does not or is not able to respond to a claim thereunder.
Association Rights 40. No act, omission, course of dealing, forbearance, delay or indulgence by the Association in enforcing any of the terms of the contract of insurance issued to the Member by the Association shall prejudice or affect the rights and remedies of the Association under the contract of insurance, and no such occurrence shall be treated as any evidence of waiver of the Association’s rights thereunder or result in any form of estoppel as to such rights and remedies, nor shall any waiver of a breach by the Member of such contract operate as a waiver or estoppel with respect to any subsequent breach thereof. The Association shall at all times and without notice be entitled to insist on the strict application and enforcement of all of the terms of the contract of insurance it issued to the Member. Provision of Security 41. The Association may, but shall in no case be obligated to, provide on behalf of a Member security to prevent the arrest or attachment or obtain the release from arrest or attachment or any other form of restraint or detention in respect of an vessel or the Member’s other property or assets or funds. Should the Association do so, the security shall be provided on such terms as the Managers in their absolute discretion deem appropriate, and the Member shall upon first demand made at any time by the Managers in writing arrange such countersecurity (which countersecurity may in the Managers’ absolute discretion include a deposit of cash with the Association) as the Managers may require, and (with or without such countersecurity having been required or arranged) the Member shall promptly indemnify the Association in consequence of any security provided by the Association. 42. In the event that a Member does not arrange such countersecurity as may have been required or does not indemnify the Association as aforesaid, the Association, without prejudice to its other rights, shall be entitled to retain any and all amounts which would otherwise be recoverable by such Member, notwithstanding that the same may have no connection with the liability in respect of which the original security was provided and may relate to other periods of cover before or after that liability was incurred by the Member or to another insured vessel. The provision of security by the Association shall be without prejudice to the Association's possible declination of liability to the Member for the claim in question. 43. Notwithstanding the foregoing, in no circumstances shall the Association be liable for the detention of an insured vessel or for any other detention or attachment of a Member’s funds or assets, or for any damage whatsoever caused to a Member by reason of the provision or non-provision of security of whatever kind. Surveys and Operational Audits 44. The Managers may at any time in their absolute discretion appoint a surveyor or such other person as they may think fit to inspect an insured vessel on behalf of the Association. The Member shall afford such facilities as may be required for such inspection, and shall comply with such recommendations as the Managers may make following such inspection. 45. Notwithstanding anything contained in these Rules to the contrary, and unless and to the extent that the Managers shall otherwise agree, the failure by a Member to present a vessel for survey by such time and date as shall have been stipulated by the Managers shall have the effect of automatically terminating cover as from such time and date without further notice. 46. By applying to enter or upon the entry or continuation of the entry of a vessel for insurance in the Association, an Applicant Member or Member as the case may be:
PROVIDED ALWAYS that
47. Unless and to the extent that the Directors in their absolute discretion otherwise decide, a Member who commits any breach of his obligations referred to in Rule 1.4.44 above shall not be entitled, in relation to any casualty, event or matter occurring during the period of the breach, to any recovery from the Association in respect of any claim arising out of such casualty, event or matter. 48. Moreover, in the event that a vessel shall, in the opinion of the Managers, have failed to pass survey, cover shall cease automatically with immediate effect without further notice. Cover may be reinstated subject to any special terms and conditions as the Managers may in their absolute discretion wish to impose. In the absence of such reinstatement, unless and to the extent that the Directors may in their absolute discretion otherwise decide, a Member shall not be entitled to any recovery from the Association for any claim of whatsoever nature and howsoever arising during the period in which such automatic cesser shall have taken effect. 49. The Managers may at any time in their absolute discretion: a. Appoint representatives to visit the Member’s offices or those of any party or parties having operational control of an insured vessel entered on behalf of that Member and/or attend on board such vessel at such time specified by the Managers to audit the Member’s management systems, including, but not limited to, interviewing all relevant personnel and reviewing all relevant documentation. The Member shall be under a duty to ensure full cooperation with such representatives, making all requested personnel, information and documentation available, and unless otherwise agreed in writing by the Managers, shall pay for the reasonable costs of such audits; and b. Make recommendations as to the rectification of any deficiencies as may have been identified during the course of such a review either forthwith or within such time as may be specified by the Managers. The Member shall inform the Managers immediately on completion of the implementation of any recommendations which the Managers shall have made and provide them with such evidence as the Managers deem fit as to the rectification and any deficiencies they shall have identified, provided always however that the Managers shall have the right to carry out re-audits at whatever time and in whatever circumstances they deem appropriate to verify the same. In the event of any noncompliance with any of the provisions of this Section 4, Sub-Section 46, the Managers shall be empowered in their absolute discretion to: – terminate the entry of any or all insured vessels entered by the Member from a time and date specified by notice in writing to the Member; or – determine that there shall be no right to recover from the Association in respect of any liability, cost or expense during a period commencing from the time and date at which the Member ceases to be in compliance, or such other date as is specified in writing, until the Managers are satisfied that compliance has been achieved; or – exclude cover for claims arising out of or contributed to by such noncompliance; or – reduce any recovery from the Association to the extent that a claim has been contributed to by such noncompliance; or – vary the terms and conditions of entry including, but not limited to, the terms of any or all insured vessels’ premium rating. PROVIDED ALWAYS that the Directors shall have power in their absolute discretion to admit in whole or in part any claim which may be excluded by reason of the foregoing. The exercise of their discretion by the Directors shall be final and conclusive for all purposes. PROVIDED FURTHER that nothing in this Section 4, Sub-Section 49, or any action taken by the Association hereunder shall relieve the Member of his obligations with regard to those requirements in regard to classification and statutory regulation of the insured vessel as set out in Rule 1, Section 4, Sub-Section 14 of these Rules, or in regard to the maintenance and/or condition of the ship generally.
Adjudication of Differences and Disputes 50. a. If any difference or dispute shall arise between a Member and the Association and/or its agents (which shall include, without limitation, the Association's Manager and the Association's and the Manager's directors, officers and employees) concerning the construction of the Member's contract with the Association, or the insurance afforded by the Association under the contract, or any amount allegedly due from the Association to the Member, or any other difference or dispute, and the Member is dissatisfied with the Manager's final decision, the Member may submit a Notice of Appeal to the Association's Board of Directors asking it to adjudicate the difference or dispute. Such Notice of Appeal, if any, must be submitted by the Member through the Manager no later than sixty days after the Manager shall have provided its final decision to the Member regarding the difference or dispute. b. The procedures for adjudication by the Directors, which are incorporated into this Rule, are stated in Appendix A to these Class I Rules. c. No Member shall be entitled to maintain any action, suit or other legal proceedings against the Association and/or its agents upon any such difference or dispute unless and until the same has been appealed to the Association's Board of Directors and it shall have adjudicated the dispute and given its decision thereof. The Board of Directors' decision shall be made and published as soon as reasonably possible, but no more than six months after receipt of the last written submission permitted under Appendix A to these Class I Rules. d. The decision of the Association's Board of Directors is intended to be final and binding. However, should the Member wish to appeal that decision, such appeal shall be brought only by suit against the Association in the United States District Court for the Southern District of New York and must be commenced no later than sixty days after the Board's decision has been provided to the Member. Claims Against Members
51.
Applicable Law
52. The contract of insurance between the Association and a Member shall be governed by and construed in accordance with the law of the State of New York. This provision is not, in any way, to be construed as a waiver of any rights, claims or defenses available to the Association under any contract term, including, but not limited to, that part of the contract included in Rule 1.4.50. Maritime Lien 53. The Association shall have a lien on the insured vessel under the contract of insurance and/or applicable law for all premium and all other sums of whatsoever nature due to it. Such lien shall extend to other insured vessels which are part of a fleet as defined in Rule 1.2 and shall be in addition to, and in no way may be construed as a waiver of, or amendment to, any other contractual or maritime lien which the Association may either expressly or impliedly possess in regard to the said insured vessel or vessels. Such lien shall apply notwithstanding that the cover of the Member in respect of any vessel insured by him with the Association may have ceased or been terminated. Delegation 54. Whenever any power, duty or discretion is conferred or imposed upon the Managers by virtue of the contract of insurance, such power, duty or discretion may, subject to any terms, conditions or restrictions contained in the contract, be exercised by any one or more of the Managers or by any servant or agent of the Managers to whom the same shall have been delegated or sub-delegated. 55. Whenever any power, duty or discretion is stated in the contract of insurance to be vested in the Directors, such power, duty or discretion shall be exercisable by the Directors unless the same shall have been delegated to any Committee of the Directors or to the Managers in accordance with the provisions as regards delegation contained in the By-Laws, in which event the power, duty or discretion may be exercised by any person to whom the same shall have been so delegated. Sanctions 56. Notwithstanding and without prejudice to any other provision of these Rules or the Association's Charter or By-Laws or a Member's Certificate of Entry into the Association relating to the amendment of these Rules, these Rules may, on such notice as the Directors may in their absolute discretion decide, be amended at any time (including with effect from any time during the course of any current or future Insurance Year) in such fashion and to such extent as the Directors may in their absolute discretion determine is necessary as a result of the implementation of, or potential or proposed implementation of, any applicable change in legislation, regulation, prohibition, restriction, or requirement to obtain any license, consent, or authorization; or the potential or actual imposition of economic sanctions or penalties against the Association by any State, government, official body, regulatory or competent authority, international organization, or the like. 57. Whenever coverage extended by the Association would be in violation of any law applicable to the Association including, but not limited to, the prohibitions and requirements of any economic, financial, or trade sanctions administered by any State or international or supranational organization, or would expose the Association to the risk of being or becoming subject to any sanction, prohibition, penalty or other adverse action in any form whatsoever by any State or international or supranational organization, such coverage shall be null, void and of no effect. Any coverage hereunder provided by the Association shall not include or, as the case may be, shall by operation of law or pursuant to this sub-section, cease or shall have ceased to include, coverage for, or with respect to, any prohibited or unlawful entity, cargo, subject matter, vessel, or activity under laws applicable to the Association, a Member, or an entered vessel, or any activity which could lead to the imposition of sanctions or penalties against the Association, a Member, or an entered vessel. Whenever coverage extended by the Association would be for any carriage, trade, voyage, or other activity that would violate economic sanctions laws applicable to the Member or an entered vessel, or that could lead to the imposition of sanctions or other penalties against a Member or an entered vessel under economic, financial or trade sanctions administered by any State or international or supranational organization, coverage shall not extend to or shall cease to extend to such carriage, trade, voyage or other activity and be null, void and of no effect. (See also, Class I, Rule 3, Section 1, subsection 4). In cases involving trade with or voyages to, from or within countries or territories subject to economic sanctions, to the extent permitted by applicable law(s) and these Rules, the Managers may, in their discretion, confirm the availability of cover only after disclosure by the Member to the Managers of all relevant facts and information concerning the subject carriage, trade, voyage, or other activity. 58. Without prejudice to the generality of the provisions contained in Rule 3, Section 1.5 of these Rules of Class I, in the event that the Association is unable to recover from any reinsurer (such term to include, but not be limited to, any association party to the Pooling Agreement, or any reinsurer subscribing to the Group Excess Loss Contract, or any other of the Association's reinsurers whatsoever) such reinsurer's contributions to any claim, loss or expense to which such reinsurance may pertain, and for which the Association would otherwise be liable to the Member under these Rules, by reason of the said reinsurer being prohibited from making such payment to the Association under any economic, financial, or trade sanctions administered by any State, or international or supranational organization having jurisdiction over the said reinsurer, the liability of the Association for such claim, loss or expense shall be limited to that sum which the Association is itself lawfully permitted to pay and shall not extend to any amount which it is unable to recover from any reinsurer for the reasons set out above. Members and Successors Bound by Rules 59. A Member or other person by whom or on whose behalf an application is made for insurance or reinsurance by the Association shall be deemed to have agreed not only on his own behalf but also on behalf of his successors and each of them that both he and they will in every respect be subject to and bound by all of the provisions of the Member's contract of insurance with the Association. Rule 2 - Risks and Losses Covered
Each Member of the Association shall be indemnified in connection with each vessel entered in the Association for Protection and Indemnity insurance against any loss, damage or expense which the Member shall become liable to pay and shall pay by reason of the fact that the Member is the owner (or operator, manager, charterer, mortgagee, trustee, receiver or agent, as the case may be) of the insured vessel, subject to the provisions of these Rules and to all the limitations herein stated or agreed to by the acceptance of the application for membership, or by the entry of the vessel, in the Association, and which shall result from the following liabilities, risks, events, occurrences and expenditures; provided that such liabilities, risks, events, occurrences and expenditures arise in respect of the Member’s interest in such vessel; and in connection with the operation of such vessel by or on behalf of the Member; and out of events occurring during the period of entry of such vessel. SECTION 1 - LOSS OF LIFE, INJURY AND ILLNESS
PROVIDED that:
PROVIDED that:
AND FURTHER PROVIDED that: In the case of each and every head of cover, A, B, C and D as set out above in this Section 1, unless and to the extent that special cover has been agreed in writing by the Managers, there shall be no recovery from the Association in respect of claims relating to cash, negotiable instruments, precious or rare metals or stones, valuables or objects of a rare or precious nature
SECTION 2 - REPATRIATION AND SUBSTITUTE EXPENSES Liability for expenses reasonably incurred in necessarily repatriating any member of the crew or any other person employed on board the insured vessel, or in necessarily sending a substitute to replace any member of the crew or any person employed on board the insured vessel: provided, however, that the Member shall not be entitled to recover any such expenses incurred by reason of the expiration of the shipping agreement, other than by sea perils, or by the voluntary termination of the agreement. Wages shall be recoverable hereunder only when payable under statutory obligation during unemployment due to the wreck or loss of the insured vessel. Coverage under Section 2 shall include expenses incurred by the Member in discharging his obligations towards or making necessary arrangements for stowaways or refugees, but only if and to the extent that the Member is legally liable for the expenses or if they are incurred with the approval and agreement of the Association. Coverage under Section 2 shall also include liability for loss of or damage to the effects of any seaman or any other person (other than passengers) provided that:
SECTION 3 - COLLISION Liability for loss or damage as set out in paragraphs 1, 2, and 3 below which arises from collision of the insured vessel with another ship or vessel, but only if and to the extent that such liability is not covered by the hull insurances of the insured vessel:
PROVIDED always that:
Loss of or damage to any vessel or vessels in tow and/or their cargoes, whether such loss or damage occurs before, during or after actual towage; provided, that this exception shall not apply to claims under Section 1 of Rule 2. SECTION 4 - DAMAGE CAUSED OTHERWISE THAN BY COLLISION Liability for loss of or damage to any other vessel or craft, or to property on board such other vessel or craft, caused otherwise than by collision of the insured vessel with another vessel or craft. Where such other vessel or craft or property on board such other vessel or craft belongs to the Member, claims hereunder shall be adjusted as if it belonged to a third person; provided, however, that if such vessel, craft or property be insured, the Association shall be liable hereunder only insofar as the loss or damage, but for the insurance herein provided, is not or would not be recoverable by the Member under such other insurance. SECTION 5 - DAMAGE TO DOCKS, BUOYS, ETC Liability for loss of or damage to any dock, pier, jetty, bridge, harbor, breakwater, structure, beacon, buoy, lighthouse, cable, or to any fixed or movable object or property whatsoever, including infringement of rights, except another vessel or craft or property on another vessel or craft, or to property on the insured vessel other than to the extent that such property is covered under section 6 below or elsewhere herein. Where any such object or property belongs to the Member, claims hereunder shall be adjusted as if it belonged to a third person; provided, however, that if such object or property be insured, the Association shall be liable hereunder only insofar as the damage, but for the insurance herein provided, is not or would not be recoverable by the Member under such other insurance. SECTION 6 - PROPERTY ON BOARD THE INSURED VESSEL
Liability for loss of or damage to any containers, equipment, fuel or other property on board the insured vessel, other than to the extent that such property is elsewhere covered herein;
SECTION 7 - LIABILITY IN RESPECT OF WRECKS Liability for costs or expenses relating to
PROVIDED that:
SECTION 8 - CARGO Liabilities and costs set out in subsections 1 to 4 below when and to the extent that they relate to cargo intended to be or being or having been carried in an insured vessel.
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 unfitness of the insured vessel.
The additional costs (over and above those which would have been incurred if the cargo had not been damaged) incurred by the Member in discharging or disposing of damaged cargo, but only if and to the extent that the Member has no recourse to recover those costs from any other party. Provided always that where the said additional costs claimed represent the daily running costs of the insured vessel, such costs shall not be payable save to the extent that the Directors, in their absolute discretion, shall otherwise determine.
The liabilities and additional costs (over and above the costs which would have been incurred by him if the cargo had been collected or removed) incurred by a Member 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.
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 transshipment bill of lading, or other form of contract, providing for carriage partly to be performed by the insured vessel. Provided always that:
Unless and to the extent that the Directors in their discretion otherwise decide, or special cover has been agreed in writing by the Managers, 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 (including cargo on deck) had been carried on terms no less favorable to the Member than the Hague Visby Rules or the U.S. Carriage of Goods by Sea Act and/or such other rules and/or conventions as the Directors may from time to time determine, provided that:
Unless and to the extent that the Directors in their discretion otherwise decide, or cover has been confirmed in writing by the Managers prior to the deviation, there shall be no recovery from the Association in respect of liabilities, costs or expenses which arise out of or which are incurred as a consequence of a deviation, in the sense of a departure from the contractually agreed voyage or adventure which deprives the Member of the right to rely on defenses or rights of limitation of liability which would otherwise have been available to him on the basis of the standard terms of carriage referred to in proviso (a) above to reduce or eliminate his liability.
Unless and to the extent that the Directors in their discretion otherwise decide there shall be no recovery from the Association in respect of liabilities, costs or expenses arising out of:
Unless and to the extent that special cover has been agreed in writing by the Managers, the Association shall not be liable for payments to cargo claimants of amounts exceeding whichever is the higher of $2,500 per unit, piece or package or the limitation per unit, piece or package specified in the standard terms of carriage, in respect of shipments of goods carried under an ad valorem bill of lading, waybill or other document containing or evidencing the contract of carriage in which the value of the relevant unit, piece or package has been stated to be in excess of $2,500.
Unless and to the extent that special cover has been agreed in writing by the Managers, there shall be no recovery from the Association in respect of claims relating to the carriage of specie, bullion, precious or rare metals or stones, plate or other objects of a rare or precious nature, bank notes or other forms or currency, bonds or other negotiable instruments.
In the event that any cargo lost or damaged on board the insured vessel shall be the property of the Member, such Member shall be entitled to recover from the Association the same amount as would have been recoverable from him 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 the terms of the Association’s recommended standard terms of carriage. SECTION 9 - FINES AND PENALTIES Liability for fines and penalties imposed by any court, tribunal or authority for:
All other fines and penalties will be recoverable only where the Member has satisfied the Directors that it took such steps as appear to the Directors reasonable to avoid the event giving rise to such fine or penalty, and only to such extent as the Directors in their sole and absolute direction may determine without having to give any reasons for their decision. Coverage under this Section 9 may also extend to confiscation of an insured vessel by a legally empowered court, tribunal or authority for breach of any customs law or regulation, provided always that:
SECTION 10 - MUTINY, MISCONDUCT Liability for expenses incurred in resisting any unfounded claim by a seaman or other person employed on board the insured vessel, or in prosecuting such person or persons in case of mutiny or other misconduct; not including, however, costs of successfully defending claims elsewhere protected in this Rule.
SECTION 11 - QUARANTINE EXPENSES Liability for extraordinary expenses, incurred in consequence of the outbreak of any disease on the insured vessel, for disinfection of the vessel or of persons on board, or for quarantine expenses, not being the ordinary expenses of loading or discharging, nor the ordinary wages or provisions of crew or passengers, provided, however, that no liability shall exist hereunder if the insured vessel be ordered to proceed to a port where it is known that she will be subjected to quarantine.
SECTION 12 - DIVERSION EXPENSES Liability for expenses incurred solely for the purpose of putting in to land an injured or sick seaman or passenger, or for putting in to land stowaways or refugees or for saving life at sea; and the net loss to the Member in respect of bunkers, insurance, stores and provisions as the result of the diversion. SECTION 13 - UNRECOVERABLE GENERAL AVERAGE CONTRIBUTIONS General average (excluding ship’s sacrifice items), special charges or salvage chargeable to any other party to the marine adventure for which the Member may become liable or be unable to recover from such party solely by reason of a breach of the contract of carriage, provided that:
SECTION 14 - DISCHARGE OF OIL OR OTHER SUBSTANCE Liabilities, costs and expenses that are the result of the discharge or escape of oil or any other polluting substance, or the threat of such discharge or escape, from an insured vessel, namely:
Provided that any recovery hereunder may be reduced if and to the extent that the Member shall not have taken steps to ensure that costs and expenses recoverable hereunder are included in general average to the extent permitted under the York-Antwerp Rules 1994.
SECTION 15 - SHIP'S PROPORTION OF GENERAL AVERAGE The insured vessel’s proportion of general average, special charges or salvage not recoverable under the hull policies by reason of the value of the ship being assessed for contribution to general average or salvage at a sound value in excess of the insured value under the hull policies. Provided always that for the purpose of determining any sum recoverable under this Section 14, the Managers shall be entitled to determine the proper value at which the insured vessel should have been insured under the hull policies and the Association shall only be liable for the excess (if any) above the amount which would have been recoverable under the hull policies had the insured vessel been insured thereunder at such value. For the purpose of this Section 14, “proper value” is defined as an amount equal to the free, uncommitted market value of the insured vessel at the time of the incident giving rise to the general average, special charges or salvage. SECTION 16 - OFFICIAL INQUIRIES Costs and expenses incurred by a Member in defending himself or in protecting his interests before an official inquiry into the loss of an insured vessel or into a casualty involving an insured vessel but only to the extent and on such conditions as the Managers in their sole discretion may determine. SECTION 17 - SUE AND LABOR AND LEGAL COSTS Extraordinary costs and expenses reasonably incurred after any casualty for the purpose of avoiding or minimizing any liabilities, costs or expenses against which the Member is insured by the Association. Legal costs and expenses relating to any liabilities, costs or expenses against which the Member is insured by the Association, but only to the extent that such legal costs and expenses have been incurred with the prior approval of the Managers in writing or to the extent and on such conditions as the Directors in their sole discretion may determine. SECTION 18 - EXPENSES OF INVESTIGATION AND DEFENSE Liability for costs, charges and expenses reasonably incurred and paid by the Member in connection with any liability insured under this Rule, subject, however, to the same deduction that would be applicable by the terms of entry to the liability defended; provided that if any liability is incurred and paid by the Member as aforesaid, the deduction shall be applied to the aggregate of the claim and expenses; and provided further that the Member shall not be entitled to indemnity for expenses unless they were incurred with the approval in writing of the Managers, or the Managers shall be satisfied that such approval could not have been obtained under the circumstances without unreasonable delay, or that the expenses were reasonably and properly incurred; and provided further that any suggestion or approval of counsel, or any incurring of expenses in connection with liabilities not insured under this Rule, shall not be deemed an admission of the Association’s liability. It is understood and agreed that the Managers may undertake the investigation of any occurrence which might develop into a claim against the Member, and may undertake the investigation and defense of any claim made against the Member with respect to which the Member shall be or may claim to be insured by the Association, and that during such investigation and/or defense the Association may incur expenses, which expenses shall be for the account of the Member, and such investigation and/or defense shall not be considered as an admission of the Association’s liability for such claim or expenses, and the liability of the Association to the Member for any loss, damage or expense shall not be affected by any acts of the Association prior to formal presentation to the Association of the Member’s claim for reimbursement or indemnity.
SECTION 19 - EXPENSES INCURRED UNDER AUTHORIZATION OF THE MANAGERS
Expenses which the Member may incur under special written authorization of the Managers of the Association in cases in which the Managers decide that it is in the interests of the Association that the direction be given.
SECTION 20 - 'OMNIBUS' CLAUSE Liability for risks, losses, costs and expenses incidental to the business of owning, operating or managing ships which, and only to such extent as the Directors in their sole and absolute discretion may determine, without having to give any reasons for their decision, fall within the scope of the insurance protection afforded by the Association under these Rules. PROVIDED ALWAYS that there shall be no recovery under this Section 20 of any risks,losses, costs and expenses expressly excluded elsewhere in these Rules unless a three-quarters majority of Directors, present at a duly-constituted meeting where such recovery is being considered, shall have decided, without having to give any reasons for their decision, that such exclusion should be overridden in the particular circumstances of the case and that recovery in regard to the said risks, losses, costs and expenses, to any extent that the Directors might in their sole and absolute discretion determine, should be allowed. Rule 3 - Risks and Losses Excluded
SECTION 1 - RISKS EXCLUDED Notwithstanding anything to the contrary contained in these Rules of Class I, there shall be no right of recovery from the Association in respect of any liabilities, costs or expenses, whether or not a contributory cause of their being incurred was any neglect on the part of a Member, Co-assured or Affiliate or any of their servants or agents, when the incident giving rise to the liability, cost or expense was caused by the following: War Risks
AND PROVIDED ALWAYS that the exclusions in this Section 1, Sub-Section 1 shall not apply to any liabilities, costs or expenses insofar only as they are discharged by the Association on behalf of a Member pursuant to a demand made under: to the extent that such liabilities, costs and expenses are not recovered by the Member under any other policy of insurance or extension to the cover provided by the Association. Where any such guarantee, undertaking or certificate is provided by the Association on behalf of a Member as guarantor or otherwise, the Member agrees that any payment by the Association thereunder 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 deemed to be by way of loan and that there shall be assigned to the Association all the rights of the Member under any such other insurance and against any third party. AND FURTHER PROVIDED ALWAYS THAT: The Directors may resolve that special cover be provided to Members against any or all of the risks set out in Rule 2 of these Rules of Class I, notwithstanding that the liabilities, costs or expenses arising from such risks would otherwise be excluded by this Rule 3.1.1. Such special cover where provided may be limited to such sum or sums and be subject to such terms and conditions as the Directors may from time to time in their absolute discretion determine. In the event of any dispute as to whether or not any act constitutes an act of terrorism, the decision of the Directors shall be final. Nuclear Risks
Provided always that this Rule 3.1.2 shall not apply to liabilities, losses, costs or expenses arising out of or in consequence of the emission of ionizing radiations from, or the toxic, explosive or other hazardous properties of:
being carried as cargo in an insured vessel, and such further exceptions as the Managers may approve. Blockade Running, Unlawful Trade etc.
Preclusion of/exclusion from cover of certain voyages involving Iran and other countries subject to US economic sanctions
Preclusion/exclusion of cover where reinsurers are subject to economic sanctions, prohibitions or the imposition of sanctions
SECTION 2 - LOSSES EXCLUDED Save to the extent as may be expressly agreed in writing between a Member and the Managers, and notwithstanding anything to the contrary contained in these Rules of Class I, there shall be no right of recovery from the Association in respect of any loss, damage or expense a Member may have sustained, directly or indirectly, by reason of: Hull Damage etc. to the Insured Vessel
Cancellation of Contracts, Loss of Hire etc.
Provided always that where any loss of hire or freight forms part of a claim in respect of cargo covered under Rule 2.7 or is, with the consent of the Managers, included in the settlement of such a claim, such loss of hire or freight may be recoverable from the Association notwithstanding the terms of this Rule 3.2.4. Sums Insurable Under Hull Policies
Towage by an Insured Vessel
Towage of an Insured Vessel
Contracts and Indemnities
Specialist Operations
Provided always that this exclusion shall not apply to liabilities, costs and expenses incurred by the Member in respect of:
but only to the extent that such liabilities, costs and expenses are covered under Sections 1 through 20 of Rule 2 of these Rules of Class I. Willful Misconduct
Drilling and/or Production Operations
Waste Disposal and Sub-Sea Activities
Refugees
Salvage of an Insured Vessel
Salvage by an Insured Vessel
Non-Marine Personnel
Heavy Lifts
CERCLA-type Liabilities
Paperless Trading
For the purposes of this Sub-Section 19,
Rule 4 - Association Funding: Premiums and Calls
SECTION 1 Mutual and Fixed Premium Insurance
Treatment of Mutual Premium in Relation to Policy Year Results
Premium to Release
Interest on Premium and other sums due to the Association
Premium and Other Taxes
Provided always that:
Member’s Obligation to the Association
Set-off
Contingency Fund
Overspill Claims / Calls
1.1 In this Section 16 the following words and expressions shall have the following meanings: CONVENTION LIMIT: in respect of a vessel, the limit of liability of the shipowner of that vessel for claims (other than claims for loss of life or personal injury) at the Overspill Claim Date, calculated in accordance with Rule 6 Section 1(b) of the International Convention on Limitation of Liability for Maritime Claims 1976 (the “Convention”) and converted from Special Drawing Rights into United States Dollars at the rate of exchange conclusively certified by the Association as being the rate which prevailed on the Overspill Claim Date, provided that:
GROUP REINSURANCE LIMIT: the amount of the smallest claim (other than any claim arising in respect of oil pollution) incurred by the Association or by any other party to the Pooling Agreement which would exhaust the largest limit for any type of claim (other than a claim arising in respect of oil pollution) from time to time imposed in the International Group Excess Loss Contract. OVERSPILL CALL: a call levied by the Association pursuant to this Section 16 for the purpose of providing funds to pay part of an Overspill Claim. OVERSPILL CLAIM: that part (if any) of a claim (other than a claim arising in respect of oil pollution) incurred by the Association or by any other party to the Pooling Agreement under the terms of entry of a vessel which exceeds or may exceed the Group Reinsurance Limit. OVERSPILL CLAIM DATE: in relation to any Overspill Call, the time and date on which there occurred the incident or occurrence giving rise to the Overspill Claim in respect of which the Overspill Call is made or, if the Policy Year in which such incident or occurrence has been closed in accordance with the provisions of this Rule, noon GMT on August 20 of the Policy Year in respect of which the Association makes a declaration under this Section 16. 1.2 All claims (other than claims arising in respect of oil pollution) incurred by the Association or by any other party to the International Group Pooling Agreement (“the Pooling Agreement”) under the entry of any one vessel arising from any one incident or occurrence including any claim in respect of liability for the removal or non-removal of any wreck shall be treated for the purposes of this Section 16 as if they were one claim. 1.3 Any reference to a claim incurred by the Association or by any other party to the Pooling Agreement shall be deemed to include the costs and expenses associated therewith. Recoverability of Overspill Claims 2.1 Without prejudice to any other applicable limit, any Overspill Claim incurred by the Association shall not be recoverable from the Association in excess of the aggregate of:
2.2 The aggregate amount referred to in 2.1 above shall be reduced to the extent that the Association can evidence:
2.3 In evidencing the matters referred to in 2.2 section (b) the Association shall be required to show that:
Payment of Overspill Claims 3.1 The funds required to pay any Overspill Claim incurred by the Association shall be provided:
3.2 The funds required to pay such proportion of any overspill claim incurred by any other party to the Pooling Agreement which the Association is liable to contribute under the terms of the Pooling Agreement shall be provided in the manner specified in 3.1 sections (b)-(e). 3.3 To the extent that the Association intends to provide funds required to pay any Overspill Claim incurred by it in the manner specified in 3.1 section (d), the Association shall only be required to pay such Overspill Claim as and when such funds are received by it, provided that it can show from time to time that, in seeking to collect funds, it has taken the steps referred to in 2.3 sections (a) and (b).
Overspill Claims – Expert Determinations 4.1 Any of the issues referred to in 4.2 on which the Association and the Member cannot agree shall be referred to a panel (the “Panel”) constituted in accordance with arrangements established in the Pooling Agreement which, acting as a body of experts and not as an arbitration tribunal, shall determine the issue. 4.2 This Section 16 shall apply to any issue of whether, for the purpose of applying any of 2.2, 2.3 and 3.3 in relation to any Overspill Claim (“the relevant Overspill Claim”):
4.3 If the Panel has not been constituted at a time when a Member wishes to refer an issue to it, the Association shall, on request by the Member, give a direction for the constitution of the Panel as required under the Pooling Agreement. 4.4 The Association may (and, on the direction of the Member, shall) give such direction as is required under the Pooling Agreement for the formal instruction of the Panel to investigate any issue and to give its determination as soon as reasonably practicable. 4.5 The Panel shall in its discretion decide what information, documents, evidence and submissions it requires in order to determine an issue and how to obtain these, and the Association and the Member shall cooperate fully with the Panel. 4.6 In determining any issue referred to it under this Rule the Panel shall endeavor to follow the same procedures as it follows in determining issues arising in respect of the relevant Overspill Claim which are referred to it under the Pooling Agreement. 4.7 In determining an issue the members of the Panel:
4.8 If the three members of the Panel cannot agree on any matter, the view of the majority shall prevail. 4.9 The Panel shall not be required to give reasons for any determination. 4.10 The Panel’s determination shall be final and binding upon the Association and the Member (subject only to 4.11) and there shall be no right of appeal from such determination. 4.11 If the Panel makes a decision on an issue referred to in 4.2 sections (b) or (c) the Association or the Member may refer the issue back to the Panel notwithstanding Clause 4.10, if it considers that the position has materially changed since the Panel made its determination. 4.12 The costs of the Panel shall be paid by the Association. 4.13 Costs, indemnities and other sums payable to the Panel by the Association in relation to any Overspill Claim, whether the reference to the Panel has been made under this Section 16 or under the Pooling Agreement, shall be deemed to be costs properly incurred by the Association in respect of that Overspill Claim for the purposes specified in 2.2 section (a). Levying of Overspill Calls 5.1 If :
5.2 The Association shall levy any such Overspill Call:
5.3 An Overspill Call shall not be levied in respect of any vessel entered on the Overspill Claim Date with an overall limit of cover equal to or less than the Group Reinsurance Limit. 5.4 The Association shall not levy on any Member in respect of the entry of any one vessel an Overspill Call or Calls in respect of any one Overspill Claim exceeding in the aggregate two and one-half percent of the Convention Limit of that vessel. 5.5 If at any time after the levying of any Overspill Call upon the Members entered in the Association in any Policy Year, it shall appear to the Association that the whole of such Overspill Call is unlikely to be required to meet the Overspill Claim in respect of which such Overspill Call was levied, the Association may decide to dispose of any excess which in the opinion of the Association is not so required by returning the excess or any part thereof to those Members who have paid that Overspill Call in proportion to the payments made by them. Closing of Policy Years for Overspill Calls 6.1 If at any time prior to the expiry of a period of thirty-six months from the commencement of a Policy Year (the “relevant Policy Year”), any of the parties to the Pooling Agreement sends a notice (an “Overspill Notice”) in accordance with the Pooling Agreement that an incident or occurrence has occurred in the relevant Policy Year which has given or at any time may give rise to an Overspill Claim, the Association shall as soon as practicable declare that the relevant Policy Year shall remain open for the purpose of levying an Overspill Call or Calls in respect of that claim and the relevant Policy Year shall not be closed for the purpose of making an Overspill Call or Calls in respect of that claim until such date as the Association shall determine. 6.2 If at the expiry of the period of thirty-six months provided for in 6.1, no Overspill Notice as therein provided for has been sent, the relevant Policy Year shall be closed automatically for the purpose of levying Overspill Calls only, whether or not closed for any other purposes, such closure to have effect from the date falling thirty-six months after the commencement of the relevant Policy Year. 6.3 If at any time after the Policy Year has been closed in accordance with the provisions of 6.1 and 6.2, it appears to the Association that an incident or occurrence which occurred during such closed Policy Year may then or any time in the future give rise to an Overspill Claim, the Association shall as soon as practicable declare that the earliest subsequent open Policy Year (not being a Policy Year in respect of which the Association has already made a declaration in accordance with 6.1 and 6.2) shall remain open for the purpose of levying an Overspill Call or Calls in respect of that claim and such open Policy Year shall not be closed for the purpose of making an Overspill Call or Calls in respect of that claim until such date as the Association shall determine. 6.4 A Policy Year shall not be closed for the purpose of levying Overspill Calls save in accordance with this Section 16.
Security for Overspill Calls on termination or cesser
7.1 If :
7.2 Unless and until such guarantee or other security as is required by the Association has been provided by the Member, the Member shall not be entitled to recover from the Association any claims whatsoever and whensoever arising in respect of any and all vessels entered in the Association for any Policy Year by him or on his behalf.
7.3 If such guarantee or other security is not provided by the Member to the Association by the due date, a sum equal to the guarantee amount shall be due and payable by the Member to the Association on the due date, and shall be retained by the Association as a security deposit on such terms as the Association in its discretion may deem to be appropriate in the circumstances.
7.4 The provision of a guarantee amount or other security as required by the Association (including a payment in accordance with 7.3) shall in no way restrict or limit the Member’s liability to pay such Overspill Call or Calls as may be levied by the Association in accordance with this Rule.
Closing of Policy Years
Rule 5 - Cesser and Termination of Cover
In the event that a Member’s insurance is terminated by reason of the foregoing, the time of the occurrence of which being hereinafter referred to as “the date of termination”, the following consequences shall ensue:
and as from the date of termination any liability of the Association for such claims shall cease retroactively and the Association shall be under no liability to the Member for any such claims or on any account whatsoever;
PROVIDED ALWAYS that: The Managers may in their absolute discretion and upon such terms as it thinks fit, including but not limited to terms as to payment of contributions, premiums or other sums, admit either in whole or in part any claim in respect of a vessel insured by the Member for which the Association is under no liability by virtue of this Rule, whether such claim has arisen before or arises after the date of termination as the case may be, or forgive wholly or partly any payment of contribution, premiums or other sums due to the Association.
by the Member only as of Noon GMT on February 20th of any year with not less than thirty days’ prior written notice to the Association; and by the Association at any time with not less than thirty days’ prior written notice to the Member. Appendix A to the Association's Class I Rules
Procedures for Board Adjudication of Differences or Disputes Adjudication Procedures
Further Appeal
Appendix B to the Association's Class I Rules
APPENDIX B PROCEDURES GOVERNING MEMBERS' "OMNIBUS CLAIMS" AND OTHER REQUESTS FOR COVERAGE AVAILABLE ONLY AT THE DISCRETION OF THE BOARD. Members may incur costs, expenses or liabilities which arise from incidents or circumstances that (1) are neither expressly covered nor excluded by the Association's Rules or (2) which, as provided by the Rules, involve facts and/or circumstances which may only be considered for coverage at the discretion of the Association's Directors. In such instances, Members may request coverage from the Directors. In their discretion, the Directors may or may not agree to provide coverage, in whole or in part. For convenient reference, a list of the Association's Rules which provide for coverage at the Directors' discretion is attached hereto as "Schedule A". Members requesting such discretionary coverage from the Directors shall comply with the following procedures: 1. The Board of Directors meets four times each year, usually in the second week of March, June, September and November. 2. At least six weeks before a scheduled Board meeting, the Member or its authorized agent or attorney shall submit to the Directors, through the Managers via e-mail and/or overnight courier: (a) a letter or brief of no more than 10 pages, double spaced typed, stating the Member's request and all the reasons why the Directors should exercise their discretion to grant the request including the specific provision(s) in the Association's Rules upon which the request is premised, and (b) all evidentiary materials on which the Member relies for its request. 3. At least four weeks before the Board meeting referenced in paragraph 2 above, the Managers may submit to the Directors (a) the Managers' position regarding the Member's request in a letter or brief of no more than 10 pages, double spaced typed; and (b) all contractual, statutory and/or evidentiary materials upon which the Managers' position is based. A copy of any such submission by the Managers shall be promptly sent to the Member. 4. At least two weeks before the above Board meeting, the Member or its authorized agent may submit to the Directors a written reply to the Managers' position. Any reply shall be in the form of a letter or brief not exceeding 5 pages, double spaced typed and may include additional evidentiary materials. 5. In their discretion, the Directors may permit or ask the Member to make an oral presentation at the relevant Board meeting. Such presentation shall not exceed 15 minutes or such other time as permitted by the Directors. 6. If the Member believes time is of the essence, the Member may ask the Directors for an expedited briefing and decision schedule. If a majority of Directors agree to such an expedited consideration, the Directors shall set an appropriate briefing and decision schedule. 7. For the purposes of resolving Members' requests, a majority of Directors shall meet in executive session. Having considered the submissions by the Member and the Managers and having conducted such discussions among themselves as they deem necessary, the Directors shall either (a) resolve the request on the basis of the Member's and Managers' written submissions; or (b) ask questions of the Member and/or Managers; or (c) ask the Member and/or Managers to make further written submissions and/or provide relevant documents and/or information in writing to clarify any issues within times and page limits set by the Directors. Within times and page limits set by the Directors, the Member and Managers may reply to each other's additional written submissions. If necessary, the Directors may extend the schedule originally adopted pursuant to paragraphs 2 - 4, above, to allow additional time for these purposes. 8. As soon as reasonably possible, the Directors shall decide the Member's request. The decision of a majority of Directors present at the meeting shall be the Board's decision. In the event of a tie vote, the Chairman of the Board shall have a second vote or two votes, in total, and if the Chairman is absent or otherwise unavailable to vote on the Member's request, the Vice Chairman shall have such a second vote, or two votes in total. 9. The Directors shall explain the reasons for their decision in writing. 10. Under the Association's Rules providing for coverage at Directors' discretion, the Directors are granted "sole discretion" in making their decision. Accordingly, the Directors' decision is final and binding on the Association and the Member and is not appealable to any court, tribunal or any other forum whatsoever. 11. These procedures are separate and distinct from and do not apply to the Rule providing for Board adjudication of differences or disputes between a Member and the Association or the adjudication procedures set forth in Appendix A of the Association's Rules.
LIST OF RULES PROVIDING FOR COVERAGE AT THE DISCRETION OF THE ASSOCIATION'S BOARD OF DIRECTORS CLASS I – PROTECTION & INDEMNITY INSURANCE
CLASS II – FREIGHT, DEMURRAGE AND DEFENSE INSURANCE
CLASS III – CHARTERER'S RISKS
Class II - Freight, Demurrage and Defense Insurance
Rule 1 - Introductory: Interpretation: Membership:
1. Each and every provision of the By-Laws of the Association and of these Rules of Class II are applicable to all Freight, Demurrage and Defense insurances of the Association. However, without prejudice to the generality of these provisions so far as they apply to this Class II, they shall only apply to Freight, Demurrage and Defense insurances contracted under Class III to the extent that they have been expressly incorporated therein. 2. The standard Freight, Demurrage and Defense cover afforded by the Association to a Member who has insured his vessel with the Association is set out in Rule 2 below. 3. The cover set out in Rule 2 may be excluded, limited, modified or otherwise varied by any special terms expressly agreed in writing between a Member and the Managers. 4. A Member is only insured against costs and expenses incurred by him which arise:
i. out of events occurring during the period of the policy year when his vessel is insured with the Association;
PROVIDED that:
a. as to claims and disputes arising under contract (other than those specified in Rule 1.1.4.i.b below), in tort or under statute, such claims and disputes will be deemed to have arisen at the date when the cause of action accrued; b. as to claims and disputes concerning salvage, or in respect of towage services, such claims and disputes will be deemed to have arisen at the date when the relevant services were commenced; and
ii. in respect of the Member’s interest in the insured vessel ; and iii. in connection with the building, sale, purchase or operation of the insured vessel by or on behalf of the Member.
5. Subject to the provisions of Rule 1.1.6 below, a Member who has insured his vessel with the Association for insurance against any or all of the aforesaid risks is obligated to pay premium to the Association in accordance with Rule 4 of the Rules of Class I, such insurance being hereinafter referred to as mutual insurance and premium payable by reason thereof mutual premium. 6. Notwithstanding the provisions of Rule 1.1.5 above, a Member may be insured on special terms to the effect that he is liable to pay fixed premium to the Association, such insurance being hereinafter referred to as fixed insurance, and premium payable by reason thereof fixed premium, but only where this has been expressly agreed in writing between the Member and the Managers. 7. The insurance provided by these Rules is solely for the benefit of a Member, Joint Member, Co-assured, Affiliate or such other parties as set out and defined in Rule 1.3 of Class I and to the extent incorporated herein. 8. A deductible or deductibles may apply to insurances as provided for in this Class II. 9. A limit of the Association’s liability to pay claims may apply to insurances as provided for in this Class II.
To the extent that their meanings are consistent with the subject and context of these Rules of Class II, the words and expressions set out in Rule 1.2 of Class I shall have the same meanings in these Rules of Class II. Words importing the singular number only shall include the plural number and vice versa. Word importing the masculine gender only shall include the feminine and neuter genders. Words importing persons shall include individuals, partnerships, corporations, associations, joint ventures and any other business entities.
The terms of Rule 1.3 of Class I, to the extent that they are consistent with the subject and context of these Rules of Class II, shall be deemed to be incorporated in and form an integral part of these Rules of Class II except that any reference in the terms of Rule 1.3 of Class I as incorporated hereunder to Protection and Indemnity insurance shall be deemed to be a reference to the Freight, Demurrage and Defense cover afforded under these Rules of Class II.
1. The terms of Rule 1.4 of Class I, to the extent that they are consistent with the subject and context of these Rules of Class II, shall be deemed to be incorporated in and form an integral part of these Rules of Class II except that any reference in the terms of Rule 1.4 of Class I as incorporated hereunder to Protection and Indemnity insurance shall be deemed to be a reference to the Freight, Demurrage and Defense cover afforded under these Rules of Class II. 2. Provided further that any vessel insured under the terms of these Rules of Class II shall be deemed to be fully insured under the terms of the Rules of Class I and a Member shall not be entitled to recover any costs and expenses under the terms of these Rules of Class II which would have been recoverable under the terms of the Rules of Class I had the vessel been so insured.
Special Conditions in Regard to Claims Under Class II
3. Notwithstanding the generality of the foregoing, the following additional special conditions shall apply to claims arising under this Class II cover. 4. Whenever a request has been made or may be made by a Member for the support of the Association in any proceedings or for legal or other advice in connection with matters covered by these Rules, the Managers may at any time appoint and employ on behalf of the Member, upon such terms as the Managers think fit, lawyers or other persons with a view to supplying services to the Member by investigating, advising upon or otherwise dealing with such matters and/or taking, continuing or defending proceedings or acting for or representing the Member therein; furthermore, the Managers may thereafter at any time in their discretion discontinue such employment. 5. In the exercise of their discretion whether or not to lend the Association’s support as provided for in Rule 1.4.4 above, the Managers may, but shall not be obligated to, take the following matters into account in addressing the appropriateness and/or prospects for success of pursuing or defending any claim and/or proceedings and/or resolving any dispute:
i. the applicable law and jurisdiction. ii. the value of the claim or sum in issue or the significance of the dispute. iii. the level of the legal costs and expenses likely to be incurred. iv. the legal merit of the Member’s position. v. any alternative means for pursuing or defending the claim or resolving the dispute. vi. the prospect of enforcement of any claim by or against the Member. vii. the conduct of the Member. viii. the importance of any issues that arise to the shipping community generally.
6. All lawyers, surveyors and other persons appointed by the Managers on behalf of the Member or appointed by the Member with the prior consent of the Managers to supply services to the Member shall be and be deemed to be appointed and employed on the terms that they have been instructed by the Member at all times (both while so acting and after they have ceased so to act) to give advice and to report to the Managers in connection with the matter without prior reference to the Member and to produce to the Managers without prior reference to the Member any documents or information in their possession or power relating to such matter, all as if such person had been appointed to act and had at all times been acting on behalf of the Association.
PROVIDED THAT:
Where a Member employs, without the prior written approval of the Managers, lawyers or other persons for the purposes of giving advice in connection with matters covered by these Rules, then the costs of such person or persons shall not be recoverable from the Association unless the Directors in their absolute discretion otherwise decide.
Power of the Directors in Regard to Supporting Members
7. Where the applicable law governing a Member's claim or dispute against a third party allows the prevailing party to recover legal fees, expenses and/or costs, and where the Managers have exercised their discretion to support such a claim or dispute in full or in part under Class II, the Association shall be entitled to recover legal fees, expenses and/or costs, plus any interest thereon, awarded to the Member by a court, tribunal, or other competent authority in any decision, order, award, or judgment, or by a settlement or agreement of the parties concerning any such claim or dispute. To the extent that such legal fees, expenses and/or costs are not recoverable in full, or if the Member settles or otherwise resolves its claim or dispute with a third party without the Managers' prior written consent or agreement, the Association shall be entitled to recover such legal fees, expenses and/or costs, plus interest thereon, on a pro rata basis from any or all recoveries by the Member on its principal claim, legal fees, expenses and/or costs and/or interest thereon. 8. Notwithstanding the discretion vested in the Managers as provided for in Rule 1.4.4 and 5 above, a Member may seek the exercise of an overriding discretion from the Directors whether or not to support any claim and/or proceedings and/or the resolution of any dispute and the determination of the Directors in exercising such discretion shall be final. 9. The Directors shall furthermore be entitled at any time in their absolute discretion to decide that the Association shall discontinue its support or decline to provide further support in connection with any claim and/or proceedings and/or the resolution of any dispute and the determination of the Directors in exercising their absolute discretion shall be final. 10. Notwithstanding the provisions of Rules 1.4.7 and 8 above, the Directors shall have power to authorize the Managers to act on behalf of the Directors for the purposes of the said Rules 1.4.7 and 8 above. 11. Approval by the Managers of any contract referred to in Rule 2 below shall in no circumstances be taken to connote acceptance or approval of the terms of such contract either on behalf of the Managers or of the Directors.
Rule 2 - Risks and Losses Covered
Cover hereunder includes all those costs and expenses necessarily incurred by a Member (including the costs of an opponent party where such costs are ordered to be paid by a court or tribunal of competent authority, or are to be paid pursuant to the terms of any settlement concluded with the express approval in writing of the Managers) in pursuing or defending claims, or in seeking to resolve disputes, on such terms as the Managers shall have approved in writing, arising in respect of the following:
i. any contract for the building of an insured vessel, which has the prior approval in writing of the Managers. ii. any contract for the purchase or sale of an insured vessel which has the prior approval in writing of the Managers. iii. any contract for the conversion, alteration, repair, refit, drydocking or maintenance of an insured vessel. iv. any charterparty, contract of carriage, bill of lading or contract of affreightment, to which a Member is party in respect of an insured vessel and disputes as to the rights of the parties under, or legal effect, of any such charterparty, contract of carriage, bill of lading or contract of affreightment. v. any contract for operational services provided to or in respect of an insured vessel, including but not limited to agency, stevedoring, towage or salvage, or harbor authority services. vi. any contract for administrative services provided to or in respect of an insured vessel for insurance broking or ship broking services, management services or the provision of technical advice. vii. any contract in respect of goods or materials, necessaries and stores including bunkers and lubricating oil provided to an insured vessel. viii. the employment of seamen. ix. any contract of marine insurance in respect of an insured vessel, or which a Member contends covers an insured vessel, other than that evidenced by the cover provided hereunder or otherwise provided by the Association. x. any damage to an insured vessel, detention of an insured vessel, or the impairment of any right of a Member in respect of an insured vessel, caused by any third party. xi. general average contributions. xii. the presence on board an insured vessel of stowaways, refugees or persons rescued at sea. xiii. the handling, loading, stowing, lashing and discharge of cargo which is to be carried, which is carried or which has been carried on board an insured vessel.
Rule 3 - Risks and Losses Excluded
1. The terms of Rule 3 of Class I, to the extent that they are consistent with the subject and context of these Rules of Class II shall be deemed to be incorporated in and form an integral part of these Rules of Class II except that any reference in the terms of Rule 3 of Class I as incorporated hereunder to Protection and Indemnity insurance shall be deemed to be a reference to the Freight, Demurrage and Defense cover afforded under these Rules of Class II. 2. Provided further that any vessel insured under these Rules of Class II shall be deemed to be fully insured under the terms of the Rules of Class I and a Member shall not be entitled to recover any costs and expenses under the terms of the these Rules of Class II which would have been recoverable under the Rules of Class I had the vessel been fully insured thereunder. 3. Notwithstanding the generality of the foregoing, the following additional exclusions shall apply to this Class II cover.
Nonrecoverability Under Class II of Risks Excluded Under Class I
4. Unless and to the extent that the Directors in their absolute discretion otherwise decide, there shall be no right of recovery to any extent whatsoever under these Rules of Class II in respect of any claims, costs, or expenses arising out of risks and losses either expressly or impliedly excluded under the Rules of Class I.
Nonrecoverability Under Class II in Regard to Disputes Between Members, etc.
5. There shall be no recovery of costs and expenses incurred in pursuing or defending claims, or in seeking to resolve disputes, between or among any Member and/or his Joint Members, Co-assureds or Affiliates as defined and provided for under the terms of Rule 1.3 of Class I which shall be deemed fully incorporated herein.
Rule 4 - The Funding of Cover
1. The terms of Rule 4 of Class I to the extent that they are consistent with the subject and context of these Rules of Class II, shall be deemed to be incorporated in and form an integral part of these Rules of Class II except that any reference in the terms of Rule 4 of Class I as incorporated hereunder to Protection and Indemnity insurance shall be deemed to be a reference to the Freight, Demurrage and Defense cover afforded under these Rules of Class II. 2. Notwithstanding the generality of the foregoing, the following additional provision shall apply.
No Returns of Premium Consequent Upon Lay-up
3. Notwithstanding the terms of Rule 4.11 of Class I, unless the Managers shall in their absolute discretion so agree, there shall be no returns of premium permitted under these Rules of Class II in consequence of an insured vessel being laid-up during her period of insurance with the Association.
Rule 5 - Cesser and Termination of Cover
The terms of Rule 5 of Class I to the extent that they are consistent with the subject and context of these Rules of Class II, shall be deemed to be incorporated in and form an integral part of these Rules of Class II except that any reference in the terms of Rule 5 of Class I as incorporated hereunder to Protection and Indemnity insurance shall be deemed to be a reference to the Freight, Demurrage and Defense cover afforded under these Rules of Class II.
Class III - Insurance for Charterers' Risks
Rule 1 - Introductory: Interpretation: Membership: General: Provisions
1. Each and every provision of the By-Laws of the Association and of these Rules of Class III are applicable to all insurances for Charterers’ Risks provided by the Association. Provided always, however, that the cover provided by these Rules of Class III shall in no circumstances apply to a charterer who has been named as a Co-assured in an insurance of a Member pursuant to the terms of Rule 1.3.8 of Class I, where such a charterer is affiliated to or associated with such a Member. 2. The standard cover afforded by the Association to a Member who has insured his vessel with the Association for Charterers’ Risks only as defined herein is set out in Rule 2 below. 3. The cover set out in these Rules may be excluded, limited, modified or otherwise varied by any special terms expressly agreed in writing between a Member and the Managers. 4. The Managers may accept the insurance of vessels on terms which afford cover to a Member against any special or additional risks not set out in Rule 2. The nature and extent of the risks and the terms of such cover shall be as expressly agreed in writing between the Member and the Managers. 5. A Member is only insured against loss, damage, liability or expense incurred by him which arises:
i. out of events occurring during the period when his vessel is insured with the Association; and ii. solely and exclusively in respect of a Member’s interest in the insured vessel as time or voyage charterer thereof; and iii. in connection with the operation of the insured vessel by the Member solely and exclusively as time or voyage charterer thereof.
6. A Member who has entered his insured vessel for cover against any or all of the risks and losses set out in Rule 2 is obligated to pay premium to the Association in accordance with Rule 4, that is to say by way of fixed premium and not by way of mutual premium as provided for in Rule 4 of Class I. Such premium may hereinafter be referred to as charterers’ fixed premium. 7. Notwithstanding the provisions of Rule 1.1.6 above, a Member may be insured on special terms to the effect that he is liable to pay mutual premium to the Association in accordance with Rule 4 of Class I where expressly agreed as between the Member and the Managers. This shall hereinafter be referred to as charterers’ mutual insurance and premium payable in respect thereof charterers’ mutual premium. 8. Provided always, however, that irrespective of whether cover in accordance with these Rules of Class III has been agreed on the basis of the liability of the Member to pay premium as charterers’ fixed premium or as charterers’ mutual premium, each and every insurance provided under the terms of these Rules of Class III shall be subject to a Member’s maximum right of recovery which shall in all cases be set at a prescribed monetary figure for the various interests insured hereunder and as shall have been agreed in individual cases between the Member and the Managers.
Except as expressly provided for hereunder, and to the extent that their meanings are consistent with the subject and context of these Rules of Class III, the words and expressions set out in Rule 1.2 of Class I shall have the same meanings in these Rules of Class III. In these Rules the following words and expressions shall have the following meanings if not inconsistent with the subject or context thereof:
Member
A time or voyage charterer (being other than a bareboat or demise charterer) of an insured vessel, or any other party having a similar capacity in respect of an insured vessel which the Managers may in their absolute discretion deem to have an insurable interest under these Rules of Class III.
Charterparty
A contract governing the time or voyage charter (being other than a bareboat or demise charter) of an insured vessel, the form of which shall have been approved in writing by the Managers, or any other contract in the nature of a time or voyage charter which the Managers in their absolute discretion may consider sufficient to create an interest capable of insurance under these Rules of Class III.
Insured Vessel
A vessel which has been insured with the Association in Class III. Words importing the singular number only shall include the plural number and vice versa. Words importing the masculine gender only shall include the feminine and neuter genders. Words importing persons shall include individuals, partnerships, corporations, associations, joint ventures and any other business entities.
The terms of Rule 1.3 of Class I, to the extent that they are consistent with the subject and context of these Rules of Class III, shall be deemed to be incorporated in and form an integral part of these Rules of Class III. Provided always, however, that:
i. references to a Member, Joint Member and membership contained in Rule 1.3 of Class I shall be interpreted in accordance with the definition of a Member contained in Rule 1.2 of these Rules of Class III as shall, mutatis mutandis, references to an Affiliate and Co-assured contained in the said Rule 1.3 of Class I; and ii. the terms of Rule 1.3.9 of Class I shall in no circumstances whatsoever apply to any insurance contracted under the terms of these Rules of Class III.
1. The terms of Rule 1.4 of Class I, to the extent that they are consistent with the subject and context of these Rules of Class III shall be deemed to be incorporated in and form an integral part of these Rules of Class III insofar as cover hereunder is provided for Protection and Indemnity risks and losses as set out in Rule 2.A of these Rules of Class III. 2. The terms of Rule 1.4 of Class I, to the extent that they are consistent with the subject and context of these Rules of Class III, shall be deemed to be incorporated in and form an integral part of these Rules of Class III except that any reference in the terms of Rule 1.4 of Class I as incorporated hereunder to Protection and Indemnity insurance shall be deemed to be a reference to the insurance of risks and losses arising from charterers’ liability for loss of or damage to an insured vessel and for financial loss arising therefrom as set out in Rule 2.B of these Rules of Class III. 3. The terms of Rule 1.4 of Class II, to the extent that they are consistent with the subject and context of these Rules of Class III, shall be deemed to be incorporated in and form an integral part of these Rules of Class III insofar as cover hereunder is provided for Freight, Demurrage and Defense costs and expenses as set out in Rule 2.C of these Rules of Class III. 4. Notwithstanding the provisions of Rule 1.4.1 to 3 above, and only to the extent that cover under this Class III of the Rules has been granted to a Member in respect of those risks and losses covered under Rule 2.A or Rule 2.B or Rule 2.C on a single and exclusive basis (such being available in any event only with the express agreement of the Managers), the cover set out in the said Rules 2.A, 2.B and 2.C shall be mutually exclusive in every respect. 5. Provided further, and notwithstanding anything to the contrary contained elsewhere in these Rules of Class III, the terms of Rule 1.4.32 and 33 and Rule 4.14 of Class I shall in no circumstances apply to any insurances contracted under the provisions of these Rules of Class III.
Rule 2 - Risks and Losses Covered
A. Protection and Indemnity Insurance
1. The terms of Rule 2 of Class I, to the extent that they are consistent with the subject and context of these Rules of Class III, shall be deemed to be incorporated in and form an integral part of this Rule 2.A of Class III. 2. However, notwithstanding the generality of the foregoing, cover provided by this Rule 2.A of Class III shall apply solely and exclusively to the extent that the relevant risk and/or loss arises out of, or is incurred in relation to, a Member’s status as time or voyage charterer of an insured vessel, or in another capacity in relation thereto as shall have been expressly agreed by the Managers as sufficient to create an interest capable of insurance under these Rules of Class III.
B. Insurance of Charterers’ Liability for Loss of or Damage to an Insured Vessel and for Financial Loss Arising Therefrom
1. Subject to any variations or modifications of cover as expressly provided for herein, and in any event to all the other terms of these Rules of Class III, cover hereunder applies to:
i. all those liabilities, costs and expenses incurred by a Member, as charterer, for loss of or damage to an insured vessel, her equipment, outfit, stores or supplies; ii. claims in respect of demurrage, loss of use and/or hire of an insured vessel suffered as a result of an accident to the insured vessel in respect of which a Member, as charterer, has been or may be held legally liable; iii. a Member’s contribution, as charterer, to general average, salvage, salvage charges and/or sue and labor expenses by reason of a Member’s interest in charter hire and/or freight and/or bunkers at risk; iv. expenses of investigation and defense in relation to any of the risks and losses set out in i. to iii. above.
C. Freight, Demurrage & Defense Insurance
1. The terms of Rule 2 of Class II, to the extent that they are consistent with the subject and context of these Rules of Class III, shall be deemed to be incorporated in and form an integral part of this Rule 2.C of Class III. 2. However, notwithstanding the generality of the foregoing, cover provided by this Rule 2.C of Class III shall apply solely and exclusively to the extent that the relevant risk and/or loss arises out of, or is incurred in relation to, a Member’s status as time or voyage charterer of an insured vessel, or in another capacity in relation thereto as shall have been expressly agreed by the Managers as sufficient to create an interest capable of insurance under these Rules of Class III.
Rule 3 - Risks and Losses Excluded
A. Protection and Indemnity Insurance
1. The terms of Rule 3 of Class I, to the extent that they are consistent with the subject and context of these Rules of Class III, shall be deemed to be incorporated in and form an integral part of this Rule 3.A of Class III. 2. Provided further that any vessel insured under the terms of Rule 2.A shall be deemed to be fully insured under Rules 2.B and 2.C and a Member shall not be entitled to recover any claims, costs and expenses under Rule 2.A which would have been recoverable under Rules 2.B or 2.C. 3. Unless and to the extent that the Directors in their absolute discretion otherwise decide, there shall be no right of recovery under Rule 2.A in respect of any claims, costs or expenses arising out of risks and losses expressly or impliedly excluded under Rules 2.B and 2.C.
B. Insurance of Charterers’ Liability for Loss of or Damage to an Insured Vessel and for Financial Loss Arising Therefrom
1. The terms of Rule 3 of Class I, to the extent that they are consistent with the subject and context of the cover provided under Rule 2.B of these Rules of Class III, shall be deemed to be incorporated in and form an integral part of this Rule 3.B of Class III. Any reference in the terms of Rule 3 of Class I as incorporated hereunder to Protection and Indemnity insurance shall be deemed to be a reference to the insurance provided under Rule 2.B of Class III. 2. Provided further that any vessel insured under the terms of Rule 2.B shall be deemed to be fully insured under the terms of Rule 2.A and 2.C and a Member shall not be entitled to recover any claims, costs and expenses under Rule 2.B which would have been recoverable under Rules 2.A or 2.C. 3. Unless and to the extent that the Directors in their absolute discretion otherwise decide, there shall be no right of recovery under Rule 2.B in respect of any claims, costs and expenses arising out of risks and losses expressly or impliedly excluded under Rules 2.A and 2.C.
C. Freight, Demurrage & Defense Cover
1. The terms of Rule 3 of Class I, to the extent that they are consistent with the subject and context of these Rules of Class III, shall be deemed to be incorporated in and form an integral part of this Rule 3.C of Class III. 2. Provided further that any vessel insured under the terms of Rule 2.C, shall be deemed to be fully insured under Rules 2.A and 2.B and a Member shall not be entitled to recover any costs and expenses under Rule 2.C which would have been recoverable under Rules 2.A or B. 3. Unless and to the extent that the Directors in their absolute discretion otherwise decide, there shall be no right of recovery under Rule 2.C in respect of any claims, costs and expenses arising out of risks and losses expressly or impliedly excluded under Rules 2.A and 2.B.
D. War Risks
1. Notwithstanding the terms of Rule 3.1 of Class I to the extent that the said terms are incorporated in these Rules of Class III, cover provided by Rule 2A, B and C of these Rules of Class III shall extend to those liabilities, costs and expenses caused by or arising out of war risks as defined in the said terms of Rule 3.1 of Class I, provided always that the Member shall have used his best endeavors to ensure that:
i. the ship is chartered on terms to the effect that: – the owners are entitled to refuse to send the ship to any port or place that is dangerous by reason of war risks (as defined in any current standard war risks insurance policy), and – the owners are in any event entitled to insure their interests against such war risks, and – the charterers are liable to reimburse the owners in respect of any war risks premium incurred as a result of the ship being ordered to or employed in such port or place; or
ii. the ship is chartered on terms no less favorable to the charterers as regards their liability for loss or damage caused by war risks as set out above; or iii. the ship is chartered on terms to the effect that:
– “charterers are under no circumstances whatsoever to be liable for any loss, damage or expense which is or could be covered by war risk insurance available commercially”.
Provided further that the cover for war risks is subject to the Institute Notice of Cancellation, Automatic Termination of Cover, War and Nuclear Exclusion Clause (Hulls etc. 01.01.95) but not subject to the current London Market War Risk Trading Warranties.
Rule 4 - The Funding of Cover
1. Save to the extent provided for under Rule 1.1.7 of these Rules of Class III where the Managers shall have expressly agreed otherwise, all Members insured by the Association in this Class III shall be liable to pay fixed premium to the Association in a manner as shall have been expressly agreed with the Managers in individual cases. 2. By reason of the insurance provided under these Rules of Class III being subject, in the absence of the Managers’ agreement otherwise, to the payment of fixed premium, a Member shall not have a right of recovery from the Association beyond a fixed monetary limit which shall have been agreed with the Managers at the time of contracting the insurance. 3. In consequence thereof, neither the rights nor the obligations in regard to the funding of the Association as apply to Members insured on mutual premium terms shall apply to Members insured in accordance with the terms of this Class III and, in particular, such Members shall have no right to any returns of premium as provided for in Rule 4.5.i of Class I, nor shall such Members be subject to the terms and conditions of Rule 4.15 of Class I.
No Returns of Premium Consequent Upon Lay-Up
4. Without prejudice to the generality of the foregoing, and notwithstanding the terms of Rule 4.11 of the Rules of Class I, there shall be no returns of premium permitted in any circumstances under these Rules of Class III in consequence of an insured vessel being laid-up during her period of insurance with the Association.
Rule 5 - Cesser and Termination of Cover
The terms of Rule 5 of the Rules of Class I to the extent that they are consistent with the subject and context of these Rules of Class III, shall be deemed to be incorporated in and form an integral part of these Rules of Class III.
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