11/2008: Statutes and Rules 2009 - Member Circulars

Circular No. 11/2008 January 2009

To the Members of Assuranceforeningen Gard - gjensidig

Dear Sirs,

Statutes and rules 2009

The Association’s Statutes and Rules for the 2009 policy year, which commences at noon GMT on 20 February 2009, contain some alterations to those applying for the 2008 policy year, as set out below.

Rules for Ships

Rule 58 War risks

Rule 58.2 (War risks) has been amended as a result of the entry into force of the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001. Liabilities, costs and expenses incurred by the Association pursuant to certain certificates (“blue cards”) shall not be excluded from cover even if they arise from war risk. However, any insurance recoveries from other insurers shall be deemed to be assigned to the Association.

Rule 58.2 shall read as follows (amendment underlined):

“2 The exclusion in Rule 58.1 above shall not apply to liabilities, costs and expenses of a Member insofar only as they are discharged by the Association on behalf of the Member pursuant to a demand made under

i) ..

ii) ..

iii) ..

iv) a certificate issued by the Association in compliance with Article 7 of the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001

to the extent such liabilities, costs and expenses are not recovered by the Member under any other policy of insurance or any extension to the cover provided by the Association. Where any such guarantee, undertaking or certificate is provided by the Association on behalf of the 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 by way of loan and that there shall be assigned to the Association to the extent and on the terms that it determines in its discretion to be practicable all the rights of the Member under any other insurance and against any third party.”

Rule 63 Excluded losses – Paperless Trading

A new addition to Rule 63 regarding Paperless Trading has been drafted for the purpose of implementing changes made in the Pooling Agreement. The clause differs slightly from the current Paperless Trading Endorsement incorporated in all Certificates of Entry. The proposed new wording provides cover for liabilities arising from the use of electronic trading systems approved by the Association. The International Group of P&I Clubs intends to keep a record of electronic trading systems, including the terms and conditions governing the use of such systems, that can be approved by the individual Club being a party to the Pooling Agreement.

Rule 63 shall read (amendment underlined):

“1) The Association shall not cover under a P&I entry, except where and to the extent that they form a part of a claim for expenses under Rule 46 (measures to avert or minimise loss):

a) ..

b) ..

c) ..

j) liabilities, losses, costs and expenses arising from the use of any electronic trading system, other than an electronic trading system approved in writing by the Association, to the extent that such liabilities, losses, costs and expenses would not (save insofar as the Association in its sole discretion otherwise determines) have arisen under a paper trading system. For the purposes of this sub – paragraph (j) an “electronic trading system” is any system which replaces or is intended to replace paper documents used for the sale of goods and/or their carriage by sea or partly by sea and other means of transport and which:

(i) are documents of title, or

(ii) entitle the holder to delivery or possession of the goods referred to in such documents, or

(iii) evidence a contract of carriage under which the rights and obligations of either of the contracting parties may be transferred to a third party.

For the purpose of this sub-paragraph (j) a “document” shall mean anything in which information of any description is recorded including, but not limited to, computer or other electronically generated information”.

Rule 73 Nuclear perils

Rule 73 (Nuclear perils) has been amended for the purpose of harmonizing the cover with the terms of the Pooling Agreement. The amendment makes it clear that liabilities under certificates (“blue cards”), as described in the explanatory note to Rule 58 above, shall not be excluded even if they arise from nuclear risk. However, any insurance recoveries from other insurers shall be deemed to be assigned to the Association. The existing Rule 73 becomes the new Rule 73.1. A new Rule 73.2 is added.

Rule 73 shall read as follows (amendment underlined):

“1. The Association shall not cover any liabilities, losses, costs or expenses directly or indirectly caused by or contributed to by or arising from:

(a) ionising radiations from, or the radioactive, toxic, explosive or other hazardous or contaminating properties of:

(i) any nuclear fuel or any nuclear waste or the combustion of nuclear fuel, or

(ii) any nuclear installation, reactor or other nuclear assembly or nuclear component thereof; or

(b) any weapon or device employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter,

(c) the radioactive, toxic, explosive or other hazardous or contaminating properties of any radioactive matter,

other than liabilities, costs and expenses arising out of carriage of ‘excepted matter’ (as defined in the Nuclear Installations Act 1965 of the United Kingdom or any regulations made thereunder) as cargo on the Ship.

2. The exclusion in Rule 73.1 above shall not apply to liabilities, costs and expenses of a Member insofar only as they are discharged by the Association on behalf of the Member pursuant to a demand made under:

(i) a guarantee or other undertaking given by the Association to the Federal Maritime Commission under Section 2 of US Public Law 89-777, or

(ii) a certificate issued by the Association in compliance with Article VII of the International Conventions on Civil Liability for Oil Pollution Damage 1992 or any amendments thereof, or

(iii) an undertaking given by the Association to the International Oil Pollution Compensation Fund 1992 in connection with the Small Tanker Oil Pollution Indemnification Agreement (STOPIA), or

(iv) a certificate issued by the Association in compliance with Article 7 of the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001

Rules for Ships – Defence

Rule 65 Cases pertaining to the operation of the Ship

Rule 65 (k) of Part IV of the Rules for Ships, dealing with defence cover, has been amended to exclude from cover legal and other costs incurred in connection with investigations or proceedings in relation to actual or alleged infringements of rules and regulations designed to enhance safety at sea and prevention of pollution. This amendment will, for example, exclude from the Defence cover legal costs and expenses relating to alleged violations of MARPOL regulations and similar legislation.

Rule 65 shall read as follows (amendment underlined):

“The Association shall cover legal and other costs necessarily incurred in establishing or resisting claims concerning the following:

a ..

b ..

c ..

…

k) customs, harbour or other public or quasi-public authorities, but not legal and other costs incurred in connection with or relating to:

(i) taxes or dues payable in countries where the Ship is registered, or where the Member is resident, or where the Member has a permanent place of business; or

(ii) actual or alleged infringement(s) of legislation or regulations relating to safety, navigation or prevention of pollution.”

Appendix II Charterers’ limits including special limit for Consortium Claims

Appendix II, Section 5 Consortium Claims

Section 5 in Appendix II to the Rules for Ships dealing with Consortium Claims has been amended for the purpose of implementing changes made in the Pooling Agreement. The qualifying criteria have been changed. An entered ship must now be employed in the Consortium at the time consortium cover attaches. The cover is further extended to feeder vessels serving the Consortium Vessel, provided the Member also has through transport cover.

Appendix II, section 5, shall read as follows (amendment underlined):

“5.1 Definitions

…

Consortium Vessel - means a ship, feeder vessel or space thereon, not being the Ship, employed to carry cargo under a Consortium Agreement.

..”

5.2 Consortium Claims

“A claim shall be a Consortium Claim where:

a) ..

b) ..

c) ..

d) at the time cover pursuant to the special provisions in this section 5 initially attaches, the Member employs a Ship pursuant to that Consortium Agreement.”

Appendix V Deductibles

At the Board of Directors meeting of the Association held on 25 October 2008 it was decided that there should be a general increase of USD 2000 in all deductibles for P&I risks. As a result Appendix V, Section 2 dealing with deductibles for P&I risks has been amended accordingly.

Appendix V, Section 2, P&I entries, shall read as follows (amendment underlined):

a) “The standard deductibles for liabilities, losses, costs and expenses incurred by all the assureds under any one P&I entry are as follows (subject to paragraphs 2(b) and (c) below):

i) Crew

All liabilities, costs and expenses covered under Rule 27 and arising out of one event, USD 5,000

ii) Passengers and others carried on board

All liabilities, costs and expenses covered under Rules 28 or 29 and arising out of any one event: USD 5,000.

iii) Cargo

All liabilities, costs and expenses covered under Rule 34 and arising out of any one cargo carrying voyage: USD 17,000.

iv) Pollution

All liabilities, costs and expenses covered under Rule 38 and arising out of any one event: USD 17,000.

v) Fines

All liabilities, costs and expenses covered under Rule 47 and arising out of any one event: USD 17,000.

vi) Collision with other ships and damage to fixed and floating objects

All liabilities, costs and expenses covered under Rule 36.1.a) and Rule 37 a) and arising out of any one event: USD 22,000.

vii) Other P&I liabilities etc.

All liabilities, losses, costs and expenses covered under any Rule, other than Rules 27, 28, 29 34, 36.1 (a), 37 (a), 38 and 47 and arising out of any one event: USD 5,000.”

Rules for Mobile Offshore Units (MOUs)

To harmonize the Rules for MOUs with the Rules for Ships the following amendments shall be made in the Rules for MOUs (amendments underlined);

“Rule 19A Diversion expensens

The Association shall cover extra costs of fuel, insurance, wages, stores, provisions and port charges attributable to a diversion, over and above the costs that would have been incurred but for the diversion, where these are incurred solely for the purpose of securing treatment for an injured or sick person on board, or for the purpose of searching for a person missing from the Vessel, or necessarily incurred while awaiting a substitute for such person, or for the purpose of saving persons at sea.”

Rule 21 Damage to fixed or floating objects

The Association shall cover liability for loss of or damage to any fixed or floating object by reason of contact between the Vessel and such object, if and to the extent not covered under the Hull Policies, provided that there shall be no recovery under this Rule 21 in respect of any deductible borne by the Member under the Hull Policies.

Rule 26 Fines

1. The Association shall cover:

(a) fines imposed upon a Member for short - or over-delivery of cargo, or failure to comply with regulations concerning the declaration of goods, or documentation of cargo, provided that the Member is insured by the Association for cargo liability under Rule 23;

(b) fines imposed upon the Member for breach of any immigration law or regulations;

(c) fines imposed upon the Member in respect of the accidental escape or discharge of oil or any other substance, provided that the Member is insured for pollution liability by the Association under Rule 22;

...

(e) smuggling or any infringement of any custom law or regulation other than in relation to cargo carried on the Vessel

Rule 29A Damage to Member’s own property

If and to the extent the Vessel causes damage to property, other than cargo, belonging wholly or in part to the Member, the Member shall be entitled to recvover from the Association under Rule 20 (collision with vessels), Rule 21 (damage to fixed or floating objects) and Rule 23 (loss of or damage to property) as if the property belonged to a third party.

If you have any questions, please contact Kjetil Eivindstad, Senior Vice President, in Gard AS.

Yours faithfully, GARD AS as agent only for Assuranceforeningen Gard –gjensidig-

Claes Isacson Chief Executive Officer