Published 03 July 1997
Circular No. 3/97 July 1997
TO THE MEMBERS
Dear Sirs,
INTERNATIONAL GROUP AGREEMENT - LIMIT ON CLUB COVER
The International Group Agreement 1985 (the "IGA") came into force at 20 February 1985. All Clubs in the International Group of P&I Clubs (the "Group") are parties to it and it applies principally to the renewal of insurance of vessels presently entered in a Group Club (the "20 February procedure"). The EC Commission (the "Commission") in Brussels granted a formal exemption for the IGA in December 1985. The exemption was granted for 10 years and covered the 20 February 1995 renewal.
In February 1995 the Group made a formal application to the Commission to renew the exemption. The approach to the Commission in 1995 was made at the same time as the Group Clubs were considering the so-called "Limitation Proposal" (see Circular No. 15/95) on the limit on Club cover and in November 1995 the Greek Shipping Co-operation Committee lodged a formal complaint to the Commission about the new limit which had been approved by all Clubs.
At a meeting in May 1997 between representatives of the Group and the Commission it was indicated for the first time that the Commission had difficulties with regard to renewing the exemption for the IGA. Officials of the Commission also indicated that the current limit on Club cover agreed under the "Limitation Proposal" was unacceptably high. The Commission?s view has subsequently been set out in a formal Statement of Objections (the "SO") which was served on the Group on 16 June 1997. The SO addresses two main issues:
the 20 February procedure under the IGA; and
the present limit on Club cover (the Limitation Proposal).
To address the issues raised by the SO, the Group set up a Working Group to try to find a compromise on the limitation issue that all Club Managers could recommend to their Boards/Committees. After lengthy negotiations the Working Group recommended that the existing limit on Catastrophe Contribution of 20 per cent of the 1976 Limitation Convention's property funds should be replaced by a limit of 2.5 per cent of those funds and that all other arrangements on limit of Catastrophe Contributions as set out in the Pooling Agreement should remain unchanged.
Moreover, the 20 February procedure under the IGA, which means that if a shipowner decides to move to a new Club he will have for one year only to pay to his new Club the rate that was justified by his own claims record with his previous Club, was considered by the Working Group to be indispensable to the maintenance of the Pool and the Group. The 20 February procedure contains the minimum restraint necessary to give shipowners the measure of confidence they need in order to allow their Clubs to co-operate in a Pool.
At the Group Managers meeting on 3 July 1997 the Working Group?s recommendation was endorsed unanimously by all Club Managers and they all undertook to circulate a Common Agenda Note to their Boards/Committees and to recommend adoption of the following Resolution:
The Common Agenda Note was circulated to your Committee on 4 July 1997 and the Gard Committee has adopted the above Resolution and the Group has been informed accordingly.
Yours faithfully, ASSURANCEFORENINGEN GARD -gjensidig-
John G. Bernander Managing Director
Gard is a member of
