Published 02 January 2007
Circular No. 6/2006
January 2007
TO THE MEMBERS OFASSURANCEFORENINGEN GARD -gjensidig-**
Dear Sirs,
Rule changes 2007
The Association’s Rules for P&I and Defence cover for ships and other floating structures (the “Rules for Ships”) and Rules for P&I cover for mobile offshore units (the “Rules for MOUs”) for the 2007 policy year, which commences at noon GMT on 20 February 2007, contain some alterations to those applying for the 2006 policy year as set out below.
Rules for Ships**
Consortium Agreements*
Rules 1, 52 and Appendix II in the Rules for Ships have been amended for the purpose of implementing the provisions in the Pooling Agreement (being the contractual framework for sharing of claims and collective purchase of reinsurance among the International Group Clubs) regarding cover for liabilities arising under so-called Consortium Agreements. The latter is commonly used in the container and liner trades and means that two operators agree to share or exchange cargo space on each others vessels. The structure of the insurance cover can in short be described as follows:
A Consortium Vessel is a vessel where the Member has got the right to utilize cargo space, not being an entered Ship, employed to carry cargo under a Consortium Agreement. The Consortium Vessel will be treated as entered in the Association on behalf of the Member under a Charterer’s Entry.
If a claim is made against the Member arising out of the carriage of cargo by the Consortium Vessel, it is classified as a Consortium Claim. Such a claim is for practical purposes allocated to the P&I entry of a Ship entered in the Association on behalf of the Member even if that Ship has not produced the claim.
A limit of USD 350 million for each Consortium Vessel, each incident or occurrence, is available for each Member in respect of all his P&I entries in the Association and any other association.
A casualty involving two or more Consortium Vessels could result in multiple limits
Against this background the following amendment has been made in Rules 1 and 52 and section 5 in Appendix II (amendment underlined);
Rule 1 Interpretation**
In these Rules the following words or expressions shall have the following meanings:
………………..
Consortium Agreement – shall have the meaning given to it in Appendix II
Consortium Claim – shall have the meaning given to it in Appendix II.
Consortium Vessel - shall have the meaning given to it in Appendix II.
…………
Rule 52 Limitations for Charterers and Consortium Vessels**
The Association’s liability under a P&I entry for any and all claims arising under Charterer’s Entries or in respect of insurance of charterers under Owner’s Entries or in respect of the Member’s liability for a Consortium Claim arising out of the carriage of cargo on a Consortium Vessel shall be limited to such sum or sums and subject to such terms and conditions as are set out in Appendix II.
………
Appendix II Charterers’ limits including special limit for Consortium Claims**
………..
5. Consortium Claims**
5.1 Definitions*
For the purpose of this section 5 to Appendix II to the Rules for Ships, the following words and expressions shall have the following meanings:
Consortium Agreement*
any arrangement under which a Member agrees with other parties to the reciprocal exchange or sharing of cargo space on the Ship and Consortium Vessels.
Consortium Claim*
means a claim as described in sub- paragraph 5.2 of this section 5 to Appendix II to the Rules for Ships.
Consortium Vessel*
means a ship 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** it arises under a P&I entry of a Ship; and
b** it arises out of the carriage of cargo on a Consortium Vessel; and
c** that the Member and the operator of the Consortium Vessel are parties to a Consortium Agreement; and
d** at the time the event giving rise to the claim occurs there is employed by the Member pursuant to the Consortium Agreement a ship entered on behalf of the Member in the Association or another association which is a party to the Pooling Agreement.
For the purpose of a Consortium Claim under this Appendix II to the Rules for Ships, the Consortium Vessel shall be treated as a Ship of entered on behalf of the Member under a Charterer’s Entry in the Association.
5.3 Allocation of Consortium Claims*
Where a Ship under an Owner’s Entry and a Ship under a Charterer’s Entry are both employed by the Member pursuant to a Consortium Agreement at the time of the event giving rise to the Consortium Claim occurs, the Consortium Claim of the Member shall for the purpose of these Rules be treated as a claim arising in respect of the Owner’s Entry of the Member.
5.4 Aggregation*
a** Where the Member has more than one ship employed pursuant to the Consortium Agreement at the time the event giving rise to a Consortium Claim occurs, all such ships shall be deemed to be an Entry of one Ship.
b** Where a Member employs one or more ships pursuant to the Consortium Agreement at the time the event giving rise to a Consortium Claim occurs and the Member has an entry in respect of such ships in the Association and another association which is a party to the Pooling Agreement
i** each such ship shall be deemed to be a part entry of one ship in the Association and the other association(s) which is a party to the Pooling Agreement, and
ii** where the Consortium Claims incurred by the Association and the other association(s) in respect of the Ship arising from that event out of the carriage of cargo on a Consortium Vessel in the aggregate exceed the sum specified in paragraph 5 below, the liability of the Association for such Consortium Claims shall be
limited to that proportion of the sum specified in paragraph 5 below that the Consortium Claims recoverable from the Association in respect of each part entry bears to the aggregate of all the Consortium Claims incurred by the Association and any other association which is a party to the Pooling Agreement.
5.5 Limit of insurance*
The cover afforded for a Consortium Claim is limited pursuant to Rule 52 to USD 350 million each incident or occurrence in respect of all ships under any and all P&I entries of a Member in the Association and any other association which is a party to the Pooling Agreement.
Exchange of information*
The International Group Clubs have agreed a procedure for sharing information about the technical condition of entered vessels as a part of a number of efforts to combat sub-standard shipping. In order to harmonize the Rules for Ships with the agreed practice within the International Group a new sub-section 5 is introduced in Rule 9 – Survey. The new Rule 9 as amended reads as follows (amendment underlined):
Rule 9 Survey**
1** The Association may at any time during the period of entry appoint a surveyor to inspect the Ship on behalf of the Association.
2** Where the Ship has been laid-up for a period exceeding six months, the Member shall give the Association not less than seven days notice prior to the Ship leaving the place of lay-up for recommissioning, to afford the Association an opportunity to inspect the Ship pursuant to Rule 9.1.
3** Should the Member refuse to co-operate in an inspection under Rule 9.1, or fail to give notice in accordance with Rule 9.2, the Association will thereafter be liable only to the extent that the Member can prove that any liability, cost or expense is not attributable to defects in the Ship that would have been detected in the course of an inspection under Rule 9.1.
4** Where an inspection reveals matters which, in the sole determination of the Association, represent a deficiency in the Ship, the Association may exclude specified liabilities, losses, costs and expenses from the cover until the deficiency has been repaired or otherwise remedied.
5** By applying for an entry of a ship or upon the continuation of the entry of the Ship in the Association, the Member;
a) consents to and authorizes the disclosure by the Association to any association which is a party to the Pooling Agreement the findings of any survey or inspection of such ship undertaken on behalf of the Association either pursuant to an application for, or after entry in, the Association.
b)waives any rights or claims against the Association of whatsoever nature arising in respect of or relating to the contents of or opinions expressed in any survey or inspection report so disclosed,
(i) Such survey or inspection reports may only be disclosed to another association when an application for entry of such ship is made thereto; and
(ii) The disclosure of the survey or inspection shall be for the limited purpose only of that association considering an application to enter such ship for insurance.
It ought to be mentioned that the new Norwegian Ships’ Safety Act contains a provision allowing Norwegian insurers to exchange information as outlined above.
Landfills*
In order to harmonize the Rules for Ships with the corresponding provision in the Pooling Agreement, the existing Rule 38. 2, designed especially to deal with liabilities arising out of discharge or escape of hazardous waste from any land based dump or storage, is moved to a new Rule 62.2 in Part II, Chapter 2 of the Rules containing various limitations and exclusions. This is merely an editorial matter and does not represent any material change. The existing Rule 62 is the new Rule 62.1
Rule 62 reads as follows (amendment underlined):
Rule 62 Waste incineration and disposal operations - landfills**
1. The Association shall not cover under a P&I entry liabilities, losses, costs or expenses arising out of waste incineration or waste disposal operations carried out by the Ship (other than any such operations carried out as an incidental part of other commercial activities).
2. Unless and to the extent that the Association in its discretion shall otherwise decide, cover under a P&I entry does not include any liability, loss, damage, cost or expense, including without limitation, liability for the cost of any remedial works or clean up operations, arising as a result of the presence in or the escape or discharge or threat of escape or discharge from, any land based dump, site storage or disposal facility of any substance previously carried on the Ship whether as cargo, fuel, stores or waste and whether at any time mixed in whole or in part with any other substance whatsoever.
Passengers and crew*
The intention is that Club cover for passenger and crew risks combined with effect from 20 February 2007 shall be limited to USD 3 billion, each vessel each accident. A sub-limit of USD 2 billion shall apply to passenger risks. The final wording to be inserted in the Rules for Ships (in Part II, Chapter 2 and in the Appendices) will be circulated together with details about the reinsurance arrangements for 2007.
Rules for MOUs**
Rule 44 Deductibles*
An increase in the deductible from USD 100,000 to USD 250,000 has been made for U.S. owned, operated or managed units as follows (amendment underlined);
Rule 44 Deductibles**
Unless otherwise agreed, cover shall be subject to a deductible of USD 10,000 (or, in the case of U.S. owned, operated or managed units, USD 250,000) …
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
