Rules Class I - Protection and Indemnity (16-20)

16 Reserves

i

The Directors may in their absolute discretion establish, maintain and accumulate such reserves, funds or other accounts for such contingencies or purposes as they think necessary, expedient or prudent including, without prejudice to the generality of the foregoing, such funds or accounts necessary to establish or maintain any solvency margin, guarantee fund or other fund as may be required of the Club by any governmental or other legislation or regulations.

ii

The Directors may apply the sums standing to the credit of any reserves or accounts for any purpose whatsoever which the Directors consider to be in the interests of the Club or its Members.

iii

The funds required to establish such reserves or accounts may be raised in any of the following ways:

a

the Directors, when considering the amount of the Mutual Premium or any Additional Premium for any Policy Year or at any time or times thereafter, may resolve that any specified amount or proportion of such premium shall be applied for the purposes of any reserve or account;

b

the Directors may, on the closing of any Policy Year or at any time or times thereafter resolve that any specified amount or proportion of the funds standing to the credit of that Policy Year shall be applied for the purposes of any such reserve or account.

17 Recovery

If any Member shall become liable in damages or otherwise or shall incur any liabilities, costs or expenses as hereinafter set out in Rules 25 and 28, in respect of a ship which was entered in the Club at the time of the casualty or event giving rise to such liabilities, costs or expenses, such Member shall be entitled to recover, out of the funds of the Club, the amount of such liabilities, costs or expenses to the extent and upon the terms, conditions and exceptions provided by these Rules and by the Certificate of Entry;

provided always that:

i

unless the Directors otherwise determine, it shall be a condition precedent of a Member’s right to recover from the funds of the Club in respect of any liabilities, costs or expenses that he shall first have paid the same out of funds belonging to him absolutely and unconditionally and not by way of loan or otherwise;

ii

any liability costs or expenses (other than those arising in respect of oil pollution) incurred by the Club or by any other party to the Pooling Agreement in respect of an entered ship arising from any one casualty or event, including any claim in respect of liability for the removal or non-removal of any wreck, shall be treated for the purposes of these Rules as if they were one claim;

iii

if less than the full tonnage of a ship is entered in the Club, the Member shall be entitled only to recover such proportion of its claim as the entered tonnage bears to the full tonnage;

iv

in no case whatsoever shall interest be paid on sums due from the Club.

18  General Exceptions and Limitations

i

If a ship is entered in the Club for the account of a time charterer, the liability of the Club shall be limited to such amount as would apply if he were the registered owner of the ship and entitled to limit liability, or to such other amount as may be stated in the Certificate of Entry.

Oil Pollution Limit

ii

Save as otherwise provided under the relevant Certificate of Entry, the liability of the Club in respect of claims for oil pollution shall be limited to such sum and be subject to such terms and conditions as the Directors may from time to time determine.

provided always that:

a

for the purposes of this Rule, claims for oil pollution shall be deemed to include claims in respect of all liabilities arising out of the escape or discharge or threatened escape or discharge of oil from the entered vessel or any other vessel or vessels or any fixed or movable object as a result of any one accident or occurrence and recoverable from the Club by virtue of one or more of the provisions of Rule 25 of these Rules;

b

in the event that the aggregate of such claims exceeds the limit determined by the Directors hereunder, the liability of the Club in respect of each claim shall be such proportion of the said limit as each claim recoverable from the Club bears to the said aggregate;

c

where claims for oil pollution arise in respect of an entered vessel providing salvage or other assistance to another vessel following an accident or occurrence, such claims shall be aggregated with any claims for oil pollution made by other vessels providing salvage or other assistance to the said vessel following the said accident or occurrence against the Club or any other association which is a party to the Pooling Agreement. The liability of the Club in respect of such claims shall be limited to that proportion of the limit determined by the Directors that each claim recoverable from the Club bears to the said aggregate;

d

Where a bareboat charterer and an owner are separately insured with the Club or any other association which is a party to the Pooling Agreement, the aggregate of all claims for oil pollution following an accident or occurrence brought against the Club and/or such other association shall be limited to the sum determined hereunder. The liability of the Club in respect of such claims shall be limited to that proportion of the sum determined by the Directors that each claim recoverable from the Club bears to the aggregate of the claims recoverable against the Club and such other association if any;

e

in the event of legislation coming into force anywhere in the world affecting a Member’s liability in respect of oil pollution the Club shall, upon each and every such enactment, have the right to increase such Member’s rate of contribution or to charge additional premium or limit its liability in respect thereto;

f

if the total amount of any pollution claim against a Member exceeds a sum equal to the Club’s limit of liability in respect of oil pollution claims, as determined by the Directors in accordance with this Rule 18, the Club will have no liability in respect of that amount by which any such claim exceeds the sum equal to the limit aforesaid.

Note: The sum approved by the Directors to apply to Rule 18 ii as from 20 February 2007 is US$1,000,000,000 each vessel any one accident or occurrence.

iii

When a Member for whose account a ship is entered in this Class is entitled to limit its liability, the liability of the Club shall not exceed the amount of such limitation or, if the ship is not entered for her full tonnage, such proportion of the said amount as the entered tonnage bears to the full tonnage, in respect of the aggregate of all claims subject to limitation arising out of that incident or occurrence; and

When the aggregate of all the claims subject to limitation, (including that of the Member as if its property was owned by a third party), in respect of that incident or occurrence would have exceeded the amount to which the Member would be entitled to limit liability;

19 Hull Risks and Specialist Operations

Unless the Managers otherwise agree in writing as a term of entry, the Club shall not insure any Member to any extent whatsoever, against the following risks:

Hull Risks

 i

liabilities, costs or expenses against which the Member would be insured if the entered ship were fully insured under the Hull Policies on terms not less wide than those of the usual Lloyd’s Policy for the current market value with attached London Institute Time Clauses - Hulls 1/10/83 (including Clause 8) and were fully entered in Class II of the Club or other Cub affording the same cover.

If the entered vessel be insured at Lloyd’s or elsewhere on wider terms than the foregoing and the Club’s liability under Rules 25 xiv or 25 xv be thereby reduced, an appropriate reduction in calls shall be made for the excluded risks provided notice be given by the Member at the inception of the risk;

Specialist Operations

ii

liabilities, costs or expenses incurred by a Member who contracts to perform specialist operations, including but not limited to dredging, blasting, pile driving, well stimulation, cable or pipe laying, maintenance or removal, core sampling, depositing of spoil, waste incineration or disposal operations, professional oil spill response or professional oil spill response training;

Drilling
Operations

iii

liabilities, costs or expenses incurred in respect of an entered ship (being a drilling ship or barge or any other ship or barge carrying out drilling exploration, construction or production operations including any accommodation unit moored on site as an integral part of such operations) and arising out of or during drilling or core sampling or production operations;

Diving
Operations

iv

liabilities, costs or expenses arising out of the operation by the Member of submarines, mini-submarines or diving bells or the activities of professional or commercial divers;

Salvage
Operations

v

liabilities, costs and expenses arising out of salvage operations conducted by an entered ship, other than where the purpose of such operations is saving or attempting to save life at sea.

20 Nuclear Risks

There shall be no recovery from the Club in respect of a Member’s liabilities, costs or expenses (irrespective of whether a contributory cause of the same being incurred was any neglect on the part of the Member or on the part of the Member’s servants or agents) when the loss or damage, injury, illness, or death or other accident in respect of which such liability arises or cost or expense is incurred, was directly or indirectly caused by or arises from:

i

ionising radiations from, or contamination by radioactivity from, any nuclear fuel or from any nuclear waste or from the combustion of nuclear fuel;

ii

the radioactive, toxic, explosive or other hazardous or contaminating properties of any nuclear installation, reactor or other nuclear assembly or nuclear component thereof;

iii

any weapon or device employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter;

iv

the radioactive, toxic, explosive or other hazardous or contaminating properties of any radioactive matter.

provided always that:

this Rule does not exclude liabilities, costs and expenses arising out of the carriage of “excepted matter” (as defined in the Nuclear Installations Act 1965 of the United Kingdom or any regulations made thereunder) being carried as cargo on an entered vessel.

Note: The Nuclear Installations Regulations reflect the provisions of the OECD Paris Convention on Carriage of Nuclear Material. “Excepted matter” is nuclear matter consisting only of one or more of the following:

a   isotopes prepared for use for industrial, commercial, agricultural,          medical  or scientific purposes;

b   natural uranium;

c   depleted uranium;

d   small quantities of nuclear matter as prescribed.