Rules Class I - Protection and Indemnity (21-25)

21 War Risks

Unless otherwise agreed in writing with the Managers on such terms as they may require, 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 incident in respect of which such liability arises, or such costs or expenses are incurred, was caused by:

i

war, civil war, revolution, rebellion, insurrection or civil strife arising therefrom, or any hostile act by or against a belligerent power or any act of terrorism;

ii

capture, seizure, arrest, restraint or detainment (barratry or piracy excepted) and the consequences thereof or any attempt thereat;

iii

mines, torpedoes, bombs, rockets, shells, explosives or other similar weapons of war, save for those liabilities, costs or expenses which arise solely by reason of:

a

the transport of any such weapons whether on board the entered ship or not, or

b

the use of any such weapons either as a result of Government order or through compliance with a written direction given by the Managers or Directors where the reason for such use was the avoidance or mitigation of liabilities, costs or expenses which would otherwise fall within the cover of the Club.

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.

Provided always that:

(i) the exclusion of cover in Rule 21 shall not apply to liabilities, costs and expenses of an Owner insofar only as they are discharged by the Club on behalf of the Owner pursuant to a demand made under

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

     (b) a certificate issued by the Club in compliance with Article VII of the International Conventions on Civil Liability for Oil Pollution Damage 1969 and 1992 or any amendments thereof; or

     (c) an undertaking given by the Club to the International Oil Compensation Fund 1992 in connection with the Small Tanker Oil Pollution Indemnification Agreement, including any addendum to, or variation or replacement of such agreement (STOPIA)

to the extent that such liabilities, costs and expenses are not recovered by the Owner under any other policy of insurance or any extension to the cover provided by the Club and

(ii) where any such guarantee, undertaking or certificate is provided by the Club on behalf of the Owner as guarantor or otherwise, the Owner agrees that any payment by the Club 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 Club, be deemed to be by way of loan and that there shall be assigned to the Club all the rights of the Owner under any other insurance and against any third party.

22 Equipment and Freight

The Club shall not under any circumstances, save only those provided for in the specific Rules enumerated hereunder, pay for loss of or damage to an entered ship, or her tackle, apparel, furniture, stores, fittings or equipment, or for any proportion thereof, or for the cost or charges of or relating in any manner whatsoever to the repair of an entered ship, or for loss of freight or hire or any proportion thereof, or for salvage, or for loss arising out of the cancellation of a charter or other engagement of an entered ship, or for bad debts, or for any loss or liability whatsoever arising out of the insolvency or fraud of the Member or its agents, or for demurrage on or detention of an entered ship.

The specific Rules referred to are as follows:

Rule 25 iv - relating to life salvage;

Rule 25 xiii d proviso (ix) - relating to loss of freight or hire, or claims for demurrage, detention and delay where such loss or claim forms part of a claim for liabilities in respect of cargo;

Rule 25 xv - relating to ship’s proportion of general average;

Rule 25 xvii - relating to confiscation;

Rule 25 xxc - relating to expenses incurred by direction of the Club.

23 Double Insurance

If a Member is, apart from the protection or indemnity of the Club, insured, protected or indemnified in any manner whatsoever against any of the liabilities, costs or expenses enumerated in Rules 25 or 28, no contribution shall be made by the Club to such liability, costs or expenses, on the basis of double insurance or otherwise, to the extent to which he is so insured or protected or indemnified. Nevertheless, with the approval of the Directors, a Member may be protected or indemnified by special agreement with the Club made either directly with himself or with other Insurers upon the terms that certain liabilities, costs or expenses shall be borne by the Club notwithstanding such other insurance, protection or indemnity.

24 Imprudent Trading

i

No claim shall be recoverable from the Club if it arises out of or is consequent upon an entered ship:

a

carrying contraband, blockade running or being employed in an unlawful trade, or

b

performing any voyage or being employed in any trade which in the opinion of the Directors is imprudent, unsafe, unduly hazardous or improper.

ii

a

There shall be no recovery from the Club in respect of any liability, cost or expense whatsoever or howsoever arising, whether directly or indirectly, out of or in consequence of

(i) the Member’s participation in or use of any system or contractual arrangement the predominant purpose of which is to replace paper-based documentation in shipping and/or international trade with electronic messages, including, without limitation, the Bolero system (and any such system or arrangement being referred to in this rule as a “paperless system”), or

(ii) a document which is created or transmitted under a paperless system which document contains or evidences a contract of carriage, or

(iii) the carriage of goods pursuant to such a contract of carriage,

save to the extent that the Club in its sole discretion may determine that such liability, cost or expense would have arisen and would have been covered by the Club if the Member had not participated in or used a paperless system and any contract of carriage had been contained in or evidenced by a paper document.

b

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

25 Preamble

The liabilities, costs and expenses against which a Member may be protected and indemnified by entry in the Club are limited to those set out in Rules 25 i to 25 xxi inclusive, subject always to

i

The terms therein provided, and

ii

The terms of this Rule and of all other Rules of Class 1 Protection and Indemnity insurance, and

iii

Any other terms and conditions applicable to the Member’s entry and in particular, where cover is excluded in respect of any sub-paragraph of this Rule 25 under the terms of the Member's entry, those liabilities, costs and expenses shall not be recoverable under any other sub-paragraph of this Rule 25.

Liability
to Persons

i

Liabilities, costs and expenses as set out in Rule 25 ii and in respect of the categories of persons set out in Rule 25 iii:

a

arising by operation of law; or

b

arising under any contract including any collective agreement approved in writing by the Managers prior to the event giving rise to the claim, and upon such terms as the Managers may require.

Covered Risks

ii

Damages or Compensation for Loss of Life or Personal Injury or Illness

a

Liability for damages or compensation in respect of personal injury, illness or death;

Medical and Funeral Expenses

b

Hospital, medical and/or funeral expenses, including repatriation of remains, in relation to injury, illness or death of any person, or any Seaman whilst engaged as crew of, or arising out of employment on board, an entered ship, provided reasonably incurred;

Repatriation

c

Repatriation expenses in respect of persons on board an entered ship in consequence of a casualty thereto or consequent on illness or injury to such persons, or in any other case where the Managers in their discretion determine that such expenses have been necessarily and reasonably incurred;

Crew Substitutes

d

Expenses necessarily incurred in sending abroad substitutes, or in securing, engaging, repatriating or deporting a substitute engaged abroad, to replace any Seaman on board an entered ship who shall have died, or who shall have been disembarked due to injury, illness, or deserted, or in any other case in which the Managers determine that such expenses were reasonably incurred, save that wages shall only be recoverable as part of such expenses when payable to substitutes, engaged abroad, whilst awaiting and during repatriation;

Shipwreck Unemployment Indemnity

e

Wages or other compensation for loss of employment payable to Seamen in consequence of the loss or constructive total loss of an entered ship;

provided always that:

in respect of paragraphs d and e of Rule 25 ii no such expenses shall be recoverable in consequence of the termination of any agreement whether in accordance with its terms, by mutual consent or by the Member’s breach, or by dismissal, or the sale of the entered ship or by reason of industrial action, or any other voluntary act of the Member giving rise to such expenses or where such expenses could reasonably have been avoided.

Compensation following a Casualty

f

(i) Damages or compensation for which a Member may be liable under a passage contract to passengers on board an entered ship in consequence of a casualty to that entered ship while they are on board, “casualty” meaning an incident involving either:

     (a) collision, stranding, explosion, fire or any other cause affecting the physical condition of the entered ship so as to render it incapable of safe navigation to its intended destination; or

     (b) a threat to the life, health or safety of passengers.

Provided that any claim on the Club under this paragraph f shall be reduced by the amount of any savings accruing to the Member as a result of the casualty.

(ii) Damages or compensation payable in respect of passengers under this paragraph f or any other paragraph applicable to passengers under Rule 25 ii shall include a Member’s liability for the cost of forwarding them to destination, returning them to port of embarkation, and their maintenance ashore.

Deviation Expenses

g

Port and deviation expenses when solely incurred:

(i) For the purpose of landing or disposing of stowaways, refugees or other persons rescued at sea; or

(ii) In order to secure the necessary treatment for an injured or sick person being carried on an entered ship; or

(iii) While awaiting a substitute for a deceased, injured or sick crew member or deserter; or

(iv) In attempting to save or saving life at sea; or

(v) In order to search for, and/or recover, persons missing from the ship;

Provided that such expenses have in the opinion of the Managers been reasonably incurred.

The expenses recoverable are limited to the costs of fuel, insurance, crew wages, stores, provisions and port charges, less any savings in expenditure which would have been incurred by the Member but for the deviation.

Loss of Property

h

Loss of or damage to baggage, property and effects save for specie, bullion, precious or rare metals or stone, plate or other objects of a rare and precious nature, bank notes or other forms of currency, bonds or other negotiable instruments, whether the value is declared or not, unless in any such case the Managers have been notified prior to any such carriage, and any directions made by them complied with, provided that in respect of crew, cover hereunder is limited to their “effects” as defined in Rule 2.

Expenses in Respect of Deserters and Stowaways

i

Repatriation expenses in respect of crew members posted as [deserters], stowaways, refugees and persons rescued at sea.

Provided always that;

(i) such expenses have in the opinion of the Managers been reasonably incurred;

(ii) the Directors may agree in their discretion to cover any other expenses and costs incurred by the Member in respect of such persons.

Categories of Persons

iii

Crew

a

Seamen, including any replacement or substitute, other than:

(i) Non-marine personnel on board an accommodation ship, employed under a contract with a third party which has not been approved by the Managers;

(ii) Hotel and restaurant guests and other visitors and catering crew of the ship where the ship is moored (otherwise than on a temporary basis) and is open to the public as a hotel, restaurant, bar or other place of entertainment.

Covered Risks:

The following risks as set out in Rule 25 ii are covered in respect of these persons:

a          damages or compensation for loss of life or personal injury or illness

b          medical or funeral expenses

c          repatriation

d          crew substitutes

e          shipwreck unemployment indemnity

g          deviation expenses

h          loss of property

Supernumeraries

b

Supernumeraries and persons being carried other than pursuant to a contract for carriage

Covered Risks:

The following risks as set out in Rule 25 ii are covered in respect of these persons

a          damages or compensation for loss of life or personal injury or illness

b          medical or funeral expenses

c          repatriation

g          deviation expenses

h          loss of property

Note: It is recommended that whenever practicable an indemnity is taken from non-fare paying passengers. The Managers will provide a form of indemnity on request and may also arrange a separate insurance to cover such passengers’ risks and liabilities

Passengers

c

Passengers

Covered Risks:

The following risks as set out in Rule 25 ii are covered in respect of these persons

a           damages or compensation for loss of life or personal injury or illness

b           medical or funeral expenses.

c           repatriation

f            compensation following a casualty

g           deviation expenses

h           loss of property

provided always that:

(i) There shall be no recovery in relation to any liabilities, costs or expanses whatsoever arising out of travel by air save during:

     (a) Repatriation by air of an injured or sick passenger or of a passenger following a casualty as defined in paragraph f (i) of Rule 25 ii; or

     (b) Excursions from the insured vessel, (subject to proviso (ii) below;

(ii) There shall be no recovery in respect of contractual liabilities, costs or expenses incurred by a Member in respect of a passenger whilst on an excursion from the entered ship if:

     (a) A separate contract has been entered into by the passenger for the excursion whether or not with the Member; and/or

     (b) The Member has waived any or all of its rights of recourse against any sub-contractor or any third party in respect of the excursion.

Third Parties

d

Third parties within the categories set out below.

Covered Risks

The following risks as set out in Rule 25 ii are covered in respect of these persons:

a             damages or compensation for loss of life or personal injury or illness

b             medical or funeral expenses.

Any person

(i) In respect of liability resulting from negligent navigation or management of the entered ship or other negligent act or omission on board or in relation to an entered ship.

Any person

(ii) In respect of liabilities arising in relation to any act, neglect or default in the handling of the cargo of an entered ship or in consequence of the negligence of persons employed solely for that purpose, from the time of receipt for shipment on quay or wharf until final delivery ex quay or wharf at the port of discharge.

Deserters

e

Deserters, stowaways, refugees and persons rescued at sea.

Covered Risks

The following risks as set out in Rule 25 ii are covered in respect of these persons

g          deviation expenses

i           expenses in respect of deserters and stowaways

provided always that:

Any wages due to a deserter shall, if and to the extent permissible by law, be retained by the Member and such savings deducted from a claim for reimbursement under paragraph i of Rule 25 ii.

Life Salvage

iv

To the extent not recoverable from hull underwriters, cargo owners or underwriters, sums awarded to third parties for the saving of, or attempting to save, the life of any person on or from an entered ship.

Collision Liability

v

Liabilities, costs and expenses arising within the categories and subject to the terms set out below consequent upon collision between an entered ship and any other ship:

a

One-fourth or such other proportion as may have been agreed by the Managers of such liabilities, costs and expenses, if and to the extent that such proportion is not covered under the collision liability clause contained in the Hull Policies of the entered ship.

Provided that the liabilities, costs and expenses are covered under the usual form of Lloyd’s policy with the Institute Time Clauses (Hulls) attached or the Hull Policies of the entered ship are in a form previously approved by the Managers in writing.

b

Liabilities, costs and expenses irrecoverable under the Hull Policies of the entered ship, solely because they exceed the ship’s insured value under those policies.

(i) There shall be no recovery under this paragraph b if in the opinion of the Managers the insured value is less than an amount reasonably reflecting the free uncommitted market value (“the proper value”) of the ship; or

(ii) The Managers may reduce such recovery to the amount, if any, that would have been irrecoverable under the ship’s Hull Policies had the ship been insured for the proper value.

(iii) At the request of a Member the Managers may, but shall not be obliged to, agree for the purposes of paragraph b of Rule 25 v, the proper value for which an entered ship should be insured for collision liabilities for the current year.

Note: When considering the proper value for which an entered ship should be insured or deemed to be insured for the purposes of Rule 25 v the Member must satisfy the Managers that the hull and machinery and/or excess liability policies of the Member concerned have been subject to periodic review as market conditions may require, so that the total amount of liability coverage contained in these policies is maintained at a figure which is as near as possible to the free uncommitted market value of the ship at the time of the incident giving rise to the claim.

Members should consult with their brokers and/or ship valuers in order to assess, in the light of the above, the amount for which insurances should be effected to cover collision and general average or salvage liabilities. Provided that the necessary insurances are effected, on the basis of the advice received, the Managers will give favourable consideration to a claim under these Rules consequent upon assessment of the value of the ship by a Court or Tribunal at an amount in excess of the insurances so effected.

c

A Member’s liability to indemnify the owner of the other ship against, or to pay, liabilities, costs and/or expenses of or incidental to:

(i) Raising, removal, destruction, lighting or marking of the wreck of such other ship, its cargo or other property on board.

(ii) Loss of, or damage to, or interference with rights in relation to any fixed or movable property, whether on or above, in or below land or water, caused by such other ship.

(iii) An actual or threatened escape or discharge of oil or any other substance (other than from the entered ship) save for that causing damage to the ship with which the entered ship is in collision or that causing damage to any property on board that ship.

(iv) Remuneration payable under the Special Compensation P&I (SCOPIC) Clause or special compensation and any increment awarded thereon under the provisions of Article 14 of the International Convention on Salvage 1989.

(v) Other risks excluded under the Hull Policies of the entered ship provided either

     (a) that the cover under those Hull Policies is no less wide than under the usual form of Lloyd’s policy with the Institute Time Clauses (Hulls) attached or

     (b) that the Hull Policies of the entered ship are in a form previously approved in writing by the Managers and upon such terms as they may require.

d

Loss or damage to cargo or other property being carried on an entered ship consequent upon collision

provided always that:

(i) the Member is insured by the Club for liabilities in respect of cargo, and subject to the terms of entry and the Rules applicable to such cover.

(ii) Rule 25 xiii proviso d (vii) shall apply in respect of cargo being carried in the entered ship which is owned by the Member.

Note: It is recommended that bills of lading or any other relevant contract of carriage should whenever possible incorporate a ‘Both-to-Blame’ collision clause. A recommended form of such a clause is set out under ‘Clauses Recommended by the Association’ at the end of the Rules.

e

Unless otherwise provided for under a form of hull policy on the entered ship approved by the Managers in writing, if the entered ship and the other ship are both to blame for a collision, then (except where the liability of the owners of one or both of them becomes limited by law, in which event claims under this Rule 25 v shall be settled upon the principle of single liability) claims for reimbursement under this Rule 25 v shall be settled upon the principle of cross-liabilities, as if the owner of the entered ship had been compelled to pay the owner of the other ship such proportion of the latter’s damages as may have been properly allowed in ascertaining the balance or sum payable by or to the former in consequence of the collision.

f

No recovery shall be made under this Rule 25 v:

(i) in respect of any excess, franchise and/or deductible borne by the Member under the Hull Policies of the entered ship;

(ii) if there would otherwise be a right of recovery under the Hull Policies of the entered ship but for the conduct of the Member.

g

If a claim arises under this Rule upon a collision involving two ships belonging to the same Member, the Member shall be entitled to recover from the Club, and the Club shall have the same rights, as if the ships had belonged to different Owners.

h

Without prejudice to any other provision, exclusion, limitation or condition set out in these Rules, cover under this Rule 25 v is subject to the following provisions:

(i) Unless the Directors shall in their absolute discretion otherwise determine, there shall be no cover under this or any other Rule in respect of any liability for loss, damage, costs and expenses arising as a consequence of the disposal, discharge or existence of any hazardous waste or other material at any dump, storage or disposal facility, and

(ii) In respect of pollution, Rule 18 ii and the note thereto.

Pollution

vi

Liabilities, losses, damages, costs and expenses caused by or consequent on the escape or discharge or threatened escape or discharge of oil or any other substance from the entered ship as follows:

Actual Escape of Pollutants

a

Liability for loss, damage or contamination.

Clean up Costs

b

Costs of any measures reasonably taken for the purpose of avoiding, minimising or cleaning up any pollution, any imminent danger of pollution, or any resulting loss, damage or contamination, together with any liability for any loss of or damage to property caused by any measures so taken.

Prevention Costs

c

Costs of any measures reasonably taken to prevent an imminent danger of discharge or escape from the entered ship of oil or any other substance which may cause pollution.

Costs Pursuant to Government Directions

d

Liabilities, costs or expenses following a casualty to the entered ship incurred as a result of compliance with the order or direction of any government or authority (other than in respect of repair or salvage or any permanent structural alteration to an entered ship) for the purpose of avoiding or minimising pollution or the imminent danger of pollution

provided always that:

(i) such liabilities, costs or expenses are not recoverable under the HullPolicies of the entered ship and

(ii) there shall be no recovery under this Rule in respect of liabilities that would be recoverable under such Hull Policies but for the conduct of the Member.

Voluntary Agreements

e

Liabilities, costs or expenses for which a Member may be liable or otherwise incur as a party to any agreement relating to oil pollution previously approved by the Managers on such terms as they may require.

Salvors’ Expenses

f

Liability for special compensation and any increment awarded thereon payable to salvors and incurred by a Member under the terms of the Special Compensation P&I Club (SCOPIC) Clause or under the provisions of Article 14 of the International Convention on Salvage 1989 or assumed under the terms of a standard form of salvage contract approved by the Managers.

provided always that:

(i) Unless otherwise agreed by the Managers in writing prior to the event giving rise to a claim, or unless the Directors shall in their discretion otherwise determine, there shall be no recovery under paragraphs a - f of this Rule 25 vi in respect of liabilities, costs and expenses which would have been recoverable by the Member in general average if the relevant charterparty or other contract of carriage had incorporated the unamended York Antwerp Rules 1994.

(ii) Unless the Directors shall in their absolute discretion otherwise determine, there shall be no cover under this or any other Rule in respect of any liability for loss, damage, costs and expenses arising as a consequence of the disposal, discharge or existence of any hazardous waste or other material at any dump, storage or disposal facility.

(iii) A Member insured in respect of a ship which is a “relevant ship” as defined in the Small Tanker Oil Pollution Indemnification Agreement, including any addendum to, or variation or replacement of such agreement (STOPIA) shall, unless the Managers otherwise agree in writing, be a party to STOPIA for the period of entry of the ship in the Club.

Unless the Managers have agreed in writing or unless the Directors in their discretion otherwise determine, there shall be no cover under this Rule 25 vi in respect of such a ship so long as the Member is not a party to STOPIA.

(iv) A Member insured in respect of a ship which is eligible for entry in the Tanker Oil Pollution Indemnification Agreement (TOPIA) shall, unless the Managers otherwise agree in writing, be a party to TOPIA for the period of entry of that ship in the Club. Unless the Managers have agreed in writing or unless the Directors in their discretion otherwise determine, there shall be no cover under this Rule 25 vi in respect of such a ship so long as the Member is not a party to TOPIA.