Rules Class I - Protection and Indemnity (31-35)

31 Handling of Claims

i

Unless the Managers shall otherwise agree in writing:

a

The Club shall have the right but not the obligation, to investigate and/or handle on behalf of the Member any claim or other matter which has resulted or may result in loss, damage, expense or liability in respect of which a Member is, or may be, insured under these Rules and/or in respect of which security has been provided by the Club on its behalf and to appoint any person on behalf of the Member for this purpose.

b

Where the Member proposes to instruct lawyers and/or other professionals on its behalf in respect of any such claim or other matter, the Managers are to be given prior notice of such proposed instructions and requested to approve the proposed appointment. In the event of such approval not being given, the Managers shall be entitled to require the Member to instruct on the Member’s behalf other lawyers or professionals of the Club’s choosing.

ii

Although instructed on behalf of the Member, it is hereby agreed that the terms of the retainer of the lawyers or other professionals will require the persons so instructed to report to the Club, to provide documents and information, and any other services forming the subject matter of that retainer as if instructed by the Club directly.

iii

Any advice or recommendation given by any person instructed on the Member’s behalf shall not bind the Club or affect its rights. 

iv

The Managers may at any time in their absolute discretion and without giving reasons direct the Member to terminate the retainer of any lawyer or other professional instructed by it in which event the Managers will have the same rights under this Rule as if no such retainer had been entered into.

v

In the event of a claim or other matter in respect of which the Member is or might be entitled to protection or indemnity by the Club, the Member shall be under a continuing obligation to keep the Managers promptly informed of all matters arising that are or may be relevant to that claim or matter and to co-operate fully in handling the claim or matter. Without prejudice to the generality of the foregoing, the Member shall disclose to the Club as soon as reasonably practicable any documents, reports or information in its or its agents’ possession, control or knowledge which are or may be relevant to the claim or other matter and permit inspection, copying or photocopying of the same. Where such documents or information are in the possession or control of the Member’s agents, including but not limited to lawyers instructed on the Member’s behalf, the Member hereby agrees to authorise the said agents to disclose such documents or information to the Club on its request.

vi

The Member will take all reasonable and proper steps for the collection, preservation and production of evidence relevant to such claim or other matter and will use its best endeavours to make witnesses within its control or power available for interview, deposition and/or giving evidence as required.

vii

The Member shall comply with the obligations set out above within any time specified in any direction given by the Club and, on request, produce evidence of such compliance.

viii

A Member shall comply with any direction given by the Club in connection with the handling or settlement of any claim or potential claim or in connection with any casualty or any other event or matter liable to give rise to a claim upon the Club.

ix

Compliance with the provisions of this Rule shall be a condition precedent to a Member’s right of recovery from the Club, provided that the Directors shall have power in their absolute discretion to admit in whole or in part a claim, notwithstanding a breach of such condition. The exercise of their discretion by the Directors shall be final and conclusive for all purposes.

32 Reinsurance

i

The Managers may on behalf of the Club enter into contracts of reinsurance under which the Club agrees to reinsure the risks arising in connection with any one or more ships insured by another insurer or else agrees to reinsure the whole or any part or proportion of the insurance business of any other insurer. The premium payable to the Club and the terms and conditions on which the reinsurance is accepted by the Club shall be such as are agreed between the Managers and such other insurer.

ii

The Club may continue to be a party to the Pooling Agreement or to any other agreement of a similar nature or purpose.

iii

The Managers shall have the right in their discretion to effect on behalf of the Club the reinsurance or ceding of any risks insured by the Club (including any risk which may fall on the Club by reason of a reinsurance or the Pooling Agreement referred to in paragraphs i or ii of this Rule) with such reinsurers and on such terms as the Managers shall consider appropriate.

33 Lay Up

If an entered ship shall be without cargo and so remain in any safe port for a period of 30 or more consecutive days after finally mooring there (such period being computed from the day of arrival to the day of departure, one only being included) the Member shall be allowed a return of Mutual Premium at the following rate:

i

if the ship so remains with more than one-fourth of her normal crew on board - at the rate of 50% of the Mutual Premium payable on her contributing tonnage;

ii

if the ship so remains with less than one-fourth of her normal crew - at the rate of 90% of the Mutual Premium payable on her contributing tonnage.

provided always that:

a

the Directors shall have sole discretion in deciding whether the port involved (or the position of the ship in that port) is a safe port within the meaning of this Rule;

b

no claim shall be admitted for lying-up returns under this Rule unless the claim is made within 12 months of the end of the policy year concerned;

c

the percentage of Mutual Premium returnable shall be calculated upon the net Mutual Premium only. For this purpose “net Mutual Premium” means Mutual Premium payable, excluding Overspill Calls, less such allowance for the unrecovered cost of reinsurance as the Managers may from time to time determine.

34 Closure of Policy Years

i

The Directors may decide that, at such times as they deem expedient, any Policy Year shall be closed, in which event, if the contributions so obtained in respect of such Policy Year should exceed the claims, expenses and outgoings falling upon the Club for that year, the Directors may either carry that surplus in whole or in part to such reserve or reserves as the Directors think proper or may return it in whole or in part to the persons who made such contributions in proportion thereto, provided that no part of that surplus shall be returned to a Member whose entry is or has been terminated by the Club.

provided always that:

Policy Years shall not be closed for the purposes of levying Overspill Calls except in accordance with the provisions of Rule 39.

ii

If at any time or times after a Policy Year has been closed it shall appear to the Directors that the claims (other than Overspill Claims), expenses and outgoings arising in respect of a Policy Year exceed the premium and other receipts in respect of such Policy Year (other than Overspill Calls), the Directors may decide to provide for such deficiency in any one or more of the following ways:

a

from the funds and reserves of the Club;

b

by levying Mutual Premium or Additional Premium in respect of an open Policy Year with the intention of applying all or any part thereof to meet any such deficiency.

35 Cessation of Membership

A Member shall cease to be a Member and shall cease to be insured by the Club in respect of any and all ships entered by him upon the happening of any of the following events:

i

in the case of an individual upon his death;

ii

in the case of a corporation if it be wound up or dissolved;

iii

if it ceases to have any ship entered in the Club;

iv

in the case of an individual if he becomes bankrupt, subject to a receiving order or makes any arrangement or composition with his creditors generally or by reason of mental disorder becomes incapable of conducting his affairs;

v

in the case of a corporation if it is placed in receivership or seeks protection from its creditors, reorganisation or rehabilitation pursuant to any applicable laws, or if a creditor takes uncontested possession of any of its assets pursuant to any security interest therein;

Save that in respect of iv and v above the Managers shall be entitled in their absolute discretion to agree that a Member may be entered upon such terms and conditions as they see fit.

Save that in respect of iv and v above the Managers shall be entitled in their absolute discretion to agree that a Member may be entered upon such terms and conditions as they see fit.

provided that:

a

if the cesser of Membership and of insurance be occasioned by any of the events specified in sub-paragraphs i to v above, such Member, its estate, legal, personal representatives, trustees in bankruptcy or liquidator as the case may be, shall be and remain liable for contributions in respect of the Policy Year during the currency of which the event occurred, pro rata only to the period beginning with that Policy Year and ending upon the happening of such event; but the Club shall thereupon cease to be liable for any claims under these Rules and in respect of such ship or ships arising by virtue of any incident or occurrence occurring after the happening of any such specified events in sub-paragraphs i to v above, or for any claims directly or indirectly arising because of such specified event(s), and nothing done by the Club subsequent to any such specified event shall constitute a waiver of the Club’s rights under this sub‑paragraph, unless the Club shall thereafter have expressly, in writing to the Member, accepted liability for such claim.

b

nothing in the foregoing proviso a shall prejudice the Managers’ rights, under Rule 37, to terminate or rescind cover, and to require payment of premium as herein provided.