Section E: Excluded Losses

5

Except as provided in this rule or otherwise agreed by the managers, there shall be no recovery in respect of:

5.1 - Hull damage

Loss of or damage to the units or any part thereof.

5.2 - Equipment damage

Loss of or damage to any equipment, containers, lashings, stores, or fuel on board the units to the extent that they are owned or leased by the member or any associated company.

5.3 - Repairs

The cost of repairs to the units or any charges or expenses in connection therewith.

5.4 - Loss of hire

Loss of freight, hire, time, market, production, profit or any other direct or indirect losses whatsoever or any proportion thereof in relation to the ship, unless such loss, with the agreement of the managers, forms part of a claim for liabilities in respect of units.

5.5.1 - Detention

Loss arising out of demurrage on, detention of, or delay to the unit or, except as provided for in rules 3.1.6 and 3.3, running costs of  the unit.

5.5.2

Liabilities arising out of arrest or detention of or delay to the units pursuant to a claim against the member liability for which is not covered under the rules.

5.6 - Cancellation

Loss arising out of the cancellation of any contract or engagement in relation to the units.

5.7 - Bad debts

Loss arising out of irrecoverable debts or the insolvency of any person.

5.8.1 - Salvage

Salvage or other services in the nature of salvage provided to the unit, and any liabilities in connection therewith, other than such as may be covered under rule 3.6.

5.8.2

Liabilities arising out of salvage operations (including wreck removal) conducted by the unit or provided by a member other than liabilities arising out of salvage operations conducted by the unit for the purpose of saving or attempting to save life at sea.

5.9 - Specialist operations, underwater vehicles and divers

Liabilities incurred by a member in connection with any claim, including any consequential losses arising therefrom, brought against him arising out of:

(1) the failure by the member to perform any work or the fitness for purpose and quality of the member’s work, products or services, including any defect in the member’s work, products or services; or

(2) any loss of or damage to the contract work; or

(3) the operation by the member of underwater vehicles unless included within the description of the unit; or

(4) the activities of professional or commercial divers where the member is responsible for such activities, other than:

a activities arising out of salvage operations being conducted by the unit, where the divers form part of the crew of the unit (or of diving bells or other similar equipment or craft operating from the unit), and where the member is responsible for the activity of such divers; or

b incidental diving operations carried out in relation to the inspection, repair or maintenance of the unit or in relation to damage caused by the unit; unless otherwise agreed with the managers.

5.10 - Pollution

Liabilities arising out of the actual, or threatened, escape or discharge of any substance save as provided for in rule 3.6.

5.11 - Blow-out and control of well

Liabilities arising from or relating to:

(1) the control, or regaining of control, of a hole or well;

(2) loss of or damage to or costs of reinstatement of a hole, well or reservoir;

(3) blow-out, cratering, or any other uncontrolled flow, discharge or escape of oil, gas or any other substance from holes, wells or reservoirs including any flow, discharge or escape thereof from the unit, other than:

(a) injury, illness or death under rules 3.1 and 3.2

(b) collision liabilities under rule 3.4

(c) wreck liabilities under rule 3.8

(d) pollution liabilities under rule 3.6 arising from the discharge or escape of any oil, gas or other substance contained within the unit immediately prior to the commencement of such blow-out, cratering or uncontrolled flow

(e) enquiry expenses under rule 3.10 unless otherwise agreed by the managers where the incident arises in connection with a hole or well or subsea or subsurface operation in respect of which the unit is employed or utilised.

5.12 - Downhole Property

Any liabilities or losses in respect of loss of or damage to or recovery or replacement of any drill string, casing, tubing, cementing or well intervention or other downhole equipment, whether or not in the sea, which is in or connected to any hole or well in respect of which the unit is employed or utilised or which is owned by the member, and the consequences thereof.

5.13 - Extension of variation of liability by reference to insurance

Any liabilities or losses accepted, assumed or incurred by the member:

(i) as a consequence of the terms of any contract or indemnity that extend the member’s liability up to any amounts that are recoverable under any insurance; or

(ii)  under any risk allocation, exclusion, limitation, indemnity or hold harmless clause that seeks to vary the member’s liability by reference to the availability and/or extent of the member’s insurance;

unless and to the extent that the managers, acting in their sole discretion, shall determine.

5.14 - Direction of the board

The liabilities set out in rule 5 may be recoverable to the extent that they may be treated as expenses arising under rule 3.11, or are approved by the board.