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6.1 - Net loss

If a member incurs any of the liabilities set out in rule 3, he is entitled to recover the net amount of such liabilities, deducting any costs and expenses which would have been incurred in any event together with any savings accruing to him and any recoveries made by him, unless otherwise agreed by the managers.

6.2.1 - Limits of recovery

Unless and to the extent the board otherwise determines, under no circumstances shall the recovery by any person exceed:

  1. the amount to which the member is entitled to limit his liability, or would have been so entitled under any relevant law had he so petitioned;
  2. any other limit contained in these rules or set out in the member’s certificate of entry;
  3. if less than the full tonnage of the ship is entered in the club, such proportion of the amount referred to in rule 6.1, or the limits referred to in paragraphs (1) and (2) above, as the entered tonnage bears to the full tonnage of the ship.

6.2.2

If the claims of all insured parties in respect of liabilities insured by the club exceed or may exceed in the aggregate any limit of cover set out in the rules or in the certificate of entry:

  1. the member shall be entitled to recover in respect of such claims in priority to the claims of any other insured parties and any joint entrants shall be entitled to recover in respect of such claims in priority to the claims of any co-assureds; 
  2. where the aggregate of the claims of the member exceeds or may exceed the said limit, the member shall be entitled to recover in respect of such claims to the exclusion of any claims of any other insured parties;
  3. where the aggregate of the claims of any joint entrants exceeds or may exceed the said limit or any part thereof remaining after application of rule 6.2.2(1), any joint entrant shall be entitled to recover in respect of such claims:
  • a to the exclusion of any claims of any co-assureds; and
  • b only such proportion of the remaining part of the limit as the claim of that joint entrant bears to the total of all claims of all joint entrants;

 4. where the aggregate of the claims of any co-assureds exceeds or may exceed the said limit or any part thereof remaining after the application of rules 6.2.2(1) and (3), any co-assured shall be entitled to recover in respect of such claims only such   proportion of the remaining part of the limit as the claim of that co-assured bears to the total of all claims of all co-assureds.

    6.2.3

    If in the opinion of the managers the claims of all insured parties in the aggregate exceed or may exceed any limit set out in the rules or in the certificate of entry, the managers may defer payment of a claim or any part thereof.

    6.2.4

    Where a guarantee, undertaking or certificate provided for in rule 4.5 has been issued and, in the opinion of the managers, the claims of all insured parties in the aggregate exceed or may exceed any limit set out in the rules or in the certificate of entry, the managers:

    1. may defer payment of a claim or any part thereof as they see fit; and
    2. shall not be under any obligation to reimburse a member until they are satisfied that all liabilities arising under demands made or which may be made under any such guarantee, undertaking or certificate have been or can be satisfied within such limit.

    6.3

    Any limits on the cover provided by the club apply in the aggregate to all insured parties and affiliated or associated companies.

    6.4

    The club shall not be liable to any insured party in respect of any liabilities except to the extent of the funds which the club is able to recover from the members or other persons liable for the same.

    6.5.1 - Recovery by owner for oil pollution claims

    Subject to any lower limits of cover contained in the rules or set out in the member’s certificate of entry, the following limits apply:

    1. the aggregate liability of the club for all claims in respect of oil pollution arising under any one owner’s entry, including all claims arising in respect of charterers insured as joint entrants or as co-assureds under any one owner’s entry, shall be limited to US$1 billion any one event;
    2. in the event that there is more than one owner’s entry in respect of the same ship with the club and/or with any other insurer participating in the Pooling Agreement, the aggregate recovery for all claims in respect of oil pollution arising under such owners’ entries shall not exceed US$1 billion any one event, and the liability of the club under each such owner’s entry shall be limited to such proportion of US$1 billion as the claims arising under that owner’s entry bear to the aggregate of all such claims recoverable from the club and any such other insurer;
    3. when the ship entered under an owner’s entry provides salvage or other assistance to another ship following a casualty, all claims in respect of oil pollution howsoever arising incurred by the ship shall be aggregated with all claims in respect of oil pollution incurred by any other ships whilst engaged in providing salvage or other assistance in connection with the same casualty, when and to the extent that those ships either:
    • a are entered under owners’ entries in the club and covered for the oil pollution risks set out in rule 3.8; or
    • b are covered for those risks under owners’ entries with any other club participating in the Pooling Agreement. 23

    In such circumstances, the limit of liability of the club in respect of the ship shall be such proportion of US$1 billion as the said claims for oil pollution incurred by the ship bear to the aggregate of all claims in respect of oil pollution of all such other ships in connection with the said casualty.

    6.5.2

    For the purpose of this rule ‘claims in respect of oil pollution’ means liabilities, costs and expenses, howsoever incurred, in respect of or relating to a discharge or escape of oil or any threat or consequence of such discharge or escape, but excluding liability for loss of or damage to such oil.

    6.6 - Recovery by owner for passenger and crew claims

    For the purposes of rules 6.6, 6.7 and 6.8, and without prejudice to anything else contained in the rules, ‘passenger’ means a person carried onboard a ship under a contract of carriage or who, with the consent of the carrier, is accompanying a vehicle or live animals covered by a contract for the carriage of goods, and ‘crew’ means any other person onboard a ship who is not a passenger.

    6.7

    Unless otherwise limited to a lesser sum, the club’s aggregate liability arising under any one owner’s entry shall not exceed:

    1. US$2 billion any one event in respect of liability to passengers; and
    2. US$3 billion any one event in respect of liability to passengers and crew.

    6.8

    Where there is more than one owner’s entry in respect of the same ship in the club and/or with any other insurer participating in the Pooling Agreement:

    1. the aggregate of claims in respect of liability to passengers recoverable from the club and/or such other insurers shall not exceed US$2 billion any one event and the liability of the club shall be limited to such proportion of that sum as the claim recoverable by such persons from the club bears to the aggregate of all such claims otherwise recoverable from the club and all such insurers;
    2. the aggregate of all claims in respect of liability to passengers and crew recoverable from the club and/or such other insurers shall not exceed US$3 billion any one event and the liability of the club shall be limited:
    • a where claims in respect of liability to passengers have been limited to US$2 billion in accordance with rule 6.8(1), to such proportion of the balance of US$1 billion as the claims recoverable by such persons in respect of liability to crew bears to the aggregate of all such claims otherwise recoverable from the club and all such insurers; and 24
    • b in all other cases, to such proportion of US$3 billion as the claims recoverable by such persons in respect of liability to passengers and crew bears to the aggregate of all such claims otherwise recoverable from the club and all such insurers.

    6.9 - Recovery by charterer and consortiums

    Subject to any lower limitations of cover contained in the rules or set out in the member’s certificate of entry, and unless otherwise agreed by the managers, the following limits apply:

    Charterer

    1. in respect of all claims arising under any one charterer’s entry, or arising in respect of charterers insured as joint entrants or as co-assureds under any one owner’s entry, or arising out of the member’s capacity as slot or space charterer, recovery is limited to US$350 million any one event;

    Consortiums

    2. in respect of any claim against the member arising out of the carriage of cargo in whole or in part on other ships not owned or chartered by the member operating in a consortium or joint service of which the member is a party at the relevant time, all insured parties covered under the same group rating agreement are not entitled to recover in respect of all the ships employed under that consortium or joint service more than US$350 million in the aggregate any one event;

    3. where all insured parties covered under the same group rating agreement have more than one ship employed under a consortium or joint service at the material time and one or more of those ships is entered with any other insurer participating in the Pooling Agreement, the liability of the club to all insured parties covered under the same group rating agreement is limited to such proportion of US$350 million as the claims incurred by the club in respect of the ships bear to the aggregate of all such claims incurred by the club and any such other insurers.

    6.10 - Member’s property

    If a claim arises following a collision involving two ships belonging to the same member, he is entitled to recover from the club, and the club has the same rights, as if the ships had belonged to different owners.

    6.11

    If a claim arises under rules 3.7 or 3.9 following loss of or damage to any ship, cargo or other property or object belonging to the member in respect of whose ship the claim arose, the member is entitled to recover from the club, and the club has the same rights, as if such ship, cargo or other property or object lost or damaged had belonged to a third party, but only to the extent that such loss or damage is not recoverable under any other insurance upon the said ship, cargo or other property or object.

    6.12

    If the cargo in respect of which a claim arises under rule 3.13 is the property of the member, he is entitled, subject to the exclusions to rule 3.13, to recover such liabilities as would have been recoverable if that property belonged to a third party and that third party had concluded a contract of carriage with the member.

    6.13 - Amounts owing to the club

    The club is not liable to make any payment in respect of any claim while any sum is due from the member, or due in respect of a ship entered under the same group rating agreement; however, if any payment is made, the club may deduct any sum which is due from a member relating to any policy year.

    6.14 - Interest

    In no case is interest payable on sums due from the club.

    6.15 - Pay to be paid

    Unless the managers otherwise determine, it is a condition precedent of a member’s right to recover in respect of any liabilities that he must have first discharged or paid the same out of funds belonging to him unconditionally and not by way of loan or otherwise.

    6.16.1 - Crew claims

    Notwithstanding rule 6.15, where a member has failed to discharge a legal liability to pay damages or compensation for crew injury, illness or death, the club shall discharge or pay such claim on the member’s behalf directly to such crewmember or dependant thereof.

    6.16.2

    There shall be no recovery unless the crewmember or dependant has no enforceable right of recovery against any other party and would otherwise be uncompensated.

    6.16.3

    Subject to rule 6.16.4, the amount payable by the club shall under no circumstances exceed the amount which the member would have been able to recover from the club under the rules and his terms of entry.

    6.16.4

    Where the club is under no liability to the member by virtue of rule 17.3, the club shall nevertheless discharge or pay that claim to the extent only that it arises from an event occurring prior to the date of cancellation, but as agent only of the member, and the member shall be liable to reimburse the club for the full amount of such claim.

    6.17 - Deductibles

    Any sum recoverable, including fees, costs and expenses, shall be subject to such deductible as has been agreed by the managers or, if not so agreed, shall be subject to the standard deductibles determined by the board from time to time. Unless otherwise agreed, deductibles shall apply any one event.

    6.18

    The club may undertake the defence of a member or institute legal proceedings on his behalf in respect of any amount not recoverable by reason of any deductible in order to ascertain the legal position of the member. Although the club may pay the costs of such legal proceedings, the member shall bear any damages therein adjudged or awarded against him.

    6.19 - Wilful misconduct

    Unless the board otherwise decides, no claim is recoverable in respect of any liabilities which in its opinion have been incurred owing to the privity or wilful misconduct of an insured party.

    6.20 - Obligation to sue and labour

    A member must at all times take all reasonable steps to avoid or minimise any loss, damage or liability in respect of which he may be insured by the club. If a member is in breach of this obligation, the board may reject any claim by the member for reimbursement or reduce the sum payable by the club.

    6.21 - Waiver of subrogation

    Where a charterer or other party is named as a joint entrant or coassured and a waiver of subrogation is required under a contract, rights of subrogation against such joint entrant or co-assured are waived only where the managers have agreed such a waiver; any such waiver applies only in respect of those liabilities which are borne by the member or other joint entrant under the terms of the relevant contract and not to any liabilities which are to be borne by the charterer or other party unless otherwise agreed by the managers.

    6.22 - Sanctions

    The member shall in no circumstances be entitled to recover from the club that part of any liabilities which is not recovered by the club from parties to the Pooling Agreement and/or under any reinsurance(s) because of a shortfall in recovery from the parties or reinsurers thereunder by reason of any sanction, prohibition or adverse action against them by any state or international organisation or the risk thereof if payment were to be made by such parties or reinsurers. For the purposes of this rule 6.22, “shortfall” includes any failure or delay in recovery by the club by reason of the parties or reinsurers making payment into a designated account in compliance with the requirements of any state or international organisation.

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