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21.1 - Payment

The funds required to pay any overspill claim incurred by the club shall be provided:

  1. from such sums as the club is able to recover from the other parties to the Pooling Agreement as their contributions to the overspill claim; and
  2. from such sums as the club is able to recover from any special insurance which may, in the determination of the board, have been effected to protect the club against the risk of payments of overspill claims; and
  3. from such proportion as the board determines of any sums standing to the credit of such reserves as the board may have established; and
  4. by levying one or more overspill calls in accordance with rules 21.4 to 21.7, irrespective of whether the club has sought to recover or has recovered all or any of the sums referred to in rule 21.1(2) but provided the board shall first have made a determination in accordance with rule 21.1(3); and
  5. from any interest accruing to the club on any funds provided as aforesaid.

21.2

The funds required to pay such proportion of any overspill claim incurred by any other party to the Pooling Agreement which the club is liable to contribute under the terms of the Pooling Agreement shall be provided in the manner specified in rules 21.1(1) to (5).

21.3

To the extent that the club intends to provide funds required to pay any overspill claim incurred by it in the manner specified in rule 21.1(4), the club shall only be required to pay such overspill claim as and when funds are received by it, provided that it can show from time to time that, in seeking to collect such funds, it has taken the steps referred to in rules 22.3(1) and (2).

21.4 - Levying

If the board shall:

  1. at any time determine that funds are or may in future be required to pay part of an overspill claim (whether incurred by the club or by any other party to the Pooling Agreement); and
  2. have made a declaration under rule 21.9 or 21.11 that a policy year shall remain open for the purpose of levying an overspill call or calls in respect of that overspill claim;

it may, at any time or times after such declaration has been made, levy one or more overspill calls in respect of that overspill claim in accordance with rule 21.5.

21.5

The board shall levy any such overspill call:

  1. on all members entered in the club on the overspill claim date in respect of ships entered by them at that time, notwithstanding the fact that, if the overspill claim date shall be in a policy year in respect of which the club has made a declaration under rule 21.11, any such ship may not have been entered in the club at the time the relevant event occurred; and
  2. at such percentage of the Convention Limit of each such ship as the board shall decide.

21.6

An overspill call shall not be levied in respect of any ship entered on the overspill claim date with an overall limit of cover equal to or less than the group reinsurance limit.

21.7

The board shall not levy on any member in respect of the entry of any one ship an overspill call or calls in respect of any one overspill claim exceeding in the aggregate 2.5% of the Convention Limit of that ship.

21.8

If at any time after the levying of an overspill call upon the members entered in the club in any policy year, it shall appear to the board that the whole of such overspill call is unlikely to be required to meet the overspill claim in respect of which such overspill call was levied, the board may decide to dispose of any excess which in the opinion of the board is not so required in one or both of the following ways:

  1. by transferring the excess or any part thereof to reserves in accordance with rule 20.6; or
  2. by returning the excess or any part thereof to those members who have paid that overspill call in proportion to the payments made by them.

21.9 - Closing of policy years

If at any time prior to the expiry of a period of 36 months from the commencement of a policy year (‘the relevant policy year’), any of the parties to the Pooling Agreement sends a notice (‘an overspill notice’) in accordance with the Pooling Agreement that an event has occurred in the relevant policy year which has given or at any time may give rise to an overspill claim, the board shall as soon as practicable declare that the relevant policy year shall remain open for the purpose of levying an overspill call or calls in respect of that claim and the relevant policy year shall not be closed for the purpose of making an overspill call or calls in respect of that claim until such date as the board shall determine.

21.10

If at the expiry of the period of 36 months provided for in rule 21.9, no overspill notice as therein provided for has been sent, the relevant policy year shall be closed automatically for the purpose of levying overspill calls only, whether or not closed for any other purposes, such closure to have effect from the date falling 36 months after the commencement of the relevant policy year.

21.11

If at any time after a policy year has been closed in accordance with rules 21.9 and 21.10, any of the parties to the Pooling Agreement sends an overspill notice in accordance with the Pooling Agreement that an event has occurred in that policy year which has given or at any time may give rise to an overspill claim, the board shall as soon as practicable declare that the earliest subsequent open policy year (not being a policy year in respect of which the board has already made a declaration in accordance with rule 21.9 or 21.11) shall remain open for the purpose of levying an overspill call or calls in respect of that claim and such open policy year shall not be closed for the purpose of making an overspill call or calls in respect of that claim until such date as the board shall determine.

21.12

A policy year shall not be closed for the purpose of levying overspill calls save in accordance with rules 21.9 to 21.12.

21.13 - Security

If: 

  1. the board makes a declaration in accordance with rule 21.9 or 21.11 that a policy year shall remain open for the purpose of levying an overspill call or calls; and
  2. a member who is liable to pay any such overspill call or calls as may be levied by the board in accordance with rules 21.1 to 21.8 ceases or has ceased to be insured by the club for any reason, or the board determines that the insurance of any such member may cease

the board may require such member to provide to the club by such date as the board may determine (‘the due date’) a guarantee or other security in respect of the member’s estimated future liability for such overspill call or calls, such guarantee or other security to be in such form and amount (‘the guarantee amount’) and upon such terms as the board may deem to be appropriate in the circumstances.

21.14

Unless and until such guarantee or other security as is required by the board has been provided by the member, the member shall not be entitled to recovery from the club of any claims whatsoever and whensoever arising in respect of any and all ships entered in the club for any policy year by him or on his behalf.

21.15

If such guarantee or other security is not provided by the member to the club by the due date, a sum equal to the guarantee amount shall be due and payable by the member to the club on the due date, and shall be retained by the club as a security deposit on such terms as the board may deem to be appropriate in the circumstances.

21.16

The provision of a guarantee or other security as required by the board, including a payment in accordance with rule 21.15, shall in no way restrict or limit the member’s liability to pay such overspill call or calls as may be levied by the club in accordance with rules 21.1 to 21.8.

22.1 - Recoverability

Without prejudice to any other applicable limit, any overspill claim incurred by the club shall not be recoverable from the club in excess of the aggregate of:

  1. that part of the overspill claim which is eligible for pooling under the Pooling Agreement but which, under the terms of the Pooling Agreement, is to be borne by the club; and
  2. the maximum amount that the club is able to recover from the other parties to the Pooling Agreement as their contributions to the overspill claim.

22.2

The aggregate amount referred to in rule 22.1 shall be reduced to the extent that the club can evidence: 

1. that costs have been properly incurred by it in collecting or seeking to collect:

  • a overspill calls levied to provide funds to pay that part of the overspill claim referred to in rule 22.1(1); or
  • b the amount referred to in rule 22.1(2); or

2. that it is unable to collect an amount equal to that part of the overspill claim referred to in rule 22.1(1) which it had intended to pay out of the levy of overspill calls because any overspill calls so levied, or parts thereof, are not economically recoverable, provided that if, due to a change in circumstances, such amounts subsequently become economically recoverable, the aggregate amount referred to in rule 22.1 shall be reinstated to that extent.

22.3

In evidencing the matters referred to in rule 22.2(2), the club shall be required to show that:

  1. it has levied overspill calls in respect of the overspill claim referred to in rule 22.1 on all members entered in the club on the overspill claim date in accordance with and in the maximum amounts permitted under rules 21.1 to 21.8; and
  2. it has levied those overspill calls in a timely manner, has not released or otherwise waived a member’s obligation to pay those calls and has taken all reasonable steps to recover those calls.

22.4 

To the extent that the club intends to provide funds required to pay any overspill claim incurred by it in the manner specified in rule 21.1(4), the club shall only be required to pay such overspill claim as and when such funds are received by it, provided that it can show from time to time that, in seeking to collect such funds, it has taken the steps referred to in rules 22.3(1) and (2).

22.5 Collectability of overspill calls

Any of the issues referred to in rule 22.6 on which the club and a member cannot agree shall be referred to a panel constituted in accordance with arrangements established in the Pooling Agreement (‘the Panel’) which, acting as a body of experts and not as an arbitration tribunal, shall determine the issue.

22.6

Rules 22.6 to 22.17 shall apply to any issue of whether, for the purpose of applying any of rules 22.2, 22.3 and 22.4 in relation to any overspill claim (‘the relevant overspill claim’): 

  1. costs have been properly incurred in collecting or seeking to collect overspill calls; or
  2. any overspill call or part thereof is economically recoverable; or
  3. in seeking to collect the funds referred to in rule 21.4, the club has taken the steps referred to in that rule.

22.7

If the Panel has not been constituted at a time when a member wishes to refer an issue to it, the board shall, on request by the member, give a direction for the constitution of the Panel as required under the Pooling Agreement.

22.8

The board may, and on the direction of the member shall, give such direction as is required under the Pooling Agreement for the formal instruction of the Panel to investigate any issue and to give its determination as soon as reasonably practicable.

22.9

The Panel shall in its discretion decide what information, documents, evidence and submissions it requires in order to determine an issue and how to obtain these, and the board and the member shall cooperate fully with the Panel.

22.10

In determining any issue referred to it under rules 22.6 to 22.17, the Panel shall endeavour to follow the same procedures as it follows in determining issues arising in respect of the relevant overspill claim which are referred to it under the Pooling Agreement.

22.11

In determining an issue, the members of the Panel:

  1. shall rely on their own knowledge and expertise; and
  2. may rely on any information, documents, evidence or submission provided to them by the club or the member as they see fit.

22.12

If the three members of the Panel cannot agree on any matter, the view of the majority shall prevail.

22.13

The Panel shall not be required to give reasons for any determination.

22.14

The Panel’s determination shall be final and binding upon the club and the member, subject only to rule 22.15, and there shall be no right of appeal from such determination.

22.15

If the Panel makes a determination on an issue referred to in rules 22.6(2) or (3), the board or the member may refer the issue back to the Panel, notwithstanding rule 22.14, if it considers that the position has materially changed since the Panel made its determination.

22.16

The costs of the Panel shall be paid by the club.

22.17

Costs, indemnities and other sums payable to the Panel by the club in relation to any overspill claim, whether the reference to the Panel has been made under rules 22.6 to 22.17 or under the Pooling Agreement, shall be deemed to be costs properly incurred by the club in respect of that overspill claim for the purposes specified in rule 22.2(1).

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