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Rule 3 Freight, Disbursements and/or Increased Value, Premiums and/or Other Interests
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- Rule 3 Freight, Disbursements and/or Increased Value, Premiums and/or Other Interests
- 3.3 - Third parties
- 3.4 - Stowaway and refugees: port charges
- 3.5 - Life salvage
- 3.6.1 - Collision with other ships
- 3.7 - Damage to other ships (other than by collision)
- 3.8.1 Pollution
- 3.9 - Damage to property (other than by pollution)
- 3.10.1 - Towage of the ship
- 3.10.2 - Towage by the ship
- 3.11.1 - Wreck liabilities
- 3.12 - Quarantine expenses
- 3.13.1 - Cargo liabilities
- Hague and Hague-Visby Rules
- Documentation and delivery
- Finished steel products
- Deck cargo
- Value declared on bill of lading
- 3.14 - Unrecoverable general average contributions
- 3.15 - Ship’s proportion of general average
- 3.16 - Fines
- 3.17 - Enquiry expenses
- 3.18 - Confiscation of ship by customs authorities
- 3.19 - Sue and labour
- 3.20 - Omnibus
An Insured Owner who has entered his ship for insurance under Rule 3 is insured against loss of freight, disbursements and/or increased value, premiums and/or other interests when the loss has been caused by any of the following risks:
War, civil war, revolution, rebellion, insurrection, or civil strife arising therefrom, or any hostile act by or against a belligerent power;
Capture, seizure, arrest, restraint or detainment, and the consequences thereof or any attempt thereat;
Strikers, locked-out workmen or persons taking part in labour disturbances, riots or civil commotions;
Any terrorist or any person acting maliciously or from a political motive;
Piracy, barratry or violent theft by persons coming from outside the Entered Ship;
Confiscation or expropriation.
PROVIDED ALWAYS that:
There shall be no insurance under Rule 3 for any losses, liabilities, costs or expenses for which an Insured Owner is insured under Rule 2 Part A.
In respect of any liabilities arising under rule 3.2, the passenger contract must relieve the member of liability to the maximum extent permitted under the applicable law.
Exclusions to rule 3.2
1. Liabilities arising out of the carriage of a passenger by air unless they occur:
- a during repatriation of an injured or sick passenger, or following a casualty to the ship; or
- b during excursions from the ship, subject to exclusion(2) below.
2. Liabilities arising under a contract in respect of a passenger while on an excursion from the ship in circumstances where either:
- a that contract has been separately entered into by the passenger for the excursion, whether or not with the member; or
- b the member has waived any rights of recourse against any sub-contractor or other third party in respect of the excursion.
3.3 - Third parties
Liabilities in respect of the injury, illness or death of any person other than crew or passengers.
3.4 - Stowaway and refugees: port charges
Port and other charges solely incurred for the purpose of landing stowaways or refugees, or others saved at sea, or, with the agreement of the managers, a deceased person, or landing or securing the necessary treatment for an injured or sick person, other than crew, including the net loss to the member in respect of fuel, insurance, wages, stores and provisions incurred for such purpose.
3.5 - Life salvage
Sums due to a third party because he has saved or attempted to save the life of any person on or from the ship.
3.6.1 - Collision with other ships
One-fourth, or such other proportion agreed by the managers, of the liabilities arising out of a collision other than those set out in rule 3.6.3.
Under a charterer’s entry, four-fourths of the liabilities arising out of a collision.
The liabilities arising out of a collision relating to:
- the raising, removing, destroying, lighting or marking of wrecks, cargo or other property
- damage done by such other ship to any property not being another ship or any cargo or other property therein
- loss of or damage to cargo or other property being carried in the ship; if the cargo is the property of the member, it is deemed to be fully insured and the member is entitled only to recover from the club the amount by which such indemnity exceeds the sum recoverable under such insurance
- the injury, illness or death of any person on board such other ship
- pollution liabilities as may be covered under rule 3.8.
That part of the member's collision liability which exceeds the sum recoverable under the hull policies solely by reason of such liability exceeding the valuation of the ship in those policies. However, the board may determine the proper value (being the market value of the ship without commitment) for which the ship should have been insured under the hull policies, and the club shall pay only the excess of the amount which would have been recoverable if the ship had been insured thereunder at such value.
There will be no recovery from the club insofar as such collision liabilities are not recoverable under the hull policies by reason of any breach of such policies.
If both ships are to blame then, unless the liability of the owners of one or both of them becomes limited by law, claims shall be settled upon the principle of cross-liabilities.
3.7 - Damage to other ships (other than by collision)
Liabilities for loss of or damage to, delay to, interference with rights in relation to, or liability for salvage or wreck removal costs incurred in respect of, any other ship or any cargo or other property therein caused other than by collision with the ship.
Liabilities arising out of the discharge or escape from the ship of any substance.
The costs of any measures reasonably taken after the discharge or escape of any substance from the ship for the purpose of avoiding or minimising any resulting loss, damage or contamination, or cleaning up any resulting pollution, together with liability for any loss of or damage to property caused by any measures so taken.
The costs of any measures reasonably taken to prevent an imminent danger of the discharge or escape from the ship of any substance.
Extraordinary liabilities incurred as a result of complying with any order or direction given or any measures taken by any authority in connection with the ship or her cargo for preventing or reducing pollution or the risk thereof by the escape from the ship of any substance, excluding any permanent structural alteration to the ship.
Liabilities under a salvage agreement to compensate salvors for work done or measures taken to prevent or reduce pollution or the risk thereof by the escape from the ship of any substance.
Liabilities incurred after the ship has become a wreck arising from the discharge or escape from such wreck of any substance.
Liabilities for which a member may be liable or otherwise incurs as a party to STOPIA and/or TOPIA. A member insured in respect of a ‘relevant ship’ as defined in STOPIA and/or TOPIA shall, unless otherwise agreed by the managers, be a party to STOPIA and/or TOPIA for the period of entry of that ship in the club. Unless agreed by the managers or the board otherwise determines, there shall be no cover under rule 3.8 in respect of such ship during a period when the member is not a party to STOPIA and/or TOPIA.
Liabilities in respect of pollution where such liabilities arise under rules 3.6, 3.7, 3.9, 3.10, 3.11 and 3.19.
Exclusions to rule 3.8
Unless the board otherwise determines, there shall be no recovery in respect of:
- liabilities which but for the terms of any contract of carriage would have been allowed in general average adjusted under the unamended York Antwerp Rules 1994 or the unamended York Antwerp Rules 2016.
- liabilities, loss or damage including, without limitation, liability for the cost of any remedial works or clean-up operations, arising as a result of the presence in, or the escape or discharge or threat of escape or discharge from, any land based dump, site, storage or disposal facility of any substance previously carried on the ship whether as cargo, fuel, stores or waste and whether at any time mixed in whole or in part with any other substance whatsoever.
3.9 - Damage to property (other than by pollution)
Liabilities for loss of or damage to, or interference with rights in relation to, any property not being any ship or any cargo or other property therein or the cargo or other property intended to be or being or having been carried in the ship.
3.10.1 - Towage of the ship
Liabilities under the terms of a contract for the towage of the ship which:
- relate to the risks set out in the other paragraphs of rule 3;
- arise under a contract for towage undertaken in the ordinary course of trading for the purpose of entering, leaving or manoeuvring within a port; or
- arise under a contract for the towage of cargo barges; or
- arise under a contract which has been approved by the managers.
3.10.2 - Towage by the ship
Liabilities under the terms of a contract for, or arising out of, the towage by the ship of any ship or floating structure where:
- such liabilities relate to the risks set out in the other paragraphs of rule 3; and
- the towage is undertaken for the purpose of saving life or property at sea; or
- the ship is towing under a United Kingdom, Netherlands or Scandinavian standard towage contract, the current Lloyd’s standard form of salvage agreement – no cure no pay, or other towage contract containing similar exclusions of liabilities to these market forms; or
- the contract is on knock-for-knock terms; or
- a contract on knock-for-knock terms is likely to be unlawful or unenforceable in whole or part and the contract under which the towage takes place:
- a does not impose on the member any liability to any person arising out of any act, neglect or default of the owner of the tow or any other person; and
- b limits the liability of the member, or preserves his right to limit, to the maximum extent possible by law; or
- the contract has been approved by the managers.
3.11.1 - Wreck liabilities
Liabilities for or incidental to the raising, removal, destruction, lighting or marking of the wreck of the ship. The value of the wreck and all stores and materials saved must be deducted from any reimbursement and only the balance is recoverable.
Liabilities resulting from the actual or attempted raising, removal or destruction of the wreck of the ship, cargo or any other property on board.
Liabilities resulting from the presence or involuntary shifting of the wreck of the ship, cargo or any other property on board caused by the casualty which led to the loss of the ship, cargo or any other property on board. Unless the board otherwise determines, a member is not entitled to be reimbursed by the club in respect of any liability incurred more than two years after the ship, cargo or any other property on board became a wreck.
Liabilities for or incidental to the raising, removal, destruction or disposal of cargo or any other property which is being, or has been, carried on the ship. The value of all cargo or any other property saved accruing to the member must be deducted from any reimbursement and only the balance is recoverable.
Exclusions to rule 3.11
- There shall be no recovery if the member has, without the agreement of the managers, transferred his interest in the wreck other than by abandonment, at any time after the ship became a wreck.
- There shall be no recovery unless the raising, removal, destruction, lighting or marking of the wreck, or the raising, removal, destruction or disposal of cargo or any other property, was compulsory by law or was undertaken with the agreement of the managers.
- Unless the board otherwise determines, a member is not entitled to reimbursement in respect of any liability unless he took reasonable measures to raise, remove, destroy, light or mark the wreck, or raise, remove, destroy or dispose of cargo or any other property.
- Unless the board otherwise determines, there shall be no recovery unless the member has contracted for removal of the wreck on terms which have been approved by the managers.
- There shall be no recovery in respect of liabilities for or incidental to the raising, removal, destruction, lighting or marking of the wreck of the ship unless the ship became a wreck as a result of a casualty. For the purpose of this rule, ‘casualty’ means collision, stranding, explosion, fire or similar fortuitous event, but excludes any wreck caused by dereliction or neglect.
3.12 - Quarantine expenses
Additional expenses incurred as a direct consequence of an outbreak of infectious disease on the ship, including quarantine and disinfection expenses, and the net loss to the member in respect of fuel, insurance, wages, stores, provisions, cargo handling and port charges.
Exclusion to rule 3.12
There shall be no recovery if at the time the ship was ordered to a port, the member knew, or should in the board’s view reasonably have anticipated, that the ship would be quarantined, unless proceeding to the port was for the purpose of landing or securing the necessary treatment for an injured or sick person.
3.13.1 - Cargo liabilities
Liabilities for loss or shortage of, or damage to, or other responsibility in respect of, cargo or other property intended to be, or being, or having been carried in, on or by the ship arising out of any breach by the member, or by any person for whose acts, neglect or default he may be legally liable, of his obligation properly to load, handle, stow, carry, keep, care for, discharge and deliver such cargo or property, or out of unseaworthiness or unfitness of the ship.
The extra costs incurred by the member:
- in the actual discharge or disposal of damaged or worthless cargo, provided that he can only recover such costs if he has no recourse to recover them from any other party; or
- as a direct consequence of the failure by cargo interests to collect or remove cargo from the place of discharge or delivery, provided that he can only recover such costs to the extent they exceed the proceeds of the sale of the cargo and he has no recourse to recover them from any other party; or
- in restowing cargo which are necessarily incurred in order to continue the safe prosecution of the voyage following a casualty, provided that he has no right to recover them from any other party either in general average or otherwise. For the purpose of this paragraph, ‘casualty’ means collision, stranding, explosion, fire or similar fortuitous event.
Liabilities for loss of or damage to or other responsibility to cargo or other property being carried by means of transport other than the ship under a contract of carriage, approved by the managers, providing for carriage partly to be performed by the ship.
Exclusions to rule 3.13
Unless the board otherwise determines, there shall be no recovery in respect of liabilities arising out of:
Hague and Hague-Visby Rules
- the carriage of cargo on contractual terms more onerous to the carrier than those of the Hague or Hague-Visby Rules, or equally wide exemptions of the carrier from liability, save where it is on such terms solely by reason of the incorporation by law of either the Hamburg Rules or other terms of mandatory application, or parts thereof, to the extent that the liabilities exceed those which would have been incurred had the contract been on the Hague, Hague-Visby, Hamburg or other terms of mandatory application as applicable, unless the contract has been approved in advance by the managers
2. a deviation, or as a consequence of a deviation, from the contractually agreed voyage, which may deprive the member of the right to rely on defences or rights of limitation which would otherwise have been available to him, unless the managers have agreed that cover may continue unprejudiced
3. the failure to arrive or late arrival of the ship at a port of loading, or the failure to load or delay in loading any particular cargo other than under a bill of lading already issued
4. the discharge of cargo at a place other than that stipulated in the contract of carriage
Documentation and delivery
5. the delivery of cargo carried under a negotiable document of title (including an electronic bill of lading) without production (or the equivalent thereof in the case of an electronic bill of lading) of that document by the person to whom delivery is made except where the cargo has been carried:
- a under the terms of a non-negotiable document, and has been properly delivered as required by that document, notwithstanding that the member may be liable under the terms of a negotiable document of title issued by or on behalf of a party other than the member providing for carriage in part upon the ship and in part upon another ship or by another mode of transport; or
- b under the terms of an electronic trading system approved by the managers and has been properly delivered to the person so entitled in accordance therewith.
6. delivery of cargo carried under a non-negotiable document without production of such document by the person to whom delivery is made, where such production is required by the express terms of that document or the law to which that document, or the contract of carriage contained in or evidenced by it, is subject, except where the member is required by any other law to which he is subject to deliver or relinquish custody or control of the cargo, without production of such document
7. the issue of a document containing or evidencing the contract of carriage recording the loading or shipment or receipt for shipment on a date other than the date on which the cargo was in fact loaded, shipped or received
8. a document containing or evidencing the contract of carriage issued with the knowledge of the member or his master with an incorrect description of the cargo or its quantity or condition
Finished steel products
9. the carriage of finished steel products, unless the member has arranged for a preloading survey to be carried out by a clubapproved surveyor at each port of shipment, and the bills of lading have been claused in accordance with the findings of the surveyor as to the condition of cargo at the time of loading
10. loss of, damage to or responsibility in respect of cargo carried on deck unless it is carried under a contract of carriage which permits it to be carried on deck and the contract states that it is being so carried and either it exonerates the member from all liability in respect of such cargo or it applies the Hague or Hague-Visby Rules to such cargo, or it is customary to carry such cargo on deck, or such carriage has been approved by the managers
11. the carriage of valuables, unless such carriage has been approved by the managers
Value declared on bill of lading
12. goods carried under a document containing or evidencing the contract of carriage where the value per unit, piece or package has been stated to be in excess of US$2,500, or the equivalent in any other currency, which may deprive the member of the right to rely on defences or rights of limitation which would otherwise have been available to him, to the extent that such liabilities exceed that sum.
3.14 - Unrecoverable general average contributions
The proportion of general average, special charges or salvage which the member is or would be entitled to claim from cargo or from another party which is not recoverable solely by reason of a breach of the contract of carriage.
Exclusions to rule 3.14
- If the contribution is irrecoverable by reason of a deviation, rule 3.13 exclusion (2) applies to any claim under rule 3.14.
- The board may reject or reduce a claim if the contract of carriage under which the cargo was being carried did not include Article IV Rule (2)(a) of the Hague Rules, as amended by the Hague-Visby Rules, or an equally wide exemption from liability.
3.15 - Ship’s proportion of general average
Ship’s proportion of general average, special charges or salvage not recoverable under the hull policies by reason of the value of the ship being assessed at a sound value in excess of the insured value under the hull policies. The board may determine the proper value (being the market value of the ship without commitment) for which the ship should have been insured under the hull policies, and the club shall pay only the amount of the ship’s proportion of general average which would not have been recoverable under the hull policies, if the ship had been insured thereunder at such value.
3.16 - Fines
Fines imposed on the member or upon any other person whom he reasonably reimburses or is legally liable to indemnify:
for short or over delivery of cargo, or for failure to comply with regulations concerning the declaration of goods or the documentation of cargo (other than fines or penalties arising from the smuggling of goods or cargo or any attempt thereat)
for breach of any immigration law or regulation
in respect of the accidental escape or discharge of any substance, so long as the member is insured for pollution liabilities by the club subject to his terms of entry and the relevant limit of liability
for any other matter to the extent that the member has satisfied the board that he took all such steps as appear to the board to be reasonable to avoid the event giving rise to the fine; in addition, any amounts claimed in respect of such fine are recoverable only to the extent the board may determine.
Exclusions to rule 3.16
Unless the board otherwise determines, there shall be no recovery in respect of a fine imposed for or arising out of:
- illegal fishing
- any personal act or default on the part of the member or his managers
- wilful misconduct on the part of any person unless the member has been compelled by law to pay the fine.
3.17 - Enquiry expenses
Costs and expenses incurred in protecting a member’s interests before a formal enquiry into a casualty to the ship where, in the opinion of the managers, a claim upon the club is likely to arise, or in other cases as the board determines.
3.18 - Confiscation of ship by customs authorities
Loss of the ship following its confiscation by any legally empowered body in respect of the infringement of any customs law or regulation but only if and to the extent that, notwithstanding rule 5.1, the board decides that the member shall recover from the club.
Exclusions to rule 3.18
- The amount recoverable shall not exceed the market value of the ship at the date of the confiscation.
- The member must have satisfied the board that he took all such steps as appear to the board to be reasonable to prevent the infringement of the customs law or regulation giving rise to the confiscation.
- No claim will be considered by the board until the member has been deprived of his interest in the ship.
3.19 - Sue and labour
Extraordinary costs and expenses, including legal, survey, expert and correspondent fees, reasonably incurred on or after the occurrence of any event liable to give rise to a claim upon the club and incurred solely for the purpose of avoiding or minimising any liability against which the member is insured by the club, but only to the extent that those costs and expenses have been incurred with the prior agreement of the managers, or to the extent that the board determines.
Exclusion to rule 3.19
Unless the managers or the board otherwise decide, there shall be deducted from such costs and expenses the deductible which would have been applicable had the liability or expenditure against which the member is insured by the club been incurred.
3.20 - Omnibus
Any liabilities which the board may determine to be within the scope of club cover, but only to the extent that it decides that the member shall recover from the club.