Section E: Excluded Losses

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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 ship or any part thereof, save as provided for in rule 3.18.

5.2 - Equipment damage

Loss of or damage to any equipment, containers, lashings, stores, or fuel on board the ship 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 ship or any charges or expenses in connection therewith save as provided for in rules 3.14 and 3.15.

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 cargo.

5.5.1 - Detention

Loss arising out of demurrage on, detention of, or delay to the ship or, except as provided for in rules 3.1.6 and 3.4, running costs of the ship, unless such costs, with the agreement of the managers, form part of a claim for liabilities in respect of cargo.

5.5.2

Liabilities arising out of arrest or detention of or delay to the ship 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 ship.

5.7 - Bad debts

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

5.8 - Pollution

Liabilities arising out of the actual, or threatened, escape or discharge of any substance save as provided for in rule 3.8.

5.9 - Salvage

Salvage or other services in the nature of salvage provided to the ship, and any liabilities in connection therewith, other than such as may be covered under rules 3.5, 3.8.5, 3.14 or 3.15.

5.10

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

5.11 - Specialist operations

Liabilities incurred during the course of performing dredging, blasting, pile-driving, well intervention, cable or pipe laying, construction, installation or maintenance work, core sampling, depositing of spoil, power generation, and such other operations as the parties to the Pooling Agreement may agree, to the extent that such liabilities arise as a consequence of:

1. claims brought by any party for whose benefit the work has been performed, or by any third party (whether connected with any party for whose benefit the work has been performed or not), in respect of the specialist nature of the operations; or 18
2. the failure to perform such specialist operations by the member or the fitness for purpose or quality of the member’s work, products or services; or
3. any loss of or damage to the contract work including, but not limited to materials, components, parts, machinery, fixtures, equipment and any other property which is or is destined to become a part of the completed project which is the subject of the contract under which the ship is working, or to be used up or consumed in the completion of such project.

This exclusion does not apply to liabilities incurred in respect of:

• a injury, illness or death of any person on board the ship
• b wreck removal of the ship
• c oil pollution emanating from the ship or the threat thereof

but only to the extent that such liabilities are covered by the club in accordance with these rules.

5.12.1 - Drilling and production operations

Liabilities incurred in respect of the ship, being a ship or any other description of vessel or unit constructed or adapted for the purpose of carrying out drilling operations in connection with oil or gas exploration or production.

5.12.2

Liabilities incurred in respect of the ship, being any ship carrying out drilling or production operations in connection with oil or gas exploration or production, to the extent that such liabilities arise out of or during drilling or production operations.

5.12.3

A ship shall be deemed to be carrying out production operations if, inter alia, it is a storage tanker or other ship engaged in the storage of oil, and either the oil is transferred directly from a producing well to the storage ship; or the storage ship has oil and gas separation equipment on board and gas is being separated from oil while on board the storage ship other than by natural venting.

5.12.4

If the ship is carrying out production operations, rule 5.12.2 shall apply from the time that a connection, whether directly or indirectly, has been established between the ship and the well pursuant to a contract under which the ship is employed until such time that the ship is finally disconnected from the well in accordance with that contract.

5.13 - Heavy lift ships

Loss of or damage to or wreck removal of cargo carried on a semisubmersible heavy lift ship or any other ship designed exclusively for the carriage of heavy lift cargo, save to the extent that such cargo is being carried under the terms of a contract on Heavycon terms or any other terms approved by the managers.

5.14 - Submarines and divers

Liabilities incurred in connection with any claim arising out of:

1. the operation by the member of submarines, mini submarines, diving bells or remotely operated underwater vehicles; or
2. 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 ship where the divers form part of the crew of that ship (or of diving bells or other similar equipment or craft operating from the ship) and where the member is responsible for the activities of such divers; and
• b incidental diving operations carried out in relation to the inspection, repair or maintenance of the ship or in relation to damage caused by the ship; and
• c recreational diving activities.

5.15 - Non-marine personnel

Liabilities incurred in respect of:

1. personnel (other than marine crew) on board the ship, employed otherwise than by the member, where the ship is providing accommodation to such personnel in relation to their employment on or about an oil or gas exploration or production facility, unless a contractual allocation of risk has been approved by the managers;
2. hotel and restaurant guests and other visitors and catering personnel of the ship when she is moored (other than on a temporary basis) and is open to the public as a hotel, restaurant, bar or other place of entertainment.

5.16 - Waste disposal

Liabilities incurred in connection with any claim brought against the member arising out of waste incineration or disposal operations carried out by the ship, other than any such operations carried out as an incidental part of other commercial activities, not being specialist operations.

5.17 - Paperless trading

Liabilities and losses arising from the use of any electronic trading system, other than an electronic trading system approved by the managers, to the extent that such liabilities and losses would not (save insofar as the managers otherwise determine) have arisen under a paper trading system.

For the purpose of this rule:

1. an electronic trading system is any system which replaces or is intended to replace paper documents used for the sale of goods and/or their carriage by sea or partly by sea and other means of transport and which:

• a are documents of title; or
• b entitle the holder to delivery or possession of the goods referred to in such documents; or
• c evidence a contract of carriage under which the rights and obligations of either of the contracting parties may be transferred to a third party.

       2. a ‘document’ shall mean anything in which information of any description is recorded including, but not limited to, computer or other electronically-generated information.

5.18 - 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 3.19, or are approved by the board.