A number of IG Clubs have recently been made aware of a clause that some charterers have been seeking to incorporate into their charters, in particular in the container trades. For the reasons set out below the clause has the potential to prejudice an Owners P&I cover and should not be agreed without considering the full implications of doing so.

There are different versions of the Charterparty Clause but the most common form is:

"Notwithstanding anything stipulated in this contract to the contrary, Owners are responsible for and shall keep Charterers free from all insured risks as covered by P&I."

These or similar words are designed to impose responsibility upon the owner for all P&I liabilities that would otherwise be liabilities falling on a charterer, even if the latter is wholly at fault, in effect requiring the owner to be the charterer's P&I insurer. The clause also bars recourse claims by the owner against the charterer, when the latter is or would normally be responsible for liabilities or losses incurred by an owner arising from an accident or casualty.

Members are advised to avoid this and similar clauses. Under an owner's P&I entry the Club cannot cover liabilities incurred under a blanket indemnity and waiver of recourse of this kind. There is thus a considerable risk, if an owner agrees this clause, that he will be exposed to significant uninsured liability.

The Club Managers will be happy to advise further, and it is recommended that any member asked to agree this clause should contact the Club before doing so.

All Clubs in the IG have issued a similar Circular.