Alterations to the Rules of the Association

23 January 2020 No.19-017

To the Members

As described in our circular No.19-012 dated 26 November 2019, the following alterations to the Rules of the Association (the "Rules") will become effective from 12 noon GMT on 20 February 2020 for the 2020 policy year.  There will also be an alteration to the Special Clause. The amendments are explained below, and extracts of the relevant provisions are attached hereto.


  1. Alterations to the Rules


Rule 26.1 (Towage Liabilities)

The previously-used term "the insurance contract with a fixed sum insured" has been replaced by the more specific “the Naiko Class insurance contract”.


Rule 29.2(2) (Cargo Liabilities)

Where there is a deviation (including a deviation from the contract of carriage) of the Entered Ship, and as a result, the Member is unable to invoke the right to exempt or limit liability as permitted in the contract of carriage, liabilities and expenses incurred in the deviation shall not be covered by the Association. The provision is amended to enable the Association to make a better judgement whether the Member’s actions can be regarded as a deviation, and should arrange additional insurance or take any action, if necessary.


Rule 30(1) (General Average)

The Association covers cargo’s or some other party’s proportion of general average which is not legally recoverable, subject to the condition that the liabilities provided for in Rule 29 (Cargo Liabilities) of the Rules of the Association have been insured against. The amendment is to make it clear that the Rule providing for the ship to be insured under Rule 29 (Cargo liabilities) does not apply in respect of unrecoverable proportions of GA which do not concern cargo, such as charterers’ bunkers and/or special charges linked to containers.


Rule 34.2 (Deductibles)

While the Association does not in principle apply deductibles under “the costs and expenses for lawyers and surveyors as well as for lawsuits” referred in Rule 32(1) (Defence Costs, etc) and in the case “the liability of the Member may be limited by any laws concerning limitation of owner’s liability for damages” referred in Rule 37 (Limitation of Coverage), the Association has added a proviso in Clause 2 of Rule 34 so that the Association can apply deductibles to the preceding expenses or liabilities by agreement between the Association and the Member.


Rule 35.1(7)(8)(13)(14) (Risks Generally Excluded)

These amendments are to keep the Rules aligned with the Pooling Agreement of the International Group of P&I Clubs. The Association has revised wording concerning special operations which are not covered in accordance with the Pooling Agreement. New clauses have been adopted concerning liabilities, costs and expenses incurred by the Member in respect of personnel.


Rule 46 (Recoveries) <New>

This Rule is provided to specify the agreed practice in accordance with Rule 45(1) (Subrogation). When the Association has full subrogation rights of the Member and exercises its right of recourse against the responsible third party and makes a recovery from that party, the recovery shall be credited and paid to the Association up to the amount corresponding to the sum paid by the Association. Any remaining amount shall be reimbursed to the Member. When the Member makes a recovery from the responsible third party, the recovery shall be paid by the Member to the Association up to the amount corresponding to the sum paid by the Association.



  1. Alteration to the Special Clause



This amendment is to reflect a change made in the IG’s excess War Risks P&I Cover. The terms on which the excess War Risks P&I Cover will be provided for the 2020 policy year are in most respects the same as for the 2019 policy year, including the limit of cover of USD500 million. However, for the 2020 policy year there is a change to the definition of the excess, which in past years has been the greater of either (a) the ‘proper value’ of the entered ship up to a maximum of USD100 million or (b) the amount recoverable in respect of the claim from primary war P&I risks underwriters. For the 2020 policy year, the deemed maximum ‘proper value’ will be changed from USD100 million to USD500 million.


A Rule Book for the 2020 Policy Year is scheduled to be delivered to Members in early February 2020.