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The first edition of the Gard Guidance to the Statutes and Rules was written and published in 2008 with the intention of helping readers to gain a better understanding of Assuranceforeningen Gard’s Statutes and Rules by adding context to content, offering comments and interpretation and showing relevant inter-relationships between provisions. Since that time, the electronic version of the Guidance has been regularly updated as and when a change in circumstances required revisions to be made. However, some significant changes have been made to the corporate structure and asset allocation within the Gard group since 2008 and it is believed that the time has now come to have a thorough review of the Guidance. 

Gard P. & I. (Bermuda) Ltd., the parent of the Gard group, is now the entity that holds the most assets and, as from 20 February 2010, the majority of ships and other units that are insured for P&I and Defence risks have been entered directly with Gard P. & I. (Bermuda) Ltd. and the balance with Assuranceforeningen Gard -gjensidig-.1 Gard AS acts as the agent for both Assuranceforeningen Gard -gjensidig- and Gard P. & I. (Bermuda) Ltd. and has prepared, and the Board of Directors of each association has approved, a joint set of standard terms of cover for P&I risks (the Rules). Since both Associations are involved in direct P&I insurance and are parties to the Pooling Agreement of the International Group of P&I Clubs, the Rules mirror to a large extent the scope of cover that is laid down in the Pooling Agreement which is the legal framework by which the P&I clubs that are members of the International Group of P&I Clubs share claims and the collective purchase of market reinsurance for P&I risks. 

This Guidance comments on the Rules of the Association and the Additional Covers that are provided by the Association on a fixed premium basis. A distinction needs to be drawn between the Rules and the Articles of Association since the function of the Articles of Association is very different from that of the Rules. The Articles of Association comprise provisions that govern the Association as a mutual P&I association that is owned and controlled by its Members.2 They encompass the purpose of the Association, membership eligibility, voting rights, the governing bodies, the authority vested in, and the functions carried out by, those bodies, as well as provisions relating to amalgamation and dissolution. Some provisions are necessitated by external legal requirements whereas others are purely self-regulatory. In brief, the Articles of Association regulate the rights and obligations of the Members of the Association as owners of that Association. In contrast, the Rules govern the rights and obligations of Members as assureds, i.e. policy holders. They contain provisions relating to the creation of the contract of insurance, the rights and obligations of the Association and the Members inter se under the contract of insurance, including, in particular, the extent to which cover is available in relation to particular risks, as well as provisions that govern the cesser and termination of entry. Therefore, since the day-to-day needs of most Members relate to the Rules rather than the Articles of Association it was decided that the commentary in this edition should concentrate on the Rules rather than on the Articles of Association. 

As from 20 February 2010 Ships that have been entered in Assuranceforeningen Gard -gjensidig- have been insured by Assuranceforeningen Gard -gjensidig- whereas the Ships that have been entered in Gard P. & I. (Bermuda) Ltd. have been insured by Gard P. & I. (Bermuda) Ltd. However, since the two insurers provide cover on the same terms, this Guidance is intended to comment on the Rules that are applicable to all entries that are insured in either Association and the reference in this Introduction and the remainder of the Guidance to the terms ’Association’ and ’Gard’ are intended to refer to whichever insurer is the relevant insurer for the purposes of the Rules. 

The fundamental principle that underscores the Rules is that of mutuality. By agreeing to be a Member of the Association each Member agrees to share on a mutual basis the cost of liabilities, losses, costs and expenses that are incurred by each Member in direct connection with the operation of the Ships that are entered by them. It is important in this regard to emphasise that the Rules that apply for any Policy Year are agreed by the Members prior to the inception of that Policy Year. Therefore, the Members themselves decide the extent of the cover that is to be provided to them by the Association and the terms upon which such cover is available or not available! 

It is important to note that the objective of the Association is not the generation of profit for external shareholders, but the creation of value for its Members by the provision of broad and cost-effective insurance cover as protection against financial loss, as well as the provision of a professional and expert claims handling service. With these objectives in mind, the Rules are designed to ensure that the principle of mutuality is properly preserved. 

For example, all entered Ships must comply with relevant flag state regulations and remain in class at all times, since they are otherwise considered to represent an unacceptable risk to the rest of the membership in terms of claims and losses. Similarly, the risks that arise as a result of certain types of specialised operations that are carried out at sea are so different in nature from those that arise in relation to traditional shipping operations that cover is not afforded for such risks since they are not the type of risks that the majority of the membership has agreed to share. Furthermore, if the particular liability, loss, cost or expense is not one that is encountered by the bulk of the membership on a regular basis, but is more the result of the manner in which the particular Member has conducted his business on a particular occasion, cover is not available under the Rules since such liabilities etc., represent a greater risk than that which has been taken into account when assessing the premium that is payable by that Member. Consequently, the funds that are contributed by the wider membership should not be used to compensate the Member for such loss. For these reasons, liabilities etc., that would not have been incurred but for the contractual terms that have been accepted by a Member are covered only to the extent that such terms have received the prior approval of the Association. 

It is also very important to appreciate that the Association is a member of the International Group of P&I Clubs and, as such, is a party to the Pooling Agreement that binds all the International Group clubs. The Pooling Agreement forms the basis on which such clubs purchase excess loss reinsurances from the commercial market. Consequently, it is vital that the Rules should comply at all times with the provisions of the Pooling Agreement in order to ensure that the Association continues to enjoy full and comprehensive reinsurance protection. It follows that, whilst the Rules are governed by Norwegian law, the Association strives, insofar as possible, to interpret the Rules in the same way (and spirit) that similar provisions are interpreted in the Pooling Agreement. 

The Association, like all the other P&I clubs that are members of the International Group, regularly monitors and amends the Rules in order to try to meet the evolving needs of its Members, and to ensure compliance with the Pooling Agreement. Therefore, the wording and interpretation of the Rules will evolve from time to time. Despite the, perhaps welcome, lack of case law relating to the interpretation of P&I club rules, the clubs that are members of the International Group try to achieve a common understanding in relation to their application. 

Notwithstanding the fact that the Association is a mutual insurer, it has in recent years, in response to the demands that have been made by its Members, endeavoured to provide additional insurances that extend cover for risks that are not fully and completely covered by the Standard P&I Cover that is provided by the Association under the Rules. Such additional insurances are separate from the Standard P&I Cover and are offered on payment of an additional fixed premium. However, such additional insurances are normally offered to Members that already have Ships that are entered in the Association for the Standard P&I Cover and are intended to ’bolt on‘ to such Cover in order to provide cover where it is not available under the Standard P&I Cover. In some instances, such additional insurances are provided by the Association itself whereas, in other instances, the Association will arrange additional insurance for the Member with other insurers. Therefore, this Guidance also comments on the additional insurances that are provided by the Association. 

To sum up, this Guidance is intended to assist and clarify issues that arise generally in relation to:

  • the Rules; and
  • the Additional Insurances that are provided by the Association. 

However, as has been the case since 2008, the commentary may periodically be reviewed and readers are reminded of the necessity to periodically scrutinise the version that appears on the Gard website. Furthermore, it is not intended to provide definitive answers in all situations and readers should seek specific guidance in specific situations. Similarly, the comments that are made in this Guidance are given in good faith and to the best of the knowledge and understanding of the contributors to it, but should not to be treated as legally binding or conclusive in relation to any particular case or matter. 

With these comments in mind you are encouraged to increase your understanding of the Rules, and, most definitely, to provide comments or ask questions by contacting the Association.


1. For further detail see Member Circular 6/2009.

2. Assuranceforeningen Gard -gjensidig- is governed by its Statutes of Association whereas Gard P. & I. (Bermuda) Ltd. is governed by Bye-Laws which are in many respects similar to, albeit not identical to, the Statutes of Assuranceforeningen Gard -gjensidig-. Therefore, the term ’Articles of Association’ is intended, in the case of Assuranceforeningen Gard -gjensidig-, to be a reference to the Articles of Association of that Association, and in the case of Gard P. & I. (Bermuda) Ltd., to be a reference to the Bye-Laws of Gard P. & I. (Bermuda) Ltd. The Statutes of Assuranceforeningen Gard -gjensidig- and the Bye-Laws of Gard P. & I. (Bermuda) Ltd. are available on request and are published on the Gard website.