Rate this article:  

Table of contents

Rule 1 Interpretation

1 In these Rules the following words or expressions shall have the following meanings:

Affiliate
any person who is insured pursuant to Rule 78.1.a.

Articles of Association
for entries with Assuranceforeningen Gard -gjensidig-, the Statutes of Assuranceforeningen Gard -gjensidig- and for entries with Gard P. & I. (Bermuda) Ltd, the Bye-Laws of Gard P. & I. (Bermuda) Ltd.

Association
for entries with Assuranceforeningen Gard -gjensidig-, the ‘Association’ means Assuranceforeningen Gard -gjensidig- and for entries with Gard P. & I. (Bermuda) Ltd, the ‘Association’ means Gard P. & I. (Bermuda) Ltd.

Bill of Lading
bill of lading or similar document of title.

Certificate of Entry
document issued by the Association pursuant to Rule 5.1, including (where the context permits) any endorsement note in respect of the relevant entry issued pursuant to Rule 5.3, which evidences the terms and conditions of the contract of insurance in respect of the Ship.

Charterer’s Entry
an entry effected by a charterer and which does not insure any other person except as a Co-assured or an Affiliate.

Consortium Agreement
shall have the meaning given to it in Appendix II.

Consortium Claim
shall have the meaning given to it in Appendix II.

Consortium Vessel
shall have the meaning given to it in Appendix II.

Co-assured
any person who is insured pursuant to Rule 78.1.b.

Crew
officers, including the master, and seamen contractually obliged to serve on board the Ship, including substitutes and including such persons while proceeding to or from the Ship.

Defence cover and Defence entry
insurance by the Association for risks specified in Part IV of these Rules, and the entry of a Ship for such cover.

Estimated Total Call
the agreed rate of premium in respect of an entry for a Policy Year, or the fixed premium payable to the Association on a fixed premium entry, according to the terms of the Ship's entry.

Group Excess Loss Policies
the excess of loss reinsurance policy or policies effected by parties to the Pooling Agreement.

Group Reinsurance Limit
shall have the meaning given to it in Appendix VI.

Hull Policies
the insurance policies effected on the hull and machinery of the Ship, including any excess liability policy.

Insurance Premium Tax
any taxes or other dues payable in respect of an entry of a Ship in the Association in the country where the Ship is registered, the country where the Member is resident, the country where the Member has a permanent place of business or in the country where the risk is located.

Joint Members
where the Ship is entered in the names of more than one Member, the named Members.

Last Instalment
the proportion of the Estimated Total Call for a Policy Year in respect of an entry (other than a fixed premium entry) which shall be deferred for payment in later years in accordance with Rule 12

Member
an owner, operator or charterer (including a bareboat or demise charterer) of a ship entered in the Association who according to the Statutes and these Rules is entitled to membership of the Association, provided that, where the context allows, the term ‘Member’ shall, in these Rules, include a Co-assured and an Affiliate.

Overspill Call
shall have the meaning given to it in Appendix VI.

Overspill Claim
shall have the meaning given to it in Appendix VI.

Owner’s Entry
an entry effected by an owner, bareboat or demise charterer or operator of the Ship and which does not insure a charterer of the Ship (other than a charterer insured as a Co-assured or an Affiliate).

P&I cover and P&I entry
insurance by the Association for risks specified in Part II of these Rules, and the entry of a Ship for such cover.

Policy Year
a year from noon GMT on 20 February in any year to immediately prior to noon GMT on the next following 20 February.

Pooling Agreement
an Agreement, to which the Association is a party, between certain protection and indemnity associations dated 20 February 1998 and any addendum to, or variation or replacement of such Agreement.

Release Call
any premium which may be payable on termination or cesser of an entry (other than a fixed premium entry) in accordance with Rule 15.1.

Ship
a ship or other floating structure entered in the Association (other than a mobile offshore unit entered in accordance with Part III of these Rules).

Supplementary Call
further premium payable for a Policy Year in respect of an entry (other than a fixed premium entry), in addition to the Estimated Total Call, but excluding any Overspill Call.

2 Headings and notes are for reference only, and shall not affect the construction of these Rules.

3 Any reference to a Charterer shall be deemed (unless otherwise expressly indicated) to be a reference to a charterer other than a bareboat or demise charterer.

4 Any reference to a person shall be deemed to include a reference to an individual or a body corporate or unincorporate, as the context requires.

5 A person shall be deemed to be the manager or the operator of a Ship for the purposes of these Rules if the Association in its discretion shall so determine.

6 Where any matter requires the agreement, approval or consent of the Association, agreement, approval or consent shall only be deemed given if in writing.

 

Guidance

It may be necessary when commenting on the Rules in this Guidance to make reference in certain contexts to the same words and expressions without capitals. This is necessary when the Guidance is not alluding specifically to the definition in the Rules.

(A) …the following words or expressions… (Rule 1.1)
Certain words and expressions used in the Rules are defined in Rule 1.1 and any such definition will be applied in the interpretation of the Rules, notwithstanding any other meaning that the relevant word or expression may have when used elsewhere. In order to distinguish words and expressions which are given a specified meaning under Rule 1.1, they appear as capitalised terms when used in the Rules.

Affiliate… (Rule 1.1)
An Affiliate is a person1 to whom P&I cover can be extended in respect of a claim by the exercise of discretion by the Association2 although he is not specifically named in the terms of entry for the Ship and is therefore not a Member or a Co-Assured. Affiliates include persons affiliated to or associated with the Member, but not those affiliated to or associated with a Co-assured. The words ‘affiliated’ and ‘associated’ are not defined, but will include the ultimate holding company of the Member and any other subsidiary of that ultimate holding company.

Articles of Association...Association (Rule 1.1)
This definition recognises the fact that the provisions which govern the rights and obligations of the Members of Assuranceforeningen Gard -gjensidig- and Gard P. & I. (Bermuda) Ltd. are currently found in different governing instruments but introduces a common definition which enables reference to be made to the governing instrument of the relevant Association in the relevant circumstances. Any reference in the Rules to the Articles of Association is to be construed as a reference to the Statutes of Assuranceforeningen Gard -gjensidig- and/or the Bye-Laws of Gard P. & I. (Bermuda) Ltd. as the context requires. 

Bill of Lading… (Rule 1.1)
A Bill of Lading may be either a ’to order‘ bill of lading in the traditional sense, e.g. made out ’to the order of X‘, or a straight bill of lading, e.g. made out ’to X‘. A straight bill of lading is referred to in the Rules as ’non-negotiable bills of lading’.3 A ‘similar document of title’ is for the purposes of the Rules any other document which, like a ’to order‘ bill of lading, gives its holder the right to possession of goods and the right to transfer that possession to a third party. Whether a document has such an effect will depend on the custom of the trade and the applicable law. Examples are ‘received for shipment’ and ‘through’ bills of lading, but not nonnegotiable receipts, consignment notes and charterparties. A more detailed explanation of these documents can be found in the Guidance to
Rule 34.

Certificate of Entry… (Rule 1.1)
The Certificate of Entry is the document issued by the Association to evidence the terms and conditions of the contract of insurance in respect of the Ship or a fleet of Ships. The certificate will also include any endorsement notes in respect of the relevant entry setting out variations in the terms and conditions as agreed between the Association and the Member, as well as the date from which such variations take effect.

Charterer’s Entry… (Rule 1.1)
Rule 3.1 provides that an application for entry of a ship may be made to the Association by “any owner, operator, charterer (including a bareboat or demise charterer) or any other insurer of that ship” and that the entry shall be made on the basis of either an Owner’s Entry or a Charterer’s Entry. Rule 1.3 clarifies that a Charterer’s Entry is an entry of a charterer other than a demise (bareboat) charterer, i.e. normally a time or voyage charterer that is associated to or affiliated to the Owner of a Ship. There can only be one Member insured on a Charterer’s Entry,4 but the entry may also provide cover for Co-assureds and Affiliates pursuant to Rule 78.

Consortium Agreement… (Rule 1.1)
The term is defined in Appendix II, Paragraph 5.1 as ‘any arrangement under which a Member agrees with other parties to the reciprocal exchange or sharing of cargo space on the Ship and Consortium Vessels’. Consortium Agreements are common in the liner container trade where container ship operators seek to maximise global utilisation of cargo space on the ships owned or chartered by them.

Consortium Claim… (Rule 1.1)
The term is defined in Appendix II, Paragraphs 5.1 and 5.2 as a claim that

  • arises under a P&I entry of a Ship; and 
  • arises out of the carriage of cargo on a Consortium Vessel; and
  • the Member and the operator of the Consortium Vessel are parties to a Consortium Agreement; and
  • at the time cover pursuant to the special provisions in this section 5 initially attaches, the Member employs a Ship pursuant to that Consortium Agreement.

Consortium Vessel… (Rule 1.1)
The term is defined in Appendix II Paragraph 5.1 as ‘a ship, feeder vessel or space thereon, not being the Ship, employed to carry cargo under a Consortium Agreement’. 

Co-assured… (Rule 1.1)
A Co-assured is any person who is insured pursuant to Rule 78.1.b, and will be named on the Certificate of Entry as such. Subject to the terms of Rule 78, a Co-assured has a right of recovery from the Association for covered liabilities, losses, costs and expenses and has joint and several liability under Rule 79 to pay all sums due to the Association in respect of such entry. However, unlike a Member, a Co-assured cannot exercise any membership rights such as voting at the General Meetings of the Association.5

Crew… (Rule 1.1)
The term Crew encompasses officers and seamen, including non-marine personnel such as stewards and hotel/catering staff on cruise ships, who are obliged to serve on board the Ship as a part of its regular complement under the terms of a contract of service or employment. However, not all persons working on board the Ship are Crew. A pilot, for example, would not form a part of the Crew as, although he is obliged to serve on the Ship under the terms of his employment contract, he is not part of the regular complement of the Ship.

Defence cover and Defence entry… (Rule 1.1)
Defence cover is insurance in respect of legal and other costs necessarily and reasonably incurred in establishing or resisting claims as set out in Part IV of the Rules. A Defence entry is the entry of a Ship for Defence cover. 

Estimated Total Call… (Rule 1.1)
The estimated total premium payable in respect of an entry for a Policy Year is known as the Estimated Total Call (often referred to as the “ETC”). The ETC is determined before the commencement of the Policy year and reflects the Association’s overall assessment of the risk that the Ship represents in terms of future claims exposure. The premium is usually agreed as a rate per gross ton for the Ship.  Last Instalment, Supplementary Call and Release Call, as defined below, are calculated as a percentage of the ETC for the Ship for the relevant Policy Year.

Group Excess Loss Policies… (Rule 1.1)
These are reinsurance policies placed by the parties to the Pooling Agreement in order to reinsure those parties in respect of claims exceeding the agreed retention level for the Pool.Any shortfall of recovery under the Group Excess Loss Policies will be shared by the parties to the Pooling Agreement.

Group Reinsurance Limit… (Rule 1.1)
The term is defined in Appendix VI, Paragraph 1 as ‘the amount of the smallest claim (other than any claim arising in respect of oil pollution) incurred by the Association or any other party to the Pooling Agreement which would exhaust the largest limit for any type of claim (other than any claim arising in respect of oil pollution) from time to time imposed in the Group Excess Loss Policies.’ 

Hull Policies… (Rule 1.1)
The Hull Policies are the insurance policies that cover the hull and machinery of the Ship and include any excess liability policy that covers liabilities that may be incurred by a Ship in excess of the maximum amounts recoverable under such policies because the liabilities exceed the valuation of the Ship under such policies. Depending on the terms and conditions of the Hull Policies, e.g. the Nordic Marine Insurance Plan, Institute Time Clauses or International Hull Clauses, the term ’hull and machinery‘ may also include the Ship’s materials, equipment, spare parts and other items regularly on board the Ship. 

Insurance Tax Premium... (Rule 1.1)
A number of countries have laws and regulations that provide that certain taxes and dues are imposed in respect of insurance premiums that are payable to the Association as insurer. Such taxes and dues are usually referred to as Insurance Premium Tax (IPT). 

The Member’s obligation to pay IPT may vary depending on the particular country and the scope of the relevant IPT legislation.7 

Joint Members… (Rule 1.1)
This includes the named Members for an entry where the Ship is entered in the names of more than one Member. All Joint Members have the same rights and obligations under the contract of insurance, but will together exercise the same voting rights as if there had been only one Member in respect of the entry.

Last Instalment... (Rule 1.1)
A proportion of the ETC in respect of a mutual entry for a Policy Year is normally deferred for payment in a later year when the claims cost and other expenses allocated to that Policy Year are better known. A forecast Last Instalment will be notified to the Membership prior to the commencement of the relevant Policy Year while the decision to collect the Last Instalment, in whole or in part or even in some cases to waive it entirely, will be taken after the expiry of the Policy year.

Member… (Rule 1.1)
Unless the context suggests otherwise a Member is an assured who has full cover with the Association and who (unlike a Co-assured) is entitled to membership of the Association including the right to vote at the General Meetings of the Association.

Where the context allows, the term Member will also include other parties insured under an entry, e.g. any Co-assured as well as any Affiliate to whom cover can be extended under Rule 78. The wider interpretation of the term ‘Member applies throughout the Rules8 in relations to the rights and obligations of those insured. For example, the duty of disclosure under Rule 6 is equally binding on a Co-assured who is the manager of the Ship as on the Member who is the owner of the Ship.9

In certain circumstances the acts or omissions of the person effecting the insurance, such as a broker, an officer or employee in the Member’s organisation or independent contractors to whom the Member has delegated important functions in the management and operation of the Ship, may be deemed to be the acts or omissions of the Member.10

Overspill Call… (Rule 1.1)
The term is defined in Appendix VI, Paragraph 1 as ‘a call levied by the Association pursuant to Paragraph 5 for the purpose of providing funds to pay part of an Overspill Claim’. Appendix VI contains specific terms and conditions concerning the recoverability and payment of Overspill Claims; the expert determination of issues pertaining to Overspill Claims; the levying and closing of Policy Years and the provision of security for Overspill Calls. 

Overspill Claim… (Rule 1.1)
The term is defined in Appendix VI, Paragraph 1 as ‘that part (if any) of a claim (other than a claim arising in respect of oil pollution) incurred by the Association or by any other party to the Pooling Agreement under the terms of entry of a ship which exceeds or may exceed the Group Reinsurance Limit’. The parties to the Pooling Agreement have agreed to pool Overspill Claims.

Owner’s Entry… (Rule 1.1)
An Owner’s Entry is an entry effected by an owner, bareboat or demise charterer or an operator of a Ship, but not by a time or voyage charterer. A time or voyage charterer that is associated to or affiliated to the Owner of a Ship can be named on such an entry as a Co-assured or may be covered11 as an Affiliate but any other charterer can be covered only under a separate Charterer’s Entry. 

P&I cover and P&I entry… (Rule 1.1)
P&I cover is the insurance for P&I risks set out in the terms of entry for the Ship and the P&I Rules for Ships. A P&I entry is a Ship entered in the Association for P&I cover. 

Policy Year… (Rule 1.1)
The date of 20 February has historically been used as the commencement date of a Policy Year by P&I clubs and is now uniformly adopted by clubs in the International Group of P&I Clubs. 

Pooling Agreement… (Rule 1.1)
The Pooling Agreement is an agreement between the P&I clubs which are members of the International Group of P&I Clubs, whereby the clubs have agreed to apportion between themselves certain claims (as defined) that exceed the maximum sum that each club is to bear individually.12 The terms and conditions of the Pooling Agreement are revised from time to time; usually from the inception of each new Policy Year. 

Release Call… (Rule 1.1)
The Release Call is an additional premium that the Member may elect to pay when an entry is terminated or ceases. Payment of the Release Call will release the Member from any and all liability to pay Last Instalments and Supplementary Calls for the entry. However, by electing to pay such a Release Call, the Member also gives up his right to receive any share of distributed surpluses.13

Ship… (Rule 1.1)
There is no universally accepted definition of ’ship’, although it is frequently interpreted as a ‘vessel used in navigation’. However, the Association has the discretion under Article 2 of the Statutes of Assuranceforeningen Gard and/or Article 1 of the Bye-Laws for Gard P. & I. (Bermuda) Ltd. to consider other types of floating structures as ships and to provide cover for them on terms that the Association deems appropriate. Such discretion is not hindered by the definition of ’Eligible Vessel’ in Appendix II of the Pooling Agreement since the latter merely determines whether a structure is to be treated as a Ship for purposes of access to the Pool and the collective reinsurance that is arranged by the International Group of P&I Clubs through the Pool. If there is doubt as to whether a vessel can be classified as a Ship, the Association may still nevertheless accept it for entry as a floating structure under the Rules for Mobile Offshore Units. 

Supplementary Call… (Rule 1.1)
A Supplementary Call is premium payable in addition to the Estimated Total Call in respect of an entry considered necessary to cover claims on, or costs, expenses and outgoings of the Association, including any allocation to reserves that the Association may deem appropriate. The right to levy Supplementary Calls on the Members is a cornerstone of mutual P&I insurance.14 The Association may levy Supplementary Calls either generally for all entries or separately for any entry or categories of entries (insert footnote See Rule 14).

(B) Headings and notes are for reference only… (Rule 1.2)
The purpose of this provision is to make clear that the headings and notes to the Rules do not form part of, and therefore shall not materially affect the rights and obligations of the parties to the contract of insurance. The headings and notes are included simply to make it easier to ‘navigate’ the Rules. 

(C) Any reference to a Charterer… (Rule 1.3)
For the purposes of the Rules a distinction is drawn between demise and bareboat charterers on the one hand and any other type of charterer on the other. Under a demise or bareboat charter the ship is leased ‘bare’ by the charterer, i.e. without officers and crew. The demise or bareboat charterer will employ the officers and crew. Hence, demise and bareboat charterers are generally treated vis-à-vis third parties as the effective owners of the ship and, accordingly, they require P&I cover for owners’ risks. The aim of the proviso in Rule 1.3 is to make clear that any reference to a ’charterer‘ in the Rules shall mean a charterer other than a demise or bareboat charterer. In other words, the Rules which set out the rights and obligations of a ‘charterer’ do not apply to a demise or bareboat charterer. They apply to time, voyage, cross, space, slot, consortium and other types of charterers, subject to specific terms and conditions that may apply to any particular type of charterer, e.g. Consortium Agreements as per Appendix II, Paragraph 5.

(D) Any reference to a person… (Rule 1.4)
Where there is a reference to a person, for example where a Member is referred to as ‘he’, this will be deemed to include female persons as well as corporate and unincorporated bodies. A ‘body corporate’ is an entity which is distinct and separate in law from its owners, e.g. a limited liability partnership or a company incorporated under the English Companies Act. An unincorporated body is any other body or group of persons, for example an unlimited partnership under English law. 

(E) A person shall be deemed to be the manager or the operator of a Ship… (Rule 1.5)
It is important to determine whether a person is a manager or an operator of a Ship for various purposes under the Rules.15 Rule 1.5 provides that such a determination is to be made by the Association in its discretion. A manager is a person who performs some or all of the technical, crewing or commercial functions on behalf of and for the account of the owner of a Ship, and is usually an organisation which is wholly independent from the owner and which renders such services to different principals under different ship management agreements. An operator will usually be a person who performs similar functions on behalf of the owner to that of a manager, but for his own risk and account, and may be affiliated to or associated with the owner. 

(F) Where any matter requires the agreement, approval or consent of the Association… (Rule 1.6)
This Rule clarifies and emphasises that a Member is not entitled to rely on any agreement, approval or consent given by the Association16 where it is given orally. It must be confirmed by the Association in writing, e.g. by e-mail, facsimile or letter, if it is to be binding on the Association. The purpose of this Rule is to avoid disagreements or disputes as to whether the Association has given its agreement, approval or consent.

 

 

1 Under Rule 1.4 a ‘person’ is deemed to include incorporated or unincorporated bodies.
2 See also the Guidance to Rule 78.1.a.
3 See (J) to the Guidance to Rule 34.
4 See also Article 2 of the Bye-Laws of Gard P. & I. (Bermuda) Ltd. and 4 of the Statutes of Assuranceforeningen Gard -gjensidig-.
5 See Rule 78.2.
6 The level of agreed retention may change. Therefore, reference should be made to the Association’s website for information as to the level of agreed retention that may be applicable from time to time.
7 See the Guidance to Rule 20A.
8 See the Guidance to Rules 6, 7 and 72 respectively concerning the concept of ‘identification’ under Norwegian law. See also the Guidance to Rule 2 concerning the scope of cover for a Member who indemnifies an officer, employee or agent for a liability incurred to a third party.
9 See also the Guidance to Rule 79.4.
10 See the Guidance to Rules 72 and 79.4.
11 See the Guidance to Rule 78.4.
12 Further information concerning the Pooling Agreement and the International Group of P&I Clubs is available on www.igpandi.org.
13 See the Guidance to Rule 15.
14 See the Guidance to Rule 13.
15 See for example the eligibility for an entry applications under Rule 3.1 and cesser under Rule 25.2.f.
16 E.g. for the purpose of approving contracts under Rule 55.a.