Table of contents
1 After an entry has been accepted, the Association shall issue a Certificate of Entry which shall evidence the terms and conditions of the contract of insurance.
2 The following provision will be deemed to be incorporated into all Certificates of Entry:
“This Certificate of Entry is evidence only of the contract of indemnity insurance between the above named Member(s) and the Association and shall not be construed as evidence of any undertaking, financial or otherwise, on the part of the Association to any other party.
In the event that a Member tenders this Certificate as evidence of insurance under any applicable law relating to financial responsibility, or otherwise shows or offers it to any other party as evidence of insurance, such use of this Certificate by the Member is not to be taken as any indication that the Association thereby consents to act as guarantor or to be sued directly in any jurisdiction whatsoever. The Association does not so consent.”
3 If the Association and a Member shall at any time agree a variation in the terms and conditions of the contract of insurance the Association shall issue an endorsement note stating the terms of such variation and the date from which such variation is to be effective.
(A) After an entry has been accepted, the Association shall issue a Certificate of Entry… (Rule 5.1)
The Certificate of Entry (COE) is normally sent to the Member when the contract of insurance has been concluded, and copies of the Articles of Association, Rules and other relevant publications follow separately. Furthermore, the Association will, at the time of conclusion of the contract of insurance, arrange any undertakings or confirmations which are required for the issuance of agreed certificates which are reasonably needed for the trading of the Ship, e.g. certificates of financial responsibility for liabilities arising under international conventions1or local law.2
(B) …which shall evidence the terms and conditions of the contract of insurance. (Rule 5.1)
The COE names and describes the Ship and identifies the Member and other assureds which are subject to the contract, either as Joint Members, or as Co-assureds.3
The COE also identifies in broad terms the risks covered by the Association in respect of the Ship, whereas the detailed terms and conditions of cover, and of membership, are found in the Rules and the Articles of Association. The COE refers to these Articles of Association and Rules, but they are expressly subject to any special terms and conditions recorded in the COE.4The COE also normally itemises any special or additional terms, which are set out in full on separate endorsement notes that must be read together with the COE. If the terms of the standard contract of insurance are amended, these amendments are also set out in separate endorsement notes.5
Currently, virtually all flag states are prepared to accept an electronically signed PDF version of the COE accompanied by access to a regularly updated and searchable register of covered vessels on the webpage of the Association as the equivalent of the original document. The Association currently has such a searchable register for Owner’s Entries which can be found on www.gard.no.
The COE is only evidence of the contract of insurance as the contract itself is concluded earlier when the Association issues its acceptance.6
(C) The following provision shall be deemed to be incorporated into all Certificates of Entry… (Rule 5.2)
The provision quoted in Rule 5.2 underlines the nature of the COE and, more generally, the extent of the obligations undertaken by the Association in respect of a Member. The provision is deemed to be incorporated into all COEs, and is, in practice, expressly recorded on each COE. This ensures that it takes effect as a condition of the contract that binds the Member and is also brought to the attention of any third party who seeks to rely on the COE. However, it will not prevent the Association from incurring direct liability to third parties if the Association has by any other form of conduct assumed obligations towards them.7
The Association may incur liabilities to third parties indirectly as a result of its insurance of the Member’s liabilities. In some cases, third parties may be allowed by law to claim directly against the Association.8However, the contract remains one which is purely between the Association and the Member, and the COE cannot be relied upon by third parties as evidence of an undertaking given by the Association directly to such third parties.9
The COE is also used by shipowners in other ways, for example as evidence of employers’ liability insurance for personal injury suffered by employees.10 The Association does not object to the reasonable use of the COE in this way as it is appreciated that failure to have such a document on board can result in the costly detention of the Ship. Nonetheless, the Association does not by such use of the COE by the Member, assume the status of a guarantor of the Member’s liabilities. The Association has no direct responsibility for the Member’s liabilities to port authorities or to anyone else to whom the COE is shown and no acceptance of such responsibility can be implied as a result of such use of the COE by the Member. Furthermore, the presentation to interested third parties of the COE does not constitute any acceptance by the Association of liability for claims against the Association or to a submission to the jurisdiction of any court in respect of such claims.
(D) …endorsement note stating the terms of…variation… (Rule 5.3)
The terms of the contract of insurance can be amended from time to time by agreement between the Association and the Member. They can either be included in a new COE issued by the Association or evidenced by the issue of an endorsement note which will state the terms of the amendments and the date from which the amendments take effect. Therefore, the terms and conditions of the contract of insurance at any one time may not be recorded solely in the COE. Any and all endorsement notes must be considered in conjunction with the COE.
1 For example, pursuant to the International Convention on Civil Liability for Oil Pollution Damage (CLC) 1992, the International Convention on Liability for Bunker Oil Pollution Damage (The Bunker Convention) 2001, The Athens Convention on the Carriage of Passengers and their Luggage by Sea (The Athens Convention) 1974 and the 2002 Protocol thereto and The Nairobi International Convention on the Removal of Wrecks 2007.
2 For example, guarantees that are required to be given to the US Federal Maritime Commission by the owners or charterers of passenger ships that are engaged in voyages to or from US ports or that are required by the European Union pursuant to the EU Passenger Liability Regulation (EC) No. 392/2009 (the PLR) for passenger ships that are engaged in domestic seagoing voyages or inland waterways.
3 Affiliates are not identified at the time the contract of insurance is entered into. See the Guidance to Rule 78.
4 See Rule 2.2.b and Rule 2.3.
5 See Rule 5.3.
6 See the Guidance to Rule 3. For a further discussion of the effect of the Certificate of Entry, see Hazelwood Steven, P&I Clubs: Law and Practice, pp. 48-51.
7 For example, if the Association provides security on behalf of the Member under Rule 88, or if there is an assignment of rights under Rule 89 by the Member.
8 Some jurisdictions allow direct claims against insurers where the insured is insolvent. See the position under Norwegian law, discussed in (A) of the Guidance to Rule 87.
9 The Association does not approve of the presentation to port authorities or other third parties of the COE as anything other than evidence that the Ship is entered with the Association for P&I risks as identified in the COE.
10 As required, for example, under Schedule 2 paragraph 12 of the English Employers Liability (Compulsory Insurance) Regulations 1998, (S.I. 1998 No. 2573).