Table of contents
1 Unless otherwise agreed in writing between the Member and the Association it shall be a condition of the insurance of the Ship that:
a the Ship shall be and remain throughout the period of entry classed with a classification society approved by the Association;
b the Member shall promptly call to the attention of that classification society any incident, occurrence or condition which has given or might have given rise to damage in respect of which the classification society might make recommendations as to repairs or other action to be taken by the Member;
c the Member shall comply with all the rules, recommendations and requirements of that classification society relating to the Ship within the time or times specified by the society;
d the Association is authorised to inspect any documents and obtain any information relating to the maintenance of class of the Ship in the possession of any classification society with which the Ship is or has at any time been classed prior to and during the period of insurance and such classification society or societies are authorised to disclose and make available such documents and information to the Association upon request by it and for whatsoever purpose the Association in its sole discretion may consider necessary.
e the Member shall immediately inform the Association if, at any time during the period of entry, the classification society with which the Ship is classed is changed and advise the Association of all outstanding recommendations, requirements or restrictions specified by any classification society relating to the Ship as at the date of such change;
f the Member shall comply or procure compliance with all statutory requirements of the state of the Ship’s flag relating to the construction, adaptation, condition, fitment, equipment, manning, safe operation, security and management of the Ship and at all times shall maintain or procure the maintenance of the validity of such statutory certificates as are issued by or on behalf of the state of the Ship’s flag in relation to such compliance.
2 The Association shall notify the Member when it intends to inspect classification documents or request information from a classification society in accordance with Rule 8.1.d.
3 The Member shall not be entitled to any recovery from the Association in respect of any claim arising during a period when the Member is not fulfilling or has not fulfilled the conditions in Rule 8.1, provided always that where the entry of a Ship is solely in the name of or on behalf of a charterer, and the charterer is not responsible for the maintenance of the Ship, or for compliance with classification or statutory requirements, the rights of recovery of such charterer shall not be dependent on the fulfilment of the conditions in Rule 8.1(b), (c), (d), (e) and (f) above.
It is obviously desirable both for the membership as a whole and for the wider international community that Ships should meet internationally recognised safety standards but the Association has no inherent authority to impose statutory regulations that are intended to ensure such standards. However, flag states do have such legislative powers and exercise such powers by delegating the necessary authority to classification societies. The Association expects Members to take their responsibilities in this regard very seriously. Therefore, to ensure compliance with such regulations for the benefit of the membership as a whole, Rule 8 requires all Members, unless the Association exercises its discretion in writing to the contrary, to comply with the requirements of the ship’s classification society and its Flag State and emphasises that the right of the insured to make a recovery under the contract of insurance is made conditional upon compliance with such safety rules and regulations. If the Member does not comply with this condition, it is no longer entitled to cover regardless of whether the breach is or is not causative of the relevant claim.
(A) Unless otherwise agreed in writing between the Member and the Association it shall be a condition of the insurance of the Ship… (Rule 8.1)
Rule 8.1 emphasises that, unless the Association agrees otherwise in writing, it is a condition of the insurance that the Member must comply with the requirements of the Ship’s classification society and the technical and certification requirements of the flag state. A condition is a solemn promise given by the assured to the insurer. Therefore, any breach of the requirements of Rule 8.1 entitles the Association to refuse cover in relation to the particular Ship.1
However, the Association is given the discretion to agree otherwise in writing. This is an example of the flexibility that is given to the Association pursuant to Rule 2.3 to agree any special conditions that it may consider to be relevant to a particular entry. Therefore, based on its risk assessment of the particular entry, the Association may consider that strict compliance with the provisions of the Rule may not be necessary in particular circumstances. Such flexibility is recognised to be a desirable feature of P&I cover and is mirrored by the provisions of the Pooling Agreement which allow the Association to confirm in appropriate circumstances that a breach of some or all of such requirements does not constitute a breach of condition. However, the Association will not lightly agree to waive compliance with the requirements of Rule 8 and can be expected to exercise its discretion to the contrary only if the Member can put forward strong and persuasive reasons why it should do so.
(B) …the Ship shall be and remain throughout the period of entry classed with a classification society approved by the Association… (Rule 8.1.a)
As stated above, classification societies were and are established to ensure the observance by shipowners of safety standards set both by themselves and by flag states for the construction and maintenance of ships. Such classification societies are usually private companies which act under the terms of a contract with the owner or operator of the ship.
There are many such classification societies, some of which are international whilst others are confined to a particular nation’s fleet. These societies compete for tonnage and revenue. In order to ensure that such a competitive environment does not cause certain classification societies to lower their standards in order to attract tonnage, the Association keeps itself appraised of the performance of classification societies. Therefore, it is a requirement that each Ship is classed with a classification society which is approved by the Association. The Association normally requires Ships to be classed with classification societies which are members of the International Association of Classification Societies (IACS).2
Since the Member must ensure that the Ship remains classed with an approved classification society throughout the period of the Ship’s entry with the Association, cover ceases automatically in respect of that Ship in the event that the Member fails to do so, or in the event that its class with an approved society is suspended, unless the Association determines pursuant to Rule 25.5 to maintain or reinstate cover.3
Since time and voyage charterers are not normally responsible for maintaining a ship’s classification status, a charterer Member is exempt from some of the provisions of Rule 8.4
(C) …the Member shall promptly call to the attention of that classification society… (Rule 8.1.b)*
The Member5 is required to give prompt notification to the classification society of any relevant incident, together with sufficient information to enable the society to decide whether its surveyor needs to visit the Ship immediately or whether a survey can be deferred.
Although Rule 8.1.b places obligations on the ‘Member’, this does not necessarily mean that it is only the Member who can and should notify the classification society. Such a duty is also imposed on those who are on board the Ship, i.e. the master and Crew, as well as on other servants or agents to whom the Member has delegated important functions relating to the management and operation of the Ship,6 all of whom are expected to have a proper understanding of when the classification society should be notified, and to ensure that proper and timely notification is given to class, either directly or via the Member’s office. Therefore, the Member is required and expected to employ personnel and representatives who have the appropriate competence and experience, and to maintain systems which safeguard the proper inspection, ascertainment and repair of any damage to, and/or defects in, the Ship, and which ensure that the classification society is properly informed whenever necessary.
(D) …any incident, occurrence or condition which has given or might have given rise to damage in respect of which the classification society might make recommendations… (Rule 8.1.b)
The requirement of Rule 8.1.b is very wide since it requires the reporting by a Member not only of damage which has occurred, but also of incidents, occurrences or conditions that may have caused damage to the Ship, even though such damage may not yet have become apparent, e.g. the grounding of a Ship on a soft bottom which does not seem to have caused any apparent damage to either the Ship’s propeller or rudder. Although the incident may have caused no apparent damage, it may, nonetheless, have affected the structural condition of the Ship. Consequently, the fact that the Ship has grounded, and the surrounding circumstances, should be reported promptly to the classification society so that it can properly assess whether the Ship should be inspected and which other action should be taken.
(E) …the Member shall comply with all the rules, recommendations and requirements of that classification society… (Rule 8.1.c)
The classification society may require the Member to carry out repairs, a further survey or take some other action within specified time limits. The Member must abide by these requirements, comply with any time limit that has been set and, generally, follow all class rules, recommendations and requirements. In particular, Members must maintain the validity of all relevant class certificates and establish proper systems for maintaining the complete and valid certification of the Ship.
The absence of valid class certificates may not only prejudice the Member’s defence to third party claims but may also affect the Member’s cover with the Association. Rule 8.3 disentitles the Member to any recovery for claims which arise whilst the Member is in breach of any of the obligations of Rule 8.1.7 Furthermore, it is unlikely that cover would normally be available in respect of fines which result from the fact that prescribed certificates are not on board the Ship.8
(F) …the Association is authorised to inspect any documents and obtain any information relating to the maintenance of class… (Rule 8.1.d)
The Association may require access not only to documents and information supplied by the Member, but also to documents and information held by any classification society with which the Ship is or has been entered in the past. In such event, the Association will notify the Member pursuant to Rule 8.2. Such documents and information may be required in order to investigate an incident, assist the Member’s defence of third party claims or to verify the Member’s compliance with the Association’s Rules.
Classification societies do not normally release documents and information except with the shipowner’s approval. By virtue of Rule 8.1.d, the Association is authorised by the Member to inspect any relevant documents and to obtain information concerning the maintenance of class of the Ship directly from the relevant classification society or societies, and the Member is deemed to have authorised the relevant classification society or societies to make such documents and/or information available to the Association upon the request of the Association. However, where the Member is not the shipowner, the Member is required to obtain the necessary authority from the shipowner. Normally, the Association will request such documentation and/or information from the Ship’s current classification society, but the authority extends to any classification society in which the Ship has been entered during and/or since her construction.
(G) …the Member shall immediately inform the Association if…the classification society with which the Ship is classed is changed… (Rule 8.1.e)
Since the classification society has to be approved by the Association9 any change of the Ship’s classification society must be immediately reported to the Association by the Member.10 If the new classification society is one which is approved by the Association, cover will continue to be available. If, however, the new classification society is not approved by the Association, cover will not continue to be available in respect of claims arising after the change.11
(H) …advise the Association of all outstanding recommendations, requirements or restrictions… (Rule 8.1.e)
The Member may change the Ship’s classification society for various reasons. One common reason is that the Member and the classification society do not agree on the extent of any ship repairs or maintenance that may be required. Consequently, the Member may wish to appoint a classification society which imposes less stringent requirements. As part of its overall duty to all Members to monitor the standards of maintenance of entered Ships, and, indeed, to monitor the performance of classification societies, the Association requires Members that are changing the Ship’s class to advise the Association of all outstanding recommendations, requirements or restrictions that exist at the date of the change. This obligation to advise applies to any and all classification societies with which the Ship has been previously entered and not merely the Ship’s current classification society at the time of the change.
(I) …the Member shall comply or procure compliance with all statutory requirements of the state of the Ship’s flag relating to the construction, adaptation, condition, fitment, equipment, manning, safe operation, security and management of the Ship… (Rule 8.1.f)
The Ship’s flag state will have imposed various statutory requirements with which a Member must comply. The principal (but not the only) requirements are compliance with:
(J) …at all times shall maintain or procure the maintenance of the validity of such statutory certificates as are issued by or on behalf of the state of the Ship’s flag in relation to such compliance. (Rule 8.1.f)
This provision applies both to statutory certificates issued by the flag state directly and to those issued by some other body (e.g. a classification society) on its behalf since the monitoring of compliance with the flag state’s statutory requirements is often sub-contracted to the Ship’s classification society. The Member is under an obligation to maintain the validity of all the statutory certificates issued by or on behalf of the flag state and Rule 8.3 emphasises that failure by the Member to do so may cause him to lose a right of recovery.
(K) The Association shall notify the Member when it intends to inspect classification documents or request information from a classification society… (Rule 8.2)
The Association will, insofar as practicable, give the Member reasonable notice of its intention to inspect documents or request information from the classification society or societies with which the Ship is or has been classed. After giving such notification, the Association is entitled to approach classification societies directly without involving the Member further.14
(L) …any claim arising during a period when the Member is not fulfilling or has not fulfilled the conditions in Rule 8.1… (Rule 8.3)
The effect of Rule 8.3 is that the Member loses his right to recover from the Association in respect of any claim which arises during a period when the Member has not fulfilled any one of the conditions of Rule 8.1. Any failure to comply gives the Association the right to reject claims arising during the period of non-compliance irrespective of whether there is any causal connection between the circumstances which have given rise to the claim on the Association and the non-compliance, e.g. if the Ship does not carry valid certificates as mandated by the rules of the flag state. However, if the Ship does carry all the required certificates, but the incident arises as a result of the acts and/or default of the Crew which constitute non-compliance with the regulations for which a certificate has been issued, the Association is not entitled to deny cover under Rule 8.3., e.g. where the circumstances causing the incident and/or the subsequent handling and reporting of the incident constitute non-compliance with the ISM Code.
It should also be remembered that a Member whose Ship ceases to be classed with an approved classification society or has its class suspended will cease to be covered by the Association in respect of that Ship under the terms of Rule 25 unless the Association determines pursuant to Rule 25.5 to maintain or reinstate cover.15
(M) …provided always that…the rights of recovery of such charterer shall not be dependent on the fulfilment of the conditions… (Rule 8.3)
This proviso to Rule 8.3 exempts charterer16 Members from the duty to comply with the obligations imposed by Rule 8.1, other than those imposed by Rule 8.1.a, since they are not customarily responsible for the maintenance of the Ship’s classification status.17 The exemption applies only where the Ship is entered solely in the name of, or on behalf of, a charterer and will not apply if the charterer is Co-assured on an Owner’s entry.18
The exemption does not apply to Rule 8.1.a. Ships entered in the Association on behalf of charterers must also remain classed by the owner in an approved classification society throughout the period of the Charterer’s Entry. However, cover is, nevertheless, available under a Defence entry for a charterer to pursue a claim against the shipowner for breach of the charterparty or the relevant contract of carriage to the extent that the relevant breach preceded (or even caused) the withdrawal or suspension of class.19
1 See the Guidance in (L) below.
2 There are exceptions to this policy, for example smaller Norwegian coastal vessels ‘classed’ directly with the Norwegian Maritime Directorate (Skipskontrollen).
3 See Rules 25.2.h and 25.5.
4 See the proviso to Rule 8.3 and (M) below.
5 Other than a charterer Member – see (M) below.
6 See (B) of the Guidance to Rule 72 for further discussion on identification of the Member with the actions of third parties.
7 See the Guidance in (L) below.
8 See Rule 47.
9 See Rule 8.1.a.
10 Other than a charterer Member – see (M) below.
11 See Rule 8.3.
12 The International Convention for the Safety of Life at Sea, London, 1974, with subsequent amendments.
13 Load lines are sometimes referred to as ‘Plimsoll Lines’ and their positioning is determined by rules agreed at international conferences on load lines which have been ratified by many countries.
14 See (F) above.
15 See (K) and (P) in the Guidance to Rule 25.
16 Other than demise or bareboat charterers – see Rule 1.3.
17 See (A) above.
18 See the Guidance to Rule 78.4.
19 See also Guidance to Rule 80.3.a concerning definition of ‘event’ for the purposes of a Defence entry.