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Rule 68 Disputes with the Association and other Members – Unpaid sums

The Association will not cover under a Defence entry costs of cases against the Association itself, its subsidiaries, agents, representatives or servants.

2 No cover shall be available under Defence entries to either party where a dispute arises between Joint Members, Co-assureds, affiliates or associates of the Member or Co-assureds or any combination thereof.

3 No Member shall be entitled to cover under a Defence entry so long as Advance Calls, Deferred Calls or Supplementary Calls or other sums of whatsoever nature owed to the Association, whether in respect of Defence or P&I cover or otherwise, remain unpaid.

 

Guidance

(A) …costs of cases against the Association itself, its subsidiaries, agents, representatives or servants… (Rule 68.1)
It would be an anomaly and contrary to the best interests of the membership as a whole if Defence cover were to be made available for the costs that are incurred by Members in order to pursue claims against the Association, or to defend claims that are brought against Members by the Association. Consequently, Defence cover is not available for legal and other costs that are incurred by Members in order to pursue claims against, or to defend claims brought by, the Association or its subsidiaries, or any other person that is acting on behalf of the Association.1 

The exclusion of cover applies whether the claim relates to P&I or Defence cover or to any other insurance. It applies not only to cases between the Member and the Association itself, but also to cases between the Member and any of the Association’s subsidiaries such as Gard AS which is the Association’s wholly owned manager in Norway, or Gard (UK) Limited or any other subsidiary of the Association, or any of their agents or representatives. For example, Defence cover is not available for the costs that are incurred by a Member in bringing a claim against a surveyor appointed by the Association for alleged negligence or malpractice. 

(B) …dispute arises between Joint Members, Co-assureds, affiliates or associates of the Member or Co- assureds or any combination thereof. (Rule 68.2)

It would also be an anomaly and contrary to the best interests of the membership as a whole if Defence cover were to be made available to finance disputes between parties that are covered under the same contract of insurance. Consequently, Defence cover is not available for legal and other costs that are incurred by Members in relation to disputes between Joint Members, Co-assureds or their Affiliates or associates. 

(C) …sums of whatsoever nature owed to the Association…remain unpaid… (Rule 68.3)
A Member is not entitled to Defence cover so long as any money is due from him to the Association, regardless of whether the outstanding amount relates to Defence or P&I cover or to any other sum that is owed to the Association. 

For the purposes of Rule 68 the unpaid sum need not relate to the entry of the particular Ship for which the Member requests Defence cover and need not be due from the Member himself but from Joint Members or Co-assureds.2


1 Rule 83.1 exonerates the Association from liability for errors or omissions on the part of its employees or other persons engaged by the Association on behalf of the Member.
2 See the Guidance to Rule 79.1.