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Appendix VI

1 Interpretation

1.1 In this Appendix the following words and expressions shall have the following meanings: 

Convention Limit
In respect of a ship, the limit of liability of the shipowner of that ship for claims (other than claims for loss of life or personal injury) at the Overspill Claim Date, calculated in accordance with Article 6, paragraph 1(b) of the International Convention on Limitation of Liability for Maritime Claims 1976 (the Convention) and converted from Special Drawing Rights into United States Dollars at the rate of exchange conclusively certified by the Association as being the rate prevailing on the Overspill Claim Date, provided that:

a when a ship is entered for a proportion (the “relevant proportion”) of its tonnage only, the Convention Limit shall be the relevant proportion of the limit of liability calculated and converted as aforesaid, and

b each ship shall be deemed to be a seagoing ship to which the Convention applies, notwithstanding any provision in the Convention to the contrary. 

Group Reinsurance Limit
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. 

Overspill Call
A call levied by the Association pursuant to paragraph 5 for the purpose of providing funds to pay part of a Overspill Claim. 

Overspill Claim
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. 

Overspill Claim Date
In relation to any Overspill Call, the time and date on which there occurred the incident or occurrence giving rise to the Overspill Claim in respect of which the Overspill Call is made, or if the Policy Year in which such incident or occurrence has been closed in accordance with the provisions of paragraphs 6.1 and 6.2, noon GMT on 20th August of the Policy Year in respect of which the Association makes a declaration under paragraph 6.3.

 

1.2 All claims incurred by the Association or any other party to the Pooling Agreement under the entry of any one ship arising directly from any one incident or occurrence including any claim in respect of liability for the removal or non-removal of any wreck shall be treated for the purposes of this Appendix VI as if they were one claim. 

1.3 Any reference to a claim incurred by the Association or by any other party to the Pooling Agreement shall be deemed to include the costs and expenses associated therewith.

 

2 Recoverability of Overspill Claims

2.1 Without prejudice to any other applicable limit, any Overspill Claim incurred by the Association shall not be recoverable from the Association in excess of the aggregate of

a that part of the Overspill Claim which is eligible for pooling under the Pooling Agreement but which, under the terms of the Pooling Agreement, is to be borne by the Association, and

b the maximum amount that the Association is able to recover from the other parties to the Pooling Agreement as their contributions to the Overspill Claim under the terms of the Pooling Agreement.

 

2.2 The aggregate amount referred to in paragraph 2.1 shall be reduced to the extent that the Association can evidence

a that costs have been properly incurred by it in collecting or seeking to collect

i Overspill Call levied to provide funds to pay that part of the Overspill Claim referred to in paragraph 2.1(a) or,

ii the amount referred to in paragraph 2.1(b) or 

b that it is unable to collect an amount equal to that part of the Overspill Call referred to in paragraph 2.1 sub-paragraph (a) which it had intended to pay out of the levy of Overspill Calls because any Overspill Calls so levied, or parts thereof, are not economically recoverable, provided that if due to change in circumstances such amounts subsequently become economically recoverable, the aggregate amount referred to in paragraph 2.1 shall be reinstated to that extent.

 

2.3 In evidencing the matters referred to in paragraph 2.2 sub-paragraph (b) the Association shall be required to show that

a it has levied Overspill Calls on all of its Members in respect of the Overspill Claim referred to in paragraph 2.1. on all Members entered in the Association on the Overspill Claim Date in accordance with and in the maximum amount permitted under paragraph 5, and

b it has levied those Overspill Calls in a timely manner, has not released or otherwise waived a Member’s obligation to pay those Calls and has taken all reasonable steps to recover those Calls.

 

3 Payment of Overspill Claims

3.1 The funds required to pay any Overspill Claim incurred by the Association shall be provided

a from such sums as the Association is able to recover from the other parties to the Pooling Agreement as their contribution to the Overspill Claim, and

b from such sums as the Association is able to recover from any special insurance which may in the discretion of the Association have been effected to protect the Association against the risk of payments of the Overspill Claims, and

c from such proportion as the Association in its discretion determines of any sums standing to the credit of the reserves as the Association may in its discretion have established, and

d by levying one or more Overspill Calls in accordance with paragraph 5, irrespective of whether the Association has sought to recover or has recovered all or any of the sums referred to in paragraph 3.1 sub-paragraph (b), but provided the Association shall first have made a determination in accordance with paragraph 3.1 sub-paragraph (c), and

e from any interest accruing to the Association on any funds provided as aforesaid.

 

3.2 The funds required to pay such proportion of any Overspill Claim incurred by any other party to the Pooling Agreement which the Association is liable to contribute under the terms of the Pooling Agreement shall be provided in the manner specified in paragraph 3.1 sub-paragraphs (b) – (e). 

3.3 To the extent that the Association intends to provide funds required to pay any Overspill Claim incurred by it in the manner specified in paragraph 3.1 sub-paragraph (d), the Association shall only be required to pay such Overspill Claim as and when such funds are received by it, provided that it can show from time to time, in seeking to collect such funds, it has taken the steps referred to in paragraph 2.3 sub-paragraphs (a) and (b).

 

4 Overspill Claims – expert determinations

4.1 Any of the issues referred to in paragraph 4.2 on which the Association and a Member cannot agree shall be referred to a panel (the Panel) constituted in accordance with the arrangements established in the Pooling Agreement, which, acting as a body of experts and not as an arbitration tribunal, shall determine the issue. 

4.2 This paragraph 4 shall apply to any issue of whether, for the purpose of applying any of the provisions in paragraphs 2.2, 2.3 and 3.3 in relation to any Overspill Claim (the “relevant Overspill Claim”),

a costs have been properly incurred in collecting or seeking to collect Overspill Claims,

b any Overspill Call or part thereof is economically recoverable, or

c in seeking to collect the funds referred to in paragraph 3.3, the Association has taken the steps referred to in that paragraph 3.3.

 

4.3 If the Panel has not been constituted at a time when the Member wishes to refer an issue to it, the Association shall, on request by the Member, give a direction for the constitution of the Panel as required under the Pooling Agreement. 

4.4 The Association may (and, on the direction of the Member, shall) give such direction as is required under the Pooling Agreement for the formal instruction of the Panel to investigate any issue and to give its determination as soon as reasonably practicable. 

4.5 The Panel shall in its discretion decide what information, documents, evidence and submissions it requires in order to determine an issue and how to obtain these, and the Association and the Member shall co-operate fully with the Panel. 

4.6 In determining any issue referred to it under this paragraph 4 the Panel shall endeavour to follow the same procedure as it follows in determining issues arising in respect of the relevant Overspill Claim which are referred to it under the Pooling Agreement. 

4.7 In determining an issue the members of the Panel

a shall rely on their own knowledge and expertise, and

b may rely on any information, documents, evidence or submission provided to it by the Association or the Member as the Panel sees fit.

 

4.8 If the three members of the Panel cannot agree on any matter, the view of the majority shall prevail. 

4.9 The Panel shall not be required to give reasons for any determination. 

4.10 The Panel’s determination shall be final and binding upon the Association and the Member (subject only to paragraph 4.11) and there shall be no right of appeal from such determination. 

4.11 If the Panel makes a determination on an issue referred to in paragraph 4.2 sub-paragraphs (b) or (c) the Association or the Member may refer the issue back to the Panel, notwithstanding paragraph 4.10, if it considers that the position has materially changed since the Panel made its determination. 

4.12 The costs of the Panel shall be paid by the Association.

 

4.13 Costs, indemnities and other sums payable to the Panel by the Association in relation to any Overspill Claim, whether the reference to the Panel has been made under this paragraph 4 or under the Pooling Agreement, shall be deemed to be costs properly incurred by the Association in respect of that Overspill Claim for the purposes specified in paragraph 2.2 sub-paragraph (a).

 

5 Levying of Overspill Calls

5.1 If

a the Association shall at any time determine that funds are or may in future be required to pay part of an Overspill Claim (whether incurred by the Association or by any other party to the Pooling Agreement); and

b the Association shall have made a declaration under paragraphs 6.1 or 6.3 that a Policy Year shall remain open for the purpose of levying an Overspill Call or Calls in respect of that Overspill Claim,

the Association in its discretion, at any time or times after such declaration has been made, may levy one or more Overspill Calls in respect of that Overspill Claim in accordance with paragraph 5.2.

 

5.2 The Association shall levy any such Overspill Call

a on all Members entered in the Association on the Overspill Claim Date in respect of ships entered by them at that time, notwithstanding the fact that, if the Overspill Claim Date shall be in a Policy Year in respect of which the Association has made a declaration under paragraph 6.3, any such ship may not have been entered in the Association at the time the relevant incident or occurrence occurred, and

b at such percentage of the Convention Limit of each such ship as the Association in its discretion shall decide.

 

5.3 An Overspill Call shall not be levied in respect of any ship entered on the Overspill Claim Date with an overall limit of cover equal to or less than the Group Reinsurance Limit. 

5.4 The Association shall not levy on any Member in respect of the entry of any ship an Overspill Call or Calls in respect of any one Overspill Claim exceeding in the aggregate two and a half per cent (2.5%) of the Convention Limit of that ship. 

5.5 If at any time after the levying of an Overspill Call upon the Members entered in the Association in any Policy Year, it shall appear to the Association that the whole of such Overspill Call is unlikely to be required to meet the Overspill Claim in respect of which such Overspill Call was levied, the Association may decide to dispose of any excess which in the opinion of the Association is not so required in one or both of the following ways:

a by transferring the excess or any part thereof to the reserve in accordance with Rule 19 in the Rules for Ships; or

b by returning the excess or any part thereof to those Members who have paid that Overspill Call or Calls in proportion to the payments made by them.

 

6 Closing of Policy Years for Overspill Calls

6.1 If at any time prior to the expiry of a period of thirty-six months from the commencement of a Policy Year (the “relevant Policy Year”), any of the parties to the Pooling Agreement sends a notice (an “Overspill Notice”) in accordance with the Pooling Agreement that an incident or occurrence has occurred in the relevant Policy Year which has given or at any time may give rise to an Overspill Claim, the Association shall as soon as practicable declare that the relevant Policy Year shall remain open for the purpose of levying an Overspill Call or Calls in respect of that claim and the relevant Policy Year shall not be closed for the purpose of making an Overspill Call or Calls in respect of that claim until such date as the Association shall determine. 

6.2 If at the expiry of the period of thirty-six months provided for in paragraph 6.1, no Overspill Notice as therein provided for has been sent, the relevant Policy Year shall be closed automatically for the purpose of levying Overspill Calls only, whether or not closed for any other purposes, such closure to have effect from the date falling thirty-six months after the commencement of the relevant Policy Year. 

6.3 If at any time after a Policy Year has been closed in accordance with the provisions of paragraphs 6.1 and 6.2, it appears to the Association that an incident or occurrence which occurred during such closed Policy Year may then or at any time in the future give rise to an Overspill Claim, the Association shall as soon as practicable declare that the earliest subsequent open Policy Year (not being a Policy Year in respect of which the Association has already made a declaration in accordance with paragraphs 6.1 or 6.3) shall remain open for the purpose of levying an Overspill Call or Calls in respect of that claim, and such open Policy Year shall not be closed for the purpose of making an Overspill Call or Calls in respect of that claim until such date as the Association shall determine. 

6.4 A Policy Year shall not be closed for the purpose of levying Overspill Calls save in accordance with this paragraph 6.

 

7 Security for Overspill Calls on termination or cessor

7.1 If

a the Association makes a declaration in accordance with paragraphs 6.1 or 6.3 that a Policy Year shall remain open for the purpose of levying an Overspill Call or Calls, and

b a Member who is liable to pay any such Overspill Call or Calls as may be levied by the Association in accordance with paragraph 5 ceases or has ceased to be insured by the Association for any reason, or the Association determines that the insurance of any such Member cease,

the Association may require such Member to provide to the Association by such date as the Association may determine (the “due date”) a guarantee or other security in respect of the Member’s estimated future liability for such Overspill Call or Calls, such guarantee or other security to be in such form and amount (the “guarantee amount”) and upon such terms as the Association in its discretion may deem to be appropriate in the circumstances. 

7.2 Unless and until such guarantee or other security as is required by the Association has been provided by the Member, the Member shall not be entitled to recovery from the Association of any claims whatsoever and whensoever arising in respect of any and all ships entered in the Association for any Policy Year by him or on his behalf. 

7.3 If such guarantee or other security is not provided by the Member to the Association by the due date, a sum equal to the guarantee amount shall be due and payable by the Member to the Association on the due date, and shall be retained by the Association as a security deposit on such terms as the Association in its discretion may deem to be appropriate in the circumstances. 

7.4 The provision of a guarantee or other security as required by the Association (including a payment in accordance with paragraph 7.3) shall in no way restrict or limit the Member’s liability to pay such Overspill Call or Calls as may be levied by the Association in accordance with paragraph 5.

 

Guidance

See also the Guidance to Rule 18.