Limitations etc. on P&I cover - Rule 63: Excluded losses

Rule 63 Excluded losses

1 The Association shall not cover under a P&I entry, except where and to the extent that they form a part of a claim for expenses under Rule 46 (measures to avert or minimise loss):

a loss of or damage to the Ship or any part thereof except to the extent that it forms part of a claim recoverable under Rule 49 (Confiscation of the Ship);

b loss of or damage to any equipment on board the Ship or to any containers, lashings, stores or fuel thereon, to the extent that the same are owned or leased by the Member or by any company associated with or under the same management as the Member;

c the cost of repairs to the Ship or any charges or expenses in connection therewith except to the extent that they form part of a claim recoverable under Rule 41 (General average);

d claims by or against the Member relating to loss of freight or hire on the Ship or any proportion thereof unless freight or hire forms part of a claim for liabilities in respect of cargo;

e costs of salvage or services in the nature of salvage, rendered to the Ship and any expenses in connection therewith except to the extent that they form part of a claim recoverable under Rule 33 (Life salvage), Rule 41 (General average) or Rule 42 (Salvage );

f liabilities, losses, costs or expenses arising out of salvage operations (including for the purposes of this sub-paragraph f, wreck removal) conducted by the Ship or provided by the Member, other than:

i liabilities, costs and expenses arising out of salvage operations conducted by the Ship for the purpose of saving or attempting to save life at sea; and

ii liabilities, costs and expenses incurred by a professional salvor which are covered by a special agreement between the Member and the Association, and which arise out of the operation of, and in respect of the Member’s interest in the Ship;

g liabilities, losses, costs or expenses arising out of cancellation of a charter or other engagement of the Ship;

h claims by or against the Member relating to demurrage on, detention of or delay to the Ship, unless such demurrage, detention or delay is covered under Rule 34.

i liabilities, losses, costs or expenses which would have been recoverable in General Average if the unamended York Antwerp Rules had been incorporated into the charterparty or the contract of carriage.

j liabilities, losses, costs and expenses arising from the use of any electronic trading system, other than an electronic trading system approved in writing by the Association, to the extent that such liabilities, losses, costs and expenses would not (save insofar as an Association in its sole discretion otherwise determines) have arisen under a paper trading system. For the purposes of this subparagraph (j) an electronic trading system” is any system which replaces or is intended to replace paper documents used for the sale of goods and/or their carriage by sea or partly by sea and other means of transport and which:

i are documents of title, or

ii entitle the holder to delivery or possession of the goods referred to in such documents, or

iii evidence a contract of carriage under which the rights and obligations of either of the contracting parties may be transferred to a third party. 

For the purpose of this sub-paragraph (j) a “document” shall mean anything in which information of any description is recorded including, but not limited to, computer or other electronically generated information 

2 The Association shall not cover general monetary loss, or loss of time, loss through price or currency fluctuations, loss of market or similar loss resulting from delay, except where the Member is legally liable to a third party for such loss and such liability is covered by the Association under these Rules.

Guidance

At first glance, Rule 63 appears to be a varied and somewhat random mix of claims that are either excluded from the cover that is available for P&I claims or which provide exceptions to such cover. However, there are some common factors that link many of the different exclusions, namely, that they are:

• claims that relate to the actual or potential damage to, or the loss of, the Ship and which are therefore, the subject of property insurance rather than liability insurance (Rule 63.1.a-c and e.); or
• claims that relate to the trading losses of the Member and which are therefore, the subject of what is collectively called, loss of hire insurance rather than liability insurance (Rule 63.1.d and f- h); or
• claims that arise because of the fact that Members are engaged in activities that increase the risk that is normally encountered by the majority of Members that engage in traditional shipping activities (Rule 63.1.i-j); or
• claims that relate to delay, which is an excluded risk under most traditional marine policies (Rule 63.2); or
• claims that relate to purely monetary losses, which are not considered to be claims that arise in direct connection with the operation of the Ship for the purposes of Rule 2.4.a (Rule 63.2). 

Therefore, since Rule 63 is intended to be a gloss on the cover that is otherwise available in most cases under one or more of the other Rules in Part II, it must be read together with, and in the light of, the other Rules in Part II (P&I cover). Consequently, the fact that cover is not excluded under Rule 63 does not necessarily mean that cover is available. It is also necessary to prove that cover is made available for the particular liability, loss, cost or expense by the Statutes and one or more of the specific Rules. 

(A) The Association shall not cover under a P&I entry… (Rule 63.1)
Rule 63 excludes cover for specified claims that arise in relation to P&I cover. Therefore, the Rule does not apply to Defence cover¹ which may still be available to the Member for legal and other costs that may be incurred by him in pursuing or defending such claims. 

(B) …except where and to the extent that they form part of a claim for expenses under Rule 46… (Rule 63.1)
Extraordinary costs and expenses that are either reasonably incurred by a Member or by a third party for whose conduct the Member is liable for the purpose of avoiding or minimising any potential liability that the Association may incur for claims pursuant to Rule 46, or which may be incurred at the Association’s direction, may be covered,² even though such claims may include items such as the cost of repairs to the Ship that would otherwise be excluded under Rule 63. 

(C) …loss of or damage to the Ship or any part thereof except to the extent that it forms part of a claim recoverable under Rule 49… (Rule 63.1.a)
The Member is expected to insure himself against damage to, or loss of, the Ship under marine hull and machinery or war risk policies, that are completely separate from the cover that is provided by the Association.³ The insurance that is provided by the Association is insurance against liabilities, losses, costs and expenses that arise in direct connection with the operation of the entered Ship. Consequently, Rule 63.1.a makes it clear that claims for damage to, or for the loss of, the Ship are excluded from P&I cover except to the extent that the Association exercises its discretion to extend cover under Rule 49 for the loss of the Ship by confiscation as a result of the infringement by the Member of customs laws etc.⁴ 

The cause and the nature of the ‘loss of or damage’ is not relevant. The phrase is broadly construed and includes not only the loss of, or physical damage to, the Ship that is caused by traditional marine risks such as collision, grounding etc., but also the loss of, or damage to, the Ship that is caused by other events such as theft, hijack or contamination which reduces the Ship’s value. 

Cover is excluded regardless of the type of entry. Therefore, the exclusion applies equally to a charterer that has entered the Ship under a Charterer’s Entry as it does to the owner of the Ship who has entered it under an Owner’s Entry. Therefore, cover is excluded for liabilities that are incurred by a charterer for the loss of, or damage to, the Ship that is caused, e.g. by the shipment of dangerous goods or by sending the Ship to an unsafe port.⁵ 

The exclusion applies not only to the loss of, or damage to, the Ship, but also to the loss of, or damage to, ‘any part’ of the Ship. However, a distinction is drawn between the loss of, or damage to, the Ship ‘and the loss of, or damage to‘equipment on board the Ship’ which is the subject matter of Rule 63.1.b.⁶ For example, if part of the Ship’s hull structure such as the bow section, were to be lost after a collision or other event, or if damage were to be caused to the Ship’s fixed derricks by shore based stevedores, cover is excluded for such loss by virtue of Rule 63.1.a. 

(D) …loss of or damage to any equipment on board the Ship or to any containers, lashings, stores or fuel thereon, to the extent that the same are owned or leased by the Member or by any company associated with or under the same management as the Member… (Rule 63.1.b)
Rule 63.1.b excludes cover for the loss of, or for damage to, containers, lashings, stores, fuel or any other ‘equipment’ that is on board the Ship. The word ‘equipment’ is broadly interpreted and includes all items that are used either for the trading or the operation of the Ship (e.g. radio equipment), or for her maintenance (e.g. spare parts). 

However, the exclusion applies only to equipment etc., that is owned or leased by the Member or by associated or co-managed companies. The phrase ‘owned or leased by’ is broadly construed and no technical legal distinction is intended to be drawn between various kinds of ownership or lease-holding. For example, Rule 63.1.b excludes cover in circumstances where containers have been leased to the Member, notwithstanding the fact that the Member may be liable to the owners of the containers pursuant to the terms of the leasing agreement for loss of, or for damage to, the containers. 

Cover is not excluded for the loss of, or for damage to, cargo even if the cargo is actually owned by the Member.⁷ Therefore, cover is excluded for loss of, or damage to, the Ship’s bunkers,⁸ but not for the loss of, or for damage to, fuel that is carried by the Ship as cargo. 

(E) …cost of repairs to the Ship or any charges or expenses in connection therewith… (Rule 63.1.c)
Since cover is excluded for damage to the Ship or any part thereof, cover is also excluded for the cost of repairing such damage. For example, the exclusion applies to dry docking expenses, port charges and all other ‘charges and expenses’ that are connected with the repairs. However, cover may be available in some circumstances under Rule 41⁹ for the cost of repairs that are reasonably necessary for the common safety of the marine adventure, and which may, therefore, be recoverable in general average. 

(F) …loss of freight or hire on the Ship…unless freight or hire forms part of a claim for liabilities in respect of cargo… (Rule 63.1.d)
The phrase ‘freight or hire’ is construed broadly to encompass all forms of remuneration that is payable by, or to, the Member for the use of the Ship or part of the Ship¹⁰ for the purposes of carrying cargo (including the Member’s own cargo) and passengers. It also includes the freight that would have been payable to the Member if the cargo had been delivered. Cover is excluded whether the right to remuneration arises under a contract such as a charterparty or Bill of Lading, or otherwise by operation of law, and regardless of whether such loss is suffered by the Member as shipowner or as charterer. 

However, cover is not excluded to the extent that the claim for loss of freight or hire is an integral part of a claim for breach of the Member’s duties in relation to cargo. For example, if the cargo has been sold on CIF (Cost, Insurance, Freight) terms, the freight is a component of the value of the cargo for the purposes of the cargo claim. Similarly, if freight or hire is withheld by charterers or cargo interests as compensation or as security for cargo claims for which the Member has cover under Rule 34, cover for that compensation is not excluded under Rule 63.1.d for that proportion of the withheld freight or hire that is equivalent to the Member’s liability for the cargo claim. However, if the charterer is allowed by the terms of the charter¹¹ to withhold from the freight the value of unpumpable cargo that remains on board after completion of discharge despite the fact that such ‘apparent loss’ has not resulted from any breach of contract on the part of the Member, cover is excluded under Rule 63.1.c for the withheld freight. The rationale for this is that the clause is not intended to provide the charterer with a remedy for a cargo claim but merely to entitle the charterer to pay less freight. 

When considering the cover available under this sub-Rule and also Rule 63.1.h, the inter-relationship between Rule 34 and these two exclusions in Rule 63 should be kept in mind.

In many cases concerning cargo damage, the Ship will be delayed, e.g. because there is a delay in discharge whilst cargo interests decide what to do with the damaged cargo and how best to mitigate their loss. The lost time resulting from that delay will often give rise to claims for demurrage and hire as between owners and charterers and perhaps sub-charterers. P&I cover is not available for loss of earnings, nor for loss of time in the use of the Ship; it is a third party liability cover. Whilst cargo damage and delay may arise from a covered breach of contract, e.g. a failure to exercise due diligence to make the Ship seaworthy, that obligation will typically apply not only to the carriage of the cargo but also to the use/earnings of the Ship. Claims by or against the owner for unpaid freight, hire or demurrage in respect of the Ship are not claims for liabilities in respect of cargo or claims covered under Rule 34, even if those claims would not have arisen but for the cargo damage. They are claims in relation to the use and earnings of the Ship. Even if a charterer withholds freight, demurrage or hire because of a cargo claim, perhaps with a view to setting off one claim against the other, they are separate claims and the applicable law will determine whether the charterer is entitled to withhold such monies. The costs of handling the Member’s claim for recovery of the withheld amount will fall under the Defence cover. As a practical solution, the Association may be willing to exercise its discretion to provide security for the cargo claim in exchange for the charterer paying the monies due to the Member. 

If the party bringing a cargo claim includes in that claim freight, demurrage and hire, that does not automatically mean that P&I cover is available for those elements. As explained in Rule 34 cover is available for a claimant’s consequential losses as a result of cargo damage, but if the claimant is not ultimately legally responsible for freight, demurrage or hire in respect of the Member’s Ship that is not a consequential loss on cargo, it is more properly the Member’s loss in the earnings of the Ship. Therefore, even if freight, demurrage or hire is strictly payable in the first instance by the claimant in accordance with the terms of the contract (e.g. a delay in discharge arises from damaged cargo but does not trigger an off-hire clause or stop laytime, which will often be the case), but the claimant is able to claim these back as damages as a consequence of owner’s breach of the contract, e.g. unseaworthiness, the loss of earnings lies ultimately with the owners. The same applies where the owner seeks to claim freight, demurrage or hire which has not been paid and there is a cross claim for damages in an equal amount giving rise to a defence of ‘circuity of action’. This would be consistent with the legal principle of not being able to claim for monies arising from one’s own fault. 

Examples of what freight, hire or demurrage would fall outside the Rule 63 exclusions and would be considered to be part of a claim for liabilities in respect of cargo or covered under Rule 34 would include freight, hire or demurrage paid by the claimant for another vessel as a consequence of the owner’s breach causing cargo damage and which is a legally recoverable consequential loss. For example, there may not be space at the place of discharge to store damaged cargo and so the claimant pays freight and demurrage or hire for a barge until such time as he can deal with the damage cargo. There may also be a liability for freight where there is no cargo damage. If the Ship were unable to complete a cargo carrying voyage which is cut short by unseaworthiness, cargo interests may elect to pay increased freight costs to complete the carriage on another ship or increased freight costs by sending a substitute cargo. If those costs are found to be a legally recoverable loss, then cover would be available. 

(G) …costs of salvage or services in the nature of salvage, rendered to the Ship… (Rule 63.1.e)
A salvor is entitled to remuneration under a salvage agreement or the general law in proportion to the value of the property saved. Therefore, a salvor can normally expect to receive remuneration from the owners of the ship, the owners of the cargo and any other interests that are at risk such as the owners of bunkers and freight. That proportion of the cost of salvage or similar services that is payable by the ship is normally paid by the hull insurer. Consequently, Rule 63.1.e makes it clear that cover is not available from the Association in that regard, unless the amount that has been paid to the salvor by the Member is recoverable as life salvage under Rule 33,¹² or as a general average claim under Rule 41¹³ or as special compensation that has been awarded to a salvor under Rule 42.¹⁴ 

(H) …liabilities, losses, costs or expenses arising out of salvage operations conducted by the Ship or provided by the Member… (Rule 63.1.f) Whereas Rule 63.1.e excludes cover for the costs of salvage services that have been rendered to the Ship, Rule 63.1.f excludes cover for liabilities, losses, costs or expenses that arise as a result of salvage services (which include, for the purposes of this sub-paragraph, wreck removal services)¹⁵ that have been rendered by the Ship or provided by the Member other than in the circumstances outlined in sub-paragraphs (i) and (ii). 

Due to the inherently dangerous and unpredictable nature of salvage and wreck removal operations, those parties that engage in such activities can cause further loss or damage to the property that is being salved or removed, or to other property, e.g. to other ships that are assisting the salvage or wreck removal operation, or to cargo, or to the environment. Such loss or damage can be caused either by the ship that is being used by those that are conducting such operations, or by other ships that have been sub-contracted by them to assist in such operations, or even by the personnel that are employed by such persons when working away from their mother vessel, e.g. divers that are working on the wreck or under a ship that is being saved. Consequently, Rule 63.1.f establishes that cover is excluded for liabilities, losses, costs and expenses that arise out of salvage operations (which, for the purposes of this sub-paragraph include wreck removal and cargo salvage operations) that are performed by the Ship, or by the Member in some other manner, unless they relate to: 

i salvage operations that are conducted by the Ship for the purpose of saving or attempting to save life at sea. For example, if cargo is lost or damaged as a result of the fact that the Ship has sailed into a storm in order to save lives, cover is available for the Member’s liability to cargo under Rule 34 and such cover is not excluded under Rule 63.1.f; or. 

ii liabilities, costs and expenses that are incurred by a Member that is a professional salvor and which arise out of the Member’s operation of the Member’s Ship as a salvage vessel, and which are covered pursuant to a special agreement between the Member and the Association. 

(I) …cancellation of a charter or other engagement of the Ship… (Rule 63.1.g)
Cover is excluded for liabilities, losses, costs or expenses that arise as a result of the cancellation of a ‘charter or other engagement.’ The exclusion applies regardless of the type of ‘charter or other engagement’¹⁶ that is cancelled, and regardless of whether the cancellation is effected by the owner or the charterer of the Ship, and of whether the cancellation is, or is not, legally valid. 

However, cover is excluded only if there is a causal link between the cancellation of the charter or other engagement and the liabilities, losses etc., that are being claimed. Therefore, the exclusion does not apply to liability for loss of or damage to cargo that arises independently of the cancellation of the charter under which the cargo is being carried by the Ship. 

Rule 63.1.g does not apply to contracts such as Bills of Lading or sea waybills since such contracts are not contracts for the use of a ship, but are contracts for the carriage of goods on ships, nor to passage or ticket contracts for the carriage of passengers. In the majority of cases, cover is available for claims relating to the cargo that is to be covered under such contracts under Rule 34, even if no formal contract is ever drawn up,¹⁷ but cover is excluded under Rule 34, proviso v, for liabilities etc. that arise out of the Ship’s failure to load cargo that should have been loaded pursuant to the Member’s previously agreed commitment to do so.¹⁸ 

(J) …demurrage on, detention of or delay to the Ship… (Rule 63.1.h)
Reference should be made to the commentary in relation to Rule 63.1.d. 

‘Demurrage’ is the amount that a charterer has contractually agreed to pay to a shipowner for any delay that has been caused to the ship as a result of the fact that the loading or discharging has taken longer than the time allowed by the contract, i.e. the laytime, or, if there is no agreed time, beyond a reasonable time. Traditionally, demurrage was payable only in such circumstances; however, there is a modern trend, particularly in the case of tanker charters, for demurrage also to be used to compensate a shipowner for delay that has been caused as a result of the fact that the charterers have asked the ship to stop or delay during the voyage, usually to enable the charterers to continue to negotiate or to renegotiate the terms of an underlying cargo sale contract. 

‘Detention’ occurs when the Ship is not permitted to move or trade freely, e.g. because Bills of Lading and/or cargo documentation have not been produced by the charterer or shippers on completion of loading, or because passenger passports and seamen’s books have not been released by the local authorities. Detention may also occur because of technical faults that are discovered on board during the course of an investigation that has been carried out by port state control or by investigators after a casualty. Therefore, depending on the reason for the detention, claims may be made either by, or against, the Member for such delay. 

Cover is excluded whether the claim is made by, or against, the Member, e.g. a claim by the Member as owner against the charterer for demurrage, or a claim that is brought against an owner by the Member as charterer for a failure to prosecute the voyage with reasonable dispatch. However, cover is excluded only to the extent that the claim is not otherwise covered under Rule 34 (Cargo liability). For example, cover is available for claims for loss of market or diminution in cargo value that may be brought by cargo interests against a Member as a result of the delayed arrival of the Ship at the discharge port. However, cover is excluded under Rule 34.1, proviso v, for liabilities, costs and expenses that arise as a result of the ‘late arrival of the Ship at port of loading’ or under proviso xi, for liabilities etc., that arise as a result of a deviation of the Ship on the carrying voyage. 

(K) ...liabilities, losses, costs or expenses which would have been recoverable in General Average if the unamended York Antwerp Rules had been incorporated into the charterparty or the contract of carriage. (Rule 63.1.i)

Rule 63.1.i provides that the cover that is available under Rule 41 does not include liabilities, losses, costs and expenses that would have been recoverable in General Average if the unamended York Antwerp Rules had been incorporated into the charterparty or the contract of carriage. In recent years three versions of the YAR have been in force - the YAR 1994, YAR 2004 and YAR 2016. The Association does not recommend the use of YAR 2004 (see below).

YAR 1994 and YAR 2016 represents a hard fought compromise between shipowner and property interests – particularly in relation to the types of pollution expenses that should be allowed in General Average. YAR 1994 and YAR 2016 excludes from General Average the costs of pollution clean-up and third party pollution liabilities incurred following a discharge, but in most instances allows the cost of preventive measures incurred prior to a spill, as well as the cost of preventing or minimising environmental damage if incurred, inter alia, as a condition of entry into or departure from a port of refuge, regardless of whether or not a spill has actually occurred. 

Both prior to and after the adoption of YAR 1994 attempts were made by charterers and cargo interests to introduce new clauses that are intended to restrict the shipowner’s rights to claim the contributions in General Average that can be made in accordance with YAR 1994.¹⁹ Furthermore, in 2004, a new version of the York Antwerp Rules (YAR 2004) was adopted without the support of all sides of the shipping industry. YAR 2004 provides for example that salvage costs shall not be included in and made subject to adjustment in General Average, whereas they are so included under YAR 1994 and YAR 2016. 

The particular Member is free to decide for himself which of the various YAR should be incorporated into the governing contract of carriage or charterparty. However, since the membership does not condone any further erosion of the rights that the shipowners has under YAR 1994 to claim contributions in General Average for, inter alia, preventive measures as described above, the Association recommends the use of the unamended YAR 1994 or YAR 2016, respectively, and not YAR 2004. This is consistent with the general provisions in Rules 55.a and b concerning terms of contract.²⁰ Therefore, the Association would not cover the Member for liabilities, losses, costs or expenses that are incurred pursuant to the provisions of YAR 2004 but which would not have been incurred had the relevant contract been subject to YAR 1994 or 2016.

(L) …liabilities, losses, costs and expenses arising from the use of any electronic trading system, other than an electronic trading system approved in writing by the Association, to the extent that such liabilities, losses, costs and expenses would not (save insofar as the Association in its sole discretion otherwise determines) have arisen under a paper trading system. For the purposes of this sub – paragraph (j) an “electronic trading system” is any system which replaces or is intended to replace paper documents used for the sale of goods and/or their carriage by sea or partly by sea and other means of transport and which: i are documents of title, or ii entitle the holder to delivery or possession of the goods referred to in  such documents, or iii evidence a contract of carriage under which the rights and obligations of  either of the contracting parties may be transferred to a third party.
For the purpose of this sub-paragraph (j) a “document” shall mean anything in which information of any description is recorded including, but not limited to, computer or other electronically generated information (Rule 63.1.j)
Currently, there are no international conventions that regulate the rights and obligations of parties that use an electronic trading system. Consequently, such rights and obligations are governed by the terms of private contracts that are concluded between such users. Furthermore, electronic trading systems may give rise to liabilities, losses, costs and expenses that do not arise under paper trading systems such as, for example, liabilities that arise as a result of the malfunctioning of the electronic system itself or the fraudulent tampering with electronic records or as a result of unauthorised transmissions by third parties. Since the bulk of international trade still operates on the basis of paper documents that are regulated by international conventions such as the Hague, Hague-Visby and Hamburg Rules, the liabilities, losses, costs and expenses that are incurred by the majority of shipowners and charterers are those that arise solely as a result of such trading. Therefore, it is important, in the interests of mutuality, to ensure that Members share only those liabilities, losses, costs and expenses to which the membership as a whole is put at risk, and not liabilities, losses etc., that arise purely as a result of the use of electronic (i.e. paperless) trading systems. 

Consequently, Rule 63.1.j confirms that cover is excluded for liabilities, losses etc., that would not have arisen but for the use of an electronic trading system unless the terms of such a system have been approved by the Association in writing,²¹ in which case cover is available as of right under the Standard P&I Cover. However, the Association and the other P&I clubs that are members of the International Group of P&I Clubs also try to accommodate those Members that may incur such liabilities under an electronic system that has not been approved in writing in advance by the Association. Therefore, the Association may in limited circumstances be able to obtain separate cover for its Members from market underwriters on terms to be agreed with the market underwriters and on payment of additional premium. However, such a facility is reviewed by the market insurers from year to year and on a case by case basis and there is no guarantee that a Member may be able to secure such cover. Further details are available from the Association’s underwriting department. 

The exclusion contained in Rule 63.1.j does not apply to liabilities, losses, costs and expenses that would have been incurred in any event if a paper trading system had been used instead of an electronic trading system. 

(M) …general monetary loss, or loss of time, loss through price or currency fluctuations, loss of market or similar loss resulting from delay… (Rule 63.2)
P&I cover is intended to protect or indemnify the Member against the kind of liabilities that are generally incurred by shipowners and charterers to third parties in direct connection with the operation of the Ship and not against losses that the Member incurs as a result of the individual way in which he chooses to operate his Ship. Such losses are not considered to be losses that should be shared by the membership generally, but losses that should be borne by the Member himself. 

For example, Rule 63.2 excludes losses that are the result of entering into an unprofitable fixture, or of the unexpectedly high costs of manning and equipping the Ship, or of the loss of the Ship’s next fixture if the Ship is delayed as a result of bad weather. Similarly if the Member has agreed to charter the Ship at a certain rate in a certain currency, and the exchange rate for the chosen currency were to fluctuate disadvantageously against the Member’s operating currency, P&I cover is excluded for the loss that is thereby incurred. 

However, Rule 63.2 only excludes cover for the Member’s own loss. Cover is not excluded for the liability that the Member has for losses that are incurred by a third party in circumstances where such liability is covered by the Rules. Therefore, cover is available under Rule 34 for the liability that the Member may have to the owners of cargo for market losses that are suffered by them as a result of the delayed arrival of the Ship at the port of discharge.

1 See the Guidance to Rule 65.
2 See the Guidance to Rule 46.
3 See the Guidance to Rules 50 and 71.
4 See the Guidance to Rule 49.
5 Cover for such risks is available under Gard’s Comprehensive Charterers’ Liability Cover further details of which are available on www.gard.no.
6 See (D) below.
7 See the Guidance to Rule 50.
8 See also the commentary in (A) of the Guidance to Rule 50.
9 See the Guidance to Rule 41.
10 For example, pursuant to a slot or part cargo charterparty.
11 Such rights are given by Cargo Retention or ROB clauses which are found in some tanker charters.
12 See the Guidance to Rule 33.
13 See the Guidance to Rule 41.
14 See the Guidance to Rule 42.
15 From commentary relating to the cover that is available to the Member for the costs, expenses and liability incurred as a result of the wreck removal of the entered Ship see the Guidance to Rule 40 (Liability for obstruction and wreck removal).
16 The phrase ‘charter or other engagement’ includes all forms of charterparty, and all other forms of contracts for the use of the Ship, e.g. contracts of affreightment, and booking notes. Cover is also excluded if the ‘charter or other engagement’ relates merely to the use of part of the carrying capacity of the Ship, e.g. a slot charter or space sharing contract.
17 See (B) of the Guidance to Rule 34.
18 See (N) of the Guidance to Rule 34.
19 See Member circulars 8/98 and 1/97 for more information in this regard.
20 See (B) in the Guidance to Rule 55.
21 The International Group of P&I Clubs keeps a record of electronic trading systems that may be approved by any club that is a party to the Pooling Agreement including details of the terms and conditions that govern the use of such systems. Currently, the systems that have been approved by the Group are the BOLERO Rulebook/Operating Procedures September 1999 and the Electronic Shipping Solutions (ESS) DSUA 2009.3 and DSUA 2013 systems. Further information can be found in Gard circulars 10/2010 and 1/2013 and in the “Frequently Asked Questions” that may be found on www.gard.no.