Policy Year 2022/23 - Changes to the Rules of the P&I, FD&D and War Risk Classes

Following consultation with the Members Board, the changes to the Rules of the P&I, FD&D and War Risks Classes detailed in the attachment to this Circular, were approved by the Directors of North of England P&I Association Limited and North of England P&I DAC, and will be effective from noon GMT on 20 February 2022.

The amended Rule Books will be available on North’s website from 20 February 2022. Should any Member wish to discuss issues arising out of these amendments, they should contact their Underwriter.

PAUL JENNINGS
CHIEF EXECUTIVE / EXECUTIVE DIRECTOR
The North of England P&I Association Limited / North of England P&I DAC

CIRCULAR REF: 2022/002

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P&I – RULE 19 (9) QUARANTINE

A reference to reimbursement of additional expenses incurred by a Member as a result of a vessel being quarantined being limited to additional insurance will be added to Rule 19(9). This mirrors the position in Rule 19(6), which allows reimbursement of the same expenses when incurred in relation to diversions to land injured or sick persons.

19(9) Additional expenses unavoidably incurred by a Member as a direct consequence of an outbreak of infectious disease on an Entered Ship for disinfection of such Ship or the cargo or persons on board such Ship or in respect of quarantine and the net loss to the Member (over and above such expenses as would have been incurred but for the outbreak) in respect of fuel, additional insurance, Seamen’s wages, stores, provisions and port charges.

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P&I – RULE 19(15) TOWAGE

A reference to SUPPLYTIME contracts being an approved contract for towage by an Entered Vessel is being added to the Notes to Rule 19(15)(b) to reflect the updated wording of the Pooling Agreement.

15(b) Liabilities, costs and expenses arising out of towage by an Entered Ship of any ship or object.

Provided always that in Rule 19(15)(b) unless the towage is for the purpose of saving or attempting to save life or property at sea:

(A) the towage contract has been approved by the Managers and the Member has paid or agreed to pay such additional premium as may be required by the Association, or…….

Note: The Managers will normally approve contracts which have been made on or incorporate the following terms and conditions:

1. United Kingdom, Netherlands or Scandinavian standard towage conditions;
2. TOWCON and TOWHIRE;
3. Any current Lloyd’s standard form of salvage agreement (whether or not incorporating SCOPIC).
4. SUPPLYTIME

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P&I – RULE 28 EXCLUSION OF CERTAIN RISKS RELATING TO SPECIALIST OPERATIONS

A reference to mining being an excluded Specialist Operation is being added to mirror the updated wording of the Pooling Agreement.

28(1) Unless otherwise agreed by the Managers in writing there shall be no recovery from the Association in respect of any claim relating to:

Liabilities, costs and expenses incurred by a Member during the course of performing specialist operations including but not limited to dredging, blasting, pile-driving, well intervention, cable or pipe laying, construction, installation or maintenance work, core sampling, mining, depositing of spoil, power generation, decommissioning to the extent that such liabilities, costs and expenses arise as a consequence of:

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P&I – RULE 43 (3) SANCTIONS – RECOVERY FROM REINSURANCE RULE

The fast-changing nature of the international sanctions landscape has been made clear recently. As a result, the Managers have identified potential for a situation to arise where the Association has made a payment to or on behalf of a Member which (although entirely lawful at the time of payment) the Association subsequently finds it is not able to recover from its reinsurers as a result of a change in applicable sanctions. Although likely to be a limited potential risk, the Managers recommend that the proposed amendment is made to protect the Association from an inability to recover from its reinsurers so far as is possible.

43 (3) The Association shall in no circumstances have a liability to a Member in respect of that part of any liabilities, costs and expenses which is not recovered by the Association from parties to any such reinsurance contract including but not limited to the Pooling Agreement, and/or the Group Excess Loss Reinsurance Contract because of a shortfall in recovery from such parties or reinsurers by reason of any sanction, prohibition or adverse action against them by any state or international organisation or the risk thereof if payment were to be made by such parties or reinsurers, and, if for any reason whatsoever the Association discharges the liabilities of the Member or makes any payment to the Member in respect of which it suffers such a shortfall in recovery, the Member shall indemnify and hold the Association harmless to the extent thereof.

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P&I – VARIOUS AMENDMENTS RELATING TO THE MERGER OF NORTH AND THE STANDARD CLUB

The amendments set out in the table below are required to address the following matters related to the merger of North and The Standard Club:

1. the change of name of “The North of England Protecting and Indemnity Association Limited” to “NorthStandard Limited”;
2. the change of name of “North of England Mutual Insurance Association (Bermuda) Limited” to “NorthStandard Reinsurance Limited”;
3. for the policy year 2023/24 North’s underwriting entities will underwrite mutual insurance business on the basis of the current North Group rule books, and the Standard Club’s underwriting entities will underwrite mutual insurance business on the basis of their existing rule books; and
4. notwithstanding the position set out in point 3 above, the mutual classes shall operate across the NorthStandard Group as a whole (e.g. the P&I class will consist of all mutual P&I policies underwritten by entities in the NorthStandard Group). Therefore, amendments to the rules ensure that Additional Calls can be levied against all Members of a class irrespective of which underwriting entities in the NorthStandard Group have underwritten the policies.

The rules of the Standard Club underwriting entities will also be amended to operate on the basis outlined above.

AMENDMENTS FOR 2023/2024 TO THE RULES OF THE FREIGHT, DEMURRAGE AND DEFENCE CLASS

Explanatory notes have been provided for the proposed changes and consequential renumbering and any cross referencing which will also be required. In the proposed new Rules, new wording is in bold and existing wording to be deleted is shown as strikethrough text […………..].

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FD&D – RULE 20 DEDUCTIBLES AND RULE 26 CONDUCT OF CLASS

In order to bring North’s position in line with the majority of the FD&D market, Rule 20 will be amended to remove the cap on a Member’s maximum contribution to fees provided for by the Rules (a maximum deductible can still, however, be negotiated separately as part of the terms of entry). Consequential amendments will also be made to Rule 26(3) to clarify the order in which any costs recovered in an FD&D dispute are applied to offset the costs paid by the Association and/or apportioned between the Association and the Member.

20 Unless otherwise agreed between the Member and the Managers in writing as part of the terms upon which the Ship is entered in the Association the Member’s recovery from the Association shall be subject to a deductible of 25% with a minimum of US$10,000 and a maximum of US$150,000 per claim.

26(3) Any amount recovered as costs shall be applied in the following order: (i) [first] against costs incurred by the Association (or costs for which the Association may be liable) in excess of those which attract the Member’s maximum deductible (if applicable); (ii) [and second] pro rata to the Association’s [remaining] costs and costs liabilities and any deductible paid by the Member in excess of its minimum deductible; and [third] (iii) against the Member’s minimum deductible.

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FD&D – VARIOUS AMENDMENTS RELATING TO THE MERGER OF NORTH AND THE STANDARD CLUB

The amendments set out in the table below are required to address the following matters related to the merger of North and The Standard Club:

1. the change of name of “The North of England Protecting and Indemnity Association Limited” to “NorthStandard Limited”;
2. the change of name of “North of England Mutual Insurance Association (Bermuda) Limited” to “NorthStandard Reinsurance Limited”;
3. for the policy year 2023/24 North’s underwriting entities will underwrite mutual insurance business on the basis of the current North Group rule books, and the Standard Club’s underwriting entities will underwrite mutual insurance business on the basis of their existing rule books; and
4. notwithstanding the position set out in point 3 above, the mutual classes shall operate across the NorthStandard Group as a whole (e.g. the FD&D class will consist of all mutual FD&D policies underwritten by entities in the NorthStandard Group). Therefore, amendments to the rules ensure that Additional Calls can be levied against all Members of a class irrespective of which underwriting entities in the NorthStandard Group have underwritten the policies.

The rules of the Standard Club underwriting entities will also be amended to operate on the basis outlined above.

AMENDMENTS FOR 2023/2024 TO THE RULES OF THE WAR RISKS CLASS

Explanatory notes have been provided for the proposed changes and consequential renumbering and any cross referencing which will also be required. In the proposed new Rules, new wording is in bold and existing wording to be deleted is shown as strikethrough text […………..].

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WAR RISKS – RULE 10 (JOINT INSURED OWNERS)

This wording is being added to reduce the risk of a situation occurring where the contracted arrangements between Insured Owners and Joint Insured Owners may create difficulties in pursuing indemnity claims against Charterers or third parties. A similar provision is already contained in the P&I Rules.

10.1.2   if, at the time of entry, the Joint Insured Owners shall have directed that all payments of any sums payable by the Association shall be paid to one of the Joint Insured Owners or to some other party, payment of such sums by the Association in the manner directed shall be a complete discharge of the Association’s liabilities to all Joint Insured Owners. If no such directions shall have been given, payment by the Association, in its discretion, to any one of the Joint Insured Owners shall operate as a similar complete discharge of its liabilities to all Joint Insured Owners. The liability of any Insured Owner to another Insured Owner shall not be excluded nor discharged by reason of the receipt of such payment or the provision of insurance pursuant to Rule 10.  Any payment by the Association to an Insured Owner in respect of such liabilities, costs or expenses covered by the Association shall operate only as satisfaction but not exclusion or discharge of the liability of such person to another Insured Owner;

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WAR RISKS – RULE 12 REINSURANCE

Rule 12.3 will be amended as set out below to mirror the amendment made to P&I Rule 43(3) as explained above. The amended Rule will read as follows:

The Insured Owner shall in no circumstances be entitled to recover from the Association that part of any liabilities, costs and expenses which is not recovered by the Association from parties to the pool and/or under any reinsurance(s) because of shortfall in recovery from the parties or reinsurers thereunder by reason of any sanction, prohibition or adverse action against them by a state or international organisation or the risk thereof if payment were to be made by such parties or reinsurers and, if for any reason whatsoever the Association discharges the liabilities of the Insured Owner or makes any payment to the Insured Owner in respect of which it suffers such a shortfall in recovery, the Insured Owner shall indemnify and hold the Association harmless to the extent thereof. For the purposes of this clause, “shortfall” includes any failure or delay in recovery by the Association by reason of the parties or reinsurers making payment into a designated account in compliance with the requirements of any state or international organisation.

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WAR RISKS – AMENDMENTS REQUIRED FOLLOWING ACCESSION OF KING CHARLES III

References within the War Risks Rules to “Queen”, “Her Majesty”, “Queen’s Enemy Risks” (“QER”), etc., will be updated following the accession of King Charles to “King”, “His Majesty”, “King’s Enemy Risks” (“KER”), etc.

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WAR RISKS – VARIOUS AMENDMENTS RELATING TO THE MERGER OF NORTH AND THE STANDARD CLUB

The amendments set out in the table below are required to address the following matters related to the merger of North and The Standard Club:

1. the change of name of “The North of England Protecting and Indemnity Association Limited” to “NorthStandard Limited”;
2. the change of name of “North of England Mutual Insurance Association (Bermuda) Limited” to “NorthStandard Reinsurance Limited”;
3. for the policy year 2023/24 North’s underwriting entities will underwrite mutual insurance business on the basis of the current North Group rule books, and the Standard Club’s underwriting entities will underwrite mutual insurance business on the basis of their existing rule books; and
4. notwithstanding the position set out in point 3 above, the mutual classes shall operate across the NorthStandard Group as a whole (e.g. the War Risks class will consist of all mutual War Risks policies underwritten by entities in the NorthStandard Group). Therefore, amendments to the rules ensure that Additional Calls can be levied against all Members of a class irrespective of which underwriting entities in the NorthStandard Group have underwritten the policies.

The rules of the Standard Club underwriting entities will also be amended to operate on the basis outlined above.

[1] ‘Cub Subsidiary is defined in the NorthStandard Limited articles of association as “Means each of the following subsidiaries of the Association, which, together with the Association, are the underwriting entities in the ‘NorthStandard Club’: (a) North EU; (b) Standard Asia; (c) Standard Ireland; and (d) Standard UK, together being, the “Club Subsidiaries”

[2] See footnote 1 above

[3] See footnote 1 above