Commentary: Rule 1 Definitions of rules and language

1.1 Swedish wording prevails

The Swedish Club is a mutual insurance association formed under Swedish law. It operates under the concession of and is subject to supervision by the Swedish Financial Supervisory Authority (Finansinspektionen). Rule 2 states that Swedish law applies in matters not provided for in these Rules. According to Rule 18, disputes arising out of the contract of insurance shall be decided in accordance with Swedish law. Therefore, as stated in the opening part of this Rule, the Swedish wording of these Rules shall prevail in case of a dispute.

The English wording is a translation from Swedish. The translation may not always be the same word for word. In those cases where the English wording has been chosen, it is because it is considered to reflect the meaning of the basic Swedish text more accurately.

1.2 Heading and list of contents

The headings and the list of contents form part of the Rules. Headings mark the framework within which the clause in question should be understood and applied.

1.3 Nature of comments

The reference in the second part of the clause to explanatory notes means this commentary. This commentary does not form part of the Rules. It is for guidance only. Even if the commentary is supposed to reflect the Club’s understanding of the Rules, it can neither extend nor reduce the cover as defined in the Rules. Nor can it affect the absolute discretion to be exercised by the Club through its Board under Rule 19, the Omnibus Rule, or elsewhere.

The commentary should be seen in the light of Rule 17. If they contain a direct or implied deviation from the effect of the Rules, it shall not constitute a waiver of the Club’s rights under these Rules.

The commentary forms part of the Club’s loss prevention program. It has been drafted for the convenience of Members to enhance the understanding and purpose of the Rules and the cover they provide. It should constitute a tool for Members to avoid liabilities arising and, when liabilities do arise, to reduce the consequences.

The commentary is provided with an index for the convenience of the user. The index is for guidance only.

1.4 Definitions

The clause contains definitions of certain words and expressions which appear in various clauses. The definitions are not ranked in any particular order. They follow the alphabetical order of the basic Swedish wording.

1.4.1 Crew

”Crew” means any person, including the master, with whom the Member has a contract which obliges the person to serve on board the entered ship. The obligation to serve makes him the Member’s servant. Contracts for independent contractors do not have that effect. Such persons (contractors), therefore, are not regarded as crew.

The service should be on board the entered ship. This condition excludes categories of persons employed by the Member who occasionally perform work on board the entered ship but who are in principle land based, such as superintendents and repair teams.

1.4.2 Ship

According to our licence and our Articles of Association, the purpose of the Club is to provide insurance to ships. What may constitute a ship in a nautical or legal sense may vary. For the purpose of these Rules, “ship” means any object for which the Club has issued a policy of insurance unless it clearly appears that something other than the entered ship is concerned (see for instance Rule 7 Section 2). The words “ship” and “vessel” are used as synonyms in the comments.

1.4.3 The Association

In these Rules, ”the Association” (Föreningen) means Sveriges Ångfartygs Assurans Förening, otherwise known as The Swedish Club. It is the party which has issued the insurance policy and which carries the responsibilities under that policy in accordance with these Rules. The Association is generally referred to as the Club in the commentary.

1.4.4 Member

”Member” is the party, whether an individual or a corporation, in favour of whom the Club has issued a policy of insurance under these Rules. As appears from the second part of Rule 2, the cover for a Member is in respect of liabilities, costs or expenses incurred by him in his capacity as owner, operator or Bareboat Charterer of the entered ship. A Member should, by definition, have one of these roles. The Member is the only party who has a valid claim for compensation from the Club under these Rules. See comments on direct action under 2.9.

Upon the request of the Member, the Club may allow one or more individuals or corporations to be mentioned in the policy of insurance as Joint Members. According to the definition in this Rule, a Joint Member is a member with the ensuing rights and obligations under these Rules. For further comments on Joint Members see Rule 30.

Other parties may be allowed the benefit of a Member’s cover without acquiring the status of a Member, such as co-assureds, as described in Rule 30 and affiliated companies in Rule 32.

A Member’s cover is also extended to a mortgagee under Rule 35. The same restrictions of cover apply as for co-assureds and affiliated companies.

1.4.5 Agreement, approval, consent 

Where these expressions appear in the Rules, they mean that the agreement, approval or consent should be in writing. The expressions are used in contexts where the Club agrees to extend the cover. As the basic commitment is in the form of a written policy of insurance, any extension of cover should also be evidenced in writing.

As appears from Rule 18, the insurance contract is subject to Swedish law. Swedish courts and arbitrators apply the principle of free evaluation of proof. They would likely accept any customary and accepted electronic transfer of written communications such as e-mail as being “in writing” in the sense of this Rule, provided that the communication is received by the intended recipient in a complete and legible form at the same time as it is transmitted.

1.4.6 Hull insurance  

”Hull insurance” means the insurance effected on the hull and machinery of the entered ship. It includes hull excess liability insurance, hull interest insurance, freight interest insurance and other total loss insurances. The relationship between P&I and Hull insurance is explained in Rule 11, Section 6.