Section 1 Member’s obligations with regard to classification and requirements by Classification Society, flag State or otherwise

10.1.1 General

The classification societies were founded by Hull underwriters to set safety standards on the construction and maintenance of ships to be insured. There are many classification societies competing for the world fleet on a competitive market. Those with the strictest requirements and the tightest control may not attract the most registrations.

For a mutual organisation and its Members, it is of considerable importance that all ships entered are and remain in first class condition. As this is the foundation for low and stable insurance costs, it pays to be selective in the choice of class.

10.1.2 Class to be approved by Club

This clause makes it clear that it is a condition for insurance that the ship is and remains entered with a classification society approved by the Club.

10.1.3 Change of class to be approved by Club

Any change of classification during the period of entry should be reported to and approved by the Club. If the new class is approved, the cover remains unaffected. Should the change of class not be reported to the Club for approval and the new classification society not be approved, Rule 27 (f) will apply and the insurance immediately cease without notification to the Member.

10.1.4 Class to be maintained

The Member has an obligation to maintain its entry with the classification society throughout the period of insurance. For comments on the period of insurance, see under 20.4.1-3. The Member must not leave the society or act in such a way that the entry is expelled under the statutes or regulations of the society.

10.1.5 Member’s obligation to call in class

According to item (b) the Member is obliged promptly to call in class in case of an incident which is or may be of a nature or extent to cause class to recommend repairs or other action. If in doubt the Member should consult the Club.

Rule 10 Section 3 empowers the Club to issue regulations to the effect that the classification society should survey the ship. See the comments under 10.3.5.

10.1.6 Member’s obligation to follow class recommendations

A Member must follow the rules laid down by the class and all requests, recommendations or subjects to effect repairs, perform surveys or to take other action as described under item (c). Such requests are often subject to a time limit. Requested action must be taken in time.

Certificates issued to confirm the compliance with such requirements or obligations must be maintained at all times. Lack of valid certificates may amount to unseaworthiness and have serious liability consequences for the Member. It may also affect the cover under these Rules through the application of the last part of this provision or Rule 11 Section 1. According to Rule 7 Section 6 3. (v) there is no cover for fines imposed upon a Member because of lack of valid or prescribed certificates. See the comments under

10.1.7 Member’s obligation to release class records

To be able to investigate an accident and prepare the Member’s defence, it is necessary for the Club to have full access to information and documents held by class in relation to the entered ship. A release by class usually requires the authority and approval of the vessel Owner. According to item (d), the Member is obliged to authorise class to disclose and make available to the Club or its representatives any information and any documents for whatever purpose they are required. The fullest co-operation from the Member to achieve the desired result is necessary. The disclosure is in respect of all previous class records and notifications made by the present or previous classification societies and its surveyors during the lifetime of the entered ship.

10.1.8 Effect of Member’s breach of obligations under this section

If a Member is in breach of any of his obligations under a-d of this section, the Club may refuse to compensate the Member for any amount due under the Rules or reduce the payment of the compensation as deemed necessary.

The most serious consequence for a Member who is in breach of his obligation to have his ship entered in a classification society approved by the Club, appears from Rule 27 (f). The Member shall cease to be insured by the Club from the moment the entered ship ceases to be classed in accordance with Rule 10 Section 1 (a). The effect is instant. No notice is required or given. For further comments see under 27.7.

10.1.9 Statutory requirements

It is stated under item 2 of this Rule that the Member shall comply with any statutory requirements of the state of the ship’s flag or obligations imposed by other competent authorities. Such authorities can be in or outside the state of the ship’s flag. There are many authorities and organisations that act to improve safety on a national or wider basis.

Based on an agreement reached in 1982, the Paris Memorandum of Understanding (Paris MoU), 14 European countries agreed to operate a system of Port State Control to ensure that visiting ships comply with the standards laid down in fundamental international conventions and protocols on safety at sea.

The requirements or obligations imposed by authorities can be in relation to the construction, adaptation, condition, fitness or equipment of the entered ship.

The focus is also directed at other important safety factors beyond the technical condition of the ship such as the education and training of the crew and the qualification of the management. Members must comply with any regulations in that respect, imposed by class or by competent authorities.

10.1.10 International Safety Management Code (ISM)

The International Safety Management Code was adopted by IMO in 1993 and included in the SOLAS Convention, Chapter IX, Management for the safe Operation of Ships in 1994. On 1 July 1998 the new Chapter IX of the SOLAS Convention entered into force for passenger ships, oil tankers, chemical tankers, gas carriers and bulk carriers. For other cargo ships, Chapter IX entered into force in 2002. The ISM Code provides an International Standard for the safe management and operation of ships and for pollution prevention. Shipping companies are required to develop a safety management system according to the ISM Code. A Document of Compliance will be issued to a shipping company that complies with the requirements of the ISM Code and a copy of that document should be kept on board the ship. A Safety Management Certificate will be issued to a ship when it has been established that the Company’s Safety Management System (SMS) has been fully implemented on board.

The second paragraph of this Rule stipulates that if Members fail to comply with the flag State’s ISM Code requirements and to maintain ISM certificates, the Club may refuse to compensate liabilities, costs or expenses caused by such failure.