Section 3 Regulations
The right to issue regulations, afforded to the Club by this provision, should be seen as an adjunct to the Club’s loss prevention role. Experience gained in handling a considerable number of cases under the P&I Insurance and information on legal, technical and nautical matters obtained from lawyers and representatives and, not least from the ongoing discussions and exchange of information between the Group Clubs, needs to be shared by all Members as part of the concept of mutuality.
Regulations to Members are generally contained in circulars issued by the Club.
The majority of circulars issued contain general information which the Club considers important for Members. Such circulars may not qualify as regulations in the sense of this clause.
However, a number of circulars contain recommendations to Members to act in a certain way. Such a recommendation should be regarded as a regulation in the sense of this clause. It allows the Club to consider whether compensation to a Member who did not follow the recommendation in order to save money, should be reduced or, in more serious cases, completely denied.
Finally, there are some circulars which contain regulations, compliance with which is clearly a condition for cover under the Rules.
The validity/lifetime of a circular and the regulations it contains may vary considerably. The effect of a breach of regulations will be considered by the Club in relation to the age of the circular and the possibilities for a Member to observe its contents, unless the circular contains an absolute exclusion of cover.
Members’ attention is drawn especially to the specific circular issued annually in December, following the Board meeting at which the conditions for the policy year to follow are decided. The circular specifies the general conditions for Owners’ and Charterers’ P&I Insurance. All circulars issued since 2002 can be found on the Club website.
10.3.3 Other regulations
Regulations can be given individually. To have the effect described in the second part of the provision, the regulations can be in writing and also issued electronically by way of email or posted on the Club website.
10.3.4 General regulations
General regulations can be directed to all Members and be in respect of all ships entered. Regulations can be general also in the sense that they concern all ships of a certain type or age or trading in certain areas or with certain cargoes.
The Club may for instance request surveys of ships beyond a certain age or equipped with hatches of a type which has caused repeated cargo damage.
The provision also empowers the Club to issue trading warranties which exclude or restrict trading in areas where war, or similar, dangerous conditions exist or allow trading only at an additional premium. See the comments under 11.5.3.
10.3.5 Particular regulations
The words “particular regulations” indicate that regulations can be made in respect of a specific Member or a certain ship. The Club may require a Member to submit his ship to be surveyed at any time by appointment of a surveyor nominated by the Club (a condition survey).
The result of such a survey may cause the Club to issue new particular regulations under this provision for the Member to effect necessary repairs forthwith or within such a time as specified by the Club.
The Club may call upon the classification society to survey the ship, should the Club become aware of any condition which could endanger the safety of the ship, its crew, passengers or cargo.
The right of the Club to survey the ship follows not only from the power to issue regulations under this clause. It is expressly stated in the third part of Rule 10 Section 4. The Club can exercise that right through the appointment of any surveyor of its choice.
The Club may also issue regulations to exclude cover for claims which arise out of or are contributed to by any defect in the ship in respect of which a surveyor has made a recommendation as to repair. A tanker with a defective coating may get a restriction of cover for types of cargo to be carried until the defect has been remedied and surveyed to the Club’s satisfaction. A ship with repeated cargo damage due to leaking hatches may lose cover for wet damage to cargo carried until its hatches have been suitably repaired.
Regulations issued by the Club for a Member to effect repairs, for instance, to comply with class regulations or to render holds suitable to receive cargo do not render the ensuing costs recoverable from the Club. It is a prerequisite for cover under these Rules that Members comply with all mandatory obligations. The costs of doing so are running expenses not subject to insurance cover, whether incurred on instructions or not.
10.3.6 Effects of failure to comply with regulations
If a Member fails to comply with such regulations, the last part of the provision allows the Club either to reject a claim for compensation or reduce any amount payable to the Member under these Rules.
The ultimate remedy against a Member who fails to comply with regulations issued by the Club under this provision is provided in Rule 26 (c). It gives the Club the right to terminate the period of insurance on seven days’ notice.