Commentary: Rule 15 Time bar

15.1 General

The traditional practice in P&I Insurance of charging advance and additional premiums is described in the comments to Rules 22 and 23, from which it appears that the Club favours stable premiums and tries to minimise additional calls. To achieve this goal, it is necessary for the Club to be aware of outstanding or upcoming liabilities as early as possible.

Premiums are generally based on a five-year record period. Late reporting of a claim reduces the number of years under which that claim has an influence on the Member’s records. It causes insufficient premiums to be charged, to the detriment of other Members.

This Rule should be seen as an incentive to Members to report all claims promptly to the Club and as a safeguard against any Member who might delay reporting, with the result that his records do not reflect the true extent of his pending liabilities.
The Rule contains different time limits to be observed.

15.2 Six month time limit

The time limit under (a) in the first part of the Rule, refers to casualties and events mentioned in Rule 10 Section 4. Any casualty or event which may give rise to a claim for compensation must be reported to the Club within six months from the time the casualty became known to the Member. Knowledge of the casualty on board the entered ship implies knowledge by her Owner. For casualties only known by Charterers or ship agents, the six month period starts when the matter is first reported to the Member.

15.3 Three year time limit

Item (b) in the first part of the Rule refers to the Member’s right to claim compensation from the Club. If this is not done within a period of three years after claims or expenses recoverable under these Rules have been paid by the Member, his right to compensation is extinguished.

15.4 Ten year time limit

According to the second part of the Rule, there is an absolute time limit for compensation under these Rules of ten years. The time is counted from the date the casualty or event occurred which gave rise to the claim against the Member.

The only exception is when a claim against the Member is subject to legal or arbitration proceedings or adjustment in general average. In such a case, the Member can file a request for compensation until one year after such judgment, award or adjustment has become legally binding. This does not mean that a judgment is a condition for compensation. If a claim in litigation is concluded by amicable settlement more than ten years after the casualty, the Member’s right to compensation is unaffected as long as the request for compensation is made to the Club within one year from the settlement.

As mentioned in the comments to Rule 7 Section 6, claims for fines are sometimes made more than 10 years after completion of discharge. The Club will exercise its discretion to consider compensation of any such late claim under Rule 19, the Omnibus Rule.

15.5 Time limit to submit a dispute to decision under Rule 18

The last part of the Rule refers to a situation in which there is a dispute between the Club and the Member subject to Rule 18. The Club may request a Member, in writing, to submit his claim for decision either by average adjuster or by arbitration within a certain time, which should be at least six months from the date when the Member received the Club’s request. Should the Member fail to comply in timely fashion with the request, his claim against the Club for compensation is extinguished.

15.6 Effect of time bar under this Rule

If a Member fails to observe the time limits mentioned in this Rule, his claim against the Club is extinguished. This means that his claim cannot be invoked against the Club in any way, not even as set-off against unpaid premiums.