Ship Association

The same ability to ‘walk away’ from a debt affects the manager vis a vis the owner’s P & I Association.  If, as is usual, the managers will not be liable for P & I calls then the Club will limit the extent to which they include the manager in the P & I cover. It is, of course, important for the managers to be ‘co-insured’ in all other insurances relating to the vessel(s) whether the insurance is arranged by the managers or the owners themselves. Whilst there is no certainty that the agreement between the owners and the managers will be on the BIMCO form,  the latter was compiled after world-wide research and it provides an excellent way of appreciating the duties and responsibilities of both parties to a ship management contract. Clause 13 in the BIMCO contract obliges the manager to deal with any legal problems which may arise. Actually coping with many of these will eventually be handled by the P & I Association but inattention or, worse still, the wrong initial response to a legal problem by the manager can make a bad situation worse and can result in losses against which there is no insurance. A typical case could be a cargo claim for shortage or damage.  Such claims occur more frequently in the general cargo trades than with bulk cargoes but wherever they occur the principle is the same.  Someone’s insurance company will have a claim to pay and the procedure is to establish which one it will be.  As with all claims by third parties, a hasty admission of liability can result in the other party having a valid claim against you without you in turn having the ability to be reimbursed by your insurance. However, the opposite to haste is not inertia in such cases because the shipper knows his claim will be time-barred under the Hague (or Hague-Visby) rules within a year.  His recourse in the absence of a satisfactory reaction to his claim is to ‘bring suit’ which in most jurisdictions means obtaining a writ which can be used to arrest the ship if necessary.  Some young maritime lawyers can be over enthusiastic and not content with the threat of arresting your ship he may well do so as soon as your vessel is next within his area of jurisdiction.