The 2011 agreement does not apply to charter parties that were concluded prior to September 1, 2011, or to claims arising from those chartered parties, whether these rights arise before or after September 1, 2011. However, the contracting parties may expressly decide to include the 2011 agreement reached before that date in the chartered lots and apply them to the rights arising from those charter lots. (b) the party requesting security response requests by offering the other part of the charter an acceptable guarantee of an equivalent amount with respect to the right to freight when asked to do so. The principal owners have demanded that distributor owners grant a counter-guarantee in accordance with Article 9 of the ICA 2011, which they consider to be included in the charter party. The Inter-Club Agreement, which was last amended in 1996 (“the 1996 agreement”), was further amended to include a new right-to-security provision for freight applications. These are issues related to the time and cost required to meet the security requirements under the 1996 agreement, which encouraged the International Group of P-I Clubs (the “international group”) to resolve the unsatisfactory position of the 1996 security agreement. The court agreed with the charterers that the chartering party included, strictly constructed, only the parts of the 2011 ICA regarding the allocation and processing of freight rights. The wording of section 35 was clearly restrictive and did not provide security for claims. In the absence of explicit wording containing the full provisions of the ICA, their full inclusion could not be accepted. Although this conclusion was made in an arbitration proceeding and therefore does not constitute a legally binding precedent, it may encourage others to challenge security claims for similar reasons.
Gard therefore recommends that members and customers carefully review the charter`s handling clauses to ensure that the 2011 ICA is clearly integrated into its entirety. Gard will discuss the potential impact of this award with other clubs within the International Group of P-I Clubs and Gard will update our members and clients in due course. In the meantime, members or clients who have questions or need help are encouraged to contact Gard. The court agreed with the charterers that, for reasons of rigorous construction, paragraph 35 concerned only the distribution and settlement of cargo claims and therefore did not contain the requirement of the warranty. There was no basis for the application of Article 9 of the ICA 2011 and Article 35 did not contain the full text of the ICA 2011. While security could sometimes be preserved, it was often an expensive and tedious process. In a case recently handled by Reed Smith, a vessel was stopped as collateral for a 1996 application for an agreement. The arrest was the subject of strong challenges in the course of a judicial proceeding, which required detailed legal advice.
The owners demanded a counter-guarantee from their charterers for a claim they had invoked with the principal owners, in accordance with Article 9 of the 2011 Inter-Club Agreement (ICA). The charter portion, an amended form from NYPE 1946, contained a clause that states: ” (l) iability for cargo claims, as between Charterers and Owners, is portioned/settled as specified by the Interclub New York Produce Exchange Agreement effective from 1996 and its subsequent subs amendment.” In addition, in 2011, the ICA was an agreement between THE IG clubs that it recommended to its members to accept. The preamble states that the Gard recommends that members and customers include the ICA in 2011 at the NYPE and ASBATIME charter evenings. The objective of the ICA is to promote adequate settlement and reduce costs by avoiding costly litigation in the handling of freight applications. In this case, the Tribunal found that the decision did not compromise the intent of the ICA, since the main objective, namely the rapid allocation of liability for cargo claims, was not affected.