Rules 2001:

These Notes, including those appended to Rule 2 Sections 10C and 11, do not form part of the Rules or any Regulations made thereunder and are intended as guidance only to Members in relation to the practice of the Association. They do not constitute any waiver or variation of the requirements of the Rules or any such Regulations.

1 Bail, Rule 14 Paragraph 1

Subject to agreement in writing in individual circumstances the undertaking which the Managers will normally require will be in the following form:

TO THE SHIPOWNERS' MUTUAL PROTECTION AND INDEMNITY ASSOCIATION (LUXEMBOURG)

Dear Sirs,

Vessel

Voyage (or port, etc)

Date

Incident

We hereby request you (either personally or through your agents) to provide bail or other security in the sum of                     which bail or security is now being requested and/or is now required in order to avoid the arrest or detention of

SS/MV 

or in order to secure her release from arrest.

In consideration of your providing such bail or security (hereinafter called "the bail or security") we hereby agree as follows:

1 To pay immediately upon any liability being incurred by you or your agents under or in connection with the bail or security a sufficient sum to discharge such liability in full and generally to take all such measures as may be necessary to ensure that such liability is discharged in full without delay as soon as it may be incurred and that neither you nor your agents shall be required to make any payment whatsoever to discharge such liability save out of the funds (hereinafter called "the funds") which we shall have provided.

2 To indemnify you and hold you harmless in respect of any loss or damage whatsoever which may result from your giving the bail or security and to reimburse to you at any time upon your demand any sum or sums of money you may be called upon to pay under or in connection with the bail or security.

3 To pay all your costs, expenses, charges and commission (as specified in your Rules) in connection with the provision of the bail or security.

4 Without prejudice to the foregoing in the event that, in breach of our obligation under Clause 1 above, we fail to provide the funds and you are obliged nevertheless to incur or, notwithstanding that you have no such obligation, you elect to incur any such liability, loss, damage, costs, expenses, charges or commission, then

A you shall be entitled to demand immediate repayment of the amount of any such liability, loss, damage, costs, expenses, charges or commission;

B in the event that, in breach of our obligations hereunder, such repayment is not immediately made, we will pay to you interest thereon or on any part thereof for the time being outstanding at the rate of 2% per annum above the offered rate between prime banks in the London Inter Bank Euro-dollar Market for three-month deposits (the rate being determined monthly on the first day of the appropriate month) until such repayment is made.

5 That this agreement shall be governed by English law and that, without prejudice to your right to institute proceedings in any other jurisdiction, the High Court of Justice in London shall have jurisdiction to hear and determine any action brought by you in connection herewith.

We further agree that, by providing any of the bail or security, the Association shall incur no obligation whatsoever to provide any further bail or security in connection with the above incident and that the Association may at any time in its absolute discretion cause the above bail or security to be cancelled or released.

If we are insured by the Association in respect of the above incident, we reserve our right to claim repayment of any sums we may pay hereunder which are properly recoverable in accordance with your Rules.

Yours faithfully,

2 Delivery of Cargo without Production of Bills of Lading/Change of Destination

A Member has no right of recovery from the Association of any claims that result from delivery of cargo without production of the bill of lading or discharge of cargo at a port or place other than in accordance with the contract of carriage.

If Members nevertheless wish to adopt either of these practices at their own risk they are advised to obtain an appropriate indemnity from charterers or cargo interests. In doing so they should understand that cover by the Association is not restored when an indemnity is obtained; the indemnity must fill the gap created in the cover by the Association and it is for Members to decide what constitutes sufficient security for these purposes.

Forms of recommended indemnity wordings follow.

Standard Form Letter of Indemnity to be given in return for delivering cargo without production of the original Bill of Lading

To:                      [insert name of Owners]

The owners of the [insert name of ship]

Dear Sirs,

Ship:                   [insert name of ship].

Voyage:               [insert load/discharge port, as stated in the Bill of Lading]

Cargo:                 [insert description of cargo]

Bill(s) of Lading:   [insert identification number, date, place of issue]

The above cargo was shipped on the above vessel by [insert name of shipper] and consigned to [insert name of consignee or to whose order the Bill of Lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the Bill of Lading] but the Bills of Lading have not arrived and we, [insert name of party requesting delivery], hereby request you to give delivery of the said cargo to [insert name of party to whom delivery is to be made] without production of the original Bill(s) of Lading.

In consideration of your complying with our above request, we hereby agree as follows:

1 To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expenses of whatsoever nature which you may sustain by reason of delivering the cargo in accordance with our request.

2 In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the cargo as aforesaid to provide you or them on demand with sufficient funds to defend the same.

3 If, in connection with the delivery of the cargo as aforesaid, the ship or any other ship or property belonging to you should be arrested or detained or if the arrest or detention thereof should be threatened to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property and to indemnify you in respect of any liability, loss, damage or expenses caused by such arrest or detention or threatened arrest or detention whether or not such arrest or detention or threatened arrest or detention may be justified.

4 As soon as all original Bills of Lading for the above cargo shall have come into our possession to deliver the same to you, whereupon our liability hereunder shall cease.

5 The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.

6 The liability of each and every person under this indemnity shall in no circumstances exceed 200% of the CIF value of the above cargo.

7 This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England.

Yours faithfully,

For and on behalf of                     [insert name of Requestor]

Signature

For and on behalf of                     [insert name of Bank]

Signature

Standard Form Letter of Indemnity to be given in return for delivering cargo at a port other than that stated in the Bill of Lading

To:                      [insert name of Owners]

The owners of the [insert name of ship]

Dear Sirs,

Ship:                   [insert name of ship].

Voyage:              [insert load/discharge port, as stated in the Bill of Lading]

Cargo:                 [insert description of cargo]

Bill(s) of Lading:   [insert identification number, date, place of issue]

The above cargo was shipped on the above vessel by [insert name of shipper] and consigned to [insert name of consignee or to whose order the Bill of Lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the Bill of Lading] but we, [insert name of party requesting substituted delivery], hereby request you to order the vessel to proceed to and give delivery of the said cargo at the port of [insert name of substitute port] against production of at least one original Bill of Lading.

In consideration of your complying with our above request, we hereby agree as follows:

1 To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expenses of whatsoever nature which you may sustain by reason of the vessel proceeding and giving delivery of the cargo in accordance with our request.

2 In the event of any proceedings being commenced against you or any of your servants or agents in connection with the vessel proceeding and giving delivery of the cargo as aforesaid to provide you or them on demand with sufficient funds to defend the same. 

3 If, in connection with the vessel proceeding and giving delivery of the cargo as aforesaid, the ship or any other ship or property belonging to you should be arrested or detained or if the arrest or detention thereof should be threatened to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property and to indemnify you in respect of any liability, loss, damage or expenses caused by such arrest or detention or threatened arrest or detention whether or not such arrest or detention or threatened arrest or detention may be justified.

4 The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.

5 The liability of each and every person under this indemnity shall in no circumstances exceed 200% of the CIF value of the above cargo.

6 This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England.

Yours faithfully,

For and on behalf of                     [insert name of Requestor]

Signature

For and on behalf of                     [insert name of Bank]

Signature

Standard Form Letter of Indemnity to be given in return for delivering cargo at a port other than that stated in the Bill of Lading and without production of the original Bill of Lading

To:                      [insert name of Owners]

The owners of the [insert name of ship]

Dear Sirs,

Ship:                   [insert name of ship].

Voyage:               [insert load/discharge port, as stated in the Bill of Lading]

Cargo:                 [insert description of cargo]

Bill(s) of Lading:   [insert identification number, date, place of issue]

The above cargo was shipped on the above vessel by [insert name of shipper] and consigned to [insert name of consignee or to whose order the Bill of Lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the Bill of Lading] but we, [insert name of party requesting substituted delivery], hereby request you to order the vessel to