PART IV: CLAIMS PROCEDURES

RULE 7: OBLIGATION TO SUE AND LABOUR

1 It shall be the duty of the Member and his agents at all times, whether before, at the time of, during or after the occurrence of any event or matter liable to give rise to a right of recovery by a Member from the Association, to take all such steps, whether in relation to his business or to the insured vessel or otherwise, as may be reasonable for the purpose of averting or minimising any expense or liability in respect of which he may be covered by the Association.

2 The duty imposed on a Member and his agents hereunder shall be to take such steps as could reasonably be expected to be taken by a competent and prudent uninsured owner in the same or similar circumstances and no account shall be taken of any circumstances peculiar to the Member such as his lack of means or inability to provide the requisite funds for any reasons whatsoever.

RULE 8: NOTIFICATION OF CLAIMS

A Member must:

1 Promptly notify the Managers of every event or matter which is liable to give rise to a claim upon the Association and of every event or matter including any legal or arbitration proceedings commenced against the Member which is liable to cause the Member to incur liabilities or expenses for which he may be covered by the Association.

2 Promptly notify the Managers of every survey or opportunity to survey in connection with such event or matter.

3 At all times promptly notify the Managers of any information documents or reports in his or his agents' possession power or knowledge relevant to such event or matter.

4 Whenever so requested by the Managers, promptly produce to the Managers and/or allow the Managers or their agents to inspect, copy or photograph, all relevant documents of whatsoever nature in his or his agents' possession or power.

5 Permit the Managers or their agents to interview any servant, agent or other person who may have been employed by the Member at any time whom the Managers may consider likely to have any direct or indirect knowledge of the matter or who may have been under a duty at any time to report to the Member in connection therewith.

RULE 9: ADMISSION OF LIABILITY

A Member shall not settle or admit liability for any claim for which or for the expenses of which he may be covered by the Association without the agreement of the Managers in writing.

RULE 10: EFFECT OF BREACHES OF OBLIGATIONS IN RULES 7, 8 AND 9

If a Member commits any breach of his obligations in Rules 7, 8, and 9, the Committee may in its discretion reject any claim by him against the Association arising out of any event or matter, or reduce the sum otherwise recoverable from the Association in respect thereof by such amount as it may determine.

RULE 11: TIME BAR

1 Without prejudice to the duty of prompt notification contained in Rule 8, if a Member:

A fails to notify the Managers of any event or matter referred to in Rule 8 within one year after he has knowledge thereof (or in the opinion of the Committee ought to have known thereof); or

B fails to notify the Managers in writing of the commencement of legal or arbitration proceedings against him forthwith upon service or receipt of notice of the said proceedings; or

C fails to submit a claim to the Managers for reimbursement of any liabilities or expenses within one year after discharging them;

the Member's claim against the Association shall be extinguished and the Association shall be under no further liability in respect thereof unless the Committee in its discretion shall otherwise determine.

2 Without prejudice to paragraph 1 of this Rule, no claim shall in any event be recoverable from the Association unless written notice thereof has been given to the Managers within three years from the time of the event or matter.

RULE 12: APPOINTMENT OF LAWYERS AND OTHER PERSONS

1 Without prejudice to any other provisions of these Rules and without waiving any of the Association's rights hereunder, the Managers may at any time appoint on behalf of a Member upon such terms as they may think fit lawyers, surveyors or other persons for the purpose of dealing with any matter liable to give rise to a claim by the Member upon the Association, including, but not limited to, investigating, or advising upon any such matter and taking or defending legal or other proceedings in connection therewith. The Managers may also at any time discontinue such employment as they may think fit.

2 All lawyers, surveyors and other persons appointed by the Managers on behalf of a Member or appointed with the prior consent of the Managers shall at all times be deemed to be appointed on the terms that they have been instructed by the Member at all times to give advice and to report to the Managers in connection with the matter without prior reference to the Member, that they are to produce to the Managers without reference to the Member any documents or information in their possession or power relating to such matter as if such person had been appointed to act and had at all times been acting on behalf of the Association and notwithstanding that any such advice, reports, documents or information would otherwise be the subject of legal or any other form of privilege.

RULE 13: POWERS OF THE MANAGERS RELATING TO THE HANDLING AND SETTLEMENT OF CLAIMS

1 The Managers shall have the right if they so decide to control or direct the conduct of any claim or legal or other proceedings relating to any liabilities or expenses in respect of which a Member is or may be covered in whole or in part or which may give rise to a claim by the Member upon the Association and to require the Member to settle, compromise or otherwise dispose of such claims or proceedings in such manner and upon such terms as the Managers see fit.

2 If a Member does not settle, compromise, dispose of or take steps in connection with the handling of a claim or proceedings as required by the Managers in accordance with paragraph 1 of this Rule, any eventual recovery by the Member from the Association in respect of such claim or proceedings shall be limited to the amount he would have recovered if he had acted as required by the Managers.

3 Unless otherwise agreed by the Managers in writing, when the Association has paid a claim to or on behalf of a Member the whole of any recovery from a third party in respect of that claim shall be credited and paid to the Association up to an amount corresponding with the sum paid by the Association together with any interest element on that sum comprised in the recovery, provided, however, that when, because of a deductible in his terms of entry, the Member has contributed to settlement of the claim, any such interest element shall be apportioned between the Member and the Association taking into account the payments made by each and the dates on which those payments were made.

RULE 14: BAIL

1 The Association shall not be obliged to provide bail or other security in relation to claims made against a Member in any circumstances whatsoever. It shall be a condition precedent of the Managers' consideration of the provision of such bail or security that:

A the Member gives an undertaking to the Association on such terms as the Managers may require;

B the Member remits to the Association any deductible that may apply to such claim, and any call or other amount outstanding due to the Association;

C the Association shall be entitled to a commission from the Member of 1% on the amount of bail or security to be provided.

The Association shall in no circumstances provide cash deposits.

2 If the Association does provide bail or other security in relation to claims made against a Member it shall be without prejudice to the Member's obligations and the Association's rights under these Rules and shall not constitute any admission of a right of recovery from the funds of the Association of the claim in respect of which such bail or other security is provided.