Request from the Turkish authorities for confirmatory letters of P&I cover for ships entering international straits and Turkish waters, ports and terminals
The Government of Turkey issued a notice dated 16 November 2022 which requires all ships transiting or entering Turkish waters from 01 December 2022 (extended to 02 December 2022), to provide letters of confirmation from the owner’s P&I Club attesting that cover will remain in place under any circumstances throughout the duration of the transit or the time the ship is in Turkish waters or the time it is in a port or terminal.The International Group has assessed this issue in detail and, at the time of writing, it has been agreed that Clubs cannot and should not issue such a letter to their Owner or Charterer members.
The Turkish Government’s requirements go well beyond the general information that is contained in a confirmation of entry letter. It requires a P&I Club to confirm that cover will not be prejudiced under any circumstances, including where there is a sanctions breach on the part of the assured, whether knowingly and intentionally or unknowingly and unintentionally. Issuing a confirmatory letter under these circumstances would expose the Club to a breach of sanctions under EU, UK and US law and as such the Clubs cannot comply with the Turkish Authority’s request.
The International Group has sought to resolve this issue through negotiation and further discussions with the relevant Turkish Authorities are likely to take place on Monday 5 December. In the meantime, it is important to note that the present situation arises from the introduction on 5 December 2022 of the Russian Oil Price Cap regime, which will prohibit the transport and related insurance services of Russian oil when it is traded above the price cap set by the G7 and its coalition partners.
The imminent introduction of this new Russian oil waiver programme is at heart of the request for letters of confirmation from P&I Clubs stating that the provision of a Member’s P&I cover will not be subject to the Rules on cover, sanctions clauses or other exclusion clauses that could result in the withdrawal of cover even when it transpires that damage has been caused by a sanctioned cargo. For this reason, Clubs cannot provide such letters.
Clearly, Members will be keen to continue voyages through Turkish controlled international straits and waters. However, the problem currently faced by Members arises directly from the prohibitions that the EU, UK and US have introduced on Russian oil. It should be noted also that there is a grace period on oil cargoes from Russia loaded before 5 December, which expires on 19 January.
Source: Skuld
Fixed premium P&I covers reinsured outside the International Group’s Pooling Agreement – special extension of cover for Covid-19 risks
We refer to Member Circular No. 15/2020 regarding the amendments to the Rules for 2021.
To harmonize standard terms of cover for fixed premium P&I entries with the governing reinsurance arrangement,1 it was necessary to include, inter alia, the Coronavirus Exclusion Clause (LMA 5395) and the Cyber Endorsement (LMA 5403) in the Rules for Mobile Offshore Units (MOUs); the Additional Covers -Terms and Condition; and in the individual Certificates of Entry for Charterers’ P&I risks2 with effect for the 2021 policy year commencing on 20 February 2021.
However, to meet the needs for protection against the Coronavirus risk within the fixed P&I segment, Gard P. & I. (Bermuda) Ltd and Assuranceforeningen Gard – gjensidig (hereinafter collectively referred to as the ‘Associations’) will offer Members and clients in respect of the categories of covers listed below a special extension of cover. The extension of cover (hereinafter referred to as the ‘Special Covid-19 Extension’) shall comprise liabilities, losses, costs and expenses falling within the scope of terms of entry agreed but for the Coronavirus Exclusion Clause (LMA 5395) and subject to a sub-limit of USD 10 million per ship or vessel per event. (No extension of cover is offered in respect of risks excluded pursuant to the Cyber Endorsement).
The Special Covid-19 Extension shall apply for the following categories of fixed premium covers offered by the Associations:
• Comprehensive Charterers’ liability cover• P&I for Mobile Offshore Units (MOUs)• Crew cover• Comprehensive Carriers cover• Extended Crew Cover• Comprehensive general liability cover for offshore and specialist vessels (CGL)• Comprehensive general liability cover for MOUs (CGL)• Divers’ cover
Certificates of entry and/or cover notes and/or insurance policies issued for the 2021 policy year in respect of the above covers shall be deemed to include the following clause:
SPECIAL COVID-19 EXTENSION CLAUSE
The contract of insurance evidenced by this Certificate of Entry/Cover Note/Insurance Policy is extended to include liabilities, losses, costs and expenses falling within the scope of cover pursuant to terms of entry agreed as specified in this Certificate of Entry/Cover Note/Insurance Policy but for the Coronavirus Exclusion clause. The Association’s liability under this COVID-19 EXTENSION CLAUSE shall be limited to USD 10 million per Ship or Vessel per event. All other terms, conditions and limitations of the insurance remain the same.
No additional premium will be levied in respect of the Special Covid-19 Extension for the 2021 policy year.
If you have any questions about the Special Covid-19 Extension for fixed premium P&I products, please contact Bjørnar A. Andresen, Group Chief Underwriting Officer, Arendal.
Source: Gard, http://www.gard.no/Content/31036371/MemberCircular_16_2020.pdf