See on the interplay between Club Rules and Marine Insurance Act; paras. 5.1–5.9 and paras.

5.29–5.37 supra.
2. Section 85(3).
3. Section 41.
4. See paras. 12.54 et seq.
5. See paras. 12.49 and 12.51 infra; as to cover for liability under towage contracts see
paras. 10.273–10.275 supra.
6. See paras. 10.175 et seq.
7. See paras. 10.180 et seq. supra.
8. See paras. 10.94 et seq. supra.
9. See paras. 10.90 supra.
10. See paras. 10.75 et seq. supra.
11. In the United States it has been held that where a shipowner’s liability policy
contained no express or implied exclusion regarding intentional misconduct and sought to cover
the assured in respect of all claims howsoever caused, the policy was too wide and was void as
being contrary to public policy; see The "Rose Murphy", Fidelity-Phoenix Fire Insurance Co v
John G. Murphy [1933] AMC 444. It is arguable that different considerations should apply to a
situation where an owner is seeking the benefits of the privilege granted to him to limit his
liability and the situation where an insurer is seeking to deprive him of his contractual right to
recover under his contract of insurance.
12. Lewis v The Great Western Railway Company (1887) 3 QBD 195 at p. 206, per
Bramwell LJ.
13. The word "wilful" should be construed in the context in which it appears; see Marcel
Beller v Hayden [1978] 3 All ER 111; R. v Sheppard [1980] 3 All ER 899; Glenlight Shipping v
Excess Insurance Co Ltd 1982 SC 42.
14. Lewis v The Great Western Railway Company (1887) 3 QBD 195 at p. 206, per
Bramwell LJ: see also at p. 211, per Brett LJ. In Morley v United Friendly Insurance plc [1993]
3 All ER 47, Neill LJ at p. 52 explained, "In my judgment the ‘wilfulness’ has to be directed to
the exposure to peril".
15. In National Oilwell Limited v Davy Offshore Limited [1993] 2 Lloyd’s Rep 582,
Colman J appeared to equate recklessness with wilful misconduct; see ibid., at pp. 621 and 622.
Cf. Papadimetriou v Henderson (1939) 64 Ll L Rep 345; Forder v Great Western Railway Co
[1905] 2 KB 532 esp. at p. 535, per Lord Alveston.
16. As to the distinction between gross negligence and recklessness in relation to a "due
diligence" clause in a policy of liability insurance, see W. & J. Lane v Spratt [1970] 2 QB 480.
17. Exclusions in policies of insurance are to be construed contra proferentem; see
Morley v United Friendly Insurance plc [1993] 3 All ER 47; Youell v Bland Welch & Co Ltd
[1992] 2 Lloyd’s Rep 127 at p. 134, per Staughton LJ. For a discussion of the approach to the
construction of insurance wordings, and the contra proferentem rule in particular, see
MacGillivray on Insurance Law, 11th edn., 2008, Chapter 11 and in particular paras. 11.033–
11.034.
18. See The "Lady Gwendolen" [1961] 1 Lloyd’s Rep 335; The "Marion" [1984] 2
Lloyd’s Rep 1.
19. See the discussion below at paras. 12.24 et seq.
20. As to a company’s alter ego, see HL Bolton Engineering Co Ltd v TJ Graham & Sons
Ltd [1957] 1 QB 159 at pp. 172 and 173, per Denning LJ; Lennard’s Carrying Co Ltd v Asiatic
Petroleum Co Ltd [1915] AC 705.
21. See Trinder v Thames & Mersey Insurance Co [1898] 2 QB 114 at p. 124, per
Scrutton LJ; The "Annie Hay" [1968] 1 Lloyd’s Rep 141.
22. Section 55(1) provides that an insurer is liable for "any loss proximately caused by a
peril insured against, but . . . he is not liable for any loss which is not proximately caused by a
peril insured against" and then goes on to particularise losses for which the insurer is not liable
and these include losses attributable to the wilful misconduct of the assured in subsection (2)(a).
23. For discussions on proximate cause and the burden of proof of loss by a proximate
cause, see MacGillivray op. cit. fn. 17 supra, at paras. 19.001–19.009.
24. The usual analysis under hull insurance has been described as follows: "The normal
approach will be to identify the proximate cause of the loss, to consider whether it is a peril
insured against, and, where the issue arises, to consider whether the loss is attributable to the
wilful misconduct of the assured or otherwise falls under an exclusion under the terms of the
cover." State of the Netherlands v Youell and Hayward and Others [1998] 1 Lloyd’s Rep 236 at
p. 245, per Phillips LJ.
25. In a London arbitration (3/88) it was decided that the phrase "sent to sea" did not
include a situation where a vessel sank whilst undergoing repairs at an anchorage within port
limits (reported in LMLN 227).
26. Compania Maritima San Basilio S.A. v The Oceanus Mutual Underwriting
Association (Bermuda) Ltd (The "Eurysthenes") [1976] 2 Lloyd’s Rep 171.
27. See paras. 11.37–11.42, supra.
28. The "Eurysthenes" op. cit. fn. 26 supra, at p. 178. See supra "Wilful misconduct of
the member" at paras. 12.13–12.22.
29. Ibid., see the authorities cited at pp. 178, 179.
30. Ibid., at p. 179.
31. Ibid., at p. 179.
32. [1995] 1 Lloyd’s Rep 651.
33. [1997] 1 Lloyd’s Rep 360.
34. Ibid., at pp. 377, 378, per Leggatt LJ.
35. As to locating the alter ego and the persons with relevant knowledge, see also The
"Ert Stefanie" [1989] 1 Lloyd’s Rep 349; El Ajou v Dollar Land Holdings plc [1994] 2 All ER
685.
36. See PCW Syndicates v PCW Reinsurers [1996] 1 Lloyd’s Rep 241; Group Josi Re. v
Walbrook Insurance Co Ltd and Others [1996] 1 Lloyd’s Rep 345. See also Meridian Global
Funds Management Asia Ltd v Securities Commission [1995] 3 All ER 918.
37. See paras. 6.45–6.48 supra.
38. The only reported decision where section 39(5) has been successfully relied upon is
Thomas v Tyne and Wear S.S. Freight Insurance Association [1917] 1 KB 938, and that case
concerned unseaworthiness by virtue of an incompetent crew.
39. See paras. 12.28–12.29 supra.
40. See paras. 11.19 et seq. supra.
41. Clause 4.
42. Clause 6.2.
43. Clause 14.4
44. para. 4.29 supra.
45. See paras. 4.29 et seq. supra.
 46. See paras. 11.11 et seq. supra.
47. See paras. 11.16 et seq. supra.
48. In cases where the entry is solely in the name of a non-demise charterer, most Rules
require only that the vessel remain classed with an approved Classification Society.
49. See para. 11.20 supra.
50. See para. 11.23 supra.
51. Sorenson & Nielson, and J. Aron & Company Inc. v Boston Insurance Company
[1972] AMC 1288.
52. See The "T. W. Lake", Hanover Fire Insurance Company of N. Y. v Merchants
Transportation Company [1927] AMC 1; George A. Moore & Co v Eagle Star & British
Dominion Insurance Company Ltd etc. (The Schooner "C.S. Holmes") [1925] AMC 729; [1926]
AMC 126; New York and Cuba Mail Steamship Company v Continental Insurance Company of
the City of New York (The "Morro Castle") [1940] AMC 366; [1941] AMC 243.
53. Continental Insurance Company Inc. v Sabine Towing Company Inc (The "Edgar F.
Coney" and Tow) [1941] AMC 262.
54. Ibid., at p. 226. Cf. the dissenting judgment of McCord CtJ at pp. 272–274 on the
basis that such a "privity" clause defeats the effect of the policy.
55. In the US case of In the Matter of Barge "B.W. 1933" [1968] AMC 2738, it was
decided that a shipowner’s P&I policy insuring an oil company’s liabilities as a "shipowner" did
not cover liability imposed on it as a terminal operator and shipper. See also Tide Water Oil Co v
American Steamship Owners’ Mutual Protection and Indemnity Association Inc. [1935] AMC
936.
56. See La Cross v Craighead, 466 F. Supp. 880; [1982] AMC 2692, where a supply-
boat owner’s P&I insurer was held not liable to indemnify a charterer as the owner of a drilling
rig when a seaman was injured in circumstances involving the charterer in his capacity as owner
of the drilling rig rather than as "Owner and Charterer" of the supply-boat.
57. [1972] AMC 818.
58. Ibid., at pp. 823, 824, per John R Brown ChJ.
59. Chrismas v Taylor Woodrow Civil Engineering Ltd and Sir Robert McAlpine Ltd
[1997] 1 Lloyd’s Rep 407.
60. Ibid., at p. 410. See also Rigby and Another v Sun Alliance & London Insurance Ltd
[1980] 1 Lloyd’s Rep 359 esp. at p. 364, per Mustill J; Sturge v Hackett [1962] 1 Lloyd’s Rep
117 at p. 124, per McNair J; C. F. Turner v Manx Line Ltd [1990] 1 Lloyd’s Rep 137 at p. 143,
per Neill LJ.
61. As to the expanded definition of a shipowner, see Merchant Shipping Act 1995,
Schedule 7, Part I which incorporates Article 1, Convention on Limitation of Liability for
Maritime Claims 1976; Cmnd. 7035.
62. See paras. 12.48 et seq. supra.
63. Most clubs also offer a form of extended cargo cover, either as an annual, or ad hoc,
short term basis to cover liability claims which arise outside of the member’s role as ship
operator, e.g. where it acts at a terminal, or freight forwarder.
64. Merchant Shipping Act 1995, section 313.
65. See paras. 6.51 et seq. supra.
66. See para. 6.55 supra.
67. A member cannot, of course, prejudice his cover by contracting according to the
appropriate law and Club Rules must be read subject to the appropriate law. Prior to the
enactment of the United Kingdom Unfair Contract Terms Act 1977, most clubs’ rules contained
a provision relating to the carriage of passengers in the following terms: "The passenger and
baggage ticket or other contract between the member and the passenger or passengers shall
relieve the member of all liabilities, costs and expenses to the utmost extent permitted by the
appropriate law."
68. As to the ordinary measure of damages, in the absence of statute and convention, see
Hadley v Baxendale (1854) 9 Ex 354; A/B Karlshamns Oljefabriker v Monarch Steamship Co
(1948) 82 Ll L Rep 137; Cory v Thames Ironworks Co (1868) LR 3 QB 181.
69. Although P&I Clubs accept claims in full which arise from the indemnity in the
towage contract, claims which arise in negligence are dealt with under the 3/4ths Collision
Clause of the owner’s hull cover; see Furness Withy & Co v Duder [1936] 2 KB 461.
70. This basically covers normal port towage of an entered vessel in the ordinary course
of trading but does not automatically cover ocean towage.
71. See Chapter 24 infra., it is thought that the clubs will deal with the Rotterdam Rules
in the same way as their current approach to the Hague and Hague-Visby regimes.
72. See paras. 10.66–10.69 supra.
73. See Joseph A. Lodrigue v Montegut Auto Marine Service, et al. [1978] AMC 2272.
74. See Seaboard Shipping Corporation v Jocharanne Tugboat Corporation, et al., and
Oceanus Mutual Underwriting Association Ltd [1972] AMC 2151, especially at p. 2156.
75. Prudential Grace Lines Inc v Continental Casualty Company [1972] AMC 2655.
76. See paras. 10.7–10.10 and para. 12.10 supra.
77. M. J. Rudolph Corp v Lumber Mutual Fire Insurance Co (Luria International and
Others, Third Parties) (The "Cape Borer") [1975] 2 Lloyd’s Rep 108 (US Dist. Ct.).
78. This type of expense is dealt with in more detail Chapter 19 infra.
79. [1972] AMC 2151.
80. Ibid., at p. 2156.
81. This is also dealt with infra, at paras. 19.39 et seq.
82. Grand Union (Shipping) Ltd v London Steam Ship Owners’ Mutual Insurance
Association Ltd (The "Bosworth") (No. 3) [1962] 1 Lloyd’s Rep 483.
83. There was also a separate claim in respect of life salvage simpliciter by another vessel
which would have been for the account of the club but for the fact that it exceeded the club’s
limit of indemnity as agreed in the terms of entry.
84. Formerly, section 544 of the Merchant Shipping Act 1894; see now, Article 16 of the
Salvage Convention 1989; the Merchant Shipping Act 1995, Schedule 11, Part II, paragraph 5.
85. [1896] 2 QB 16.
86. Ibid., at p. 23, per Lord Esher MR.
87. See paras. 10–246 et seq. supra.
88. As to entry by charterers, see paras. 6.60–6.68 supra; and Chapter 25 infra.
89. Prudential Grace Lines Inc v Continental Casualty Company (Morlich’s Case)
[1972] AMC 2655.
90. Ibid., at p. 2658.
91. See para. 6.59 supra.
92. See para. 12.10 supra.