Subject: Summary before LEG 91 - available insurance

From: Erik Røsæg

Date: Fri, 21 Apr 2006 08:41:05 +0200


To: Athen-korrgr


Dear Correspondents,

Despite the radio silence in the Correspondence Group the last weeks, there has been a fruitful dialog between some interested parties. There are still a few loose ends to tie up, and /all /interested parties must obviously get a chance to take part in the discussions and have time and opportunity to consider the proposals. I therefore foresee the following procedure:

   * An informal working group Monday and Tuesday of the Legal
     Committee next week, either set up by the plenary or working in
     the fringes
   * An outline of an agreed way forward in the plenary session
     Wednesday morning
   * Final decision at LEG 92

Information from the industry - some of which was only confirmed to me last night - indicate that the Athens Convention can be implemented quite smoothly:

  1. The non-war Athens cover (with BioChem exemptions, etc as
     envisaged in the LEG documents) are likely to be offered by the
     P&I Clubs for currently entered vessels if - but only if - the
     terrorism insurance issues can be resolved in a way the
     clubs/shipowners find satisfactory.
  2. The key element of a satisfactory solution of the terrorism
     insurance issues - seen from the shipowners'/mortgagees' point of
     view - would probably be to avoid liability that is not insurable.
     This problem can be overcome by ensuring that the 1996 LLMC limit
     (SDR 175,000 per passenger) applies to terrorism-related
     liabilities pursuant to Article 19 of the Athens Convention.
     Insurance would then be available. A moot point in this context is
     whether the shipowners should remain liable if the insurance  is
     canceled (under the terms of the insurance).
  3. The insurance referred to in #2 above is subject to policy
     defences and has no provisions for direct action. A CLC-type
     insurance for the additional protection of passengers would
     therefore be advantageous. A well-reputed London broker has now
     informed that that such insurance is available up to USD 500 mill.
     subject to such exemptions as envisaged in the LEG documents. (The
     limit envisaged in the LEG documents was USD 400 mill.)

I look forward to see the finalizing of this long-standing issue.

Erik Røsæg


Professor Erik Røsæg (Rosaeg)
Scandinavian Institute of Maritime Law
University of Oslo
POB 6706 St. Olavs plass
N-0130 Oslo, Norway

Tel: (+47) 22 85 97 52
Fax: (+47) 97 38 49 98