Inter-Club Nype Agreement 1996 (As Amended 1 September 2011)

This was a practical and commercial decision of the judge in circumstances where the owners were aware of the claim in question, but wanted to rely on technical arguments of delay to avoid liability. It also contains welcome clarification of the time limits applicable to the ICA 1996 claims which, as they will be presented, will also apply to the claims covered by the ICA 2011. It was issues related to the time and cost of managing the safety requirements of the 1996 Agreement that encouraged the International Group of P&I Clubs (the “International Group”) to resolve the unsatisfactory security position under the 1996 Agreement. Reference is made to Circular 2016/011, in which members are referred to the Inter-Club New York Produce Exchange Agreement 1996 (the “ICA”) as amended in September 2011, which provides for a liability mechanism for freight rights arising from the New York Produce Exchange Form (NYPE) or the Asbatime Charterparties and/or contracts of carriage approved under these charter parties; fast and fair can be shared between owners and charterers. Under this new provision, the right to security is reciprocal as soon as one of the parties to a party to the charter has provided security in respect of a request for freight, provided that the time limits set out in clause 6 of the agreement have been complied with. According to the judge, the reasonable man would read the ICA(2) clause in such a way that the limitation period should apply in the case of clause (6) ICA, notwithstanding clause 39(2). The judge referred to the decision of the Court of Appeal of Strathnewton [1983] 1 Lloyd`s Rep 219 and accepted, in this case, that the ICA terms “shall cut debts and objections under the other terms of the party to the charterer”, including “debts and defences of the Hague Rules when admitted to the charter party”. The Strathnewton decision referred to the ICA in 1984, but remained relevant to the interpretation of the ICA in 1996, particularly in view of the text added in clause (2) ICA 1996. The Inter-Club Agreement, last amended in 1996 (the 1996 Agreement), has been amended to introduce a new provision on the right to safety for loading claims. This new clause confers a contractual right to security, provided that the other party has the mutual guarantee. This guarantee may be required even in the absence of a right of levy. It is only necessary that the right falls under the definition of a “right to freight” as defined in clause 3 of the 1996 Agreement and that the notice period has been respected in clause 6. This provision makes the payment of a freight entitlement a condition precedent for any right to compensation under the 1996 Agreement.

Until now, if the claim has not been paid, the party sued in respect of a freight claim was generally not able to assert a right to obtain a claim for reimbursement from the other party of the charter concerned. The sub-charterers paid a freight-related claim, which was invoked by freight interest, and attempted to recover the amount of the transaction from the charterers who, in turn, attempted to pass on the claim to the owners. . . .