With thanks to our friends at Britannia and the IG, we are circulating their update of 3 July which reports on changes to the Inter Club Agreement with effect from 14 July 2025.
Our perspective is different to the Club’s. We only see matters that end up in legal disputes. For that reason, we’re not sure we’d agree that the ICA continues to work well achieving its intended purpose. There are still plenty of disputes under the ICA, even in cases where both sides are insured by IG Clubs. We expect that this may be due to members not wanting these losses to sit on their claims records thus affecting their renewal premiums.
This latest amendment seeks to deal with a problem that we have never encountered before. We have always taken the view that “properly settled or compromised and paid” has always included a Court judgment or arbitration award. This stems from Lord Justice Kerr’s comments in The Strathnewton (1). He said that those words did no more than state that the cargo claim had to be “dealt with” before a claim under the ICA could be pursued. We’ve never heard it argued that an ICA claim can’t be pursued if the cargo claim was resolved rather than settled. Indeed, that would be a rather odd argument no doubt conceived by a pedantic lawyer!
Most legal wrangling in this area concerns cargo claims that are settled without due care and attention being given to the HVR defences. Or where substantial legal costs are run up by the claimant which are then lumped into the ICA claim. Those problems will continue to exist.
There is also an amendment to clause 3 (c) of the ICA which deals with the legal and other costs of defending a cargo claim which in fact fails. This addresses some previous conflicting arbitral decisions which we reported on back in 2018. We took the view at that time that the existing ICA did cover a claim for these costs, so we’d once again say there is no need for this amendment. However, the IG has now made the position clear.
At BDM we handle many ICA disputes. We see no obvious reduction in the number of claims. Indeed, ICA claims appear to be on the rise no doubt due to the fact that the quantum of cargo claims and the associated legal costs have increased. That makes it more likely that owners and charterers will find a way to disagree on who should bear this exposure particularly since P&I premiums are now more closely linked to a members’ claims record.
(1) [1983] 1 Lloyds Rep 219 (Court of Appeal) at page 227.
Nick Burgess
Partner
