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ITIC

THE PROFESSIONAL INSURER

ITIC

THE PROFESSIONAL INSURER

INTERMEDIARY2006 EDITION

In this edition:

Signing off - The importance ofgetting it right

Naval Architects LossPrevention

Classification Liabilities

Ship Managers’liabilities underGerman Law

Surveyors signingIndemnities

visit ITIC's new website andsign up for the new ITICnews service

itic-insure.com

Features in this issue:Surveyors Signing Indemnities 2

Signing Off - The Importance of Getting it Right 4

Liabilities of Ship Owners Attaching to Agents 6

FONASBA/ITIC ISPS Clause 8

Drafting Pro-forma Disbursement Accounts 8

When is a Ship not a Ship? 9

Ship management German style 10

The ITIM team 12

Classification Society Liability 14

Escrow Accounts 16

Naval Architects - Thoughts on Loss Prevention 18

ITIC News 20

1

ITIC

THE PROFESSIONAL INSURER

© International Transport Intermediaries Club Ltd. 2006

The Intermediary is for the general information of the readerand does not replace the need to take special advice.Thearticles represent the views of the contributors and do notnecessarily reflect the views of the Club or the Managers.

Welcome from Harry GilbertChairman ITIC

I am delighted to introduce this latest edition of The Intermediary. It isdesigned, as ever, to be informative and practical on the one hand, whileremaining straightforward and readable on the other. It also seeks toprovide you with information about the continuing development of theClub and details of those within the Managers' offices that you mayhave cause to contact.

Your Club has had another excellent year, and now serves nearly 1800Members from around the world. Our financial position is strong, andwe have once again been able to announce a "mutual dividend" in theform of a continuity credit. It is your Board's hope that this trend willcontinue, but we all understand that it cannot be taken for granted andwill always depend on the Club's strategic and financial development.

ITIC insures many different professions within the transport industryand it is impossible to include articles that will touch on everymember's professional life in each edition. However, the thread that runsthroughout this edition is that care must be taken throughout ourworking careers, and that ITIC can help you if something goes wrong.This edition of The Intermediary includes articles on signing indemnitiesas a surveyor, ship management in Germany and how intermediariesshould sign off documents, how agents should word pro-formadisbursement accounts and loss prevention for naval architects.

You will also find details of changes within the Managers' office followingrecent retirements and new appointments.These changes arehighlighted at pages 12 and 13 and are also set out on the Club'srecently revised website.The Managers continue to provide a seamless24-hour service for us all, and when things do go wrong we know wecan look to them for assistance in the expectation that the service wereceive will be consistently first class.

Finally, I would like to thank you, the Members, for the support andenthusiasm you give to your Club. It is my intention that it should alwaysbe an organisation run for the benefit of us, its Members.

32

SURVEYORSSIGNING INDEMNITIESSometimes the Club's surveying members will be asked to sign indemnities, disclaimers, waivers or releasesbefore the ship owner authorises the surveyor to board the ship.This is obviously a very different situationto when the surveyor is agreeing terms between themselves and their own principal. A surveyor may beasked to sign an indemnity / waiver when appointed to perform a pre-purchase survey or when appointedby insurers to inspect a ship following an accident.

What must you consider?It should be remembered that the surveyor will be acting on behalf

of his principal (who instructed him to perform the job). It is likely

that there will already be terms and conditions between the surveyor

and his principal containing various waivers and indemnities.

The indemnity/waiver required by the owner will be a completely

separate agreement.

Before allowing the surveyor on board he could be asked by a ship

owner to sign:

a) a disclaimer or waiver of all the surveyor's rights to claim orsue against the ship owner and his servants and agents shouldhe have any cause to do so; and

b) an indemnity to the ship owner and his servants and agents forany loss or damage suffered howsoever caused;

Obviously the surveyor's principal will be waiting for the survey to

be conducted and, consequently the surveyor will be keen to

board the vessel.

As far as Part a) is concerned a surveyor should consider the following:

n Under English law (The Unfair Contract Terms Act 1977), a

party cannot exclude or limit their liability for death or personal

injury.Therefore, if a surveyor is injured or killed whilst on

board, the owners will be liable irrespective of whether the

surveyor signed the release.

n For all non-personal injury claims– ie damage to tools or loss of

income, the surveyor should only waive his rights to claim for

such losses if the loss or damage suffered was caused by his

own negligence or wilful misconduct.

Therefore, if the owner (or their servant or agent) breaks the

surveyor's laptop, the surveyor should not be barred from issuing

a claim for the loss he has suffered. However, if the surveyor

placed his laptop on a surface known to be hot and the laptop

melted, this loss would have resulted from his own negligence

and, therefore, it would be unfair to hold the owner responsible.

For Part b) surveyors should:

n only agree to indemnify the owner for losses suffered as a

result of the surveyor's negligence or wilful misconduct.

Therefore, as in the example above, if the surveyor left his

laptop on a hot part of the engine and it melted, causing

damage to the engine, it is reasonable for the owner to be

entitled to claim back the loss suffered (ie repairs, loss of use of

the ship etc) from the surveyor. However, if the owner or their

employee or agent placed the laptop on the engine themselves,

it would be unreasonable for them to be able to claim any

losses from the surveyor. Similarly, if the surveyor places his

laptop on a surface which ordinarily should not be hot, but

which is hot due to a "technical malfunction", it would be

unreasonable for the surveyor to have to indemnify the owner

for any damage caused as a result. In fact, in that situation, the

surveyor should be able to claim his loss from the owner.

n ensure that the surveyor is insured for the amount specified

by the owner.

ITIC suggested wordingIf asked to sign any indemnity / waiver prior toboarding a vessel, ITIC would suggest that ideallynothing at all be signed; and if this is impossible thefollowing wording be used:

“In consideration of your allowing [the Surveyor]its agents and/or servants (“the Company”) toboard the above ship for the purposes of carryingout a survey on behalf of the Company's principal(s),the Company hereby undertakes not to make anyclaim against the Owner, their servants or agents(“the Owner”) for any losses suffered by theCompany (other than those for which the Ownercannot exclude their liability by provision ofstatute) provided such losses occurred solely dueto the Company's negligent acts and omissions orwilful misconduct.

Further, the Company hereby agrees to indemnifythe Owners against any claims brought by anythird party arising from the Company's negligentacts and omissions or wilful misconduct whilstonboard the ship.

This Agreement shall be governed by and construedin accordance with English law.Any disagreementor dispute arising from this Agreement is subjectto the exclusive jurisdiction of the English HighCourt, or if agreed in writing between the parties,arbitration in London, subject to the provisions of the Arbitration Act 1996, or any statutorymodification or re-enactment thereof for the timebeing in force, and the current rules of the LMAAfrom time to time in force.”

This text can be downloaded from the publicationssection of www.itic-insure.com

54

The law in most jurisdictions stipulatesthat an agent does not become personallyliable under the contract he arranges onbehalf of his principal. However, agentswho are careless in putting togethercontracts often end up having to meetthe principal's obligations under thecontract in the event that the principal isunable or unwilling to do so.The agentmay present the claimant with a muchmore attractive target than the actualprincipal, who may be insolvent. Agentshave been found liable to pay unpaidbills, cargo damage claims, claimsresulting from defective bunkers etc.merely because they forgot to add “asagent only” when signing off the contractin question.

Bunker Brokers

A bunker broker (who also acted onoccasion as a bunker trader) orderedbunkers for the operator of three shipsat a total cost of US$186,000. Six monthslater the operator went bankrupt withoutpaying the bunker suppliers, who thenissued a writ against the bunker brokeralleging that he had ordered the bunkersfor his own account. Although e-mailsfrom the company mailbox had anautomatic sign-off which included thenecessary footnote making it clear (asappropriate) when the company wasacting “as broker only”, most of theindividual brokers worked from theirpersonal mailboxes, which had no suchautomatic footnote.The courts foundthat the bunker broker had not made itsagency status clear and that the bunkersuppliers were entitled to look to thebroker for payment.

Ship Managers

Suppliers of services to ships undermanagement are entitled, if the managerhas not made it clear that he is orderinggoods and services as an agent for theowner or bareboat charterer, to lookonly to the manager for payment.Whensigning purchase orders for supplies to aship, managers must always state thatthe supplies are ordered by themanagers “as agents only” for theshipowner or bareboat charterer. If he has not, then in most jurisdictions he is personally liable. Ship managers are often more financially sound andreputable than the principals theyrepresent. Suppliers will often allowcredit to a ship manager, but not to asingle ship owning company.This is whatthe courts will look at.

Ship Agents

Ship agents order numerous goods andservices on behalf of their principals. If ashipping line becomes bankrupt,suppliers will look to get paid by anymeans and from any party. Ship agentsoften make life difficult for themselves byaccepting cargo bookings, invoices etc. intheir own name, which show the agentas “the carrier” or “the shipping line”instead of returning the booking note orinvoice, asking that it be re-issued in thename of “ABC Agency Co. as agents forXYZ Shipping Line”.

In one case involving a shipping linewhich had become insolvent, the line'sagent was facing claims from two feederlines for unpaid freight totallingUS$175,000.The agent had, over aconsiderable period, allowed the feederlines' agents to issue bills of ladingshowing the agent as the shipper on thefeeder bills of lading, and invoicesaddressed to the agency company.The feeder line is the sub-contractor ofthe actual ocean carrier, and the nameof the shipper on the feeder bills oflading should either be “XYZ ShippingLines” or “ABC Agency Co. Ltd as agentsfor XYZ Shipping Lines”.

Ship Brokers

Ship brokers do not currently face thesame problems that other agents do ifthey fail to sign off “as brokers only”.Although ship brokers normally sign off charterparties and other formaldocuments “as agents/brokers only”they generally do not sign off othercommunications in this way.This is notto say that there have not been claimsagainst ship brokers where it is allegedthat they acted as principals incharterparties.Therefore, in order toprotect their agency status, ship brokersshould also make it clear that they aresigning in their capacity “as brokers only”.

Guidelines for agents to avoidcontracting as a principal

n Sign off all documents “as agent only for and on behalf of XYZ Shipping Company”;

n E-mails to be signed off “as agentonly” or “as broker only” even ifpersonal mailboxes are used;

n If invoices are issued in your name,return them for re-issue in the nameof the principal; e.g. “Owners/Charterers of M.V.... c/o ABC Agency Co”;

n Do not accept feeder bills of ladingwhich show you, rather than yourprincipal, to be the party contractingwith the feeder company;

n Although ship brokers may beprotected by custom of the trade, itwould still be safer for them to sign off“as broker only for and on behalf of ...”;

n Where brokers act as intermediatebrokers between two other brokers(and not as sub-brokers) therecommended course would be tosign “as broker only” and to leave thequestion of the identity of theprincipal to be decided, if necessary,on the facts.

n If you are a ship agent or a shipmanager, send out a letter every sixmonths to your principals' suppliersinforming them of your agency status.This should not be an unaddressedcircular as you may need to use it asevidence that you have made youragency status known to anyparticular supplier. ITIC would behappy to provide a suggestedwording if required.

Other pitfalls

Failure to disclose name ofprincipal

In some countries, even if the agentsigns off “as agent only”, he may still befound by a court to be personally liableif he fails to disclose the name of hisprincipal. For absolute safety agents needto sign off “ABC Company as agent onlyfor XYZ Company”.

“Agent” or “as agent only”?

In an English law case heard in 1984 itwas held that the word “agent” in thesignature “ABC Company, agent” was adescriptive title rather than an indicationof the capacity in which the companyacted in a particular transaction. In orderfor the agent to make it clear that he isacting in a representative capacity, heneeds to sign off “ABC Company, asagent only”.

DO NOT sign off “as agent only”when you are not

A company entering into a contract onits own behalf must not sign off “asagent only”. If a company purports tosign off “as agent only”, when theyintended to act as a principal, thecompany could lose its rights under thecontract.You cannot avoid personalliability under the contract by allegingagency status and at the same timemaintain your own rights under thatsame contract.

Conclusion

Claims against companies who intendedto act as agents in transactions succeedall too often. Even if an allegation that anagent has contracted personally issuccessfully defended, this will not bewithout considerable expenditure oftime, trouble and legal costs. Do notmake life more difficult for yourselves.

Get it right first time – takecare in signing off.

Six months later the operatorwent bankrupt without payingthe bunker suppliers, whothen issued a writ against thebunker broker

ITIC insures many companies whose job it is to arrange contracts on behalf of a principalbetween the principal and a third party. A problem which continues to produce many claims isthe failure to clarify, when arranging the contract, that they are acting “as agent only”.

SIGNING OFFthe importance of getting it right

In many countries shipagents, and, in some casesship managers, can findthemselves involved inclaims as a resultof their joint andseveral liabilitywith theirprincipal, be thatthe ship owneror charterer.

76

LIABILITIES OF SHIPOWNERS ATTACHINGTO AGENTS

This exposure arises as a result of eitherlocal law or port statute (statutoryliabilities). Examples include cargoclaims, payment of freight tax, customsduty and penalties, removal of wrecks,abandoned cargo, containers, etc.,dock damage, immigration fines andrepatriation costs, and oil pollution.These liabilities should, in the normalcourse of events, be handled by theprincipal and, where appropriate, theirP&I Club.

The agent may also be liable, either atlaw or by port statute, to pay theprincipal's commercial debts, such asport and harbour dues, pilotage,bunkers/stores and repairs. Statutoryliabilities form part of the coverprovided by ITIC but commercial debtsare not insured, as they can theoretically

be taken care of by a prudent agentobtaining funds in advance.

In most jurisdictions, even where thereis a joint and several liability, theprincipal, and not the agent, is theprime target for claims (eg althoughship agents in Singapore are jointly andseverally liable for dock damage andwreck removal, in practice the portauthority will always look to theprincipal to ensure that security isprovided before the ship leaves theport). However, in other jurisdictions(eg Pakistan) the ship may be allowedto sail and the port authority will sendtheir bill to the ship agent, who thenhas to obtain payment from his principal.In the United Kingdom, the agent'sliability is restricted to the costs andfines relating to illegal immigrants.

Whilst it is not always possible toobtain a LOG based on this wording,the above is preferable and can beused as a guide if necessary.

ITIC has a number of other suggestedLOG wordings for dealing with specifictypes of claims in certain countries,i.e. for expenses/fines incurred byagents in respect of illegal immigrantsinto Australia and the United Kingdom,customs dues and penalties in India,customs dues and penalties and cargoclaims in Pakistan, all of which can beprovided by the Club.

In the event that the claim falls outsideof the scope of P&I Clubs cover, or aP&I Club refuses to provide a LOGfor any other reason, the agent shouldlook directly to his principal forsecurity, preferably in the form of abank guarantee.

It is probable that the courts will notallow the ship agent to arrest the shipfor an anticipatory claim but it may be

possible where there is an actual claimon the ship agent (eg from the portfor damage to harbour installations).

When first made aware of anystatutory liability claim, the agentshould immediately inform hisprincipal of the loss/claim and seekconfirmation that they (the principal)will indemnify the agent as per hisduty and obligations in accordancewith the laws of agency and anycurrent agency agreement.

Whilst it is preferable to obtain formalsecurity in respect of the claim, be thatin the form of a P&I Club letter ofguarantee or a cash bond/bankguarantee, consideration should begiven to the reputation and status ofthe principal. In some cases it may beacceptable to receive the principal'swritten confirmation that his P&I Club is handling the matter, protecting bothowner's and agent's interests.

In the event that the principal doesnot co-operate with the request forsecurity, the agent should contactITIC who will approach the principaland/or the P&I Club directly with aview to obtaining security. Additionalassistance is always available from the Club’s local correspondent.The correspondent will be experiencedin the type of claim faced by the agentand this may be the best and mosteconomic way to deal with it.As theagent may be jointly liable with theprincipals, the local correspondentmay already be involved, and may bedefending the agent's interests already.

An earlier Intermediary article("misdirected arrows – ignore themat your peril" October 2002) addressedthe problems faced by agents whereclaims are brought against themwhere they do not have joint andseveral liability and where there is nobasis in law for a claim against them.This is available from the Club'swebsite www.itic-insure.com.

P & I Club Lette

r of Guarantee

International Gr

oup Wording

Ship: M.V. "..

......."

Incident:

Date:

In consideration

of your releasi

ng from arrest a

nd/or refraining

from arresting

or re-arresting

and/or interferi

ng in any other

way with the use

or trading of

the above ship o

r any other ship

or property or asset

in the same or

associated

ownership or man

agement, we, The

..............

Protection & Ind

emnity

Association Ltd,

HEREBY AGREE to

pay you such su

m or sums as may

be adjudged

without the righ

t of appeal by a

competent court

or arbitration

tribunal or

agreed between t

he parties with

our consent to b

e due to you fro

m the owners

of the above shi

p in respect of

the above matter

, provided alway

s that our

total liability

hereunder shall

not exceed the s

um of Pounds Ste

rling

.......... (....

............Poun

ds Sterling) inc

lusive of intere

st and costs.

This undertaking

is given withou

t prejudice to a

ny rights or def

ences of the

owners of the ab

ove ship, includ

ing their right

to limit liabili

ty.

This undertaking

shall be govern

ed by English la

w and any disput

e arising

hereunder shall

be subject to th

e jurisdiction o

f the High Court

of Justice

in London.

.............

The ...........P

rotection & Inde

mnity Associatio

n Ltd

ITIC's experience has revealed that theauthorities in the following countriesmay look to the ship agent, rather thanthe principal, for various liabilities;

This is not an exhaustive list, andconsideration must be given to changing laws and revising port authority enactments.

Of the countries listed above, severalhave legal systems which take manyyears to process claims.This meansthat during the intervening years thereis always the risk that the ship will besold, or the owner will cease trading, inwhich case the agent will be left todeal with the claim.

If the agent becomes aware of theclaim while the ship is still in port,attempts should be made, with theassistance of ITIC if necessary, toobtain a P&I Club letter of guarantee(LOG) before the ship sails. If there issubstantial damage to cargo or a dockdamage which cannot be defended ordisputed then it may be possible to dothis amicably.When a LOG is providedit is essential to check the wording ofthe letter to ensure that the agents'liability is protected fully and thatadequate consideration is given inrespect of both interest and legal costs.The "International Group of P&I Clubs",which is made up of 13 separate andindependent P&I Clubs, have an agreedstandard LOG wording, and this is setout opposite.

ArgentinaAustraliaBangladeshBrazilCanadaChileEcuadorColombiaEcuadorIndiaKuwait

PakistanPhilippinesSingaporeSpainTaiwanTurkeyUnited KingdomUnited States

of AmericaVenezuela

8 9

Perhaps more accurately in this instance, thequestion is really when does a ship cease to be aship for the purposes of arrest.This was the issueaddressed by the Ghent Court of Seizures.

A Maltese-registered car-carrier suffered a serious fire inAntwerp in July 2004. After a survey, a certificate of total losswas issued. She was bought by a scrap dealer, free of mortgages,arrests and other encumbrances. Her new owner deleted herfrom the Maltese register and towed her as a 'shipbreaker'sship' to Ghent under a shipbreaker's insurance policy.

She was arrested for outstanding debts. Her new owner, thescrap dealer, challenged this.The Court considered the matteraccording to the Belgian procedural rules and the 1952 Arrest Convention.

According to the Belgian Maritime code, the Court may allowthe arrest of seagoing vessels, and the court had to considerwhether the ship was still in this category.The court

considered the following points. According to the MaritimeCode, a seagoing vessel is one which is destined or customarilyused to carry on trade at sea for profit.The court also referredto the necessity for the vessel to ply the seas and be subjectto the perils of the sea.

The court found that the above criteria no longer applied tothe ship in question.The ship was burned out; she was notentered in any register ; she had been bought and insured asscrap; all the usual conditions regarding the contract of sale orpurchase of a seagoing ship had been deleted; the ship agentwas employed to attend to her requirements as a wreck. Shewas described as a 'ship' when sold to the scrap dealer, butthis was considered to be unimportant. Overall, therefore, shewas not seaworthy and therefore could not be considered aseagoing ship.

The arrest was lifted, but the court dismissed the claim fordamages for vexatious arrest as unfounded.

WHEN IS A SHIP NOT A SHIP?

FONASBA/ITICISPS ClauseIn July 2006 the Federation of NationalAssociations of Ship Brokers and Agents(FONASBA) conferred "StandardDocument" status on an ISPS clause,drafted with the assistance of, andapproved by, ITIC. FONASBArecommends that the clause, which isheaded "FONASBA Standard Clausefor Limiting Agents Liability for FilingISPS Code Compliance Information", beincluded in agents' standard tradingconditions or any other documentrelating to agents' liabilities to principals.

The purpose of the FONASBA/ITICISPS clause is to clarify the role andresponsibilities of the agent in

transmitting ISPS information from theship to the port in accordance with theport's requirements.The clause makes itclear that the agent's responsibility is totransmit the information to the correctparty within the required timescale, butthat the agent is not responsible for theaccuracy of the information provided,nor is he responsible for mattersbeyond his control, such as the lateprovision of information by the Masteror technical problems (such ascomputer failure).

Please contact ITIC if you wish toobtain a copy of the FONASBA/ITICISPS Clause.

DRAFTING PRO-FORMADISBURSEMENT ACCOUNTSITIC has recently received a number of enquiries from ship agents who have experienced problemswith principals not settling disbursement accounts in full because they are different from the proforma disbursement account originally provided by the agent. ITIC would therefore suggest placingthe following wording on all pro-forma disbursement accounts so that your principal is wellaware that the pro-forma document is simply an estimate and is liable to change.

This text can be downloaded from thepublications section of www.itic-insure.com

Please note that this is a pro-forma disbursement accountonly. It is intended to be an estimate of the actualdisbursement account and is for guidance purposes only.Whilst [the Agent] does take every care to ensure that thefigures and information contained in the pro-formadisbursement account are as accurate as possible, the actualdisbursement account may, and often does, for variousreasons beyond our control, vary from the pro-formadisbursement account.You are required and are liable to payupon demand, the full amount described and shown in theactual disbursement account.This duty exists regardless ofany difference between the figures in this pro-formadisbursement account and the actual disbursement account.For the avoidance of doubt, this pro-forma disbursementaccount is not a contractual document.

“

”

What are the risks for the managers of KGfinanced ships?1 Any ship manager taking on the management of a KG financed

vessel must first have considered carefully the challenges of

working on behalf of a group of private investors.

2. Another challenge is finding sufficient numbers of qualified and

experienced shoreside personnel.The successful future managers

will be those who plan and invest well ahead in the training of not

only crew but also superintendents and operational staff ashore.

How can ITIC help?There are four simple steps that a ship manager can take to protect

himself. Most of them apply to ship managers throughout the world,

not just in Germany.

1) Modern contract wordingsIn the event of an error or omission on the part of the ship

manager leading to financial losses for the ship owning company,

the first document that is going to be analysed in detail is the

ship management agreement.This document needs to be

prepared carefully.

Jan Hungar of Ince & Co., Hamburg has provided his view on some

of the issues to consider in a well constructed German ship

management agreement (or Vertragsreedervertrag).

(i) A Vertragsreedervertrag needs to reflect that the ship

manager or Vertragsreeder is more than an ordinary third

party ship manager.The Vertragsreeder is often involved as

the arranger and "true" buyer/seller of the ship for which the

KG and its investors then provide the finance.The contract

must therefore balance the interests of the Vertragsreeder as

long term manager of the vessel and the interests of the

individual investors as legal owners of the vessels on the other.

A Vertragsreedervertrag is a tailor made contract. A BIMCO

SHIPMAN agreement is not recommended for use, even

when modified.

(ii) The Vertragsreedervertrag should be subject to German law

as the contract relates to a German shipfonds vessel.

(iii) The scope of work of a Vertragsreeder, his duties and the

power to represent the owners are in general more

extensive than those of a third party ship manager and this

needs to be reflected in the contract.

(iv) For tax saving reasons it is recommended to distinguish clearly

in the contract between certain management activities such

as (1) management during construction period (if any), (2)

preparation of the management and (3) management itself.

Moreover, it is important that the contract reflects that the

management will be conducted almost entirely from

within Germany to meet the tonnage tax requirements.

Subcontracting to service providers abroad is only permitted

in limited areas such as, for example, the provision of ratings.

(v) Exclusion or limitation of liability requires careful drafting to

avoid being rendered invalid. In general, exclusion or limitation

of liability requires a more specific wording than under English

law. In this regard, the following issues ought to be distinguished:

(a) liability arising out of cardinal and marginal obligations

under the contract;

(b)liability for death or personal injuries and other claims; and

(c) liability arising out of gross negligence on one side and simple

negligence and lesser degrees of culpability on the other.

Furthermore, consideration must be given to cover liability risk

connected with tax issues. It is still not entirely clear whether

the German tax authorities will ultimately side with the owners'

and managers' interpretation of the tonnage tax laws on

conformity issues.The existing statutory instrument is not

sufficiently clear in this regard and, as a result, the contract

should be sufficiently flexible to accommodate possible

changes in the German tax system and their consequences.

ITIC also offers the following guidance to all ship managers worldwide

2) Co-assuranceEnsure that you are co-assured on all of the ship's operational

insurances, such as P&I, hull and loss of hire.Whether the ship

owner manages his own vessel, or contracts some of the duties

to a manager, the risk is the same for the underwriter. It is also a

condition of ship management cover with ITIC.

3) Operate with appropriate systems and controls ashoreMistakes can always happen but you can minimise the chances

of something being overlooked. Holiday periods and staff

absence through illness are a time to be especially careful. It is

at this time when staff have to handle unfamiliar tasks.

4) Sub-contractorsBe aware that, in the event of negligence by a sub-contractor to

whom you entrust certain management responsibilities, it is the

"head manager" who will be responsible for his sub-contractor's

actions.Take care to ensure that any sub-contract is on back-to-

back liability terms and, essentially, that the sub-manager has in

place well chosen liability insurance.

ITIC is available for any ship manager who wishes todiscuss their management agreements, loss preventionactivities or liability insurances.

Our thanks for this article go to Jan Hungar of Ince & Co., Hamburg, who provide advice on German andEnglish law.

Ahead of ITIC’s Directors’ Meeting in Hamburg in September 2006,Roger Lewis looks at ship management German style.

SHIP MANAGEMENTGERMAN STYLE

10 11

In recent years liner operators have been rushing to Germany for their new tonnage. Several have set up their own shipmanagement companies in Germany.They have done so because, during the 1990s, Germany's tax laws were amended to encourageprivate investment in merchant shipping.This developed into the tonnage tax system of 1999, which was amended in 2006 and hasfuelled a surge in private investment in shipping in Germany.

Nowadays, private individuals, faced with low investment returns elsewhere, favour the purchase of shares in “fonds” created topurchase and operate new ships, usually container ships.An ever growing number of finance houses now specialise in managing suchprojects on behalf of private individuals. Many ship owners have chosen to expand their own fleets by transforming themselves intoship managers, tasked with the job of supervising the construction and operation of these new ships.As markets move, otheroperators including those of tankers, bulkers, heavy-lift and other specialised tonnage are also showing an interest.

Shares in the single ship-owning company, typically a GmbH and Co.Kommanditgesellschaft (KG), are purchased by private investors with the shipmanager retaining a minority ownership.A ship management agreement establishes the duties of the owner and manager duringthe period of management.Typically ships are delivered from the yard into the hands of liner operators under long-term time charter.

13

THE ITIM TEAMWe have reorganised the ITIMteam, promoting Stuart Munro toClub manager and commercialdirector and Roger Lewis tounderwriting director,AdamJacobson and Alistair Mactavish todirector; their new roles are

communications director andgeneral manager respectively.Robert Sniffen has been promotedto an account executive.

We also welcome Robert Crichtonand Stephanie Belcourt who have

joined the team as trainee account executives.

We set out brief biographies of allthe ITIM staff below:

Adam Jacobson Communications Director

Adam joined ITIM in 2001 fromRayfield Mills, a specialist firm ofshipping lawyers based inNewcastle. He is an admittedsolicitor who has practisedsolely in maritime law sincequalifying in May 1999.Adam haspreviously lived in France andSpain and speaks both Frenchand Spanish. Adam is the areaexecutive for France, Portugal,Spain, Gibraltar and Africa.

+44 20 7204 2931

Alistair MactavishDirector and General Manager

Alistair worked as a claimsexecutive for Steamship MutualP&I for 10 years before joiningITIM in 2001. He is the accountexecutive for South East Asia,Central and South America,Scotland and Ireland.

+44 20 7204 2347

Andrew JamiesonLegal Advisor and Claims Director

Andrew is ITIC's claims director.He has been with ITIM since itsfoundation in 1992 and and waspreviously with CISBACLUB.Andrew is a barrister. He is theauthor of "Ship Brokers and theLaw" (LLP Ltd, 1997) and a widerange of articles for shippingjournals. He regularly providesloss prevention presentations forMembers and industry bodies.

+44 20 7204 2927

Charlotte KirkMarketing Director

Charlotte joined ITIM in 1992.Previously she worked in thechartering and operationsdepartment at Blue Star Linebefore going to work atCISBACLUB. Charlotte is aFellow of The Institute ofChartered Ship Brokers and isthe account executive for Cyprus,Middle East, Scandinavia, the Westof England and South Wales.

+44 20 7204 2928

Christopher ArnoldAccount Executive

Christopher Arnold joined ITICin 2005, having previouslyworked as a shipbroker. He hasa degree from Oxford and legaltraining. He won several BalticExchange prizes in the ICSexamination. He is an accountexecutive for Germany, and theSouth Coast of England.

+44 20 7204 2126

Mark BrattmanAssistant Legal Advisor

Mark joined ITIC in March 2004.He is a solicitor and qualified atCity maritime firm Shaw andCroft in 2000. Mark undertook awide range of shipping work atShaw and Croft before movingto Beaumont & Sons in 2001where he specialised in aviationclaims, insurance and reinsurancedisputes and general commerciallitigation. Mark is now assistantlegal adviser at the Club.

+44 20 7204 2905

Julia MavropoulosConsultant

Julia is the claims consultant ofITIM. She joined TIM in 1985after working for a P and I Clubcorrespondent office in Greecefrom 1970. She became claimsdirector, but retired in 2005 andnow works two days a week asa consultant.

+44 20 7204 2930

Paul MonteithSenior Claims Executive

Paul has a law degree and priorto joining ITIM in 1992, workedfor City solicitors Hedleys andCISBACLUB. He has 20 yearsexperience in the maritimeindustry with a particularemphasis on the recovery ofMember's debts.

+44 20 7204 2932

Peregrine Massey,Chairman

A barrister and mediator,Peregrine's career has seen himinvolved since 1977 in themanagement of a number ofmarine and professionalindemnity mutuals within theThomas Miller group. He isITIM's chairman and leads themanagement team. He is also adirector of Thomas MillerHoldings Ltd.

+44 20 7204 2148

Robert CrichtonTrainee Account Executive

Robert studied law at LiverpoolUniversity prior to working as acase handler in the generalaverage and salvage departmentof WK Webster Co Ltd. He iscurrently studying formembership of the Institute ofChartered Shipbrokers.

+44 20 7204 2935

Robert SniffenAccount Executive

Robert joined ITIM in 2001 andis the account executive for theUS Gulf,Argentina, Uruguay,Paraguay,Venezuela, Caribbean,East/South East of England.He also assists Stuart Munrowith Australia.

+44 20 7204 2938

Roger LewisUnderwriting Director

Roger joined ITIM in 1993having obtained a degree inInternational TransportManagement from CardiffUniversity and having worked in liner agency for Evergreen.Roger is a Member of theInstitute of Chartered ShipBrokers, and the underwritingdirector of ITIM and is theaccount executive for Germany,India and Northern England.

+44 20 7204 2926

Stephanie BelcourtTrainee Account Executive

Stephanie joined ITIM in 2006after completing her first degreein law and obtaining her mastersdegree in maritime law atSouthampton University. She isnow studying for her ICS exams.

+44 20 7204 2925

Stuart MunroClub Manager & Commercial Director

After graduating in law, Stuartjoined Thomas Miller as a claimsexecutive for the UK P&I Clubin 1985. He joined TIM in 1990and is currently the ClubManager and commercialdirector of ITIM. He is also theaccount executive responsiblefor Australia, New Zealand, FarEast, and the UK.

+44 20 7204 2933

Vincent EgonAccount Executive

Vincent joined ITIM in 2003after completing a mastersdegree. He has successfullycompleted the Institute ofChartered Ship Brokers' exams,receiving a prize from the BalticExchange.Vincent is French. Heis the account executive forMalta, Greece, Belgium,Netherlands,Turkey and theSouth West of England.

+44 20 7204 2906

Zareena HussainTraining Director

Zareena is a director of ITIM.She worked for several years inoil trading/tanker charteringbefore graduating with abusiness degree from UCLA.Zareena also has extensivecredit management experience,working as a credit analyst priorto joining ITIM in 1993. She isthe account executive for USA,Canada, Italy and Switzerland.

+44 20 7204 2929

Support Team

The team of account executivesis assisted by Sandra Spurling,Sylvia Barwick,Elizabeth Rose, Lee Ennis andJanis Adams (not pictured).

Steve HarveyFinance Director

Steve joined Thomas Miller in1969 and in those 37 years hasworked with most of the Clubsmanaged by them. He is currentlyFinance Director and has beeninvolved with the finances ofITIC and TIM since 1985. He is afellow of the Association ofAccounting Technicians.

12

14

Classification societies enforce statutory requirements onbehalf of flag and port states yet they are not governmentagencies themselves.They have the power to impose sanctionsyet they also compete for the business of those who comeunder their scrutiny.They make and enforce the rules but alsooffer consulting services on how best to comply. Increasingly,this mix of roles and attitudes has struck many observers asproblematic in the context of the discussion over whetherclassification societies should be made legally liable for theirnegligence.The three most frequently heard arguments againstliability are:

n the relatively small size of classification fees cannot justifythe potential liability exposure;

n the shipowner has ultimate responsibility for vesselseaworthiness; and

n the "special character" of a public service institutionshould provide relief from legal liability.

In today's world, classification societies are hardly uniqueamong professionals who charge relatively small amounts fortheir services, yet still they risk a considerable economic liabilityfor losses caused by their negligence. Other professionalscustomarily minimise the risk through different forms ofinsurance arrangements and increasingly the societies havedone the same.

While the shipowner always remains responsible for hisvessel's seaworthiness, he or she should be able to rely on theclass certificate. But if the classification society is unwilling toaccept legal responsibility for its judgments then how muchcredibility can an owner or insurer be reasonably expected toplace in the certificate? In the case of newbuildings, the classrepresentative (customarily paid by the yard) has not justperformed one survey but rather been a regular presence onsite throughout the vessel's construction. Under suchcircumstances, is it appropriate for a new owner to bear therisk of loss caused by the classification society's negligence ifthe vessel is designed, built and tested in accordance with theclassification society's own rules, and where this control hasled to a classification certificate and delivery of the vessel?

In Norway the authorities have delegated certain controlfunctions through the Agreement of 1 July 1987 with annexesbetween the Ministry of Trade and Det Norske Veritas (DNV).

This delegation has lead to some questions regarding the roleof DNV.The tasks DNV performs on behalf of the authoritiesare considered to be more of a service than business nature.Activities of a service nature have traditionally held a protectedposition in Norwegian tort law, and there might be reason toask if this protection has influenced the discussion onclassification societies' liability for those tasks that are notperformed on behalf of the authorities.

The claim that classification societies are public spirited serviceinstitutions deserving of special treatment with regard toliability dates back many years.Today, it must be examined inlight of the fact that hospitals, health professionals, accountancyfirms, and even government agencies are all now held legallyliable for their negligence.While it is certainly true thatclassification societies perform important and valuable researchon improving safety at sea, commentators have questionedwhether it is still appropriate for that research to be carriedout by each society individually. If classification societies aredeserving of special treatment with regard to liability becauseof their public mission, then many believe the public missionwould be more efficiently and effectively pursued bycombining resources through one set of standards rather thanthe societies competing amongst themselves.

The long simmering debate over classification society liabilitywas raised a notch in 2003 when the Spanish governmentsued the classification society responsible for classing thePRESTIGE: there are no signs of it cooling anytime in the nearfuture. As shipowners are increasingly held accountable byclass for their performance and actions, they are expectingnothing less than the same of classification societies. On thelegal front, the trend is in favour of increased liability forgovernment bodies dealing with matters of a "service nature"and classification societies seem unlikely to escape the samefate in the long term.

ClassificationSociety LiabilityBy Gry Bratvold and Gaute Gjelsten of Wikborg Rein

Classification societies occupy a unique place in the field of maritimelaw and commerce, despite, or perhaps because of, the controversythat surrounds them.

Our thanks for this article go to Gry Bratvold andGaute Gjelsten of Wikborg Rein, Oslo, Norway.

15

As shipowners are increasingly held accountable by class for theirperformance and actions, they are expecting nothing less than thesame of classification societies.

16 17

ITIC has seen an increasing number ofsale and purchase brokers being askedto hold deposits on behalf of the buyersand sellers. While not yet a feature of alarge number of transactions, the practiceis now sufficiently established that it maybe considered part of the usual courseof business of a sale and purchase broker.A member insured as a sale and purchasebroker would therefore be covered bytheir entry with ITIC in respect of dealswhere they have acted as brokers.The cover would apply to negligence inoperating the account.

This task is falling on shipbrokers due toa reluctance by banks to open closingaccounts for S&P transactions. A majorreason for their reluctance is the cost of complying with money launderingregulations. Shipbrokers may not face all the detailed regulations applying tobanks, but they must ensure that theyare aware of the local money launderingregulations and how they would applyto their businesses. A failure to complywith such regulations is a criminaloffence and any penalties are likely tofall outside cover.

By accepting instructions to hold moneyon behalf of the buyers and sellers thebroker accepts an obligation to bothparties and cannot treat one morefavorably than the other.This may createa difficult commercial situation if a disputearises and one party believes that "theirbroker" should be doing more to supporttheir position.

It is very important that the duties of theshipbroker are clearly set out in an escrowagreement signed by both buyers andsellers.The agreement should cover bothhow the money is to be held and thegrounds upon which it is to be released.

The Baltic Code provides that membersof the Baltic Exchange acting as brokersare required to operate a separate bankaccount for clients.The agreement willoften specify that the money will beheld separately from the funds of thebroker.The parties will accordingly beprotected if the broker becomesinsolvent.There is a difference betweena client account and one speciallyopened for a transaction. If, as is usual,the broker is using a general clientaccount that should be made clear inthe agreement.

The question of who will receive interestpaid on the account should be set out.The broker should not, of course,specify what the rate of interest will be.A common provision is that the rate ofinterest is to be determined by the bankand shall be the rate for immediatelyavailable deposits.The interest on themoney while held as a deposit is usuallystated to belong to the buyer.

The most obvious concern is that thebroker could release the funds wronglyand therefore face a liability for negligence.A good guiding principle is that thebroker should avoid being placed in aposition where he has to make adecision as to whether to pay out the funds or not.

escrowaccounts

The normal wording is:-

" The buyers and the sellers instructthe broker to release the funds inaccordance with:-1) a written instruction signed

(jointly or in counterpart) onbehalf of both the sellers andbuyers;or

2) a final and unappealable decisionof an arbitration tribunal orcourt*;or

3) an order of a court of competentjurisdiction."

* There is a problem when releasingagainst a "final and unappealable"decision.This is because the broker isnot in a position to assess whether suchan award is "final and unappealable".ITIC recommends it is replaced with

"a decision of an arbitration tribunal orcourt which appears on its face to be final".This provision has causedsome principals concern but has beenwidely accepted.

The broker should seek advice if adispute arises. Most court systems havea process where a person holding fundsas a stakeholder can either pay disputedfunds into court or ask the court todetermine the issue. Sometimes aprovision that the broker has the optionat anytime to pay the funds into court isadded. An agreement ITIC reviewedrecently provided that the principalswould reimburse any legal fees incurredby the broker in performing his duties.

Brokers frequently ask about obtainingan indemnity from the principals.Thiswill not prevent the broker being liable"come what may" but it is prudent toadd something along the following lines:-

" The buyers and sellers jointly andseverally agree:-

i) to indemnify the broker upon firstdemand against all losses, liabilities,costs and claims and demandsarising out of and in connectionwith our holding of the funds inaccordance with his Escrowagreement; and

ii) that the broker's only obligation isto hold the funds upon the termsset out in this Escrow Agreement.The broker will have no liabilityfor any act or omission taken ornot taken by him in good faith. Forthe avoidance of doubt it is theburden of the party alleging thatthe broker acted in bad faith toproduce evidence thereof."

The agreement should contain a choiceof law and jurisdiction clause.The partieswill often choose the same law andjurisdiction as governs the MOA.Theescrow agreement is however a separatecontract and there are obvious advantagesin having it subject to the law andjurisdiction where the broker is based.

The managers are always available toadvise on the wording of individualescrow agreements and assist memberswho are caught up in disputes regardingmoney they are holding.It is very important that the duties of the shipbroker

are clearly set out in an escr ow agreement signed byboth buyers and sellers.

Be aware of locakmoney launderingregulations ...a failure to comply is a criminal offence.

18 19

ITIC insures an ever increasing number ofnaval architects.The challenges and claimsencountered by naval architects are extremelyvaried, but the following article illustratesthree of the common issues ITIC has seenfaced by this profession.We hope that thisrisk prevention advice will be of use to bothITIC's naval architect members and othermembers employed in similar areas of worksuch as marine surveyors and consultantsand new building supervisors.

Be specific from the outsetWhen negotiating a contract with a client, please ensure thatthose parts of the design for which you are not responsible(particularly those which the client may think you will beundertaking) are clearly defined as such in the contract.Yourclient will then not be able to claim that they had any reasonto believe that your duties under the terms of your contractincluded the task you have specifically excluded. Conversely,please also make sure that all the tasks you do intend toperform under the contract are clearly defined.

A naval architect believed that they had no responsibility forthe selection and design of the propellers on a ship they werecontracted to design.The naval architect claimed that theywere not experts in this field and would never holdthemselves out as such. Indeed, there was no mention of themselecting and designing the propeller in the contract. However,the client believed that this task would be automaticallyincluded in the naval architect's duties.The propellers werelater found to be the cause of major problems with the ship,and both sides blamed each other for the selection of theincorrect blade types. Obviously had the naval architectexpressly stated in the contract that they would not beresponsible for the selection of propeller blades, they wouldnot have attracted any liability in this instance.

Changes to the agreementDo not be pressured into agreeing changes to your designsif you are not entirely happy with them. If the ship yard orthe ultimate buyer of the ship alters any part of your designswithout your agreement, no matter how small, ensure thatyou notify all parties of the changes from your originaldesigns and your disapproval of these changes.

A naval architect is paid to design ships according to thespecification provided by his client. For instance, if the navalarchitect has designed the ship's hull to have a certain type ofwelding but the shipyard which actually performs the weldingsuggests that a lesser type of weld would be just as viable andcheaper.The naval architect may not be happy about thechange but can be pressured into agreeing that the single weldwill suffice. Unless you express your dissatisfaction with thechange at this stage, you may prejudice your position if, oncethe ship is in use, cracks in the hull become apparent and theblame is placed on the single welding that the naval architectagreed to.

Misunderstanding of the projectEven though the architect believes radical new ideas maypotentially be the answer to his client's problems, thearchitect must also take into account the environment inwhich the ship is due to operate and the task it is supposedto perform. Naval architects must avoid accepting liability for performance criteria that can be achieved only inoptimum conditions.

The naval architect should be aware of the client's plans forthe use of the ship and design it accordingly. ITIC has seenclaims where the architect has designed a new type of shipusing the latest technology available, but clients have claimedfor various alleged problems with the ship including that (a)due to the design, passenger seats had to be removed forsafety reasons, (b) the ship could not withstand the rough seasin the area it was designed to operate in and (c) the specifiedspeed of the ship, whilst being achievable in optimumconditions only, was not achievable during the day to dayoperations, on the route required by the client.

ConclusionIn order to minimise the risk of exposure to claims, youshould not only consider the factors set out above but also,in all cases, seek to limit your liability under the terms of thecontract to a fixed sum.This may be up to ten times the feeyou receive but, in some contracts ITIC has seen, the limit ofliability has been fixed at the amount of the fee the architectreceives for the design.A number of claims received by ITICrelate not to design defects but to build quality and, accordingly,the designer should always verify that the shipyard is buildingthe ship to the specification and standards required by him.

ArchitectsNaval

Thoughts on loss prevention

ITIC News

20 21

Lloyd’s Ship Managers Conference

ITIC Board ofDirectorsThe Club has announced the retirement ofDeputy Chairman Henrik Lehmann (asreported adjacent) from the board ofdirectors. Steven See and Simon Morse havealso retired from the board.

Peter French of BMT Ltd (London) and BobFlynn of Mallory, Jones Lynch Flynn &Associates Inc (Geneva) joined the board inMarch 2006 and Terence Sit of JardineShipping Services (Hong Kong) and BjornTonsberg of Wilhelmsen Maritime ServicesAS (Singapore) will join the board inSeptember 2006.

Tour Pour La MerA dedicated team from ITIM successfullycompleted the 125 mile charity cycle ride fromGreenwich to Le Touquet recently.The "TourPour La Mer" was organised by V Ships, togetherwith the American Bureau of Shipping andIntertanko, to raise money for the Missions toSeafarers and the Sea Alarm Foundation.

ITIM's team comprised of Chris Arnold,VincentEgon and Roger Lewis. Shaded from themorning sun by the masts of the Cutty Sark theteam set off at a good pace in the direction ofDover. Not content with the considerabledistance, the organisers decided that the cyclistswould enjoy the challenge of a more scenicitinerary; eighty-two miles and an aggregate hill

climb of three thousand feet. Later the teamrolled into Dover and embarked on the ferryto Calais.

After a night's rest in the hotel, the second daysaw a return to unrelenting hill climbs for thefirst thirty miles, followed by a gala dinner in Le Touquet.

The event has been a great success for thecharities it supported as well as a lot of fun forus. ITIM collected GBP 1,700 and we would liketo thank all who sponsored us in this event,especially Ravenscroft Shipping, who wereextremely generous.We are all looking forwardto be next shipping cycling event rumoured tothe London to Amsterdam, via Harwich, inSeptember 2007 and Members are, of course,welcome to join us.

Henrik Lehmann retiresHenrik Lehmann, Deputy Chairman of ITIC,retired in March 2006. His company, LehmannNordic A/S, became members of ISBA(International Shipbrokers and Agents P&I Club)in 1976. A couple of years later, Henrik wasasked to join the board for the usual term ofone year.

After the first couple of meetings, the board ofISBA approved the merger of ISBA with CSPI(Chartered Shipbrokers P&I, a Club establishedin 1925), and CISBA (Chartered and InternationalShipbrokers and Agents P&I) was born. Henrikwas invited to remain on the board of the newClub, although his 12 months had elapsed.

In 1984, as the number of members increasedand as competition appeared in the form of theTransport Intermediaries Mutual (TIM) run byThomas Miller, the Board of CISBA, then chairedby Henrik, concluded that the time had cometo invite a specialist company to manage theClub. Consequently,Tindall Riley (managers ofBritannia P & I Club) were invited to run CISBA,and Henrik took a great interest in the growthof the Club under its new management.

The first discussions on the merger with TIMtook place in 1989 and CISBA and TIM mergedin 1992 to create ITIC. Henrik was appointedDeputy Chairman of the new Club.

Since then, the organisation has never lookedback, first under the joint management of TindallRiley and Thomas Miller, and from 1996 underthe sole management of Thomas Miller. Membersare still joining in increasing numbers, financesare going from strength to strength and Henrikis delighted to have been involved during themost successful period in the history of mutualinsurance for transport intermediaries.

The Thomas Miller Hong Kong branch is the AsiaPacific headquarters for Thomas Miller managedClubs such as the UK P&I Club,TT Club and ITIC.The office has over 30 staff with a wide range ofprofessional qualifications (e.g. ACII / LLB holders,master mariners, and qualified lawyers), who provideit with substantial experience and local expertisewhen serving the members of the various Clubs.

Harry Lee has recently completed a 19-monthsecondment to Thomas Miller's head office inLondon and has now returned to the Hong Kongbranch. During his time in London, Harry trained

with ITIC London, which he enjoyed very much. On hisreturn, he now assumes claims handling and servicingresponsibility for ITIC's Hong Kong membership, whichmainly consists of liner and tramp agents, marinesurveyors, ship managers, and S&P / chartering brokers.

Harry is an economics and law graduate with eight yearsexperience in handling a wide range of claims in relationto logistics contracts, charterparties and bills of lading,terminal operations, real property and business interruption,cargo handling, third-party liabilities, and professionalindemnity (for marine professionals).

ITIC

THE PROFESSIONAL INSURER

Tony Payne – a career in shipping

The Sydney office was the first overseasoffice set up by Thomas Miller, and wasestablished 30 years ago. The office has 8staff and is located in the city, overlookingthe Queen Victoria Building. TM(A)handles claims for over 130 AustralianITIC members. Membership in Australiacomprises both marine and non-marineand include liner and tramp agencies,naval architects, marine surveyors, S&Pand chartering brokers and ship managers.

The office is headed by Marcus John, whois a qualified lawyer who practised law inLondon and Sydney before joining ThomasMiler in 1995. He and Iain Sharples, whojoined the London office of Thomas Millerin the same year, have extensive experiencein claims work for the UK P&I Club,TTClub and ITIC.They are assisted by AlisonCook who is well on the way to finishingher legal studies, completing her lawdegree next year. She joined Thomas MillerLondon in 2000 and returned home toSydney in 2003.

In addition, the office is well experiencedin advising on contracts, bills of lading,transport contracts, charterparties,disclaimers, standard terms and conditions,and the office has an active involvement inindustry associations, particularly ShippingAustralia Ltd.

ITIC members in Australia should reportall new claims to the Sydney office, theaddress and contact details of which arePO Box Q697, Queen Victoria Building,Sydney, NSW 2000, Australia. Tel: +61 2 8262 5800. Fax: +61 2 8262 5858. E-mail: sydney.itic@thomasmiller.com

Thomas Miller Australia

Thomas Miller Hong Kong

Tony Payne has always been adaptable andenthusiastic for whatever task he was pitchedinto.That is certainly why he succeeded in theworld of shipping, which he left upon hisretirement as managing director ITIM on 31st March 2006.

Tony joined ITIM, and its predecessor TIM, fromthe outset, helping to shape it into one of themost successful organisations in the sector.However, he started his professional life as amanagement trainee for Port Line, a Britishshipping company, which made him work hispassage to Australia where he worked in theSydney office, before becoming a jackaroo in Queensland.

After a few months he returned to Port Line'soffices where he was introduced to the intricateworld of bills of lading inwards prior to spendinga few more months dealing with bills of ladingoutwards. However, after eight months or so,Tony was beginning to get restless and accepteda job in Singapore. So began his entry into theworld of ship agents. He was placed in chargeof service to "sundry ships" that were usuallymaking a bunkering call after weeks at seaserving China or South America.

While in Singapore, incidentally, there was abrief foray into modelling when Tony appearedin a cinema advertisement for Tiger Beer afterbeing recommended by a colleague.

Subsequently he accepted a job as a deputyoffice manager for Gellatly Hankey in SaudiArabia. He found that the firm was a Lloyd'sagent, ship agent and agent for other businessesincluding the Australian Wheat Board, BMWand Sony.

Settled in Jeddah,Tony welcomed many visitors,one of whom was a leading London surveyorwho asked what he knew of Greece. Behindthe question was the search by Miller Insurancefor someone to take over management of its Piraeus office, which was a Lloyd's agent and correspondent for UK P&I Club.Thatconversation led to Tony leaving his Saudi jobfor Piraeus in 1974, where he was to stay until1985. Being so close to Greek shipping for 11 years was "very helpful".

In the early 1980s Thomas Miller decided tolaunch the first industry mutual since it formedthe Through Transport Club.The new bodywent by the name of Transport IntermediariesMutual, (or TIM), and Tony was invited to begeneral manager. Back he went to London forTIM, which then had a premium income of$1m or less and fewer than 100 members.

TIM was launched in favourable conditions andwas doing well in competition with the mutualthat had been in the same field for half a century,CISBA, (the Chartered and InternationalShipbrokers' P&I Association) managed byTindall Riley. In 1992 it was decided the twoshould merge, which produced the newly namedITIC with 900 members and premium incomeof $12m.Today the Club has nearly 1,800members and has a premium income of $35m.

It has proved a total success story in the mutualfield. ITIC prides itself in having an excellentworking relationship with the members,supported by its policy of giving staff the dualrole of underwriting and claims and Tony playeda key role in this development, having contributedto, and lead, the development of your Club.Wewish him well in his retirement.

Charlotte Kirk will be speaking at the 16thannual Lloyd's Ship Manager Ship ManagementConference in Cyprus on 11th and 12thOctober 2006.

For more details visit :www.lloydslistevents.com/lm1778

Marcus John (far left) and his team

Tony Payne, front, with members of the ITIMboard and Thomas Miller Chris Arnold, Vincent Egon and Roger Lewis

Henrik Lehmann receives his retirement gift from Harry Gilbert