Inter-Club Agreement

Comparison Between 1984 and 1996 Forms

The Inter-Club Agreement (ICA) was formulated in 1970 in order to promote amicable and
equitable settlements for cargo claims under the New York Produce Exchange form of
charterparty (NYPE). It is an agreement between the Clubs in the International Group of P&I
Clubs, who undertake to recommend to their Members apportionment of cargo claims as between
owners and charterers in accordance with its terms. From time to time the Agreement has been
amended in order to keep it in line with legal developments. For the last 12 years the 1984
version (ICA 1984) has been in operation.

The ICA appears to have become somewhat standard in the trade, since it is now often expressly
incorporated into charterparties in the NYPE form.1,2 However, when the Agreement was drafted it
was not designed for incorporation into charterparties, so that various problems have arisen in
practice. In 1992 one important decision of the English Commercial Court3 dealt with the
application of the Agreement when expressly incorporated as a term of the charterparty, against
the practical background of container operations and through and multimodal transport bills of
lading.

The Agreement has now been amended once again in order to overcome some of the effects of
the above-mentioned decision, as well as to adapt it to the carriage of containerised cargo, and to
deal with other issues which have given rise to disputes over the years. The new version is also
an attempt to arrange the Agreement in a more logically structured way, to make it more "user-
friendly". The new version of the Agreement (ICA 1996) is in force as of 1st September 1996. The
full text of the Agreement is printed on pages 17 and 18.

APPLICATION
Minor changes were introduced to the parts of the Agreement dealing with its application.

The 1984 form provided for application of the Agreement to "Charters on the New York Produce
Exchange form". The new Agreement applies to "all charterparties on the New York Produce
Exchange Form 1946 or 1993 or Asbatime Form 1981 (or any subsequent amendment of such
Forms)". It should be noted that the so-called Asbatime Form 1981 is equivalent to the New York
Produce Exchange Form (NYPE) 1981. The ICA 1996 does not contain the sentence "The
Agreement is not binding on Members", which appeared in the 1984 version. However, these
words are superfluous because the Agreement is between the Clubs, who do not have authority
to bind their Members to it, so the Agreement is not binding on the Members in any event. Still,
the omission of this sentence may serve to avoid confusion when the ICA is expressly
incorporated into charterparties and thereby binding on charterers and owners. The new form
also makes clear that the Clubs have a duty to recommend application of the Agreement to their
Members whether or not the Agreement is incorporated into the relevant charterparty. (This was
implied in the 1984 form).

The 1996 form makes clear that the Agreement applies between Clubs despite any provision to
the contrary in the charterparty. In particular, the time bar in the Agreement (contained in Clause
6, which will be discussed in detail later) should prevail over any contractual or statutory time bar.

As a result, between Clubs, application of the Agreement to existing charterparty forms will be as
set out in Table I.4
Table I
Charter Party Form Applicable ICA Version

NYPE 1913 1984

NYPE 1921 1984

NYPE 1931 1984

NYPE 1946 entered into on or before 1984

1st September 1996

NYPE 1946 entered into after 1996

1st September 1996

NYPE 1981 (Asbatime 1981) entered 1984

into on or before 1st September 1996

NYPE 1981 (Asbatime 1981) entered 1996

into after 1st September 1996

NYPE 1993 entered into on or before 1984

1st September 1996

NYPE 1993 entered into after 1996

1st September 1996

Future amendments to the NYPE form 1996

DEFINITION OF CARGO CLAIMS

In "THE HOLSTENCRUISER"5 the court decided that under the terms of the 1984 version of the
ICA the apportionment of short delivery claims did not apply to customs fines imposed in respect
of short delivered cargo. This seemed to conflict with the intention behind the Agreement.
Accordingly, it became necessary to introduce a clear definition of "cargo claims". These are now
defined in the ICA 1996 as claims relating to the following:
– loss of cargo;
– damage to cargo;
– shortage of cargo (including slackage, ullage or pilferage);
– overcarriage of cargo;
– delay to cargo;
– customs dues or fines in respect of any of the above.

Costs
Although the 1984 version of the ICA did not contain a definition of cargo claims, it made clear
that the apportionment should also apply to "legal costs incurred" on cargo claims. In "THE
HOLSTENCRUISER" case, in interpreting the 1984 version of the ICA the court decided that
where the 50 per cent/50 per cent apportionment applied, charterers were not entitled to recover
50 per cent of the legal costs in defending and settling the cargo owners’ claim, nor 50 per cent of
the judicial survey fees. The Clubs’ general understanding was that these costs were intended to
be allowed under the Agreement. Nevertheless, after "THE HOLSTENCRUISER" decision the
legal position was such that under the ICA 1984 only legal costs paid to the original cargo
claimant would be included in the apportionment. One of the purposes of the Clubs in drafting the
ICA 1996 was to change that point.
The 1996 version continues to include "costs" in the apportionment, and clarifies that "costs"
means the following:
(1) any legal costs "claimed" by the original cargo claimant;6
(2) all legal, Club correspondents’ and experts’ costs7 reasonably incurred in the defence of or in
the settlement of the original cargo claim.

The ICA 1996 expressly excludes from the apportionment costs incurred in making a claim under
the Agreement or in seeking an indemnity under
the charterparty.

Interest
The ICA 1996 expressly allows the apportionment of interest "claimed" by the original cargo
claimant.8 It was not clear whether this should be allowed under the ICA 1984.

Accordingly, the above-mentioned items would be considered as set out in Table II.9

Table II
Item ICA 1984 ICA 1996

Loss of cargo; damage to cargo; Allowed Allowed

shortage of cargo (incl. slackage,
ullage or pilferage); overcarriage
of cargo

Delay to cargo Unclear Allowed

Customs dues or fines in respect Not allowed Allowed

of any of the above

Legal costs paid to the original Allowed Allowed

cargo claimant

Legal, Club correspondents’ and Not Allowed Allowed

experts’ costs reasonably
incurred in the defence of or in
the settlement of the original
cargo claim.

Costs incurred in making a claim Not Allowed Not Allowed

under the Agreement or in
seeking an indemnity under the
charterparty

Interest Unclear Allowed

CONTRACTS OF CARRIAGE TO WHICH THE AGREEMENT APPLIES

For the 1984 version of the Agreement to apply the cargo had to be "carried" under a bill or bills
of lading incorporating the Hague or Hague-Visby Rules or containing terms no less favourable.
Although the wording is not clear in that respect, in "THE HOLSTENCRUISER" the court decided
that the 1984 Agreement only applied to cargo claims brought under a bill or bills of lading (as
opposed, for example, to cases where although the cargo was "carried" under a bill of lading, the
cargo claim was brought under a charterparty).

Under the 1996 form the Agreement will continue to apply where the cargo claim is brought under
a bill or bills of lading, and the wording has been amended to reflect the fact that the claim must
be brought under such document(s). However, the 1996 Agreement will also apply where the
claim is made under a document other than a bill of lading. Application has been extended to
claims made under contracts of carriage of whatever form10, provided such contracts are
authorised under the charterparty.

In addition, although the relevant contract of carriage must still incorporate the Hague or Hague-
Visby Rules or terms no less favourable, the 1996 Agreement will also be applicable where the
contract incorporates the Hamburg Rules or any national law giving effect thereto, where these
Rules are compulsorily applicable by operation of law to the contract of carriage.

THROUGH OR COMBINED TRANSPORT

The ICA 1996 provides for one exception where it is applicable even though the underlying
contract of carriage is not authorised under the charterparty. This involves cases in which the
contract would have been authorised except for the inclusion of through or combined (multimodal)
transport provisions. This means that the simple fact that the underlying contract of carriage is a
contract for through or multimodal transport is not a reason in itself to avoid application of the
Agreement, even if this type of contract is not authorised under the charterparty.

The background to this new provision is the decision in "THE HOLSTENCRUISER", mentioned
above. In that case it was decided that the ICA would only apply where the relevant bill of lading
had been issued in strict compliance with the terms of the charterparty in question.11 From the
decision it appears that in the absence of a special provision in the charterparty allowing the issue
of through or multimodal contracts of carriage, any through or multimodal transport document
issued will not be in accordance with the terms of the NYPE charter, since it will also provide for
carriage by means other than the chartered ship. Accordingly, claims settled under through or
multimodal bills of lading will be outside the scope of the 1984 version of the Agreement, unless
expressly allowed under the charterparty.

In "THE HOLSTENCRUISER" it was also decided that, even where through or multimodal bills
were expressly allowed under the charterparty, application of the Agreement was limited to loss
of or damage to cargo arising during the period for which the shipowners
were responsible.

This latter part of the ratio in "THE HOLSTENCRUISER" decision is confirmed in the ICA 1996,
which expressly provides that in the case of contracts of carriage containing through or
multimodal transport provisions the application of the Agreement will be limited to cargo claims
arising after commencement of the loading of the cargo onto the chartered vessel and prior to
completion of its discharge from the vessel. It also makes clear the fact that the charterers have
the burden of proving that the cargo claim did or did not so arise.

Accordingly, application of the two forms of the Agreement to claims brought under different types
of documents will be as shown in Table III.12

Table III
Type of Document ICA 1984 ICA 1996

Bills of Lading authorised under the Applicable Applicable

charterparty and incorporating the Hague
or Hague-Visby Rules or containing terms
no less favourable

Waybills authorised under the Not applicable Applicable

charterparty and incorporating the Hague
or Hague-Visby Rules or containing terms
no less favourable
Charterparties authorised under the Not applicable Applicable
charterparty and incorporating the Hague
or Hague-Visby Rules or containing terms
no less favourable

Any other document authorised under the Not applicable Applicable

charterparty incorporating the Hague or
Hague-Visby Rules or containing terms
no less favourable

Documents not authorised under the Not applicable Not applicable

charterparty whether or not incorporating
the Hague or Hague-Visby Rules or
containing terms no less favourable

Documents which would have been Not applicable Applicable

authorised under the charterparty except
for the inclusion of through or combined
(multimodal) transport provisions,
incorporating the Hague or Hague-Visby
Rules or containing terms no less
favourable

Any form of document authorised under Not applicable Applicable

the charterparty or which would have
been authorised under the charterparty
except for the inclusion of through or
combined (multimodal) transport
provisions, incorporating the Hamburg
Rules or any national law giving effect
thereto, where these Rules are
compulsorily applicable by operation of
law to the contract of carriage

MATERIAL AMENDMENTS TO THE CHARTERPARTY WHICH RENDER THE AGREEMENT

INOPERATIVE
It is quite common that, when negotiating a charterparty on the NYPE form, the parties make
amendments to the standard form. Some of these amendments may introduce changes to the
manner in which liability for cargo claims is apportioned between owners and charterers. For the
ICA 1984 and 1996 to apply, the cargo responsibility clauses in the NYPE must not be materially
amended. A material amendment is defined in both forms as one which makes liability for cargo
claims clear.

The ICA 1984 gives one example of such a material amendment: the addition of the words "and
responsibility" in Clause 8 of the NYPE together with the addition of the words "cargo claims" in
Clause 26, or the words "cargo claims" in Clause 26 only. Where these amendments are in place
the ICA’s apportionment will not apply and owners will be responsible for cargo claims. The ICA
1984 then provides, in a quite contradictory manner, that the addition of the words "and
responsibility" in Clause 8 is in itself a material amendment, but that this does not render the
Agreement inoperative. Instead, an alternative apportionment formula is to be applied.

The ICA 1996 endeavours to remove the contradiction contained in the 1984 formula. In addition,
it was thought that the provision of two apportionment formulae was quite confusing, so there
were attempts to amalgamate them into one, without affecting the division of liability as
established in the 1984 form. As a result, the new form says clearly that the addition of the words
"and responsibility" in Clause 8 is not a material amendment (even though the inclusion of such
words will affect the manner in which liability is apportioned - see comments to "Apportionments"
below), but that the addition of the words "cargo claims" to Clause 26 renders the Agreement
inoperative even if it is expressly incorporated into the charterparty. In practice the result should
be the same as under the 1984 form.

APPLICATION REGARDLESS OF OTHER TERMS OF THE CHARTERPARTY

Like its predecessor, the 1996 Agreement is to apply regardless of legal forum or place of
arbitration specified in the charterparty and also regardless of any incorporation of the Hague or
Hague-Visby Rules and (new for the 1996 Agreement) the Hamburg Rules. The reference to the
Berth Standard of Average Clause (General Standard of Claim Clauses/Charterers' Contribution
Clause 1971) has been dropped since this clause seems to have fallen into disuse.

CLAIMS TO BE PROPERLY SETTLED

The 1984 Agreement provided that it was a condition precedent to apportionment under the ICA
that the cargo claim should have been properly settled or compromised. It went on to provide that
ex-gratia payments made for commercial or other reasons, where no legal liability existed, were
to be borne by the party by whom the payment was made. The 1996 Agreement also provides
that apportionment under the ICA may only be made if the claim has been properly settled or
compromised. In addition, there is now a new requirement that the cargo claim must also be paid.
However, the reference to ex-gratia payments has been dropped since it was considered that the
words were superfluous. An ex-gratia payment made where no legal liability exists cannot be a
claim properly settled or compromised.13

TIME BAR
One will recall that the ICA 1984 provided that "claims should be notified to the other party in
writing as soon as possible, but in any event within two years from the date of discharge, or the
date when the goods should have been discharged". Under the 1996 Agreement, written
notification of a claim must be given to the other party within 24 months of the date of delivery of
the cargo or the date the cargo should have been delivered, except for where the Hamburg Rules
are compulsorily applicable, in which case the time limit is 36 months from the date of delivery.
The apparent more generous time bar for Hamburg Rules cases is necessary due to the fact that
under the Hamburg Rules there is a two year limitation period14 compared to the one year under
the Hague and Hague-Visby Rules.15 The requirement in the 1984 Agreement to notify as soon
as possible has now been omitted since it was felt that these words were too vague to operate as
an effective time bar and at most could only be viewed as aiming to promote the good practice of
timely notification.

One will also note that "delivery" has been substituted for "discharge". This change brings the ICA
into line with the terminology of the respective time bars set out in the Hague, Hague-Visby and
Hamburg Rules. In fact the change is more subtle than mere semantics. The Hague/Hague-Visby
Rules distinguish between discharge and delivery.16 Delivery is when the goods are made
available to the receiver and this may be before or after discharge. For example, if the bill of
lading is on "free in out" terms and therefore receivers are to perform the function of discharge,
"delivery" will take place when the hatches are opened and the cargo is then available to
receivers, notwithstanding the fact that owners’ period of responsibility continues until discharge
has been completed.17 Under the Hamburg Rules the owners' period of responsibility is port to
port. The distinction between discharge and delivery may be of vital importance if discharge is
completed several days after the hatches are opened. In cases of through or combined transport,
"delivery" will be delivery by the relevant contractual carrier under the through bill of lading which
may be some distance in time and place from the vessel. "Discharge" however, still remains
significant under ICA 1996 in particular clause 4(a)(iii) in relation to through and combined
transport

AMOUNT TO BE APPORTIONED
When making an apportionment under the ICA, one is to have regard only to the amounts
claimed under that particular charterparty and the fact that there may be a chain of charterparties
under which other apportionments are made is to be disregarded. This provision although worded
differently gives the same effect as its counterpart in the 1984 Agreement.

APPORTIONMENTS
The ICA 1984 provided two apportionment formulae: One for claims where Clause 8 of the
charterparty contained no material amendments and one for claims where the only material
amendment was the inclusion of the words "and responsibility" or similar words, by which the
Master was made responsible for cargo handling. Now under the 1996 Agreement the inclusion
of the words "and responsibility" in Clause 8 is no longer regarded as a material amendment and
there is just one apportionment formula. However, as we describe below, for claims arising from
cargo handling the apportionment formula maintains a distinction between cases in which Clause
8 has been amended to include the words "and responsibility" or has otherwise been amended to
make the Master responsible for cargo handling and those cases in which Clause 8 has no such
amendment.

ERROR OR FAULT IN NAVIGATION OR MANAGEMENT OF THE VESSEL

The 1996 Agreement introduces a new element in the apportionments, to reflect the fact that the
Agreement now operates in respect of contracts of carriage to which the Hamburg Rules are
compulsorily applicable. Claims in fact arising out of error or fault in navigation or management of
the vessel, are to be apportioned 100 per cent to owners. The rationale behind this is that many
charterparties incorporate the Hague or Hague-Visby Rules thus giving owners a complete
defence to claims of this kind. However, if under such a charterparty, charterers have issued bills
of lading to which the Hamburg Rules apply as a matter of law, there will be no defence to a claim
for negligent navigation or management of the vessel under the bill of lading but charterers will be
unable to pass on the claim to owners due to the negligent navigation or management of the
vessel defence in the charterparty. Since charterers have no control over the navigation or
management of the vessel, such a result would seem inequitable. The new apportionment
provision should only be of relevance in cases where the Hamburg Rules are compulsorily
applicable. In a claim to which Hague or Hague-Visby Rules apply, cargo claimants should be
defeated by the contractual carrier under the contract of carriage, if the claim arises by virtue of
negligent navigation or management and so there should be no claim to pass on under the ICA. If
the contractual carrier pays the claim in any event, the claim will not have been properly settled
and therefore no recovery can be made under the ICA.18

UNSEAWORTHINESS
As previously, claims arising out of unseaworthiness are apportioned 100 per cent to owners.
However, this is now subject to the express proviso that where owners can prove that the
unseaworthiness was caused by the loading, stowage etc. of the cargo, the claim will be dealt
with under the cargo handling heading in Clause 8(b). Whilst the words of the proviso may be
new, it is believed that they merely state expressly what was implicit in the 1984 Agreement and
therefore it is anticipated that, in practical terms, there will be no change in apportionment of
claims under this heading.

LOADING/STOWAGE/HANDLING
Again as previously, claims arising out of poor or incorrect loading, stowage, lashing, discharge,
storage or other handling of the cargo are apportioned 100 per cent to charterers, unless "and
responsibility" has been added to Clause 8 of the charterparty, in which case, claims will be
apportioned 50 per cent charterers/50 per cent owners. However, this is subject to the proviso
that where charterers can prove that the failure to properly load, stow or handle etc. was due to
the unseaworthiness of the vessel, claims will be treated as unseaworthiness claims under
Clause 8(a). As with the proviso in Clause 8(a), it is considered that the new words merely state
expressly what was implicit in the 1984 Agreement.

Since the ICA 1996 extends to claims arising under through or combined transport bills of lading,
a question arises as to how "stowage" should be interpreted in respect of containerised cargo:
does it mean stowage of the cargo inside the container or stowage of the container on board the
chartered vessel? It would seem that the phrase means stowage of the container on board the
chartered vessel. As explained above, by virtue of Clause 4(a)(iii), the ICA only applies where
charterers can show the loss, damage, shortage, overcarriage or delay occurred after
commencement of the loading of the cargo onto the chartered vessel and prior to completion of
discharge from that vessel. Since stowage of the cargo inside the container takes place ashore,
the cause of the loss or damage will have taken place prior to the container being loaded onto the
vessel and therefore any claim arising therefrom should fall outside the ambit of the ICA.

SHORTAGE OR OVERCARRIAGE
As under the 1984 Agreement, shortage or overcarriage claims are apportioned 50 per cent
charterers/50 per cent owners, unless there is clear and irrefutable evidence that the claim arose
out of pilferage or act or neglect by one party or the other, in which case that party shall be liable
in full. However, in cases where owners are 100 per cent liable, this apportionment is no longer
subject to a contribution by charterers under the Berth Standard of Average Clause/Charterers'
Contribution Clause (1971). These clauses seem to have fallen into disuse and therefore it is
believed that the minor change will be of little or no practical significance.

ALL OTHER CLAIMS

The 1996 Agreement introduces a new "catch-all" category, where claims arising from other
circumstances e.g. delay will be apportioned 50 per cent owners/50 per cent charterers, unless
there is clear and irrefutable evidence that the claim arose out of the act or neglect of one or other
of the parties in which case the party at fault shall be 100 per cent liable.

CONDENSATION
Readers will note that, unlike its predecessor, the ICA 1996 makes no express mention of claims
for condensation damage. Under the ICA 1984 such claims were dealt with in two ways. If the
condensation damage resulted solely from improper ventilation, owners were 100 per cent liable.
However, if condensation resulted otherwise than from improper ventilation, liability was
apportioned equally between owners and charterers, unless the condensation arose from poor
stowage. In such a case, the claim would be dealt with as a poor stowage/handling case and
would be apportioned either 100 per cent charterers or 50 per cent charterers/50 per cent
owners, depending on whether Clause 8 had been amended to include the words "and
responsibility". Under the 1996 Agreement, it is envisaged that condensation claims will be dealt
with
as follows:

Liability for condensation arising out of improper ventilation will be apportioned 100 per cent to
owners by one of two separate routes: either the improper ventilation arises by virtue of the
vessel’s uncargoworthiness (an element of unseaworthiness) and therefore the claim falls within
Clause 8(a) or the improper ventilation arises by virtue of the crew’s failure during the voyage to
take care of the cargo. This should fall into the catch-all provision of 8(d) and because the claim
arose out of the act or neglect of owners the "100 per cent to the party at fault" apportionment will
apply rather than the 50/50 split. Condensation cases caused otherwise than by improper
ventilation will fall into the new catch-all provision in Clause 8(d) – 50 per cent owners/50 per cent
charterers, unless owners are able to prove improper stowage/handling in which case the claim
will be dealt with under Clause 8(b) (see previous comments). As can be seen, despite the
absence of any express reference to condensation claims, it is believed that these claims will
continue to be treated in the same way as before.

The apportionment of liability under the two versions of the ICA will be very similar, with some
minor exceptions where no provision for apportionment existed in the 1984 version and the
inclusion of the "catch-all" provision. Apportionment under each form should be as per Table IV,
based on English law.
Table IV
Type/Cause of cargo claim Apportionment under Apportionment under
ICA 1984 ICA 1996

Error or fault in navigation or No provision for 100 per cent Owners

management of the vessel apportionment

Unseaworthiness 100 per cent Owners 100 per cent Owners

Loading/Stowage/Handling 100 per cent Charterers 100 per cent Charterers

where responsibility" have not
been added to Clause 8

Loading/Stowage/Handling 50 per cent Owners – 50 50 per cent Owners – 50

where the words "and per cent Charterers per cent Charterers
responsibility" have been
added to Clause 8

Shortage or Overcarriage, 50 per cent Owners – 50 50 per cent Owners – 50

where there is not clear and per cent Charterers per cent Charterers
irrefutable evidence that claim
arose out of pilferage or
act/neglect by one party or the
other

Shortage or Overcarriage, 100 per cent Owners 100 per cent Owners
where there is clear and
irrefutable evidence that claim
arose out of pilferage or
act/neglect by Owners,
Owners’ servants or sub-
contractors

Shortage or Overcarriage, 100 per cent Charterers 100 per cent Charterers
where there is clear and
irrefutable evidence that claim
arose out of pilferage or
act/neglect by Charterers,
Charterers’ servants or sub-
contractors

Condensation resulting solely 100 per cent Owners 100 per cent Owners
from improper ventilation

Condensation resulting from 50 per cent Owners – 50 50 per cent Owners –

bad stowage where the words per cent Charterers 50 per cent Charterers
"and responsibility" have been
added to Clause 8

Condensation resulting from 100 per cent Charterers 100 per cent Charterers
bad stowage where the words
"and responsibility" have not
been added to Clause 8
Condensation resulting from 50 per cent Owners – 50 50 per cent Owners –
something other than improper per cent Charterers 50 per cent Charterers
ventilation or bad stowage
unless there is irrefutable
evidence that the claim arose
out of the act or neglect of one
party or the other (including
that party’s servants or sub-
contractors)

Condensation resulting from 50 per cent Owners – 50 100 per cent Owners
something other than improper per cent Charterers
ventilation or bad stowage
where there is irrefutable
evidence that the claim arose
out of the act or neglect of
Owners, their servants or sub-
contractors

Condensation resulting from 50 per cent Owners – 50 100 per cent Charterers
something other than improper per cent Charterers
ventilation or bad stowage
where there is not irrefutable
evidence that the claim arose
out of the act or neglect of
Charterers, their servants or
sub-contractors

All other claims whatsoever No provision for for 50 per cent Owners – 50
(including claims for delay to apportionment per cent Charterers
cargo) where there is not
irrefutable evidence that the
claim arose out of the act or
neglect of one party or the
other (including its servants or
sub-contractors)

All other claims whatsoever No provision for 100 per cent Owners
(including claims for delay to apportionment
cargo) where there is
irrefutable evidence that the
claim arose out of the act or
negligence of Owners, their
servants or sub-contractors

All other claims whatsoever No provision for 100 per cent Charterers
(including claims for delay to apportionment
cargo) where there is
irrefutable evidence that the
claim arose out of the act or
neglect of Charterers, their
servants or sub-contractors

DURATION OF THE AGREEMENT

The ICA 1996 declares that it replaces the ICA 1984 in respect of all charterparties specified in
Clause 1 of the 1996 Agreement i.e. all contracts of carriage to which the ICA 1996 applies which
are entered into after the coming into force of the 1996 Agreement. As stated above this was 1st
September 1996. The ICA 1996, like the ICA 1984 provides that it will continue in force until
varied or terminated. Any variation has to be approved in writing by all the parties, however, any
Club is entitled to withdraw from the Agreement upon the expiry of three months’ written notice. It
is understood that no Club has ever withdrawn from the ICA.

GOVERNING LAW
Also new in the ICA 1996 is the governing law clause, which provides that the Agreement itself as
between the Clubs is subject to English law and jurisdiction.

However, in order to ensure that no conflict arises between the main body of the charterparty and
the settlement of claims under the ICA, the law and jurisdiction of the charterparty under which an
apportionment is sought shall apply in the following situations:
(1) where the charterparty expressly incorporates the ICA;
(2) where the charterparty does not technically "incorporate" the ICA, but it states that cargo
claims will be settled in accordance with the ICA;
(3) where the charterparty does not contain a clause in the terms of (1) or (2) above, but after a
claim arises owners and charterers agree to settle cargo claims in accordance with the ICA.
Since many charterparties are subject to English law and jurisdiction, it is likely that English law
will be relevant in the majority of cases.

Footnotes
1 The Standard wording of the 1993 NYPE form refers to cargo claims to be apportioned in
accordance with the ICA.
2 Where the Agreement is expressly incorporated into a charterparty it becomes a contractual
term binding on owners and charterers, and has to be read in conjunction with the other terms of
the contract.
3 A/S Iverans Rederi v. KG MS Holstencruiser Seeschiffahrtsgesellschaft m.b.H. & Co. and
Others "THE HOLSTEINCRUISER", (1992) 2 Lloyd’s Rep. 378. See article in Gard News 136 of
December 1994.
4 When the ICA is expressly incorporated into a contract, the parties are free to incorporate any
of the ICA versions into any of the charterparty forms, as long as there is an express provision to
that effect in the contract.
5 "THE HOLSTENCRUISER", (1992) 2 Lloyd’s Rep. 378.
6 The expression "claimed" should be interpreted to mean "properly claimed and properly settled
or compromised and paid". See clause 4 (c) of the ICA 1996.
7 We understand this expression includes surveyors’ fees.
8 The expression "claimed" should be interpreted to mean "properly claimed and properly settled
or compromised and paid". See clause 4 (c) of the ICA 1996.
9 Based on English law.
10 These should include for instance sea waybills, voyage charterparties, combined transport
documents etc.
11 See article in Gard News 136 of December 1994.
12 Based on English law.
13 As under the ICA 1984, nuisance settlements made with a view to avoiding legal costs, where
no liability exists, may be outside the scope of the 1996 Agreement. In such cases it is
recommended that prior to settlement of a cargo claim the other party to the charterparty and its
Club are asked to approve the settlement and confirm that they will contribute to it in accordance
with the ICA.
14 Hamburg Rules, Article 20.
15 Hague/Hague-Visby Rules Article III, Rule 6.
16 Compare Hague/Hague-Visby Rules Article I (c) and Article III Rule (6).
17 See The "FILIKES" (1983) 1 Lloyd’s Rep. 9.
18 See ICA 1996 Clause 4 (c).