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P&I (CLASS 3) / PART IV / RULE 27
LIMITATION OF LIABILITY
27.1 General Limitation
Subject to these Rules and to any special terms and conditions on which a Ship may be entered, the Association insures the liability of a Member in respect of an Entered Ship as this liability may ultimately be determined and fixed by law, including any laws pertaining to limitation of liability. The Association shall in no circumstances be liable for any sum in excess of such legal liability. If the Ship is entered for less than its Full Tonnage the liability of the Association shall be limited to the proportion that the Entered Tonnage of the Ship bears to the Full Tonnage.
27.2 Limit of Liability
The Association shall in no circumstances be liable for any sum in excess of the Limit of Liability:
27.2.1 as set out in or provided in accordance with these Rules, including Rule 27.1 General Limitation; or
27.2.2 as may be advised by the Association by Policy Year circular; or
27.2.3 as set out in the Member’s Certificate of Entry
whichever is the lowest.
27.3 Passengers and Seafarers
27.3.1 For the purposes of this Rule 27.3 and the provisos hereto, and without prejudice to any other provision of these Rules, a “Passenger” shall mean a person carried onboard a ship under a contract of carriage or who, with the consent of the carrier, is accompanying a vehicle or live animals covered by a contract for the carriage of goods and a “Seafarer” shall mean any other person on board a ship who is not a Passenger.
27.3.2 Unless otherwise limited to a lesser sum, the Association’s aggregate liability in respect of any one Entered Ship for losses, liabilities, and the costs and expenses incidental thereto, shall not exceed:
27.3.2.1 USD2,000,000,000 any one event in respect of Passengers; and
27.3.2.2 USD3,000,000,000 any one event in respect of Passengers and Seafarers.
27.3.3 PROVIDED ALWAYS THAT:
Where an Entered Ship is also separately insured on behalf of any person (other than a charterer who is not a demise or bareboat charterer) by the Association and/or by any other association which participates in the Pooling Agreement:
27.3.3.1 the aggregate amount in respect of Passengers recoverable from the Association and/or such other associations shall not exceed the Limit of Liability any one event; and the liability of the Association shall be limited to such proportion of that sum as the amount recoverable in respect of Passengers from the Association bears to the aggregate of all such amounts otherwise recoverable in respect of Passengers from the Association and all such other associations;
27.3.3.2 the aggregate amount in respect of Passengers and Seafarers recoverable from the Association and/or such other associations shall not exceed the Limit of Liability any one event and the liability of the Association shall be limited:
27.3.3.2.1 where liability in respect of Passengers has been limited to USD2,000,000,000 in accordance with proviso 27.3.3.1 to such proportion of the balance of USD1,000,000,000 as the amount recoverable in respect of Seafarers bears to the aggregate of all such claims otherwise recoverable in respect of Seafarers from the Association and all such associations; and
27.3.3.2.2 in all other cases, to such proportion of USD3,000,000,000 as the amounts recoverable in respect of Passengers and Seafarers bear to the aggregate of all such claims otherwise recoverable from the Association and all such associations.
27.3.4 Where liabilities to Passengers include liabilities arising under a non-war certificate issued by the Association in compliance with either Article 4 bis of the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974 and the Protocol thereto of 2002 or Regulation (EC) No. 392/2009 of the European Parliament and of the Council of 23 April 2009 on the liability of carriers of passengers by sea in the event of accidents (“Certified Liabilities”) and all liabilities to Passengers exceed or may exceed in the aggregate the limit of cover specified in this Rule 27.3:
27.3.4.1 the Managers may in their absolute discretion, until the Certified Liabilities, or such part of the Certified Liabilities as the Managers may decide, have been discharged, defer payment of a claim in respect of other liabilities to Passengers or any part thereof; and
27.3.4.2 if and to the extent any Certified Liabilities discharged by the Association exceed the said limit any payment by the Association in respect thereof shall be by way of loan and the Member shall indemnify the Association in respect of such payment.
27.4 Prioritisation of Liabilities
27.4.1 Where:
27.4.1.1 the Association has issued any guarantee, undertaking or certificate as referred to in Rule 23.2 and Rule 25.3 or other bail or security in accordance with Rule 31.5.1 under which it undertakes directly to discharge or guarantee any relevant liabilities (together the Direct Liabilities); and
27.4.1.2 claims in respect of Direct Liabilities alone or in combination with other claims may in the opinion of the Managers exceed and limit(s) on the cover provided by the Association as set out in the Rules or in the Certificate of Entry;
then payment of any such other claims or any part thereof may in the absolute discretion of the Board (or, in the case of claims not exceeding USD2,000,000, the Committee) be deferred until the Direct Liabilities, or such parts of the Direct Liabilities as the Board (or, in the case of Direct Liabilities not exceeding USD2,000,000, the Committee) may in their absolute discretion determine, have been discharged.
27.4.2 To the extent any claims or liabilities (including Direct Liabilities) discharged by the Association exceed the limit(s) any payment by the Association in respect thereof shall be by way of loan and the Member shall indemnify the Association promptly upon demand in respect of such payment and shall assign to the Association to the extent and on the terms that the Association determines in its discretion to be practicable all the rights of the Member under any other insurance and against any third party.