FD&D (Freight, Demurrage and Defence) provides assistance to Members for the cost of legal representation and expert advice in relation to claims, disputes and other matters of a shipping nature which are not already covered by P&I and are not covered by any other form of insurance.
SCOPE OF COVER
The disputes which are covered under FD&D include those arising over freight, charter hire, demurrage and detention. Cover also includes claims arising out of the supply of bunker fuels and ship’s equipment, repair work improperly carried out and damage to hull (not covered by Hull & Machinery Insurance). Similarly, disputes involving salvage, towage and pilotage, sale and purchase, as well as new building contracts, all fall within the ambit of FD&D cover. It is important to note that the cover provided relates only to the legal and other allied expenses involved in a dispute, not the liability itself. This is in contrast to P&I insurance where, for example, the actual liability for cargo or dock damage, oil pollution, etc. is covered as well as the associated legal costs. It is also important to note that any new claim must be discussed with the Club at the outset, before any action is taken, as the Club must be satisfied that the claim has merit. This does not mean that the claim must ultimately be successful, but for cover to be applicable there has to be a sound basis in fact and law for the matter to go forward. A Member should never be put off, however, from consulting the Club on any FD&D matter, even though at the outset the Member’s claim or defence may not appear strong. It is sometimes the case that after the Club has had an opportunity to consider the issues in detail, the position may be better than it initially seemed.
Britannia has a team of claims handlers who offer Members with FD&D cover a full advisory service on all FD&D issues. The service covers a wide range of matters including, amongst others, advice on the construction of charter party clauses, interpretation of demurrage provisions, analysis of unsafe berth and damage to hull disputes.
The defence team will pursue recoveries of freight, hire or demurrage wherever and whenever appropriate, and where disputes cannot be amicably resolved, they will assist members in taking matters to arbitration or litigation, appointing outside lawyers if appropriate or necessary. FD&D disputes can involve any jurisdiction in the world and the Club is well equipped, through its international network of correspondents and correspondent lawyers, to deal with claims arising anywhere at a moment’s notice. If outside legal advice is required, attorneys, solicitors or counsel will be instructed and their cost carefully monitored by the Club. The Club will, however, strive to do as much work in-house as is possible to keep the overall legal expenditure to a minimum while maintaining the highest standards of professional advice. The defence team is available to help and guide Members at any stage of a contractual negotiation or to find answers when none are readily apparent and Members are encouraged to consult the FD&D team on any defence issue of concern.
DEDUCTIBLES AND LIMITS
Under current arrangements, the Association covers the first USD7,500 of all external expenses incurred in any matter and thereafter the Member contributes one third of all additional legal expenses capped at USD150,000 per claim. In fact, many disputes are resolved within the USD7,500 threshold and require no contribution from the Member. The maximum recovery in respect of any one claim is limited to USD10m, with a sub-limit of USD2m for disputes relating to new buildings, conversions and sale and purchase.
Britannia’s FD&D cover provides protection, at a low cost, against runaway legal expenses as well as enabling Members to obtain the best advice on the handling of a wide variety of maritime disputes arising in any part of the world. As disputes of a defence nature almost invariably affect a ship’s earnings and cash flow, FD&D is regarded by many Members as an important adjunct to their day to day business operation.