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Monday, June 25, 2018

WAR RISK CLAUSES – INTERTANKO SEEKS DIALOGUE WITH CHARTERERS ON THE COST OF ADDITIONAL PREMIUMS

In previous issues of our Weekly News we have highlighted the issues concerning war risk clauses and in particular where liability falls for the expense of additional premiums. Whilst some clauses now provide that charterers will reimburse owners for these additional costs others give owners a more restrictive right of reimbursement.

In previous issues of our Weekly News we have highlighted the issues concerning war risk clauses and in particular where liability falls for the expense of additional premiums. Whilst some clauses now provide that charterers will reimburse owners for these additional costs others give owners a more restrictive right of reimbursement.

The cost of additional premiums for particular areas are substantial. Whilst charterers have the possibility to pass on these cost seffectively to end consumers, owners do not have such a possibility. Therefore we strongly feel that it would be fair and equitable for charterers to pay such additional costs. Accordingly on behalf of our members we have initiated a dialogue on this issue with a number of major charterers.

We are concerned not just about the additional premiums payable but also about the voluntary increases in the annual premiums sought by underwriters that the majority of owners have agreed to. In the context of time charters the relevant clause may well not provide that such costs are for charterers’ account. Given that these costs are likely to have arisen after the rate of hire was fixed owners will not have been able to include such costs in their estimate of the running expenses of the vessel. The call for mid-term voluntary increases in annual rates is without precedent . This extraordinary situation calls for there to be a consideration by charterers of taking on these additional costs as they have the possibility of passing them on down the line with consumer being the ultimate recipient. This is a further issue we have taken up in our dialogue with the major charterers.