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Arctic Shipping: the Northern Sea Route P&I Insurance Faqs

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Arctic Shipping: the Northern Sea Route P&I Insurance Faqs ARCTIC SHIPPING: THE NORTHERN SEA ROUTE ARCTIC SHIPPING: P&I INSURANCE FAQs The Northern Sea Route (NSR), or North East Passage, runs along the Russian coast from the Atlantic to the Pacific through the Kara, Laptev, East Siberian, and Chukchi Seas, having the potential to significantly shorten voyage times between European and Far Eastern ports. The exact routing is variable and depends on the time of the year, ice conditions, and the size and draft of the ship in question. The route has long been Q: Does the UK Club have Q: What are the additional used by Russian shipping for any geographical limits risks from a P&I domestic purposes, but, with to exclude cover for polar perspective? climate change reducing levels risks? of Arctic sea ice, has been used (i) Operators of ships using for commercial voyages by No - the UK Club has no the NSR are at risk of incurring international shipping since 2009 geographical exclusions and liabilities arising from physical and numbers of such transits has been insuring P&I risks risks to the ship and crew, of have steadily increased. arising from Arctic trading for extreme weather, cold, and many years, through coverage ice conditions. Contact with The route is administered by of fleets based in Northern ice floes and icebergs, ice Russia’s Northern Sea Route and Far East Russia. It has also accretion, restricted visibility Administration (NSRA) under insured specialist exploration and operational malfunctions laws that were most recently vessels in Antarctic voyages and due to cold, can all potentially updated in 2013. The main has experience of dealing with contribute to cause delays and season for transits when sea ice claims during polar voyages damage to the ship, her crew and recedes is from late July to early when incidents arose. cargo. November. Q: Does the Club consider (ii) The physical risks are Members contemplating that polar voyages present aggravated by infrastructure whether newly to use the additional risk? risks of poor communications, Northern Sea Route should incomplete charting in some conduct a thorough risk Yes – the Club recognises that areas, unreliable navigational aids, assessment and should contact there are additional risks, and and potential remoteness from all the Club to confirm the position has underwritten those fleets sources of help when an incident in relation to P&I cover. that traditionally trade in Arctic happens, including remoteness regions against the background from salvage and clean-up The UK Club website contains of considering how their facilities, search and rescue, a collection of links to relevant experience and expertise enables medical assistance, surveyors, information for assessing the risk them to manage such additional Club correspondents, bunkering of Arctic voyages, on the page risks. Fleets that are newly facilities, etc. flagged ‘Polar Shipping’. considering whether to use the NSR will need to acquire new (iii) Third, there are enhanced The FAQs in this document expertise to undertake such human element risks if the focus on the implications for voyages safely. officers and crew lack the P&I insurance of choosing to use training and experience to the Northern Sea Route. address the difficulties noted above. ARCTIC SHIPPING: THE NORTHERN SEA ROUTE Q: How can the risks be liability if the ship is sent to sea have received their approval or addressed? in an unseaworthy state with the agreement to extend the hull privity of the assured. This Rule cover, if necessary with any The Club expects that a Member would be relevant in the unlikely amended terms and additional contemplating a polar voyage will and extreme case of a shipowner premium required. properly research and assess the deliberately refraining from taking risks, and follow the mitigation measures necessary to make the Q. Is it necessary to have advice that is now widely available. ship seaworthy for the demanding approval from cargo owners Much of this is collected on the environment of a polar voyage. to a voyage via the Northern Club’s website at ukpandi.com Shipping Route? under the page entitled “Polar Q. What is required of the Shipping” – linked here: http:// owner? Shipowners are under a duty to www.ukpandi.com/knowledge/ cargo owners not to deviate from industry-developments/polar- The UK Club’s Rule 5K requires the “normal and customary” route shipping/ the owner, as a condition of cover, for a voyage, unless there is a to comply with recommendations specific agreement to the contrary. Q: How does the additional and requirements of the ship’s There is an increase in the number risk impact on cover? Classification society and certain of voyages from Europe to Asia via statutory requirements of the flag the Northern Shipping Route, but The Club’s Rule 5J provides state. The UK Club would expect such voyages make up only a tiny for a reduction in what can be the owner to have confirmed fraction of the number of voyages recovered in the event that a with the Classification society and via Suez and are clearly not the claim arises from a voyage that flag state that the vessel is suitable normal and customary route. the Club’s Directors consider to for the intended voyage, that it If cargo is lost, damaged or delayed have been unsafe or imprudent. maintains an appropriate Ice or and Owners are found to have Measures such as those shown ‘Polar’ Class if necessary for the deviated from the contracted below would have some relevance planned voyage dates and route, voyage, they are at risk of losing to determining whether a given and that any requirements are the right to any contractual voyage was so imprudent as to complied with. limitations and defences to liability, trigger Rule 5J. on the basis that their conduct The Club will also expect the may be regarded as a repudiation The Club’s Rule 5M incorporates owner to have notified hull of the contract. the UK Marine Insurance Act underwriters (who will usually 1906, under Section 39(5) of operate a geographical exclusion) Such increased liabilities are not which an insurer is relieved of of the intended voyage and to included within normal P&I cover. ARCTIC SHIPPING: THE NORTHERN SEA ROUTE Claims arising from a deviation deductible, and the cost of any of temperatures that may be in the sense of “a departure from damage sustained by either party experienced en route during the contractually agreed voyage or by third parties as a result of the polar voyage? What extra or adventure which deprives the using the route. spare parts should be carried Owner of the right to rely on on board? defences or rights of limitation Q. Where can I find out more which would otherwise have been information? • Have the crew been briefed available to him … to reduce or and trained appropriately eliminate his liability” are excluded The UK Club website has an for the additional risks? Are under proviso (b) to UK Club’s excellent page on polar shipping they aware of the potential Rule 2, Section 17, unless special where links to key resources are unreliability of charts or additional cover has been agreed in collected in one place, at: electronic aids? Have writing. http://www.ukpandi.com/knowl- they undergone recent edge/industry-developments/po- medical checks, and do they Not all Arctic voyages will be a lar-shipping/. understand the potential deviation from the contract of unavailability of medical help? carriage. A ship may, for example, Do (some at least of) the crew be following a normal and What else would the Club have experience of a previous customary route in the case where expect? polar voyage? a fully ice classed ship is employed in Russian cabotage trade. For the purpose of being satisfed • Have contracts been arranged that the voyage was not imprudent for any ice breaker and Q. How should any or unsafe, the Club would expect pilotage services that are agreement with the cargo the owner to have taken expert required for the intended owners be recorded? advice to address at least the passage? following matters: If cargo is carried under negotiable • Have contingency plans bills of lading, the front of the bills • Have the requirements of all been considered for the of lading should be endorsed to states that have jurisdiction availability of salvage services make clear that the contractually over any parts of the planned from icebreakers, and for agreed voyage is via the Northern route been identifed, and conducting clean-up measures Shipping Route. steps taken to ensure they can in the event of an oil spill? be complied with? • Te ITOPF website provides • Have communications and guidance on the particular Q. What other contractual navigation aids been upgraded difculties of dealing with oil risks should be addressed? to provide satisfactory spills in Arctic climates. performance in polar regions? If the ship is on time charter, the owner should seek to address in • What access will the ship have advance, in the charter party, the to ice forecasts, other relevant question of who is responsible as meteorological advice, and to For more information: between owner and charterer for up-dated information during www.ukpandi.com matters such as the engagement the voyage? and costs of pilots and icebreak- ers, obtaining approvals from the • Are the ship’s key controls NSRA, the costs of any additional and equipment capable of insurance premium or increased operation at the whole range .
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