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skuld.comSkuldmagazineDECEMber 2010 / issue 198Skuld1897Collision liability / 11All roads leadto Geneva ... / 21

ViewpointDouglas JacobsohnCEOA FRESH APPROACHWith the most significant diversification in Skuld’s long history, we nowoffer marine and energy insurance through a newly-establishedLloyd’s syndicate. Skuld 1897, named after Skuld’s founding year, willbe an S&P ‘A+’ rated carrier and benefit from Lloyd’s licenses in morethan 80 countries. In addition, Skuld Offshore, underwriting on behalfof syndicate 1897 and other Lloyd’s syndicates, brings a new definitionof service quality to the offshore energy industry. These initiatives aretransforming Skuld from a leading P&I mutual into a comprehensivemarine insurance provider.beacon DECEMber 2010 / issue 198Members and clients firstWhile remaining fully committed to growing our mutual business, theadded hull service through Skuld 1897 brings together the best of bothworlds. We continue placing members and clients first and are lookingto establish relationships based on a shared commitment to the higheststandards of quality.FinancesSkuld’s third quarter results have just been released. The club is doingwell and a strong result of USD 52 million will be added to our freereserves, which now stand at a record USD 254 million. After a relativelyhigh number of large claims in the two first quarters, we have seen areduction in the third quarter. This development underlines theimportance of having a strong balance sheet to meet any volatility inour business.Photo: BARRY WILLIS Photo: AFPSkuld prides itself on being close to its members. At the time ofwriting, we are hoping to meet as many members, clients and brokersas possible through our ‘Market Update Tour’. This series of eventsgives us the opportunity to present the exciting launch of Skuld 1897 toall major markets.Season’s greetings.Douglas JacobsohnSkuldmagazinebeaconDECEMber 2010 / Issue 198Beacon (Skuld Magazine) is the official publication of Assuranceforeningen Skuld (Gjensidig)Address P.O. Box 1376 Vika, NO-0114 Oslo, Norway, Tel +47 22 00 22 00, Fax +47 22 42 42 22E-mail ingeborg.berge@skuld.com editor in chief Ingeborg Berge Editorial staff Lise Larson,Inger Margrethe Holm Layout Transmission AS Repro and printing 07 Group Front pageShip’s bow. Photo: SeaTeamImages.com. Entire contents ©2010, all rights reserved. Reproductionin whole or in part, without written permission from Skuld, is prohibited. Opinionsexpressed by writers in Beacon are not necessarily those held by Skuld. Skuld assumesno responsibility for unsolicited material WWW.SKULD.COM12Emergencyin DubaiUrgent transmission from Lloyd’s MIU Casualty ReportingService: “Chemical tanker Kashmir (2,761 gt, built 1988)….carrying around 30,000 tonnes of oil condensates in collisionwith fully cellular containership Sima Saman (15,995 gt,built 2006) off Jebel Ali today....”

contentsNews feature6 Skuld 1897 – Delivering the best of both worlds9 Product range / The Skuld 1897 team10 Market Update TourFEATURE11 Collision liability12 Emergency in Dubai14 “A collision at sea can ruin your entire day”Legal issues16 Offshore – How do you manage liability risks?18 The Norwegian wayCURRENT20 All roads lead to Geneva ...news22 Personnel news23 News6Deliveringthe best ofboth worldsSkuld has entered the global marine andenergy market with a flourish by establishinga new Lloyd’s syndicate: Skuld 1897 – thename reflecting Skuld’s founding year. Thenew syndicate received Lloyd’s FranchiseBoard approval in September 2010 andobtained its operating licence in November.It is now ready to start underwriting for the2011 policy year.18TheNorwegianwayInsurance under Skuld Rules is subject toNorwegian law and jurisdiction. Why isNorwegian law and jurisdiction a goodchoice in marine insurance, as well asin commercial shipping and offshorecontracts?

News featureSkuld 1897: Delivering the best of both worldsthe bestbofbothLooking up – the interior of the Lloyd’sbuilding, Lime Street, London.Photo: BARRY WILLIS

News feature LEGALSkuld 1897: Delivering the best of both worlds ISSUESWritten byName SurnameJob title, Skuldname.surname@skuld.com/article introheadingIntro textTextworldsread morewww.address.com“quote fromtext”Skuld 1897 is a brand new syndicate at Lloyd’s providingmarine and energy covers such as hull and machinery, energypackages and cargo. The syndicate is supported by theknowledge and experience of Skuld P&I club in everythingfrom claims handling to loss prevention and risk management.beacon / DECEMber 2010 5

News featureSkuld 1897: Delivering the best of both worldsSkuld 1897:a new generation Lloyd’s syndicate with a fresh approachDelivering the bestof both worldsSkuld has entered the global marine and energy market with a flourish by establishing a new Lloyd’ssyndicate: Skuld 1897 – the name reflecting Skuld’s founding year. The new syndicate receivedLloyd’s Franchise Board approval in September 2010 and obtained its operating licence in November.It is now ready to start underwriting for the 2011 policy year.Commenting on the most significant diversification in Skuld’s long history,Skuld CEO Douglas Jacobsohn says: “Our vision for the future is basedon Skuld as a major provider of comprehensive marine insurance, notonly including our core protection & indemnity product, but now hull,loss of hire, cargo and several other covers. We see Lloyd’s as aunique, highly versatile platform for the effective delivery of non-mutualmarine insurance and we have worked hard over the past year to winLloyd’s approval. Under the Lloyd’s umbrella, we can now operateas an S&P ‘A+’ rated marine and energy insurance provider in over80 countries with the ability to accept business from more than 200countries and territories across the world. We now look forward towriting a wide range of covers through Skuld 1897 and a second newentity, Skuld Offshore Ltd., serving the offshore and energy markets.”Ambitious targetsDouglas Jacobsohn continues: “We believe we can build substantialand profitable marine and offshore books to sit alongside Skuld’s P&Iportfolio of more than 5,000 vessels or more than 100 million grosstons. We have ambitious targets, but we are confident that they areachievable. We will offer our non-P&I products to existing clubmembers and clients and we will seek new clients in the world’s majorshipping and offshore centres. Skuld has achieved positive P&I resultsfor eight consecutive years and we intend to perform just as effectivelyin the marine and energy insurance market. We now offer membersand clients the best of both worlds!”“we can nowoperate asan S&P ‘A+’rated marineand energyinsuranceprovider inover 80countries”our focus on writing profitablebusiness.”The diversification processBernt Hellman will oversee thedevelopment of Skuld 1897. Thenew syndicate’s launch marksthe latest step in Skuld’s majorprogramme of diversification,which accelerated in 2008 withthe re-establishment of Skuld’soffshore P&I underwriting. During2010 the offshore sector wasboosted further through theestablishment of Skuld OffshoreLimited, which is a specialisedmarine and energy Lloyd’s coverholder set for a 2011 start. SkuldOffshore is backed by four well-Skuld is providing the majority of Skuld 1897’s capital, with the balancecoming from French speciality reinsurance company SCOR andRandall & Quilter (R&Q). During the syndicate’s first three years,R&Q’s managing agent RQMA will be the syndicate manager. BerntHellman, the new syndicate’s active underwriter, says: “We have setdemanding targets for Skuld 1897; we intend to set up our own syndicatemanagement after the first three years of operation under RQMA.In order to make this management change economically viable, weneed to grow our income to around £100m by the end of 2013 withoutcompromising Skuld’s strict underwriting principles and maintainingHull and cargo are two new covers offered by Skuld 1897.Photo: Epa6 beacon / DECEMber 2010

News featureSkuld 1897: Delivering the best of both worlds/Stefan Gattberg, Douglas Jacobsohn and Bernt Hellman discuss the arrival of Skuld 1897 to the Lloyd’s insurance market.Photo: Barry Willisestablished Lloyd’s syndicates as well as Skuld 1897. Skuld OffshoreLimited recently obtained Financial Services Authority preliminary approvaland is now ready to commence operations in the 2011 policy year.Skuld 1897 and Skuld Offshore Limited (the latter now headed by GregoryThomas, Senior Vice President, Offshore P&I) will run in parallel,offering a full range of marine/offshore covers from 1 January 2011.One-stop P&I and hull, marine and energySkuld CEO Douglas Jacobsohn adds: “With Skuld 1897, we now offerone-stop access to P&I and hull. We have a marine and energyinsurance vehicle driven by the same ‘hands-on’ approach, which hasalways been our greatest strength as a P&I provider. We also intend tooffer integrated marine logistics covers for shore-based activities asmany of our members and clients have extensive onshore operations– certainly, there is more to Skuld 1897 than bluewater hull and cargo!”“With Skuld Offshore, we can take a larger participation on offshoreenergy risks than with Skuld 1897 alone and we can combine this withour involvement on the P&I side, where we offer bespoke offshorecontract reviews and risk assessment as an integral part of ourservice. Once again, we will apply our ‘best of both worlds’ principle.”/STRATEGY FOR SKULD 1897/ To take a proactive stance in thechanging P&I environment bybecoming a world-class marineinsurance provider/ To build on our unique client base/ To introduce a comprehensive rangeof products that offer synergies to ourclients and allow us to provide afull-service offering/ To capitalise on the strength of theLloyd’s platform, which iscommensurate with Skuld’s philosophyof reputation, financial standing andservice standards, i.e. to offer ‘thebest of both worlds’beacon / DECEMber 20107

News featureSkuld 1897: Delivering the best of both worldsSound underwriting and claims-handling excellenceSkuld’s service quality, as always, will be defined by proactive claimshandling – a relatively rare commodity in today’s marine and energyinsurance market. P&I members and new clients placing non-mutualproperty business with Skuld 1897 benefit from Skuld’s extensiveglobal organisation and business intelligence network.In addition to the traditional access to Lloyd’s via Lloyd’s brokers,members, clients and local brokers gain direct access to Skuld 1897through Skuld’s offices around the world and our members and clientscan benefit from direct, efficient and responsive service.Bernt Hellman says: “We intend to follow Skuld’s core principles forgood service. In contrast to most Lloyd’s syndicates, which rely on theservices of third-party loss adjusters, we will handle marine claimswhere we act as claims leaders in-house as we are confident that thisis the best way to provide quality service.Lloyd’s has been very supportive throughout our process of gettingapproval for Skuld 1897; we suggested that a large share of Skuld 1897’sincome will be new business to Lloyd’s. In addition, our reputation forsound underwriting and claims-handling excellence were cornerstonesfor the new syndicate to gain approval. And we have a strongconviction that Skuld 1897 will be a success as long as we can matchthe high service levels that are our norm in P&I.”Quality members and clientsBernt Hellman concludes: “There can be no doubt that our biggestchallenge is to achieve necessary profitability – this has been thefoundation of Skuld’s success as the ‘New Generation P&I Club’ and itwill also be key to Skuld 1897. We have a strong belief in the quality ofSkuld’s existing members and clients and also believe that we will getthe support of the many brokers that place business with Skuld today.The same brokers are of huge importance when we deliver ourmessage – that Skuld 1897 will be an innovative and service-drivenprovider of marine and energy insurance, and we are here for thelong term!”Skuld Offshore Limited is ready to commence operations in the 2011 policy year.“Skuld 1897will be aninnovativeand servicedrivenprovider ofmarine andenergyinsurance,and we arehere for thelong term!”Looking ahead, Douglas Jacobsohnadds: “This diversification has aclear context. We believe the P&Ilandscape is set for major changeover the coming years. If Skuld isto realise its ambitions, it mustgrow as a comprehensive provider,with its business base extendingbeyond P&I. That said, we remaintotally committed to growing theexisting P&I portfolio. We believethe new facilities add value forour P&I members and clients andthey give us a firm foundation forbroader business development.”read morewww.skuld1897.com8 beacon / DECEMber 2010

News featureSkuld 1897: Delivering the best of both worlds/SKULD 1897PRODUCT rangeThe Skuld 1897 teamMARINEHull and machineryHull and machinery and related ancillary covers, such as increasedvalues, disbursements, etc. based on all internationally recognisedconditions.Loss of hireLoss of time/charter for owners and charterers based on theNorwegian Plan for Loss of Hire.War risksHull war risks and liabilities based on all internationally recognisedconditions.Builders’ risksBuilders’ risks and packages.Bernt HellmanActive UnderwriterBernt, 43, has almost 20 years’ experience in themarine and offshore insurance industry and isresponsible for the syndicate’s underwriting. Beforemoving to Skuld 1897, Bernt helped to establishSkuld Offshore Limited.Mike BennettDeputy Active UnderwriterMike, 50, is the Deputy Active Underwriter for thesyndicate, as well as Underwriter for Skuld 1897’shull and war classes. Mike has more than 30 years’experience in the Lloyd’s and London companiesmarket and is a member of the London MarketAssociation’s Joint Hull Committee.Yacht coversHull and liability covers specially designed for yachts.CargoCargo and related ancillary covers based on all internationallyrecognised conditions.Marine liabilityMarine liabilities, logistics covers, ports and terminals cover andcharterers’ extended liability, including charterers’ loss of use.ENERGYMobile offshore unitsHull and machinery and related ancillary covers for mobile offshoreunits.Operator’s risksPhysical damage cover for operator’s offshore assets, control of well,operator’s extra expense and associated risks.Construction all risksPhysical damage cover for offshore construction projects.Energy liabilityEnergy liabilities (other than P&I) for the offshore industry.Guy LandymoreCargo UnderwriterGuy, 43, is the Cargo Underwriter for the syndicate.He has over 25 years’ experience, both as under writerand broker in the Lloyd’s and London companiesmarket. Guy is a former member of the LondonMarket Association’s Joint Cargo Committee.James ScottEnergy UnderwriterJames, 31, joins Skuld 1897 in December as EnergyUnderwriter. James has over ten years’ experience asoffshore energy underwriter and broker in the Londoninsurance market.Lucy BellUnderwriting AssistantLucy, 22, joined as a graduate from Reading Universityand is now studying for the Advanced Diploma inInsurance (ACII) from the Chartered Insurance Institute.Simon ScottUnderwriting AssistantSimon, 22, joined as a graduate from ManchesterUniversity and is now studying for the AdvancedDiploma in Insurance (ACII) from the CharteredInsurance Institute.read morewww.skuld1897.combeacon / DECEMber 2010 9

News featureSkuld 1897: Delivering the best of both worldsSKULD 1897Bernt Hellman, Active Underwriter with Skuld 1897, presents the new syndicate to 140 guests in Oslo.Top right: Skuld’s Yvonne Thaulow with Skuld committee memberFelix Tschudi of Tschudi Shipping Company AS.Over: Trond Nesse of Aon Grieg and Nikolai Ivanov of Skuld.Far left: Henrik Mjaaland from Bergvall Marine in discussionwith Ketil Urdal of Skuld Oslo.Left: Rune Bågenholm of Skuld and Anne-Marie Hansen ofFred. Olsen Brokers.Market update tourBeing ‘close to members’ is animportant Skuld philosophy,which continues with Skuld 1897.In November and December,we have invited members,clients and local brokers in allmajor markets to receptionsand presentations of the newsyndicate.The pictures show the Skuld 1897launch in Oslo on 24 November.The attentive audience listening to the presentation.Kurt Severinsen from Marsh Kristiansand.10 beacon / DECEMber 2010

FEATUREBy Claes LindhEVP Underwriting and Marketing, Skuldclaes.lindh@skuld.com/An underwriting perspectiveCollision liabilityA collision between two ships generally causes structural damage to both vessels. Repairs arenecessary, which means delays and loss of use. Consequently, shipowners are liable for opponents’losses based on the division of blame, either negotiated or tried in court.Hull & machinery – Loss of hireThe shipowner recovers cost of repairs from the hull and machineryinsurers and possible loss of use from the loss of hire insurer. The fullcost of repairs, time lost and deductibles suffered by the shipownerforms the basis for his claim against the opponent.Liability coverThe opponents’ liability insurer covers the eventual agreed payment tothe claimant less the deductible on liability cover.Professional assistanceA collision is normally stressful and generates challenges where theshipowner can benefit from professional help. Such assistance isafforded by P&I clubs and some marine law firms.Changing timesTraditionally, P&I clubs took over a quarter of the collision liability or‘Running Down Clause’ as the hull insurers name it. P&I clubsnegotiated and settled the opponent’s claim and paid a quarter of theliability, leaving owners to collect the balance from their hull insurers.Modern times have seen a change to this practice. As all modernenterprises, the shipowner is looking at all his costs and starting to ask:“If I exclude the ‘RDC’ on my hull insurance cover, how much rebatedo I get from my hull premium and how much does the P&I clubcharge for adding collision liability cover to my P&I insurance?”P&I clubs used to charge a minimum mutual premium without anyprofit loading for adding the RDC in full – a win-win situation for shipownersand hull underwriters, but a source of large losses for P&Iclubs. Now with statistics on hand, the situation has been rectified,although there is a tendency, especially outside Scandinavia, thatP&I insurance covers ‘4/4ths RDC’.P&I club support is essential when dealing with the aftermath of an accident, especiallyif pollution is involved.P&I club supportCollision liability may leave significant exposure and lead to veryexpensive claims. When freight rates are high and repair yards farapart, loss of use claims escalate costs. Hands-on service fromexperienced claims handlers supporting an active approach to acollision has a very positive impact giving shipowners the support theydesperately require. If you consider potential environmental damageand what this entails, you really find the support from your P&I clubvalue for money.“Collisionliability mayleave significantexposure andlead to veryexpensive claims”beacon / DECEMber 201011

FEATURECasualty response from a claims handler’s perspectiveEmergencyNo loss of life or pollution emanated from the collision between the Kashmir (pictured) and the Sima Saman.Photo: AFPUrgent transmission from Lloyd’s MIU Casualty Reporting Service: “Chemical tanker Kashmir(2,761 gt, built 1988)….carrying around 30,000 tonnes of oil condensates in collision with fullycellular containership Sima Saman (15,995 gt, built 2006) off Jebel Ali today....”The transmission arrived on the morning of 10 February 2009. Photossoon followed. They showed raging fires on the Kashmir with thick,black smoke filling the sky. Further messages told us crew were safe– due to their excellent conduct – and fire-fighting tugs had respondedto the Kashmir master’s call for assistance. Finally, the Dubai PortAuthority confirmed that fires were extinguished at 13.30 local time.Thankfully there was no pollution or loss of life, although two crewmembersfrom the Sima Saman lifted from the water suffered slightinjuries. The collision took place in a busy shipping channel five milesfrom the Jebel Ali port, close to the ‘World’ and ‘Palm’ developments.It left the Kashmir with a gaping hole on the port side, extensive damageto its structure and two cargo tanks. The Sima Saman suffered damageto its bow and a number of containers.As a Skuld case handler, I have been involved in many incidents duringmy four years with the club, but none as large as this. My manager, Claes12 beacon / DECEMber 2010

By Stefan Bjarnelöf-SovticClaims Executive, Skuld Oslo Syndicate 1Stefan.bjarnelof-sovtic@skuld.comFEATURE/in Dubai“At the start ofa case, it is vitalto understandand controlinformation flow”The Sima Saman suffered damage to its bow and a number of containers.Westman, gave me responsibilityfor the casualty and placed all ofthe club’s internal and externalresources at my disposal, includinghis own time. Encouraged, I felt asense of trust and enablement.The Kashmir is my member’s vesseland the Skuld way is that eachindividual claims handler shouldhandle each relevant case under theguidance of senior staff, regardlessof size and possible implications,using all available resources.With Claes Westman’s assistance,we drew up an action plan toobtain a clearer picture of theincident and establish who neededto be contacted for assistance.First stop was our technicaldepartment and Captain SverreBergh. He was flown out on thenext flight to liaise locally and actas our eyes and ears in Dubai.Secondly, we contracted aninternationally renown law firmwith offices in Dubai to representPhoto: AFPthe club and our member. Thirdly,through our local correspondent,a local technical advisor andsurveyor were appointed to assistus straight from the outset.At the start of a case, it is vitalto understand and controlinformation flow. Close co-operationis essential between all parties.The team included personnelfrom the local law firm, Skuld’scorrespondent, member, P&Ibroker, technical advisor andsurveyor, and Skuld. All partiesreported to our local lawyers whoconsolidated information into onedocument. At the beginning,information flow was so extremethat we received hourly accounts,but as the first days went by thiswas reduced to a daily report.Almost two years down the line thecase is not concluded, although wehope to achieve a settlementwithin the next six months.From a general viewpoint, westrongly advise members tocontact us immediately if an incidentoccurs. We take all necessaryaction to protect our membersand are ready to assist withmeasures to minimise injury, lossof life, pollution, all damages andcoordinate and control casualtyresponse.read morewww.skuld.combeacon / DECEMber 2010 13

FEATURETaking a look at collision legislation“A collision at seacan ruinyour entire day”This saying (attributed to the fifth century Greek historian Thucydides) isone of the greatest understatements of all time, as the previous articleclearly shows.“Collisionsand fires atsea are themost fearedincidents amariner canimagine”Collisions and fires at sea are the most feared incidents a mariner canimagine. The resulting damages can be substantial with risk of totalloss, environmental disaster and loss of life. Investigations by expertsand lawyers inevitably follow and all relevant ship’s documents, suchas logs, bellbooks, course recorders and records of communicationsmust be collected and produced in litigation.Another old saying goes: “when ships get into trouble at sea, there aremany wise men on shore.” Liability for collisions, defined as ‘the violentencounter of moving vessels’, is based upon those faults that cause orcontribute to the damage incurred. Investigators, lawyers, experts andjudges often use the ‘microscope of hindsight’ to assess collisionliability, but the advanced navigational equipment onboard ships today,such as AIS and bridge data recorders, and sophisticated legalinvestigations are of great assistance in determining more preciselythe cause and ultimate fault for a collision. However, the standard ofcare is still determined from general principles of prudent seamanshipand reasonable care, rules of navigation and maneuvering, as well ascustom and practice. The most frequent source of liability for collisionsand other marine casualties is the violation of a statute or regulation.The International Regulations for Preventing Collisions at Sea (COLREGS)is an internationally accepted set of rules, which are not only guidelinesand regulations on ship navigation, but binding codification thatmust be followed. The rules, although updated numerous timesthrough the years, were adopted as a convention by the InternationalMaritime Organization (IMO) on 20 October 1972 and entered into forceon 15 July 1977.The convention first gives general rules on its application and theresponsibility required by the ordinary practice of seamen (Part A) and14 beacon / DECEMber 2010

By Ulrika LeikvangAssistant Vice President/Lawyer, Skuld North Americaulrika.leikvang@skuld.comFEATURE/In collision cases, usually more than one vessel is found at fault and liable for damages.Photo: AFPcontinues with rules on steering and sailing (Part B). The rules arevery detailed, but the general risk of collision is dealt with under Rule 7:“Every vessel shall use all available means appropriate to the prevailingcircumstances and conditions to determine if risk of collision exists. If thereis any doubt such risk shall be deemed to exist”. With this determinationcomes the requirement to maintain safe speed and proper use of lookoutsand radar equipment, all of which are dependent on the specificcircumstances of the case, such as failure to switch radar to a closersetting or improper plotting.The COLREGS also require vessels to observe general standards ofgood seamanship. Hence, liability may be imposed for negligence eventhough no violation of the navigation rules is found. The same principleapplies to custom and practice, but the party pleading this has the burdenof proof, since a custom is not a rule of law that is consistently applied.If properly proved, it can have the force of law in a particular case.In order to impose liability for a collision, there is a fundamental rulethat the fault committed by the vessel must be a contributory cause.As in any tort case, the claimant in a collision has the burden of proofthat negligence or unseaworthiness is the proximate cause of the lossor damage. When a vessel is in violation of a regulatory rule intendedto prevent collisions, however, it is presumed that the violation is acontributory cause of the collision. Consequently, the vessel mustshow that the violation was not the cause or even a contributing factorof the accident.In collision cases, more than one vessel is usually found at fault andliable for damages. Liability is then allocated among the partiesproportionately to the comparative degree of their fault. The media areoften the first to learn about a major collision, fire or other marinecasualty, and the details are soon known around the world. Prudentshipowners ensure that their masters and officers are thoroughlyknowledgeable about the COLREGS and always observe the regulations,as well as standards of good seamanship.read morewww.skuld.combeacon / DECEMber 2010 15

LegalIssuesOffshore operational contractsSkuld Offshore assists members and clients with contract reviews to identify the risks and need for cover.How do you manageliability risks?Skuld Offshore’s client base consists of operators, owners and charterers of vessels and mobileunits operating offshore. Clients enter into standard or bespoke contracts on a regular basis,either for spot or long-term work. These contracts vary greatly depending on the scope and areaof operation, type of unit or vessel engaged, contracting partner and various other factors.Contractual riskWith contracts follow risks; there is a risk of delayed or non-payment,risk that you are unable to perform as promised if your unit, vesselor equipment breaks down, risk that the contract is terminated,etc. These risks normally go hand in hand with the allocationof performance.Knock-for-knock principleThe contract will further allocate certain liabilities between the parties.The starting point should be that each party provides reciprocal andunlimited indemnities for injury or death to the parties’ respectivepersonnel or any loss or damage to their property, regardless of fault.Referred to as the knock-for-knock principle, it originated from the16 beacon / DECEMber 2010

By Christofer KobroSenior Executive/Lawyer, Skuld Offshorechristofer.kobro@skuld.comLegalissues/vision of a fair distribution of risks between the parties, allocation ofrisk to the party best placed to assume it, avoidance of insurance coverduplication and minimisation of dispute potential, thus eliminatingcosts and efforts to manage risks and fight claims.Commercial exposureUnfortunately, from a risk management perspective, we normally seethat terms of offshore contracts deviate from the knock-for-knockprinciple, which creates problems for both the contractor and theirliability insurer. The contract could stipulate that the rig owner assumesstrict liability up to a certain limit for pollution emanating from thewell, that the vessel owner assumes liability for pollution emanatingfrom, or for damage to, charterers’ property carried on board thevessel, or for strict liability for third parties on board the vessel. Or thecontract may not provide for indemnities, which expose you over andabove your liability insurance cover limit. So how do you manage theseliability risks?Internal systems on contractual risk managementIt is important to establish internal guidelines for contracting principles.These guidelines should include a system for performing contractreviews, so that the reviewer knows what to look for and how provisionsshould be constructed to balance liability. The guidelines should interalia cover the following elements:• Key contractual provisions/sections: definitions, scope of work,liabilities, claims, indemnities, insurance, law and jurisdiction, aswell as specific provisions on wreck removal, pollution, third parties,mutual hold harmless agreements together with indirect andconsequential losses• Identification of any issues not dealt with in the contract, e.g. lack ofindemnity provisions. This is just as important as positive provisionsgoverning liability allocation• Clarification of your company’s position on deviations from theknock-for-knock regime and details of an approval system for suchdeviations, including how and when approval is soughtHaving clear contractual guidelines in place internally helps clarify overallcompany risk and financial exposure. The process also identifies:• Your insurance needs and/or whether you have gaps in your existinginsurance cover• The extent that you have to assume commercial risks“Having clearcontractualguidelinesin placeinternallyhelps clarifyoverallcompany riskand financialexposure”Offshore may facilitate bespokeinsurance covers to respond toambiguous contractual termsthat must be accepted to fix thecontract 1 .Skuld Offshore assists membersand clients with contract reviewsto identify the risks and need forcover. We provide comments andproposed changes to contracts asnecessary with a view to balancingthe overall risks. In this way, wepartner with our members andclients to create a ‘win-win’situation for all concerned,essentially improving the termson offer and reducing potentialexposure for both the club andthe member.Please contact any member ofSkuld’s Offshore team to discussyour insurance needs and howwe may assist you in managingyour company’s liability risks.1) Cover may be afforded as perSkuld’s Terms and Conditions forOffshore, Section B – Part 1Extended Contractual LiabilityCover (ECL).Managing risk with SkuldSkuld Offshore encourages all clients to only accept risks that areequitable to the task being performed and to closely review theoperational contracts before accepting the terms offered.However, we are constantly seeing changes in liability regimesfrom what are otherwise commonly accepted industry standards.This can depend, for example, on vessel and unit availability or bealtered following the aftermath of a particular incident, such as theDeepwater Horizon tragedy in the Gulf of Mexico. We accept that someflexibility must be shown to give you the tools to compete and Skuldread morewww.skuld.combeacon / DECEMber 2010 17

LEGALISSUESMaking a case for Norwegian lawThe Norwegian wayInsurance under Skuld Rules is subject to Norwegian law and jurisdiction. Why is Norwegianlaw and jurisdiction a good choice in marine insurance, as well as in commercial shipping andoffshore contracts?In our view, it is generally beneficial for commercial parties to chooseNorwegian law in commercial contracts in general and in maritimeand offshore industry contracts in particular.Maritime traditionNorway has a long maritime tradition and today ranks among theleading nations within many sectors, including marine insurance,shipowning, ship broking, classification and ship finance. Ever sinceNorway first found oil in 1966, it has developed first-class competencewithin oil and gas production and related service sectors. There arefew countries, if any, where the maritime and offshore industriescontribute more to business than in Norway.The importance of the maritime and offshore industries is reflected inNorway’s highly developed and sophisticated legislation. Norwayadopted its first Maritime Law Code in 1893. The Norwegian PetroleumAct of 1996, together with Norwegian safety rules, has since been amodel for statutes and regulations in many other jurisdictions.The Norwegian legal system balances the predictability and strictnessrequired of and expected by commercial parties with general principlesof good faith and fair dealing. We would argue that Norwegian law iseasy to use and apply for international commerce. Norwegian rulesand regulations are developed in co-operation with industry and caterfor fair and balanced provisions.One major benefit of Norwegian law is that contracts can becomparatively simple as they are interpreted through the sophisticatedand up-to-date rules and principles of Norwegian law. Thus, partiescan focus on contractual provisions specific for each particular deal,while rules and principles of Norwegian law do not have to be repeatedin the contract. This contrasts with, for example, English law, wherecontracts are normally very detailed and cover not only aspects relevantto a particular deal, but also ‘boiler plate’ provisions for any number ofgeneral or non-material issues unspecific to the agreement in question.“Norwegianlaw is easyto use andapply forinternationalcommerce”With regard to P&I insurance,Skuld has had its own set ofrules since it was established in1897. Skuld is a member of theInternational Group of P&I Clubsand is party to the InternationalGroup Pooling Agreement, whichmeans the rules of foreign clubsand those of Skuld are largelysynchronised.In hull & machinery insurance,Norwegian legislation issupplemented by the NorwegianMarine Insurance Plan, whichhas included a leading set ofstandard terms since the late1800s. Both the plan andcommentary are regularly updatedbased on developments inNorwegian and internationalmarine insurance law.Dispute resolution underNorwegian lawIf a dispute is subject to Norwegianlaw and arbitration, it is governedby the Norwegian Arbitration Actof 2004. The act is modern, userMarine insurance lawAs Norwegian marine insurers insure a substantial part of the world’smerchant fleet, the Norwegian maritime law community has focusedextensively on marine insurance law for decades. The result is aleading Norwegian and Nordic marine insurance law community thatis skilled, efficient and attractive to the international shipping andoffshore industry.Most Norwegian courts have maritime and offshore experience.Photo: Aftenposten18 beacon / DECEMber 2010

By Mats E. SætherSenior LawyerBugge, Arentz-Hansen & Rasmussen (BA-HR) law firm, Oslomesat@bahr.noLEGALISSUES/“quote fromtext”The Norwegian legal system balances the predictability and strictness required of and expected by commercial parties with general principles of good faith and fair dealing.Photo: Nils-Erik Bjørholt /Scanpixfriendly and based on the UNCITRAL Model Law on InternationalCommercial Arbitration of 1985. Arbitration therefore has a form andcontent familiar in most comparable jurisdictions.Arbitration cases are normally heard quite quickly and effectively.Importantly, Norwegian lawyers and arbitrators can, in most areas,reference up-to-date statutes as interpreted and supplemented bycourt decisions in contrast to many other jurisdictions where casesare, to a larger degree, decided on the basis of case precedent. TheNorwegian way makes for a lean and cost-efficient process.Norway offers a substantial pool of highly skilled arbitrators withexperience in offshore, maritime and marine insurance law. Due toclose co-operation between the Scandinavian countries in theseareas of law, arbitrators from Sweden and Denmark are regularlyused in arbitration proceedings under Norwegian law and vice versafor Norwegians.If the parties have agreed to submit a dispute to the ordinary lawcourts in Norway, it may pass through three instances; the districtcourt, the court of appeal and the Supreme Court. As adisproportionately large share of Norwegian business is shippingor offshore related, most of the relevant courts have maritime andoffshore expertise. In the districtand appeal courts, experts maybe called from the shipping orinsurance industry to sit on thebench and rule together with thecourt’s judge(s).In both arbitration and court,parties are represented by lawyerswho prepare and plead the case.This keeps costs down comparedto a system with solicitors andbarristers. Legal fees in Norwayare also usually substantiallybelow those in, for example, theUK or US. Translation of documentsfrom English to Norwegian isgenerally not required as arbitrators,judges and lawyers normally havegood command of English. Theseindependent, experienced andcompetent representatives providepredictability and fairness andensure cases are decided onfacts and law, rather than throughexternal or unverifiable factors.In summary, the combinationof modern laws and competentprofessionals at all levelsenables Norway to offer costandtime-efficient settlements ofoffshore, maritime and marineinsurance disputes.beacon / DECEMber 2010 19

CurrentInternational trade – a centuries-old traditionAll roads leadGeneva is the world’s seventh most important financial centre and home to the regional headquarters of the UN (pictured).It is 1446, five years before the birth of Christopher Columbus, and Gerozzo di Jacopo de ’Pigli,a banker from Florence, travels to Bruges in West Flanders, the centre of Northern Europeantrading. He has been ordered by Cosimo de’Medici to visit branch offices of the Mediciconglomerate on his journey. A natural stop is Geneva, which is the meeting point for tradebetween Spain and south Germany and similarly, between Italy and Flanders.Paris was previously the European financial centre for internationalcommerce but, due to the Hundred Years’ War 1 , Geneva took poleposition in this new financial world and Italian bankers became the keyplayers of European finance. Carrying cash was out of the question, soGeneva was the place for using bills of exchange and obtaining lettersof credit, which were the most important financial tools in those daysand, arguably, still are.Over 500 years later and Geneva still holds its position. With a populationof around 185,000, it is the world’s seventh most important financialcentre, ahead of Chicago, Frankfurt and Sydney. In addition, a 2010survey by Mercer found Geneva to have the third highest quality of lifein the world, narrowly outranked by Vienna and Zürich 2 . Given its sizethis is somewhat extraordinary. So what is it about Switzerland andGeneva in particular?Why Geneva?It is well known that Switzerland is light on taxes, both for corporationsand individuals. Cantons, such as Geneva and Zug, are attractive fornew businesses as they offer negotiable tax levels. From a commercialpoint of view, another notable benefit is the close proximity betweenthe many large capital providers – the banks and credit institutions20 beacon / DECEMber 2010

By Marcus LindforsSenior Claims Executive, Skuld Oslomarcus.lindfors@skuld.com/to Geneva ...that finance international trade. Add to these points an efficientinfrastructure with a nearby international airport, highly skilled labour,a short distance to other major European cities, business-friendlyauthorities and the multi-cultural, international atmosphere of the cityand you’re well on your way to understanding Geneva’s popularity./ FACT FILECharterer centralSo what does this have to do with shipping? Quite simply, between200 and 300 ships with an average deadweight of 15,000 tonnes arechartered daily by the city’s large number of commercial trading houses.Buying and selling is one thing, but if you seal a deal on a ‘costs insurancefreight’ (cif) basis then you have to get the goods to the buyer. This iswhere Skuld plays a vital role. As a global risks insurance provider,Skuld covers potential liabilities towards shipowners, cargo owners andthird parties. For decades, Skuld has been a capital provider forcharterers’ risks, with the flexibility of adding various tailor-madesolutions, such as special cover for charterers owning cargo.It should be mentioned that Geneva is not only favoured amongcommercial traders – particularly in energy, but is very popular amongshipowners, offshore players, commercial brokers and commercial/technical-manning operators. Nevertheless, the point to note is thatthey are all heavily dependent upon commercial traders who, bybuying and selling, set the market price on goods and commodities.In turn, this affects the global economy, politics, natural resourcedevelopment, global freight levels and shipbuilding to mention a fewimportant issues.If you want to learn more about what Skuld can do for you as acharterer, please contact any of our offices and/or read more onSkuld’s website at skuld.com/products and services/charterers.1) French: (L Guerre de Cent Ans) was a series of separate wars lastingfrom 1337 to 1453 between two royal houses for the French throne(http://en.wikipedia.org/wiki/Hundred Years’ War) 02.11.2010.2) Mercer.com, Quality of Living report – 2010 edition.read moreskuld.com/products and services/charterersGeneva/ Location: Geneva canton, at the tip of Lake Genevaon the Rhône river, Switzerland/ Size: 15.86 km 2 (6.1 sq. miles)/ Climate: Temperate/ Population (December 2009): 185,958 (second highestin the country)/ Main language: French/ Major industries: Commodity trading, banking,insurance and the manufacture of precisionmachinery and watches/ What’s there?: Headquarters for the InternationalRed Cross, WTO, WHO and the World Economic Forum.Regional headquarters of the UN. Also location ofCERN laboratories where the world wide web wasinvented/ Also known for: Signing of the Geneva conventionsin 1864, 1906, 1929 and 1949, birthplace ofphilosopher, writer and composer Jean-JacquesRousseau and the founder of the Red Cross,Henry Dunant© Photo: 1-images.nobeacon / DECEMber 2010 21

personnelnewsfrom skuld officesaround the worldNew employees and promotions12SKULDCopenhagenSKULDHONG KONGSKULDOSLO357911134681012/ Total number ofnationalities amongSkuld staff(all offices):251 / Jonas Axelsen MundtClaims ExecutiveJonas, 28, is appointed ClaimsExecutive in Copenhagen Claims& FD&D. Previously, he specialisedin maritime law in the role ofAssistant Attorney with GorrissenFederspiel. Jonas also teachesmaritime law at the University ofCopenhagen.SKULDHAMBURG2 / Johan Ivan ErikssonClaims ExecutiveJohan Ivan, 28, is appointedClaims Executive. He joinedSkuld Oslo in 2009 as temporaryClaims Assistant and holds aMaster of Law degree from theUniversity of Stockholm, as wellas a LLM in Maritime Law fromthe University of Oslo. Johan isfluent in Swedish, English andRussian.3 / Angie Evelyn ZamudioSantibanezOffice ManagerAngie, 33, is appointed OfficeManager. She joined SkuldHamburg in 2009 as AdministrativeAssistant/Claims Assistant.She has also worked in variouspositions in the UK and Australia.4 / Niklas TjorbenSonnenscheinClaims ExecutiveNiklas, 28, is appointed ClaimsExecutive. Niklas studied lawin Oslo and at the University ofBremen before completing hisLLM in Maritime Law at theUniversity of Oslo in 2010.He speaks German, English,Norwegian, Swedish and a littleDutch and French.5 / Michelle ChongSecretaryMichelle is appointed Secretary.She has a Bachelor degree inElectronic Engineering fromHong Kong University of Scienceand Technology and three years’marketing experience with alocal trading firm.6 / Captain Binoy Kumar DubeyClaims ExecutiveBinoy is appointed ClaimsExecutive. He is an Extra MasterMariner with sea and onshoreexperience and a LLM degree.Binoy was Acting Dean ofSaminundra Institute of MaritimeStudies in India where hedeveloped a number of trainingprogrammes for masters andsenior officers. Previously, asMaster for Fednav Ltd Canada,he gained extensive icenavigation experience, whichwas put to good use in his book‘Ice Navigation Managing ColdClimate Risks’.SKULDLONDON7 / Gill NicholsExecutive Assistant/OfficeManagerGill is appointed ExecutiveAssistant/Office Manager. She isa highly skilled trainingco-ordinator, office manager andexecutive assistant with 26 years’Lloyd’s work experience.8 / Yngve KleppeRisk Management ExecutiveYngve, 30, is appointed Executivein Risk Management. He is aMarine Engineer and previouslyworked as Super intendent witha Norwegian shipowner.9 / Rune BågenholmSenior Vice PresidentRune, 52, is appointed SeniorVice President, Underwriting &Marketing. He has many years’experience from The SwedishClub, underwriting hull and P&Iworld-wide. Rune headed its HongKong office for four years and has,during the last decade, been SeniorUnderwriter for certain Europeanmarkets and North America.10 / Eirik BøhmAssistant Vice President,Business ControllerEirik, 32, is appointed AssistantVice President, BusinessController in Finance. Eirikjoined Skuld in 2001 as CreditController. In 2007, he wasappointed Business Controllerand, in 2009, Senior Executive,Business Controller.11 / Inger Margrethe HolmEXECUTIVEMARKETING & COMMUNICTIONInger Margrethe, 32, is appointedMarketing & CommunicationExecutive. She joined Skuld in2009 as Claims Assistant. IngerMargrethe has a Bachelor ofArts in Communication from theUniversity of Newcastle, Australiaand has previously worked asSecretary/Web Manager at thelaw firm Brækhus Dege ANSand as Project Manager at theadvertising agency Uncle GreyOslo.22 beacon / march 2009 beacon / december 2008

news /NEWS from SKULD12 / Siv-Lajla Nystad HansenAccounting AssistantSiv-Lajla, 51, is appointedAccounting Assistant in Finance/Accounting. Using her financialbackground, she has worked forcompanies such as Unique AS,Norma Tekniske AS and GemsysAS where she was in charge ofadministration and accountingrelatedassignments.13 / Florencia Ortiz de RozasClaims ExecutiveFlorencia, 28, is appointedClaims Executive in Syndicate 1.Florencia has worked forSyndicate 1 on a temporary basissince June 2010. Florencia is aqualified Argentinean Lawyerwith an LLM from the ScandinavianInstitute of Maritime Law,University of Oslo./ Danish Defence ClubDanske Rederes Retsværn/DanishDefence Club (DDC) and AssuranceforeningenSkuld (Gjensidig), Oslo(Skuld) recently reached an agreementto amalgamate the activitiesof the two parties into one, andcontinue as Skuld.Skuld welcomes all members ofDDC and will continue the club’slong tradition of providing reliableand expedient advice in maritimematters. We look forward to asmooth and mutually beneficialtransition.READ MORE www.skuld.com /Press release 17 November 2010/ ‘ALERT’ register for Skuld NewsIf you want to keep track of newsfrom Skuld or other sourcespublished on our website, pleaseregister for our e-mail subscriptionservice, ‘ALERT’. By registering,you receive Skuld updates in yourmailbox at selected intervals.Updates include news and circulars,articles, lessons learned, etc. Youmay also select news supplied toSkuld by correspondents, lawyersor other contacts.READ MORE www.skuld.com /ALERT(link at very top of Skuld website)FactsDevelopments in Skuld Offshore –number of units entered4003002001000178 185192170SOURCE: Skuld Offshore3564262005 2006 2007 2008 2009 2010‘Confined Spaces’ and ‘Fresh Air in Dark Places’ are the latest publications from Skuld.BookletsFRESH AIR IN DARKPLACESThe booklet ‘Fresh Air in Dark Places’ covers the important subject ofpreventing serious incidents and avoiding danger when enteringconfined spaces. In addition, a pocket safety guide ‘Confined Spaces’ isavailable and shows the recommended procedures for working inthese limited areas. Both booklets are published in co-operation withWitherby Seamanship International Ltd.A ship has many confined and enclosed areas, mostly with limitedaccess. The atmosphere within them is often dangerous with a risk ofnoxious fumes. Still, most need to be entered for cleaning, inspectionor maintenance. Such routine activities can cause death of a seafarerin a matter of minutes. It is with this in mind that the expression ‘darkplaces’ seems appropriate.In December, Skuld members will receive one copy of each bookletfree of charge. Further copies may be ordered directly fromwww.witherbyseamanship.com. By entering the promotional codeSKULDSPEC, members receive 20% discount on the respective retailprices of GBP 20 and GBP 6.read morewww.witherbyseamanship.combeacon / DECEMber 2010 23

Skuldmagazinenext issueout march 2011DEFENCESkuld works hard to provide proactive assistance,legal advice and defence services to memberswith FD&D cover. In the next edition, we’ll look atthe issues we face daily and how these havechanged with new threats and recent legislation.about skuldAs the New Generation P&I Club,Skuld provides liability insuranceto New Generation shipowners andclients in the shipping industry.The head office for global operationsis located in Oslo, with additionaloffices in Bergen, Copenhagen,Hamburg, Hong Kong, Moscow,New York and Piraeus.24-houremergencynumber+47 952 92 200Call this number if you havean emergency where Skuldcan assist.beacon back issuesFor back issues of Beacon, please go to the publicationssection of our website. You can print an entire issue oruse the table of contents to select individual articles.Earlier editionswww.skuld.com/publications/BeaconRUSELØKKVEIEN 26NO-0251 OSLOP.O. BOX 1376 VIKANO-0114 OSLONORWAYTEL +47 22 00 22 00FAX +47 22 42 42 22skuld.com