Letters of Indemnity

It is common industry practice for Members to be asked to accept a letter of indemnity (LOI) from a charterer or other party in return for the delivery of cargo without presentation of the original bills of lading, or for delivery of cargo at a port other than that named in the bill of lading, or a combination of the two.

When responding to such a request, Members should carefully consider their position. Liabilities arising out of these actions are excluded from Club cover and the acceptance of an LOI does not re-engage cover in any way. The LOI in effect stands in place of Club cover and Members therefore need to be satisfied both that the LOI will be enforceable and that the party giving it has sufficient financial standing to meet their liabilities. The Club recommends that any LOI is counter-signed by a first class bank.

In order to assist Members the International Group Clubs have produced standard LOI wordings which can be found by following the links below. In using these forms Members’ attention is specifically drawn to Rule 2 Section 16 proviso (e) of the Club’s Class 1 Rules and to Notices to Members No. 1 2001/2002 and No. 20 2010/2011.

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