The ISM Code and Ship Managers (Circular 01/04/98)

Our Ref: 97/05

April, 1998

To: Ship managers and their insurance brokers

The International Safety Management Code (ISM) is a mandatory provision under the terms of the SOLAS Convention 1974. The Code is concerned with the implementation of a policy for both ship and shore operations which provides guidelines to companies on safety and pollution prevention. The Code applies to a company which is widely defined to include, among others, owner, bareboat charterer, and a manager who has assumed responsibility for the operation of a ship, and so agreed to take over the duties and responsibilities imposed by the Code.

Members will be aware of the fact that they have to obtain via an audit or assessment a Document of Compliance and a Safety Management Certificate and that these have to be obtained by 1st July, 1998 for passenger ships, tankers, gas carriers, bulk carriers and highspeed craft over 500 grt. Other cargo ships and mobile offshore drilling units of 500 grt., and upwards, have to be certificated not later than 1st July, 2002.

The Club believes that it is part of the function of ship management to implement the ISM Code. If a ship manager Member fails to act with reasonable skill and care in the exercise of his duty, a claim on the Member and the Club may result. Where a ship under management subject to the 1st July, 1998 deadline is not ISM Code certified, the Club's Directors have decided that there should be no cover, regardless of whether the claim has arisen from non-certification under the ISM Code or not. However, the Directors have also decided that they should retain the right to exercise their discretion depending on the particular circumstances of any such claim or claims.

The Directors of the Club require the following clause to be included in the standard ship management endorsement which is attached to the certificate of entry of all ship manager Members of the Club. This clause will take effect from 1st June, 1998:

"Unless and to the extent that the Directors otherwise decide, you are not insured for any risk arising from the management of a ship that is not ISM Code certified, as required by IMO resolution A.741(18)."

If Members require further clarification, they are requested to contact the Managers.

ITIM Co. Limited, Managers
International Transport Intermediaries Club Ltd.