Joint Cargo Committee responds to Covid 19 and amends the JC20 Project Cargo and Delay in Start-up wording JC20

For over 10 years the JC 20 Project Cargo and Delay-In Start Up wording has provided the base wording for the Projects and DSU. Developed by the Joint Cargo Committee (JCC) it is now in use globally.

The Joint Rig Committee (JRC) has produced amended wordings to cater for the challenges faced by Marine Warranty surveyors in the current environment.

The JCC have also been looking at our wording and specifically the Survey Warranty and we have found that, in its current form, it requires alteration to best cope with a pandemic situation.

I was heavily involved in the production of the original JC20 wording and recall well the discussions regarding the survey warranty and what constitutes a breach. 

It was felt that if the assured advises a surveyor of a shipment, within the correct time frame and the surveyor doesn’t attend then the coverage should not be compromised.

However, what happens today if the surveyor can’t attend? The assured has complied, the surveyor has tried to comply. Should full cover remain in force?

There are likely to be a number of answers to this question.

To take away doubt and ensure we as underwriters are able to give full cover we have developed an amended survey warranty.

The previous warranty is available on the JCC web site. The difference is shown in bold in the new warranty below.

SURVEY WARRANTY

The Named Surveyor is:

……………………………………………….………………………………………

(and/or their nominated representative)

And,

It is warranted that the Named Surveyor attends and approves all loading, all stowage (Including protection for non-containerised Critical Items shipped on deck), and unloading to or from carrying conveyances of all named Project Cargo Critical Items (shown below).

And,

All of the Named Surveyor’s recommendations are to be complied with by the insured.

And,

All named Project Cargo Critical Items are to be shipped under deck other than where such critical items are shipped in totally enclosed steel containers per purpose built cellular container vessels, or where on deck stowage has been approved by the Named Surveyor.

Shipments requiring the use of local barges or lightering shall not be regarded as on deck.

However, where local barges or lightering is used the Named Surveyor will approve the tug, barge, fastening and towing operations in accordance with this Survey Warranty.

In respect of Project Cargo Critical Items, it is warranted that where items are not new and not sourced directly from the original manufacturer, packaging is approved by the Named Surveyor.

All fees for the account of the insured unless otherwise agreed.

This Survey Warranty does not apply if:

1 Any critical items are shipped;

a. In full and/or sole use fully enclosed containers door to door.

b. By airfreight (other than heavy lift aircraft).

And/or

2 The proposed shipping methodologies and/or procedures of any critical items are deemed acceptable by the Named Surveyor for the proposed transportation and in their opinion survey attendance can be waived.

3 In the Named Surveyor’s opinion any component or sub-assembly of any critical item does not necessitate a survey.

4 The Agreement Parties agree to waive survey requirements for any specific shipment or part of the entire transportation.

Failure to comply with this warranty shall not affect this insurance except as respects to the individual shipment (s) concerned. This insurance will continue in full force and effect for all other shipments which comply with the survey warranty.

In the event of a breach of the Survey Warranty the policy coverage will not cease but the insuring conditions under Section 1 of this policy shall be deemed to be no wider than:

Institute Cargo Clauses B dated 01/01/2009 (CL383) with clause 1.3 deleted, and in the event that the carrying road vehicle is not approved by Named Surveyor hereon for a Critical Item shipment then paragraph 1.1.3 is also deleted.

Institute War Clauses (Cargo) dated 01/01/2009 (CL385)

Institute Strikes Clauses (Cargo) dated 01/01/2009 (CL386)

In respect of on deck shipments and/or local barges or lightering policy coverage will be deemed to be no wider than

Institute Cargo Clauses C dated 01/01/2009 (CL384)

Institute War Clauses (Cargo) dated 01/01/2009 (CL385)

Institute Strikes Clauses (Cargo) dated 01/01/2009 (CL386)

In the event that the insured subsequently complies with the conditions of the Survey Warranty, then from the date of compliance, as evidenced by the surveyor’s inspection certificate, full policy coverage will be reinstated.

Where a breach of Survey Warranty has occurred and cover is subsequently reinstated and a loss occurs the onus of proof that any such loss(es) would be recoverable under this policy rests with the insured to prove to the satisfaction of the insurers hereon.

It is further understood and agreed that where the Insured or Companies acting on their behalf have provided the Named Surveyor or their customary notification office with the shipment Estimated Time of Delivery and Estimated Time of Arrival at least 72 hours in advance of estimated load/discharge dates then failure of the Surveyors to actually attend shall be deemed not to be a breach of the above warranty.

However, during the Covid 19 pandemic, or other similar pandemic:

All relevant technical documents, such as method statements, lift plans, sea-fastening calculations, transport manuals etc, are to be provided to the Named Surveyor at least 20 days prior to the start of the loading, stowage or discharge operations.

The Named Surveyor should be advised of impending loading, stowage and discharge of project cargo critical items a minimum of 20 days in advance of the start of the loading, stowage or discharge operations to allow mobilization of appropriately qualified personnel and to quarantine if needed. In the event of the Named Surveyor being unable to attend or prevented from attending the required survey in time whether directly or indirectly due to Covid 19 or similar pandemic, the following provision is to apply;

The Insured’s representative is to regularly consult with the Named Surveyor, to include the provision of daily updates to the Named Surveyor, and also a reasonable opportunity to participate by video or teleconference in any “tool box” or other relevant operational meetings, over the course of the loading, stowage and discharge planning and operations. Written approval of the proposed loading, stowage or discharge methodology must be obtained from the Named Surveyor in advance of the commencement of the operation. This approval must be in written form, such as email. Once this written approval is provided then, should the Named Surveyor not be able to attend, coverage remains in full force, provided that the actual loading, stowage or discharge operations do not deviate from the proposed loading, stowage or discharge methodology that was approved, unless any deviations are referred to and approved by the Named Surveyor. 

All Named Surveyor recommendations must continue to be complied with and fully documented.

Project Cargo Critical Items

A Project Cargo Critical Item shall display one or more of the following characteristics:

?            All Project Cargo which, in the event of loss or damage during transit, cannot be repaired, remanufactured, replaced, reshipped, installed, tested and commissioned within sufficient time to arrive at the Project Site in time to facilitate the Scheduled Commercial Operating Date.

?            Where the unit price of an item of Project Cargo is valued in excess of USD 5,000,000 (or equivalent in any other currency) and will be shipped in break-bulk.

?            Any Project Cargo which including packing has dimensions in excess of 12 Meters length and/or 2.5 Meters wide and/or 2.5 Meters high [or US equivalent] and therefore does not fit inside a standard 40-foot container or equivalent road trailer.

?            Any Project Cargo including packing with a weight in excess of 50 Metric Tonnes.

?            Ocean barge shipments.

Schedule of Project Cargo Critical Items

As you can see the new warranty imposes slightly more work on the assured, but we feel this is a reasonable request and should enable coverage to remain in place. Most business now works on Zoom or Teams; communication is available.

It is also a key factor that underwriters must work with fully and highly qualified surveyors who are able to manage this process be it on site or remotely.

We believe this clarity will assist all Underwriters, Brokers, Surveyors and our Customers.

The JC20 in its current and original format is now being updated and this work continues.

At this time we are making available this amended survey warranty, should practitioners wish to use it.

It is also worth commenting on the issue of replacement times for key items. Projects written one or two years ago, may well have shown replacement times that are now very different. Underwriters and brokers may well wish to update replacement times for projects that are part way through.

Authored by: Andrew Corton – Chair Joint Cargo Committee and Philip Norwood – Secretary, Joint Cargo Committee

The Joint Cargo Committee is comprised of underwriters from the London market, both Lloyd’s and Companies, including Under 35 marine group representatives. The purpose of the Committee is to assist the wider cargo market on the issues of the day and to develop new clauses where appropriate. We have worked in conjunction with LIIBA on numerous clauses such as Cyber, Project Cargo, updated Bulk Oil clauses and revamped versions of the standard ICCA clauses, to name but a few.

https://www.lmalloyds.com/LMA/Underwriting/Marine/Joint_Cargo_Committee/LMA/Underwriting/Marine/JCC/jcc.aspx