1. Inform ITIC immediately
You must inform ITIC as soon as you receive a claim or become aware of circumstances which might lead to one. It is a requirement of your insurance and failure to do so may prejudice your cover. The early reporting of a claim saves you time, trouble and costs. Remember, whatever the circumstances, ITIC has probably seen something similar before.
2. Do not admit liability
You must not make an admission of liability or settle any claim without ITIC’s approval. Even an apology to your client could be considered an admission of liability. It is not unknown for people under pressure to admit liability, even if they have done nothing wrong. All liability insurances contain a provision prohibiting you from admitting liability. An admission may remove all prospects of a negotiated settlement and the claim amount can increase significantly as a result. At the same time, you could prejudice your right to recover from ITIC.
We do not expect you to offend your client by rejecting liability when you are clearly at fault. It should be enough to provide a simple acknowledgement of the claim, confirmation that you have passed it to ITIC and a statement that you cannot comment further. ITIC will be pleased to assist with an appropriate response.
3. Instructing lawyers and/ or experts
Please do not appoint any lawyers (or other professional advisors) before obtaining ITIC’s approval to do so. Costs incurred without approval may not be covered.
4. Prepare the claim
The better presented the claim is, the quicker it can be dealt with. Please do not send a string of email exchanges with a note marked “claim attached”. The obligations under the ITIC Rules state that any information, accounts or documents provided to ITIC must be provided in good order and in a form appropriate for the efficient handling of such a claim.
You should prepare a summary while events are still fresh in your mind, setting out the circumstances which have led to the (possible) claim against you, and send it to ITIC with all relevant documents. It is difficult to give a comprehensive list of documents required, but the following is a list of suggestions:
- copy of the communication from the claimant setting out their alleged claim;
- copies of all communications relating to the claim, including where appropriate, emails, records of instant messaging services and/or social media conversations;
- bills of lading, manifests, agency agreements, etc (ship agents);
- charterparties, fixture files (chartering brokers);
- sale file, memorandum of agreement, (sale and purchase brokers);
- management agreement (ship managers);
- survey report (marine surveyors);
- scope of work, GA, drawings and designs (naval architects);
- contract with your client;
- your standard terms and conditions.
You should only pass this summary to ITIC. Do not pass it on to others.
5. Handling the claim
If the claim is covered by your insurance policy, ITIC will work with you to decide the best way forward. The options include paying the claim, attempting settlement negotiations or disputing liability on your behalf.
What happens in each scenario?
- If ITIC considers that you have a liability to the claimant, ITIC will authorise you to settle the claim. Once the claim is settled, ITIC will indemnify you, less your deductible.
- If liability is in doubt or there are mitigating circumstances which may serve to reduce liability, ITIC will recommend settlement negotiations. Depending on the circumstances, these could be between the parties directly, between ITIC and the claimant or ITIC may arrange for lawyers to conduct the settlement negotiations on your behalf. Once the claim is settled, ITIC will indemnify you, less your deductible. Sometimes, it may not be possible to negotiate a settlement and a form of dispute resolution will be needed to conclude the matter.
- A claim can be brought incorrectly against you or you could have a valid defence. In these circumstances, where ITIC considers that you do not have any liability to the claimant, ITIC will deny liability on your behalf. If the claimant does not agree with this assessment of liability, it is likely that they will proceed with a form of dispute resolution.
6. Working in partnership with ITIC and lawyers
Dispute resolution can take various forms. Litigation is the most well known but alternatives include arbitration, adjudication, expert determination and mediation. If a form of dispute resolution is needed, often a lawyer and/or other expert will be appointed to act for you. You will be expected to work closely with the lawyer and/or expert to ensure the best possible outcome. For example, you may be asked to:
- provide proper and timely information
- attend meetings
- provide witness statements and/or attend depositions
- provide dates for your availability for future hearings / trial dates
- attend hearings
- comply with any court orders
7. Disclosure obligations
If a claim proceeds to litigation or arbitration you must consider your duty to formally disclose documents to the other side. The precise rules will depend upon the jurisdiction in which the dispute is taking place, but usually include:
- the documents that you intend to rely on;
- documents which adversely affect your own case and documents which either adversely affect or support your opponent’s case;
- any documents required to be disclosed by the court.
Documents do not simply mean written correspondence, and can include:
- correspondence via electronic messaging systems;
- notes of meetings, notes of telephone conversations, diary entries, day books;
- drawings, plans and designs;
- charterparties, bills of lading, contracts, standard terms and conditions;
- tape or video recordings (of phone calls or meetings);
- emails, computer discs, computer files, back up data, information on social media, video, film, microfilm and photographs.
You will be expected to make a reasonable search for these documents. The court will decide what is reasonable depending on the facts of the claim, including the amount in dispute, the complexity of the issues, the number of documents and the ease and expense of retrieving the documents.
Therefore you must keep relevant information safe, so that it can be retrieved and provided when required.
If you are faced with a claim ITIC offers you the following practical advice:
- do not destroy any information or documents (even ones which are not beneficial
to your case);
- do not write directly on any disclosable documents (or even copies of them);
- do not tamper, change, edit or amend any files or documents;
- do not send any documents to anyone else without the approval of ITIC.
For further information about a debt collection (Rule 10) claim or a cash in transit (Rule 12) claim please download the PDF at the top of the page.
The information and opinions contained above are for general information purposes only, are not intended to constitute legal or other professional advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. Those requiring legal advice should consult their company lawyer.