The ICA
The International Group of P&I Clubs have recently issued a joint circular advising of a new update to The Inter-Club New York Produce Exchange Agreement (the “ICA”). The ICA, which originally came into force in 1970, was introduced with the intention of providing a streamlined mechanism for the apportionment of cargo claims between Ship Owners and Charterers arising under time charters performed using the New York Produce Exchange Form (NYPE) and Asbatime forms. The raison d’etre behind the ICA was to avoid the need for the parties to enter into complex and costly litigation in disputes on the handling of cargo claims. The ICA has previously been amended three times in 1984, 1996 and in 2011.
IG Group Joint Circular
The first amendment under Clause 3(c) of the ICA clarifies the position as to whether a Ship Owner who successfully defends a cargo claim may subsequently recover their legal costs from the Charterers under the ICA? This became necessary due to the differing opinions in London Arbitration 30/16 and London Arbitration 10/15.
The second amendment to Clause 4(c) of the ICA deals with one of the preconditions for the apportionment of cargo claims under the ICA and the IG Group joint circular explains that the Group “is aware of a specific issue concerning the interpretation of clause 4 (c), which provides:
“(4) Apportionment under this Agreement shall only be applied to Cargo Claims where: ….. (c) the claim has been properly settled or compromised and paid.”
In regard to this “specific issue” the circular expands:
“The intention of the Group Clubs has always been that the term “settled” encompasses a court judgment or arbitration award. However, arguments have surfaced to the contrary and to provide contractual certainty and avoid disputes on this issue, which would run counter to the purpose of the ICA, the Group has decided to amend the Inter-Club New York Produce Exchange Agreement 1996 (as amended September 2011) (the 2011 Agreement).”
Amendments
The amended sections of the ICA (shown in red below) are fundamentally limited to Clauses 3(c) and 4(c):
“3(c) all legal, Club correspondents’ and experts’ costs reasonably incurred in the defence of or in the settlement of the claim made by the original person, even if the claim is successfully defended, withdrawn or otherwise not pursued but shall not include any costs of whatsoever nature incurred in making a claim under this Agreement or in seeking an indemnity under the charterparty.
…
4 (c) the claim has been properly settled or compromised and paid. Settled includes but is not limited to, claims adjudicated by any court or tribunal, or those resolved through an amicable settlement between the parties.”
Applicability
The 2025 version of the ICA will only be applicable to any new charterparties expressly referring to / incorporating the new version of the ICA or those including words such as “the Inter-Club New York Produce Exchange Agreement of February 1970, as amended in 1996 or any subsequent amendments”. Existing charters will not be subject to the amended version unless varied by way of addendum.
Comment
It is questionable as to whether the 2025 amendments actually materially change the existing position. In regard to Clause 4 it is arguable that the existing wording was already sufficiently broad to encompass claims dealt with by way of a court judgments or arbitration awards or the position on costs recovery where a claim is withdrawn, not fully pursued or successfully defended. However, the 2025 version cuts of the risk of any ambiguity and is likely to be widely adopted without any resistance from the shipping market.
