Substantive amendments were made to Cl. 16-12 in 2003, and a mere editorial amendment was made in 2007 as a consequence of the abolition of the seaworthiness concept in the previous Cl. 3-22, which from 2007 contains the definition of safety regulations, see further the Commentary to Cl. 3-22. In 2013, the words “class of work” was replaced by “category of work”. A new sentence was added to sub-clause 4 in 2016 and the word “policy” was replaced by “insurance contract” in line with the general change of terminology introduced in the 2016 version of the Plan, see the Commentary to Cl. 1-2.
Simultaneous repairs mean that two or more categories of work are carried out at the same time. The situation may be that repairs covered by the loss of hire insurance are carried out simultaneously with the owner's work, or that repairs resulting from two casualties covered by the same loss of hire insurance are carried out simultaneously, or that repairs covered under one loss of hire insurance are carried out simultaneously with work covered under another loss of hire insurance, or various more complex permutations of the above.
Cl. 16-12 of the Plan deals with simultaneous repairs and reads:
If repairs covered under this insurance are carried out simultaneously with work which is not covered under any loss of hire insurance, but which:
the insurer shall pay compensation for half of the time common to both categories of repair in excess of the deductible period.
- is carried out to fulfil classification requirements or
- is necessary to enable the ship to meet technical and operational safety requirements or perform its contractual obligations, or
- is related to the reconstruction of the ship,
If repairs resulting from two casualties, both of which are covered under this insurance, are carried out simultaneously, the rule in sub-clause 1 shall apply correspondingly for the time that is within the deductible period of one casualty, but not within the deductible period of the other casualty.
If repairs covered under this insurance and work covered under other loss of hire insurance are carried out simultaneously, the insurer shall pay compensation for half of the repair time common to both categories of work in excess of the deductible period. This also applies where repairs under the other insurance contract are carried out within the deductible period under this insurance contract. Furthermore, if work which is not covered under any loss of hire insurance, but which falls within the scope of sub-clause 1, is carried out simultaneously, the insurer shall only pay compensation for one fourth of the common repair time which exceeds the deductible period.
When applying the rules set out in sub-clauses 1-3, each category of work shall be deemed to have lasted for the number of days the work would have required if each category of work had been carried out separately, reckoned from the time the work started. Unless the circumstances clearly indicate another point in time, all categories of work shall be deemed to have started on the ship's arrival at the yard. Any delay which might occur due to several categories of work being carried out simultaneously shall be attributed to all categories in proportion to the number of days each category would have required if carried out separately, reckoned from the time the work started. However, the insurer’s liability shall not exceed the amount which would have been payable if the category of work for which he is liable had been carried out separately.
Where casualty repairs are carried out simultaneously with owner's work, the time lost will in reality be a result of a combination of causes, to which the main rules concerning causation in Cl. 2-13 would have applied in the absence of any specific rules. Specific apportionment rules have been provided in the loss of hire conditions in order to simplify the adjustment process. 16-12 supersedes the causation rules in two respects; with regard to when apportionment shall take place and with regard to the calculation of the apportionment in different types of situations.
It has sometimes been asked whether an apportionment is necessary at all. One solution could be to let the insurer be liable for all the time lost during the repair of casualty work, regardless of whether other work is carried out at the same time. However, such an extension of the cover would have resulted in an increase of the premium. While the 1999 Commentary, page 401, states that most shipowners would probably not be interested in paying for the extra benefit of being able to carry out their own work in parallel with casualty work, this assumption may be questioned. As will be explained below, the deletion of the previous letter (c), has developed the Plan a further step in the suggested direction.
The substantive amendment to sub-clause 1 in 2003 consisted of deleting the previous letter (c) and splitting letter (b) into two, the latter part of which was moved to letter (c). Sub-clause 1 provides for the apportionment between casualty work and owner's work within the following three categories of repair for owner's account:
Other repairs for the owner's account, which were previously listed under letter (c), no longer deprive the assured of full compensation under the loss of hire insurance, even if such other work for his account is carried out simultaneously with casualty repairs.
The provisions are based on two fundamental propositions. First, the fact that when two categories of repairs are carried out simultaneously, the total repair time will be less than if the repairs were carried out separately. Second, the view that any time saved by simultaneous repairs shall benefit both the assured and the loss of hire insurer. This is demonstrated by the following example:
Repair of casualty……………………………………….. 40 days
Classification repairs…… 40 days
Time for both repairs, if carried out simultaneously……. 40 days
Deductible period………… 14 days
If the two categories of repair are carried out separately, the loss of hire insurer would pay 40 – 14 = 26 days for the repair of the casualty. The assured would have to carry the time lost during the deductible period for casualty repair and the time lost during the classification repair (i.e. a total of 54 days).
Sub-clause 1 provides that if both categories of repairs are carried out simultaneously, the loss of hire insurer will pay for half of the time lost in excess of the deductible period i.e., the half of 26 days = 13 days. The assured must carry the deductible period of 14 days and half of the last 26 days, that is 13 days, all in all 27 days. This means that both parties have saved time and money by carrying out their repairs simultaneously.
The principle of equal division is based on the assumption that both parties will use the time equally efficiently, and if so, it is reasonable for them to share the time lost. However, the most important reason for this rule is probably that equal division is easy to apply in practice.
Letter (a) requires apportionment to be made when casualty repairs are carried out simultaneously with work for the owner's account done in order to fulfil class requirements. The only prerequisite for applying this rule is that the classification society has made the completion of the work a class requirement. A recommendation by class is clearly a class requirement within the meaning of letter (a). The same goes probably for a memo by class. On the other hand, it is not necessary for the class requirement to have been given in connection with a periodic survey or that the requirement is due immediately. Work done on mere suggestions of class will not be sufficient to apply letter (a), but it is conceivable that such suggestions may be relevant to applicable technical and operational safety requirements so that letter (b) may be applied.
Letter (b) deals with apportionment when casualty repairs are carried out simultaneously with work necessary to comply with technical and operational safety requirements or to enable it to perform its contractual obligations.. The reference to the ability of the vessel to perform its "contractual obligations" covers not only contracts of carriage of cargo and/or passengers, but any other contracts e.g. regarding research of all kinds such as geological services, salvage and towage contracts, stand-by service etc. Any repairs needed to perform under any type of contracts will fall under letter (b).
Letter (c) applies to all kinds of reconstruction of the vessel. The borderline between repairs/maintenance for owner’s account and reconstruction may be blurred in those cases where the owner needs to strengthen the construction of the vessel. Damage experiences related to the insured or other vessels may necessitate improvements of the construction of the vessel by e.g. increasing the steel thickness on certain frames or plates of the hull. If imposed by the class letter (a) will apply. Letter (b) may also be applicable on such work. If neither letter (a) or (b) is applicable on such work, the question is whether such strengthening of the vessel must be deemed to be reconstruction of the vessel so that letter (c) will apply. The previous letter (c) which was deleted in 2003 expressly listed strengthening work among other owner’s work which should be apportioned if exceeding 30 days’. Reconstruction was then listed in letter (b), so that strengthening work was clearly deemed different from reconstruction work. Therefore, mere strengthening work cannot now be treated as reconstruction work subject to apportionment pursuant to letter (c), but must be treated as owner’s work which is no longer within Cl. 16-12, subsection 1 in the same way as other owner’s work previously listed in letter (c).
The apportionment rules set out in sub-clause 1 are based on the assumption that the common repair time relates to work which is covered in its entirety by the loss of hire insurance and to work that is not covered at all. If the damage has been caused by a combination of perils not all of which are covered by the insurance, the apportionment rules in Cl. 2-13 to Cl. 2-15 must be applied in addition to the rules in Cl. 16-12. If so, one must first calculate the liability of the loss of hire insurer on the basis that the damage is fully covered by the perils insured against. Thereafter one must reduce the liability of the loss of hire insurer in accordance with the rules in Cl. 2-13 to Cl. 2-15.
This has been illustrated by the following example in the Commentary to Cl. 16-12
|Repair of casualty||80 days|
|Insured's work falling under letter (a) or (b)||60 days|
|Time for both repairs, if carried out simultaneously||80 days|
|Deductible period||20 days|
If both of repairs are carried out simultaneously, and if the damage were solely due to marine perils, the loss of hire insurer would have been liable for half of the common repair time in excess of the deductible, i.e. the half of 40 days = 20 days, plus further time to complete the casualty work = 20 days, i.e. a total of 40 days. The assured would have had to bear the deductible period and half of the common repair time (i.e. a total of 40 days).
However, if the casualty were the result of a combination of marine and war perils under such circumstances that Cl. 2-14 applies, only half the loss falls upon the insurer against marine perils, i.e. 20 days.
If the casualty were the result of a combination of perils mentioned in Cl. 2-13, the 40 days shall be apportioned over the individual perils according to the influence each of them must be assumed to have had on the occurrence and extent of the loss.
So far we have only considered how the common time of casualty repairs and owner's work will be treated. What will be the position when work is effected simultaneously to repair two (or more) casualties caused by separate accidents?
If both casualties are covered by the same loss of hire insurance, no problems arise as long as the deductible period for both casualties runs parallel. Since the two casualty repairs are effected simultaneously, the deductible period is common to both of them and incur only one deductible period. Furthermore, it is only the time lost in excess of the common deductible period that is recoverable under the loss of hire insurance. When casualty repairs are effected simultaneously, the total claim cannot exceed – but neither can it be less than – the period of the time expended on the longest–running repair in excess of the deductible period. The assured cannot recover time lost in excess of the deductible period more than once.
If the deductible period for one casualty expires before that of the other, the situation is dealt with by sub-clause 2, which states that the apportionment rule in sub-clause 1 is to be applied to the time that falls within the deductible period of one casualty, but not within that of the other. The provision may be illustrated by the following example given in the Commentary to Cl. 16-12:
"A ship suffers machinery damage in February and must call at a port of refuge to carry out temporary repairs. The prolongation of the voyage and the stay at the port of refuge amount to 14 days, which also happens to be the deductible period. In March of the same year the ship suffers heavy weather damage, the extent of which is determined during a stay at a repair yard in June. During this stay, permanent repairs of both casualties are completed. Carried out separately, the repair of the machinery damage would have required 40 days and the repair of the heavy weather damage 20 days."
The common repair time is thus 20 days. The deductible period for the machinery damage was consumed during the temporary repairs and had accordingly expired when the permanent repairs commenced. In the absence of any specific rules the time required for permanent repairs of the machinery damage would have been recoverable in full under the loss of hire insurance.
Under the same conditions, only six days would have been covered with regard to the heavy weather damage because the first 14 days of the permanent repairs would have consumed the deductible period.
However, sub-clause 2 provides that equal apportionment must be applied to the first 14 days of the permanent repairs, which means that the insurer is only liable for half of the time lost as long as the deductible period for the second casualty continues to run.
The liability of the loss of hire insurer will be as follows in the above example:
|Machinery damage||Heavy weather damage|
|Temporary repairs||14 days||-|
|Less deductible||- 14 days||-|
|Permanent repairs 40 days|
|The first 14 days||7 days||0|
|The next 6 days||3 days||3 days|
|The last 20 days||20 days||0 days|
|Recoverable||30 days||3 days|
The apportionment problem which arises where damage covered by two different loss of hire insurances are carried out simultaneously is dealt with in sub-clause 3. A typical situation is that one damage is covered under the 2015 policy while the other damage is covered under the 2016 policy. However, sub-clause 3 also applies if damage covered by the insurer against marine perils and damage covered by war insurance are repaired simultaneously.
The first sentence of sub-clause 3 provides that the rule of equal apportionment shall be applied. The following example will illustrate the point. The policy period is 1st of January – 31st of December, and loss of hire insurances have been taken out for both 2015 and 2016 but with two different insurers, and the deductible period is 14 days under both insurances. The ship suffers a machinery damage in December 2015 and a heavy weather damage in January 2016. During a stay at a repair yard in June 2016, repairs of both casualties are completed. Carried out separately, the repair of the machinery damage would have required 20 days and the repair of the heavy weather damage 30 days. The common repair time in excess of the deductible period is thus 6 days, which shall be apportioned equally between the two insurances. The last 10 days must be allocated to the heavy weather damage. This means that 3 days will be compensated under the 2015 policy, while 13 days will be compensated under the 2016 policy.
The rule of equal apportionment is also to be applied to common repair time which is within the deductible period for one insurance, but not within the deductible period for the other, see the second sentence. The assured will thus only be covered for half of the time lost while the latter situation lasts.
Where damage covered by two different loss of hire insurances is carried out simultaneously with owner's work of the type mentioned in Cl. 16-12, sub-clause 1, the third sentence of sub-clause 3 provides that the assured must carry half of the common time and the insurer shall divide the other half equally between them, i.e. 1/4 each. The Commentary to Cl. 16-12 also states:
In accordance with practice, the rule must be interpreted as meaning that the maximum the assured must cover is half the common repair time, and he must not have to bear a further 1/4 for the period during which the deductible period runs under one of the insurances but not the other. The insurer whose deductible period has expired must then pay compensation for half of the common repair time until the deductible period under the other insurance has expired.
The Commentary l.c. continues with an impractical example which is not dealt with in the text of Cl. 16-12:
The conditions do not address the conceivable, but hardly practical situation in which repairs relating to three different loss-of-hire policies are carried out simultaneously, but an analogy from the rule applicable to two insurances quite clearly leads to the conclusion that each insurer must only carry 1/3 of the common time in excess of the deductible period for the insurance contract in question. Furthermore, if owner's work of the type mentioned in Cl. 16-12, sub-clause 1, is carried out, the analogy would require that each of the three insurers must bear 1/6 of the loss of time, while the assured must bear 1/2.
In applying the rules set out in sub-clauses 1 - 3, it is necessary to establish the number of days that each category of work has lasted, in accordance with the provisions in sub-clause 4. The main rule in the first sentence is that each class of work shall be deemed to have lasted for the number of days the work would have required if the different categories of work had been carried out separately, counting from the moment the work commenced. This means that one must investigate how long each class of work would have taken if carried out separately. It could very well be that the work would have been completed sooner if performed separately, and, if so, this shall be taken into account. The fewest number of days that would have been required if the work had been carried out separately is to be used instead of the actual time used.
This is illustrated by the following example given the Commentary to Cl. 16-12:
During a stay at a repair yard, both extensive casualty repairs and various work for owner's account are carried out. The total time spent at the yard is 98 days. The casualty repairs continue during the entire stay, while the owner's work is completed after 50 days. It would appear, therefore, that there are 50 days of common repair time, and if a deductible period of 14 days has been agreed, pursuant to the rules in the first paragraph the owner himself should have to carry the loss of time for 14 + 1/2 (50-14) days = 32 days.
However, if it turns out that owner's work would only have taken 30 days if carried out separately, while the casualty work would have taken 98 days in any event, then the assured must only carry 14 + 1/2 (30-14) days = 22 days.
It is further necessary to fix the starting points for the relevant periods, inter alia in relation to the deductible period, simultaneous repairs and the amount of the daily indemnity (Cl. 16-5).
The natural solution is to assume that the work was performed continuously from the time it was started until the expiry of the number of days that would have been used if the work had been carried out separately. However, the second sentence of sub-clause 4 contains an important supplementary rule. It is presumed that all classes of work are commenced at the same time, i.e. on the arrival of the vessel at the repair yard. This presumption must prevail even for work which has been postponed in the overall plan for the progress of the work and which has not been started at all during the initial period at the yard.
Different starting dates must be applied for casualty repairs where the ship suffers a casualty whilst in dock to carry out class surveys. The starting date will here be the time the casualty occurred. Where unknown damage is discovered after repair of another casualty has commenced, the starting date (for example in relation to a new deductible period) will be the time the damage was discovered.
Where each class of work would have taken less time if carried out separately than the total number of days that the vessel was at the repair yard, the third sentence of sub-clause 4 provides that the delay shall be apportioned over all classes according to the number of days each would have been required, if carried out separately, counting from the time the work started.
If we amend the above example and assume that the two classes of work would, if carried out separately, have required 30 and 90 days respectively and 98 days when carried out simultaneously, the repair time has been increased by 8 days, as a result of the simultaneous repairs.
The 8 days must be divided in the proportion 30:90, which means that 3/12 = 2 days are allocated to owner's work and 9/12 = 6 days to the casualty work. These shares must be carried by each group in full. They do not fall within the apportionment to be made in accordance with sub-clauses 1 and 2.
The total time to be borne by the assured would in this example be:
(14 + 1/2 (30-14) + 2) days = 24 days.
The casualty work would be charged with:
1/2 (30-14) + (90-30) + 6 days = 74 days.
In 2016 the principle of apportionment of delays was modified by adding a new fourth sentence to sub-clause 4 of Cl. 16-12 reading:
However, the insurer’s liability shall not exceed the amount which would have been payable if the category of work for which he is liable had been carried out separately.
In the above example there will not be any change. The casualty work would have taken 90 days if carried out separately. Less deductible 14 days would give 76 days compensation, which is more than the 74 days that actually falls on the insurer after apportionment of the 8 days delay. If the example is modified so that the deductible period is e.g. 30 days, then the insurer would only compensate 90-30 = 60 days if the casualty work had been carried out separately. Hence, under the 2016 amendment, the insurer will limit his compensation to 60 days, so that the 8 days delay will have to be born by the assured.
 The remaining 20 days set out in the marine peril loss of hire adjustment, would be covered under the war peril loss of hire insurance which is part of a standard war risk insurance covered on the basis chapter 15 of the Plan, in particular Cl. 15-2 letter (e), cp. Cl. 15-16. The same would be the case if the marine loss of hire insurance is expressly extended to comprise war risks, see further the introduction to chapter 16 below.
 The wording of sub-clause 2 was edited in 2003, but this amendment has no bearing on the substantive content of this paragraph.