Lloyd’s Open Form Default Clause Launches to Enhance Emergency Tug Service Contracts

The Lloyd’s Open Form Default Clause was recently launched in collaboration with various stakeholders in the shipping industry, including Lloyd’s, underwriters, claims adjusters, the International Chamber of Shipping (ICS), and P&I Clubs. This new clause aims to provide clarity on the process for contracting emergency and non-standard tug services. It emerged from a working party tasked with addressing challenges to the use of the Lloyd’s Open Form (LOF) and encouraging its utilization in emergency situations.

The objective of the new clause is to streamline the procedures for utilizing LOF in emergencies and non-emergency situations. It also outlines a process for notifying hull underwriters and seeking their input on the appropriate contract to use. By facilitating dialogue between shipowners and underwriters, the clause is expected to enhance communication, improve understanding, and ensure all parties are satisfied with the chosen option.

Both the Lloyd’s Market Association (LMA) and the ICS are optimistic that the new clause, along with recent enhancements to the LOF, will address concerns that have led to a decline in its use. They believe this will restore confidence in LOF as a vital contract that promotes maritime safety for years to come. Arabella Ramage, Legal Director for the LMA, emphasized the importance of the clause in ensuring vessel and crew safety, while Kiran Khosla, Principal Director, Legal, at ICS, highlighted the historical significance of LOF in maritime safety. The clause underscores LOF’s role in responding swiftly and effectively to ship emergencies, emphasizing its importance in salvaging lives, the environment, and property.

Overall, the introduction of the new clause is seen as a positive step towards fostering greater collaboration between shipowners and insurers, reducing the potential for disputes, and enhancing the effectiveness of the salvage process. It is anticipated that the new clause will be made available shortly as an LMA clause, serving as a valuable tool for the shipping community in emergency situations.

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