Gard Guidance for Correspondents

Contents
PREAMBLE ..................................................................................................................................................... 3
Initial stage .................................................................................................................................................... 4
First notice to Gard ........................................................................................................................................ 4
Responding to communications from Gard .................................................................................................. 5
Incident investigation .................................................................................................................................... 5
Club letters of Undertaking ........................................................................................................................... 5
Claims handling.............................................................................................................................................. 6
Invoices and payments .................................................................................................................................. 6
Reporting ....................................................................................................................................................... 7
Annex 1: Guidelines for appointment of surveyors ...................................................................................... 8
Annex 2: Guidelines for appointment of lawyers .......................................................................................... 9
Annex 3: Guidelines for appointment of surveyors to carry out pre-loading surveys of steel cargoes ...... 11
Annex 4: Specimen invoice .......................................................................................................................... 11
Annex 5: First notice of P&I incident to Gard .............................................................................................. 11
Annex 6: Claim status Report to Gard ......................................................................................................... 11

GUIDANCE TO CORRESPONDENTS 2
PREAMBLE

Gard aims to be the Club of choice for quality shipowners. One major Club feature is to provide Members
with high quality service in dealing with casualties and claim incidents. Gard leans heavily on its world-wide
network of P&I correspondents in providing such high quality service. Your value as "eyes and ears" when it
comes to claim incidents, as well as "arms, hands and brains" when it comes to working out practical and
timely solutions to the benefit of Gard and its Members, cannot be over-estimated. Being among the listed
Gard correspondents is in itself a quality mark!

The service ambition of Gard calls for continuous improvement at all levels, which is why Gard has
introduced a Quality Management System (QMS). As part of our on-going efforts to promote quality, we
wish to establish simple quality performance benchmarks across all aspects of business, including services
supplied by claim correspondents, and to document that the level of service meets such benchmarks.

The purpose of this document therefore is to:

 clarify what Gard perceives to be quality performance of the service provided by its correspondents
to the Association and its Members;
 establish reporting formats for the first notice of claim incidents as well as claim status reports;
 establish guidelines for appointment of surveyors and lawyers.

It is our hope that you will not perceive this document as yet another set of instructions demanding strict
compliance, but rather as a useful tool for your on-going efforts to deliver quality services to Gard and its
Members.

This is our first edition of "Guidance to Correspondents". If this document contains what you think are
impractical suggestions; has left out important pieces of advice or guidelines; or contains inconsistencies,
please contact us and we shall do our utmost to improve a future edition. Thank you.

Arendal, May 1999

GUIDANCE TO CORRESPONDENTS 3
Initial stage

"When lightning strikes" - Initial stage

You may be notified about a P&I claim incident from various sources: the ship, port agent, P&I Club,
shipowner, charterer, port authority etc. In this situation it is important to clarify as soon as possible which
P&I Club has the owner's or charterer's entry of the ship.

Sometimes, you may be uncertain as to the entry status of the vessel in Gard when a new incident arises.
Notwithstanding such initial uncertainty, you may rest assured that you will incur no financial loss if you
continue to handle the matter in good faith as if the ship was entered in Gard.

You must, however, always give immediate notice to Gard if you have already been appointed to assist
another P&I Club or any other third party, so that Gard may determine whether your representation of
Gard and its Member may lead to a conflict of interest.

You are to appoint surveyors, lawyers, consultants, technical experts or other third party service suppliers
as the incident and a cost-effective approach to it requires. Separate guidelines for appointment of
surveyors and lawyers, respectively, follow under Annexes 1 and 2.

First notice to Gard

"We're on stage" - First notice to Gard

How - Reporting format

The first notice of a P&I incident shall preferably be reported in writing on a form similar to that set out in
Annex 5 by fax, E-mail, telex or letter. Ensure that you advise whether you have been instructed to act on
behalf of the owner and/or charterer and obtain instructions regarding the further handling of the matter .
The first notice may of course contain additional information, but that should preferably be attached to the
above-mentioned form.

First notice of casualties, other major incidents and ship arrests/detentions should be given by telephone
so as to enable Gard to take immediate measures to rectify the situation and avert or minimise liability.
Please note Gard's emergency telephone number (which can always be reached during outside office
hours) and the home telephone numbers of Gard's claims staff, all of which are published in the latest
editions of the List of Correspondents and Gard News.

Who - Reporting addressee

The first notice of a P&I incident shall be reported to Gard's head office in Arendal, Norway unless you have
received specific instructions to provide such first notice to one of Gard's subsidiaries or its general
correspondent for North America.

When - Timely notification

For any claim incident, notification to Gard must be made as soon as possible after your becoming aware of
the incident. A preliminary incident report providing brief details of the nature/cause/extent of the
incident, including recommended short term actions to be taken (if any), shall be submitted as soon as
possible, but in any event no later than two working days after first notice has been given. E-mail, fax or
telex are the preferred means of communication.

Casualties, other major incidents and ship arrests/detentions must be notified immediately. In order to
facilitate communication, please inform Gard of the names of the person(s) in your office who has (have)
been designated to deal with the casualty/major incident, as well as the relevant telephone/mobile phone
numbers for outside office hours. In case there is more than one person in your office dealing with the
matter, please inform Gard of the tasks assigned to each person.

GUIDANCE TO CORRESPONDENTS 4
Responding to communications from Gard

"Get on stage" - Responding to communications from Gard

Unless otherwise agreed, the following response times are expected:

A written confirmation of receipt of Gard's first notice, including what initial action is suggested, is expected
as soon as possible and in any event no later than 12 hours after receipt of the notice.

A written reply to other urgent correspondence (fax, E-mail, telex) received from Gard is expected as soon
as possible and in any event no later than 24 hours of receipt after such correspondence.

A written reply to routine correspondence (fax, E-mail, telex, letter) received from Gard is expected as soon
as possible and in any event no later than 7 working days of receipt after such correspondence.

Incident investigation

"No stone unturned" - Incident investigation

Gard's relationship with you is one of mutual confidence and reliability. You are our local expert with
knowledge superior to ours' on how to proceed in order to protect our Members' interests in the best
possible way.

You should have Gard's "trilogy", i.e. Handbook on P&I Insurance, Handbook on Marine Pollution, and
Handbook on Tanker Safety; which set out in great detail what are the risks insured and what is to be kept
in mind when casualties and major incidents occur. Some guidance on how to deal with various types of
incidents is also provided in the "Guidance to Masters" section in Gard's List of Correspondents , but it is to
be remembered that those guidelines are primarily targeted at the master and officers on board the ship.
One other important source of information is Gard News, which contains articles on a wide range of topics.
We also refer to the Guidelines for pre-loading surveys of steel cargoes, which is attached in Annex 3.

Unless the casualty/incident warrants more frequent reporting, it is anticipated that a written progress
report will be provided within three days from submission of the first report. The progress report shall
include an incident status description and recommended actions to be taken, if any. A more detailed
written report is anticipated within seven days of your receipt of report(s) from the surveyor or any other
appointed third party supplier of services. An opinion and recommendation on how to proceed shall be
included.

Club letters of Undertaking

"My word is my bond" - Club Letters of Undertaking

No Club Letter of Undertaking is to be provided without the express authority of Gard, whether such
authority has been granted as a stand-by authority or for any particular third party demand. In urgent
matters and outside office hours, express authority can be given verbally.

GUIDANCE TO CORRESPONDENTS 5
Claims handling

"The story goes on" - Claims handling

Please provide your best monetary estimate of the likely liability arising from the incident as soon as
possible, with a separate rough estimate in respect of legal and other costs likely to be incurred due to
services rendered by yourselves, lawyers, surveyors, experts and other third parties. Your best estimate will
assist Gard in setting an appropriate reserve.

You are to advise Gard about all developments in any pending case that may be of significance to Gard
and/or the Member.

Status reports are to be submitted to Gard for all pending cases on a six-monthly basis in the Gard format
attached in Annex 6. The first status report shall be prepared and submitted six months after the incident
occurred, the second status report twelve months after etc.

You shall - without any undue delay - advise Gard about difficulties or problems encountered with
Members, claims agents, surveyors, etc. which may affect the performance required.

Time extensions
No time extension is to be granted to any party without having received express authority from Gard or the
Member.

Claims settlement
You shall not enter into settlement negotiations on behalf of Gard or its Member without having received
express authority to do so from Gard, unless acting in accordance with a stand-by authority given by Gard
and/or the Member.

You shall not agree to any settlement proposal on behalf of Gard or its Member without having received
express authority to do so from Gard, unless acting in accordance with a stand-by authority given by Gard
and/or the Member.

Settlement funds can only be advanced with the express authority from Gard, unless acting in accordance
with a stand-by authority given by Gard and/or the Member.

Trial/Arbitration/Mediation
No claim shall be taken to trial, arbitration or mediation without prior instructions from Gard.

Invoices and payments

"Where honour is due" - Invoices and payments

Cash flow counts. Gard takes pride in providing prompt payment for your services and those rendered by
surveyors, lawyers or other third party service suppliers. Please observe that when you are put in funds by
Gard to pay invoices presented to you by surveyors, lawyers or other third parties, we expect that you will
forward such funds without undue delay.

Invoice specimen
There are nearly as many ways of presenting an invoice, as there are correspondents. Please note that
ensuring the invoice contains sufficient information about the services rendered and the basis for the fees
charged will facilitate prompt payment. In order to achieve uniformity, we are introducing a standard
invoice format which we would prefer you to use unless it creates great inconvenience. The specimen
invoice is attached in Annex 4.

GUIDANCE TO CORRESPONDENTS 6
Interim invoices
There is no requirement for interim invoices, but it may be in your own interest to present them - in
particular if your services have been provided over a period of time. Gard will aim to pay your interim
invoices without undue delay.

Final invoice
When the handling of the matter is at an end, a final invoice for services should be rendered without undue
delay so that payments can be made and the file can be closed. Please ensure that there are no outstanding
invoices of surveyors, lawyers or other third party service suppliers appointed by you. All final invoices
should be submitted within three months after the case is over.

Invoice queries
Invoiced items may sometimes need to be questioned and we may ask for more details. Please do not
consider this as criticism of the services rendered or the amount charged. Sometimes more details are
required for auditing purposes or to provide a better explanation to the Member of the costs incurred in a
given case.

On the rare occasion that a disagreement emerges between Gard and a correspondent regarding invoiced
items, the correspondent may rest assured that Gard will arrange for prompt payment of all items that are
not in dispute so as to avoid as far as possible any undesirable cash flow effect for the correspondent.

Reporting

"Behind the scenes" - Reporting

If you have E-mail, Gard will provide you with the report forms in electronic format. Please submit your
progress reports by E-mail. Correspondents who do not have E-mail may provide reports either by fax or
mail.

First notice of a P&I incident

The first notice of a P&I incident need not be comprehensive or detailed, but it should provide certain basic
information which is necessary for Gard to check whether the subject vessel is entered and whether a file
has already been opened in respect of the incident:

 Vessel name (please double-check the spelling of the name)

 The Gross Tonnage (GT) of the vessel (because Gard may have more than one entry with the same
name)
 Incident date (or, in respect of cargo claims: date of arrival at discharge port)
 Port/place where incident occurred
 Incident type (e.g. cargo, collision, pollution, crew, personal injury etc.)
 Short description of nature of incident (e.g. damage to cargo, struck pier at…., illness of crew
member ….)
 Who requested assistance: vessel owner and/or charterer
 Name of owner and/or charterer, if known
 Short description of initial measures taken or recommended, if any. Please state the identity of
appointed surveyor, lawyer, expert or other service provider, as applicable.
 Short description of information/instructions needed from Gard or the Member.

A standard form for reporting first notice is attached hereto in Annex 5. It is expected that you submit the
notice on your own letterhead.

GUIDANCE TO CORRESPONDENTS 7
Claim Status Report

The format for routine status reports is attached in Annex 6. More complex matters may/will require more
comprehensive status reports. We hope, however, that the attached format will be useful in the majority of
cases.

Annex 1: Guidelines for appointment of surveyors

ANNEX 1

GUIDELINES FOR APPOINTMENT OF SURVEYORS

Introduction

Just as correspondents are the "eyes and ears" of the Club, so surveyors are the "eyes and ears" of the
correspondent. Although many correspondents are able to go on board vessels from time to time,
surveyors are usually the "first port of call" when notification of a problem or casualty is received. Gard is
aware of the fact that our correspondents already have experience of appointing and monitoring the work
of surveyors and know the qualities of surveyors in their respective ports. Nevertheless, these guidelines
may assist the correspondents to know what Gard expects.

Notification and authorization

If the request to appoint a surveyor has not come from Gard, the Club should be notified of the request as
soon as possible. If time permits, authority to appoint a surveyor should be obtained before the actual
appointment is made, although it is understood that a decision sometimes has to be taken immediately,
based on the request received and the correspondents' own assessment of the situation. In this event,
Gard should be informed immediately after the surveyor has been appointed.

Finding the right surveyor

Obviously, the surveyor appointed should be appropriate for the survey, both in terms of his qualifications
and his experience. Some surveyors specialise in particular cargoes or vessels (e.g. tankers). Many are
former master mariners. Some are former marine engineers, whose experience and qualifications will
mean they are especially suited for "engineering" surveys. Details of the surveyor's qualifications and
experience should be on file already, but if there is any doubt, the correspondent should satisfy himself
that the surveyor is competent to handle the survey before appointing him.

Appointing the surveyor

Because of pressure of time, the initial appointment will often be made by telephone. This will establish
whether the surveyor is available and willing to accept instructions. It will also give the correspondent an
opportunity to explain to the surveyor exactly what is required of him. Give the surveyor as much
information as possible. Any verbal appointment should always be confirmed in writing as soon as possible
thereafter. The written confirmation should set out clearly on whose behalf the surveyor is acting (which in
almost all cases will be the Member) and what it is he has been instructed to do.

Who is acting for whom?

The master or the local agent often makes requests for a surveyor to attend. Once the surveyor has been
appointed, his name and the name of his company should be communicated to the master or agent. It
should be made clear to the master and agent that no other surveyor(s) should be allowed on board until
the Member's surveyor has arrived and can attend jointly with any other surveyor(s). Unfortunately, there
have been a few cases where a surveyor has misled the master into thinking that he (the surveyor) is acting
for the shipowners, when in fact he is acting for another party. The correspondent should therefore ensure

GUIDANCE TO CORRESPONDENTS 8
that the master knows the details of the surveyor who is acting on behalf of his principals before allowing
any surveyor on board. In cases where the Club has an entry for the charterers, the correspondent should
ensure that the surveyor informs the master whom he is representing. In practice, surveyors representing
owners and charterers will often arrange with each other to attend jointly, thus avoiding later
disagreement as to the facts.

Reporting procedures

The speed of reporting and detail of the surveyor's preliminary report will, to some extent, depend on the
size and complexity of the case. In some cases, a telephone call advising "don't worry, there will not be a
claim and the report will be with you in a week" is good enough. In other cases, it will be necessary for the
surveyor to send a series of written reports, (sometimes more than one a day) by fax or E-mail, during the
course of his attendance on board, with a formal written report to follow. In all cases, the correspondent
should expect and require from the surveyor a verbal report immediately after his initial attendance. With
modern communications, calls can be made from anywhere in the world.

The surveyor will of course physically examine whatever area of the cargo and/or vessel is related to the
incident. In doing so, he will collect sufficient evidence and information to enable him to advise the
correspondent of the nature and extent of any alleged loss or damage. Additionally, the surveyor should be
able to express an opinion as to the likely amount of any financial loss. This does not necessarily have to be
accurate down to the last dollar and cent, but it should be a reasonable indication of the figures involved.
The surveyor should be able, if instructed to do so, to express an opinion as to whether the steps taken by
the receiver to minimise any alleged loss are reasonable. If, as sometimes happens, the receiver refuses to
take delivery of allegedly damaged cargo, the surveyor should, if instructed to do so, also be able to assist
in finding alternative methods of disposing of the goods.

It should be remembered - by both the correspondent and the surveyor - that the surveyor's findings could
well be examined in a court of law. The surveyor himself could be questioned by a court. Unlike the crew,
the surveyor is an independent, contemporaneous, witness. His findings and evidence are therefore
extremely important and this should be kept in mind when the surveyor is instructed and when his report is
prepared and passed on to Gard.

One golden rule: the surveyor's job is to report the facts, not to express his opinion as to who is responsible
for the problem. The surveyor's view of where responsibility lies can be expressed verbally, but should not
feature in the report.

Annex 2: Guidelines for appointment of lawyers

ANNEX 2

GUIDELINES FOR APPOINTMENT OF LAWYERS

Introduction

Gard is aware of the fact that our correspondents already have experience of appointing and monitoring
the work of lawyers and know the qualities of lawyers in their respective ports. Nevertheless, these
guidelines may assist the correspondents to know what Gard expects. Care must be taken to choose a
lawyer who is appropriate considering the particular nature of the case. The experience, skill and
knowledge of the lawyer should be taken into account.

GUIDANCE TO CORRESPONDENTS 9
Notification and authorisation

If the request to appoint a lawyer has not come from Gard, the Club should be notified of the request as
soon as possible. If time permits, authority to appoint a lawyer should be obtained before the actual
appointment is made, although it is understood that a decision sometimes has to be taken immediately,
based on the request received and the correspondents' own assessment of the situation. Please note that
some Members have their preferred lawyers. In any event, Gard should be informed immediately after the
lawyer has been appointed.

Instructions

It is always advisable to give written instructions. Verbal or telephone instructions should be confirmed in
writing, to ensure that they have been clearly understood. The lawyers should, however, be telephoned
before written instructions are sent to check that they do not have a conflict of interest and are free to act
for the Member.

Supervision and reporting

Even when lawyers are appointed the correspondent is still responsible for closely monitoring the progress
of the case. The lawyer should be instructed to always consult the Association through your office before
taking any steps involving substantial costs, for example, before the appointment of experts. Furthermore,
the lawyer should provide progress reports at all important stages of a case and also at regular intervals
throughout the duration of the case.

You must keep Gard fully advised at all times and seek our instructions before taking any action. It is a
fundamental rule that you should take instructions from us and give instructions to the lawyer. In some
cases, it may be necessary for the lawyer to advise Gard (or even the Member) direct. In such situation, you
and the Association - as the case may be - must always be copied in on all correspondence and kept fully
aware of the position.

Costs

Care must be taken to ensure that the basis on which legal fees will be charged is understood and agreed,
and is appropriate to the case in question. A close watch must be kept upon the costs incurred in
connection with the claim. When legal proceedings are being considered an estimate of costs involved
should be requested. Interim bills should be requested on a 6-monthly basis as well as interim estimates.

Lawyers' fees charged on a contingency basis or upon a percentage of the claimed amount are normally not
acceptable to the Association. Fees should be chargeable on the basis of a reasonable sum of money per
hour for work done.

Close attention should be paid to the activities undertaken by the external lawyer to ensure that the best
interests of the Club and the Member are protected and that the lawyer does not carry out unnecessary
activities, which are not economically justified. Again, it is the correspondent's responsibility to monitor the
progress of any case to the benefit of Gard and the Member.

GUIDANCE TO CORRESPONDENTS 10
Annex 3: Guidelines for appointment of surveyors to carry out pre-loading
surveys of steel cargoes

ANNEX 3

GUIDELINES FOR APPOINTMENT OF SURVEYORS TO CARRY OUT PRE-LOADING SURVEYS OF STEEL

CARGOES

Through its correspondents and on behalf of its Members, Gard has for many years arranged for pre-
loading surveys of steel cargoes. This practice continues today. Unfortunately, claims by cargo interests for
alleged damage to such cargoes still arise. This may be due to damage having been caused during the
voyage. Equally, it may be due to pre-shipment damage and it is in this respect that the pre-loading survey
is critical.

The majority of the pre-loading survey reports submitted to the Club are in the form and of the standard
expected. Regrettably, a few are not. The article entitled "Steel Preshipment surveys" in Gard News No. 153
- March 1999, written by Capt. Peter Roberts of London Offshore Consultants, sets out clearly the
procedures to be followed and steps to be taken by a surveyor performing a pre-loading steel survey.

It is your responsibility, as correspondents, to ensure that the surveyor knows what is required of him and
that the survey is carried out in accordance with those requirements. If you have any doubt as to what the
Club and Member requires, please contact us immediately. Equally, if, in your opinion, the surveyor's work
is not of the standard expected, the Club should be informed as soon as possible.

Annex 4: Specimen invoice

Annex 5: First notice of P&I incident to Gard

Annex 6: Claim status Report to Gard

Other Gard claim forms may be found on the Gard website, www.gard.no under 'Claims |
Instructions/Forms'.

GUIDANCE TO CORRESPONDENTS 11