Rule 25   CESSER OF INSURANCE

A. A Member shall forthwith cease to be insured by the Association in respect of any and all ships entered by him or on his behalf upon the happening of any of the following events:

i. Where the Member is an individual,

(i) upon his death,

(ii) if a receiving order is made against him,

(iii) if he becomes bankrupt,

(iv) if he makes any composition or arrangement with his creditors generally,

(v) if he becomes incapable by reason of mental disorder of managing or administering his property and affairs;

ii. Where the Member is a corporation,

(i) upon the passing of any resolution for its voluntary winding up (other than voluntary winding up for the purposes of company or group reorganization),

(ii) upon an order being made for its compulsory winding up,

(iii) upon its dissolution,

(iv) upon a receiver or manager being appointed of all or part of its business or undertaking,

(v) upon its commencing proceedings under any bankruptcy or insolvency laws to seek protection from its creditors or to reorganize its affairs.

B. Unless otherwise agreed in writing by the Managers, a Member shall forthwith cease to be insured by the Association in respect of any ship entered by him or on his behalf upon the happening of any of the following events in relation to such ship:

i. upon the Member parting with or assigning the whole or any part of his interest in the ship whether by bill of sale or other formal document or agreement or in any other way whatsoever;

ii. upon the mortgaging or hypothecation of the ship or of any part of the Member’s interest in that ship;

iii. without prejudice to the effects of the provision of Section 7 of Rule 5, upon the ship ceasing to be or not being classed with a Classification Society approved by the Managers or upon the decision made by the Managers by virtue of the failure of the Member to fulfill his obligations in respect of the ship under paragraphs [E] or [F] of Rule 8.

iv. upon undisputed possession being taken of the ship by or on behalf of a                  secured party.

v. upon the managers of the ship being changed by the appointment of new managers;

vi. without prejudice to the effects of the provision of Section 7 of Rule 5 upon the requisition for title or use of the entered ship by a State or Government Authority.

C. Unless otherwise agreed in writing by the Managers, a Member shall forthwith cease to be insured by the Association in respect of any ship entered by him or on his behalf upon the happening of whichever shall be the earliest of the following events:

i. upon the ship being missing for 10 (ten) days from the date when she was last heard of;

ii. upon the ship being posted at Lloyd’s as missing;

iii. upon the ship becoming an actual total loss;

iv. upon acceptance by hull underwriters (whether of marine or war risks)  that the ship is a constructive total loss;

v. upon agreement by hull underwriters (whether of marine or war risks) to pay to the Member of the ship an unrepaired damage claim which exceeds the market value of the ship without commitment immediately prior to the casualty which gave rise to such claim;

vi. upon a compromise or settlement with hull underwriters (whether of marine or war risks) on the basis of which the ship is considered or deemed to be an actual or constructive total loss;

vii. upon a decision by the Managers that the ship is to be considered or deemed to be an actual or constructive total loss or otherwise commercially lost.

PROVIDED ALWAYS that

a. Notwithstanding the cesser of the insurance under paragraph [C] of this Rule the Association shall, subject always to these Rules and to the terms and conditions of the entry of the ship in the Association, remain liable as regards liabilities flowing directly from the casualty which has given rise to the actual or constructive total loss of the ship.

b. If the Managers agree that the insurance of the ship shall continue after the happening of any of the events listed in paragraphs [B] and [C] of this Rule they may in their discretion impose such terms and conditions as they think fit for the continuation of the insurance.

c. Notwithstanding the cesser of the insurance under paragraphs [B] and [C] of this Rule, the provisions of Rule 5 shall apply in respect of the cover under Rule 5.

D. On the occurrence of any of the events specified in paragraphs [A] to [C] inclusive of this Rule in respect of an entered ship, the Member shall, unless otherwise expressly required in any other provisions of these Rules, give notice in writing of such event to the Managers within one month after the date thereof.

E. Upon a Member ceasing to be insured by virtue of paragraph [A] of this Rule, and upon a Member ceasing to be insured in respect of any ship by virtue of paragraphs [B] or [C] of this Rule, and without prejudice to the effects of cancellation of insurance pursuant to Rule 26 [A] then:

i. Unless and to the extent that in the case of Call Entries, the Member’s liability may have been agreed or assessed under paragraph [F] of this Rule (Release Calls upon cesser of insurance, other than Overspill Calls), such Member and his successors shall be and remain liable in relation to any Overspill Calls for the whole amount payable by him in accordance with Section 4 of Rule 16, and in relation to all other contributions, Calls/Premiums and other sums payable:

(i) in respect of the policy year in which such cessation occurs, on a pro rata basis, namely, in respect of the cover under Rule 3 or Rule 4, for the proportion of such sums applicable to the period beginning at the commencement of that policy year (or, in the case of a ship entered during that policy year, the date of entry) and ending at 12 hours G.M.T. on the date of such cessation, or in respect of the cover under Rule 5, for the proportion of such sums applicable to the period beginning at the commencement of that policy year (or, in the case of a ship entered during that policy year, the date of entry) and ending at 24 hours Beijing time on the date of such cessation; provided that, if the Member fails to give notice of the event in accordance with paragraph [D] of this Rule, such period shall end at 12 hours G.M.T. or at 24 hours Beijing time ( as the cover may be) on such later date as the Managers in their discretion shall decide, and

(ii) in respect of previous policy years, for the whole of those policy years.

ii. Subject to the other provisions of these Rules and to the terms of entry, the Association shall remain liable in respect of any ship entered by such Member or in respect of such entered ship (as the case may be) for all claims under these Rules arising by reason of any event which had occurred prior to the date of such cessation, but shall not otherwise be under any liability whatsoever by reason of anything occurring

after that date.

F. Release Calls upon cesser of insurance

Upon an entered ship or a fleet ceasing to be insured by the Association for any reason, whether or not the circumstances giving rise to such cesser of insurance shall be any of those specified in Rule 21 or Rule 22 or in paragraphs [A], [B] or [C] of this Rule, the Managers may:

i. Whether or not negotiations may have taken place with the view to the application of paragraph [ii] below, in addition to any assessments made by them before in relation to Release Calls, further assess as at the date of the cesser of insurance the amount of Release Calls which seems to the Managers in their discretion to represent the likely liability of the Member in respect of such ship or such fleet and levy the said Release Calls on the Member, other than Overspill Calls.

ii. Release the Member from liability to pay Release Calls referred to above, other than Overspill Calls, in respect of such ship or such fleet, wholly or partly or upon such terms and conditions as the Managers in their discretion may deem to be appropriate in the circumstances.

iii. If the Managers shall exercise their powers under paragraph [F][i] or paragraph [F] [ii] above, then:

(i) The amount of Release Calls of any assessment under paragraph [F][i] hereof shall be payable by the Member without deduction on demand.

However, the Managers may, in their discretion, accept a guarantee, in the amount with the terms and conditions from a bank approved by the Managers, to be provided within such period as specified by them to secure payment of such Release Calls. The provision of such guarantee shall not release the Member from any liability in respect of Overspill Calls.

(ii) The Member shall be under no liability for any Supplementary Calls which the Directors may decide to levy after the date of an assessment made under paragraph [F] [i] hereof or after the date of a release given under paragraph  [F] [ii] hereof, as the case may be, and the Member shall have no right to share in any returns which the Directors may thereafter decide to declare or make in accordance with Rule 23.