A. Where a Member has failed to pay, either in whole or in part, any amount due from him to the Association, the Managers may give him notice in writing requiring him to pay such amount by any date specified in such notice, not being less than 7 days from the date on which such notice is given. If the Member fails to make such a payment in full on or before the date so specified, the insurance of the Member (whether the insurance is current on such date or has ceased by virtue of paragraphs [A], [B] or [C] of Rule 25 or in accordance with any other provisions of these Rules) in respect of any and all ships referred to in such notice and entered in the Association by him or on his behalf shall be cancelled forthwith without further notice or other formality.

B. When the insurance of a Member is cancelled in accordance with paragraph [A] of this Rule (which time is hereinafter in this Rule 26 referred to as “the date of cancellation”) then:

i. Unless and to the extent that in the case of Call Entries, the Member’s liability may have been otherwise assessed under paragraph [D] of this Rule (Release Calls upon cancellation, 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 the date of cancellation falls, on a pro rata basis, namely 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 on the date of cancellation or such earlier date as the Managers in their discretion decide and agree in writing, and

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

ii. The Association shall with effect from the date of cancellation cease to be liable for any claims of whatsoever kind under these Rules in respect of any and all ships in relation to which the insurance of the Member has been cancelled,

(i) irrespective whether such claims have occurred or arisen or may arise by reason of any event which has occurred at any time prior to the date of cancellation, including   during previous years;

(ii) irrespective whether such claims arise by reason of any event occurring after the date of cancellation;   

(iii) irrespective whether the Association may have admitted liability for or appointed lawyers, surveyors or any other person to deal with such claims;

(iv) irrespective whether the Association at the date of or prior to the date of cancellation knew that such claims might or would arise, and as from the date of cancellation any liability of the Association for such claims shall terminate retrospectively and the Association shall be under no liability to such Member for any such claims or on any account whatsoever;

PROVIDED ALWAYS that

The Managers may in their discretion and upon such terms as they think fit, including but not restricted to terms as to payment of contributions, Calls/Premiums or other sums, admit either in whole or in part any claim in respect of any ship entered by a Member for which the Association is under no liability by virtue of paragraph [A] or [B] of this Rule, whether such claim has arisen before or arises after the date of cessation or the date of cancellation as the case may be, or remit wholly or partly any payment of contribution, Calls/Premiums or other sums due to the Association.

C. Sums due to the Association for the purpose of application of the Rules on cancellation

i. For the purpose of determining whether any (and, if so, what) sum is due for the purposes of paragraph [A] of this Rule or otherwise under these Rules no account shall be taken of any amount due or alleged to be due by the Association to the Member on any ground whatever, and no set-off of any kind (including set-off which might otherwise have arisen by reason of the bankruptcy or winding up of the Member) shall be allowed against such sum (whether or not any set-off against contributions has been allowed at any time in the past), except to the extent (if any) to which any sum demanded by the Managers as due, and required to be paid in a notice served under the said paragraph, may (in the Managers’discretion) in itself have already allowed for a set-off or credit in favour of the Member.

ii. Without prejudice to the generality of Rule 27 no act, omission, course of dealing, forbearance, delay or indulgence of any kind by or on behalf of the Association nor the granting of time, nor the acceptance by the   Association (whether express or implied) of liability for, or the recognition of, any claim, and whether occurring before or after any date of cessation or date of cancellation as hereinbefore referred to shall derogate from the effect of Rules 24, 25 and 26 or be treated as any waiver of any of the Association’s rights thereunder.

D. Release Calls upon cancellation

i. Upon the cancellation of a Member’s insurance in accordance with paragraph [A] of this Rule, notwithstanding that, if there has been a cesser of insurance prior to such cancellation, the Managers at the time of such prior cesser may not have exercised or may have agreed not to exercise the powers described in paragraphs [F] [i] and [ii] of Rule 25, the Managers may, in addition to any assessments made by them before in relation to Release Calls, further assess as at the date of the cancellation of insurance the amount of Release Calls which seems to the Managers in their discretion to represent the likely liability of the Member for the Association and levy the said Release Calls on the Member, other than Overspill Calls.

ii. If the Managers shall exercise their powers under sub-paragraph [i] above, then:

(i) The amount of any such assessment made under paragraph [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 condition 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 such       assessment of Release Calls made under paragraph [D] [i], and the Member shall have no right to share in any return which the Directors may thereafter decide to declare or make in accordance with Rule 23.