J. Security
In no circumstances shall the Association be obliged to provide bail or other security to obtain the release of, or to prevent the arrest or attachment of an entered ship or any other ship, property or assets (including freight or monies due) owned or managed by the Member or any company associated with or under the same management as the Member, or to obtain the release of or prevent the arrest of any seaman of such ships. The Association may agree to provide such bail or other security in a particular case on such terms as it may consider necessary. If it does so agree, then subject to any variation of any of sub-paragraphs [i] to [vii] below by specific agreement between the Managers and the Member:

i.  the provision of a bail or other security by the Association shall not constitute any admission of liability by the Association for the claim in respect of which the bail or security is given;
ii.  the Association shall be entitled to recover from the Member the expenses incurred in connection with providing such bail or other security, except insofar as such expenses, if incurred by the Member, would be recoverable from the Association under Section 24 of Rule 3;
iii.  the Association shall be entitled to a commission from the Member of 1% per annum on the amount of the bail or other security provided, or such other sum as may be considered appropriate by the Managers;

iv.  the Member shall upon the Association agreeing to provide the bail or other security, give to the Association an undertaking in the form of “Standard Form of Member‘s Counter Security” as set out in Attachment 2 to these Rules;

v.  the Member shall on such date or dates as the Association determines pay the Association the amount of any deductible which the Association determines may apply to any liability, loss, cost or expense in respect of which the bail or other security has been provided and in respect of which the Member may be insured;
vi.  whether or not the Member has given such undertaking, if the Association does provide bail or other security then the provisions of the “Standard Form of Member ‘s Counter Security” referred to in sub-paragraph [iv] above shall be the terms as between the Association and the Member. The terms and conditions contained in that form of undertaking shall be binding on the Member as if such undertaking had been duly given by him to the Association.
vii.  Where the Association has provided bail or other security in accordance with this paragraph [J] and the Member fails to comply with the requirement made or direction given by the Association under this Rule 8, the Association by giving to the Member 14 days written notice to this effect shall (unless in the meantime the Association has been released from its liability in respect of such bail or other security) be entitled in the name of the Member to defend, settle or otherwise deal with such claim or potential claim against him and Member shall on demand indemnify the Association against any loss, damage, liability, costs and expenses incurred by the Association as a result of exercising its rights, except in so far as such loss, damage, liabilities, costs and expenses, if incurred by the Member, would be recoverable under this insurance with the Association.

viii.  The Association shall in no circumstances provide cash deposits.

K.   Employment of lawyers and other persons

i. Without prejudice to any other provisions of these Rules and without waiving any of the Association's rights hereunder, the Managers may at any and all times appoint and employ on behalf of a Member upon such terms as they may think fit lawyers, surveyors or other persons (whether or not lawyers, surveyors or other persons have already been appointed or employed by the Member) for the purpose of dealing with any matter liable to give rise to a claim by the Member upon the Association, including, but not limited to, investigating, or advising upon any  such matter and taking or defending legal or other proceedings in connection therewith.

The Managers may also at any time discontinue such employment as they may think fit.

ii. The Association is only responsible for costs, fees, expenses incurred by such person appointed by a Member with prior consent of the Managers or appointed by the Managers on behalf of a Member.

iii. All lawyers, surveyors and other persons appointed by the Managers on behalf of a Member or appointed by a Member with the prior consent of the Managers shall at all times be and be deemed to be appointed and employed on the terms:

(i) that (without prejudice to their right to retire from the matter on any other  grounds) they shall be entitled to retire from the matter if either the Managers or the Member so requests or if such person considers that a conflict of interest has arisen or may arise between the Member and the Association so that he ought to retire from the matter;

(ii)  that they have been instructed by the Member at all times (both while so acting and after having retired from the matter) to give advice and to report to the Managers in connection with the matter without prior reference to the Member;

(iii) that they are to produce to the Managers without prior reference to the Member any documents or information in their possession or power relating to such matter, as if such person had been appointed to act and had at all times been acting on behalf of the Association and notwithstanding that any such advice, report, documents or information would otherwise be the subject of legal or any other form of privilege.

L.   Interest

In no case shall interest be paid upon sums due from the Association.

M.  Willful or intentional act of the Member

The Association shall not be liable for any liabilities, losses, damages, costs or expenses which result from the Member’s knowingly sending the entered ship to sea in an unseaworthy condition.
The Association shall not be liable for any liabilities, losses, damages, costs or expenses caused by the willful or intentional misconduct act or default of the Member.

N.  Electronic communication

The Association’s logs and records of any electronic communication sent or received by the Association shall, in the absence of manifest error, be conclusive evidence of such communication and of its dispatch or receipt.

O. Law of contract

These Rules and all contracts of insurance made by the Association shall be governed by and construed in accordance with law of the People’s Republic of China, except “Insurance Law”.

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