CLAIMS

1. claims

A. All policy years

　　In the 2007 policy year, the reported claims for all policy years totaled 1,718 (including newly registered claims for the 2007 policy year) with an aggregate claim amount of US$ 429.54 million. This represents an increase of 3.9% and 263% in comparison to 1,654 claims and US$ 118.34 million last year.

B. The 2007 policy year

　　There were 1,463 reported claims in the 2007 policy year with an aggregate claim amount of US$ 421.98 million, an increase of 3.6% and 266% increase in comparison to prior policy year’s 1,412 claims and US$ 111.97million respectively.

C. Classification of newly registered claims in the 2007 policy year

　　Among the newly registered claims in the 2007 policy year, the most frequent claim types were related to cargo liability, the Club’s instruction and crew illness. Compared to that of 2006, the Club’s instruction surpassed cargo liability to become of the first in terms of number of claims. The incident types giving rise to the largest claims by value are pollution liability, collision liability and cargo liability. The pollution liability ranked the highest in terms of claim amount in the 2007 policy year, rising from the fifth place in the previous policy year. In addition, cargo liability went down to the third place from the first place in the previous policy year.

Table 2

Table 3
　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　US$,000s

D. Major claims incurred in the 2007 policy year

　　20 major claims occurred in the 2007 policy year with a total claim amount of US$ 408.28 million. Compared to the 2006 policy year when there were 28 claims and a total claim amount of US$97.95 million, the number of claims in the 2007 policy year decreased by 28.6% and the aggregate claim amount increased by 316.9%. This shows a marked deterioration.

E. guarantee

　　In the 2007 policy year the Association arranged for securities in various forms for 53 entered ships for a total amount of US$ 29.47 million. The increase in terms of number and amount of securities, compared to those provided last year, is 8.2% and 43.3% respectively.

Table 4:

Arrest / Guarantee Cases

　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　US$ ,000s

2.Claims Settlement

A. Settled claims

　　In the 2007 policy year, 1,950 claims occurred in various policy years were settled and closed. The total claim amount was US$ 78.93 million whereas total net payment by the Association was US$ 17.75 million. Compared to the 1,304 claims of the 2006 policy year, the number of closed cases increased by 49.5%. (Table 5).

Table 5
　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　US$ ,000s

Note: Please refer to the Audit Report of Policy Year 2007

B. Report on settlement of major claims (please also refer to our previous reports)
2000 policy year

　　ａ.　M.V. “Da Hua” of Cosco Shipping Co. Ltd. carried generator sets from Germany to Tianjin, China on 21st November 2000. The packing of 5 pieces were found damaged at the discharging port. The consignee requested a guarantee in the amount of US$ 6.5 million. The Association applied to establish limitation fund for Maritime Claims at Tianjin Maritime Court and provided Club LOU. The consignee subsequently raised a claim for US$3.078 million. The case was later settled at US$50,000, amounting to 50% of the package limitation.

2001 policy year
　　b. M.V. “Da Qiang” of Cosco Shipping Co. Ltd. was loading cargo at a port of Republic of Korea when a piece of thermal equipment weighting 142 mts suddenly fell to ground. The equipment became constructive total loss. The cargo owner threatened to arrest the vessel and demanded for security. The Association provided LOU in the amount of US$495,000 to release the vessel. Later on, the cargo owner lodged suit at Netherlands court, for a claim of US$650,000. The first instance court delivered their judgment against the shipowner, and ruled that the shipowner should pay damages at US$520,000 to the cargo owner. The focus in this case was the issue of applicable laws. If the US COGSA applied, then the shipowner could have invoked the package limitation of US$500. Through the effort of the Association, the shipowner finally won the case at court of appeal. And the cargo owner was compelled to give up further appeal.

2003 Policy Year

　　c. M.V. “De Feng Hai” of Guangdong Sunfont Shipping Co., Ltd. grounded at Zhujiangkou on 26th March 2003, while carrying 29,000tons of coal from Tianjin to Huangpu. The Association dispatched the experts promptly to assist the owner. Then the Association arranged relevant surveys and achieved positive results in salvage and oil pollution prevention. Although according to relevant statute, the shipowner can not raise negligence in navigation as defence in carriage between Chinese ports, the Association effectively defended the interest of the owner and achieved a satisfactory amicable settlement. There were three claims in the amount of US$ 1.26 million, including cargo claim, claim for bunder, and general average contribution in this case. The total payment was US$480,000.

　　d. M.V. “Sha He Kou” of Cosco Shipping Co., Ltd. grounded and spilled oil at the anchorage of port San Ya on 4th April 2003, while discharging heavy cement box. The accident was caused by ingress of water into engine room due to collapse of cargo stow. The Association immediately arranged salvage operation to pump out the oil and carry out efficient measures to prevent the oil spill from spreading. The local environment protection authorities and fishermen put forward a huge oil pollution compensation claim of RMB 30 million. Through the joint effort of the Association and the owner, a settlement was reached at RMB 2 million, effectively minimized the risk. The shipowner sued the cargo interests for pollution liabilities, damage to ship, damage to cargo and salvage costs etc at Haikou Maritime Court. The cargo interests lodged suit against the shipowner for salvage costs for the cement box, demurrage for berth etc. The two cases were heard together. The first instance judge ruled that the shipowner was at fault and should pay compensation to the cargo interests in the amount of RMB 2.96 million. The Association insisted on appeal. The Appeal court delivered their judgment that the shipowner and cargo interests should apportion the liability at 40% and 60% respectively. Therefore, the Association was able to reduce the loss for RMB 5 million.

2005 Policy Year

　　e. M.V. “Chipobrok Sun” of Chinese-Polish Joint Stock Shipping Co. encountered heavy weather in the bay of Biscay on 30th December 2005 while en route from Hamburg to Taichung. The windmill propellers carried on deck collapsed and the vessel could not continue the voyage. The cargo was discharged at Brest, France. The cargo interests agreed to transport the cargo back to Hamburg at first. However, they later refused to do that. The cargo was detained in Brest and resulted in considerable amount of storage costs. The Association requested the cargo owner give authorization to the shipowner to process the damaged cargo so that the loss could be minimized. But the cargo interests did not answer. Later on, the cargo interests put forward a claim for US$1.137 million. The Association raised the defense of deck cargo clause and package limitation, and finally persuaded the cargo interested to accept US$100,000 as settlement. The damaged cargo was scraped at Brest with the permission from the cargo interests.

　　f. M.V. “Tian Li” of Tianjin Marine Shipping Co., Ltd encountered heavy weather during the voyage from Tianjin to Huangpu on 16th December 2005. Water entered into two cargo holds. The Association arranged survey on the vessel’s arrival at Huangpu. The survey showed that 31 containers suffered damage to various extents. The cargo owners authorized lawyers or recovery agents to put forward their claims. The claim amount aggregated to US$360,000. Although the strict liability applies for the carriage between Chinese ports, the Association achieved settlement at US$90,000 inclusive of survey fees through negotiation with the lawyers and recovery agents.

3. SPECIAL NOTES FOR CLAIMS INCURRED IN the 2007 POLICY YEAR

Ａ.Collision Accidents

　　In the 2007 policy year, several entered ships were involved in collision accidents. These accidents brought huge financial loss and adverse effects to the related Members. Statistics show that there were 35 collision cases with a total claim amount of US$ 29.66 million in the policy year 2007, ranking second in all risk types. Compared to the US$ 4.313 million in policy year 2006, it has increased by 587.6%.
　　The Association would like to draw the attention of all Members to such accidents by introducing hereunder some typical cases.

　　ａ.　The entered ship MV “Puhai 216” collided with MV “Wanshou 1886” on 10th March, 2007 at Zhenjiang area. The latter vessel capsized with 5 crew members on board, 3 of whom were dead. The accident resulted in oil pollution on the river surface. The Association provided guarantee of RMB 1.5 million to cover crew liability and oil pollution compensation under the request of Zhenjiang MSA.

　　ｂ.　The entered ship MV “Fu Wang” collided with moored fishing vessel “Zhe Dai Yu 01335” at Zhoushan area on 29th March 2007. The fishing vessel sank and 14 crew members were all rescued. Because the fishing vessel was moored, the collision liability solely fell on the entered ship. The shipowner paid out a compensation of RMB 900,000 in the case.

　　ｃ.　The entered ship MV “Deli/Zhongren 1500” barge team collided with fishing vessel “Zhe Sheng Yu 05317” at Shengsi area on 3rd April 2007, while on route to Japan. The fishing vessel sank. 15 crew members were rescued and one suffered severe injuries. The Association provided guarantee of RMB 1 million to the Zhejiang Shengsi MSA to release the vessels. Later on, the owner of fishing vessel filed suit for damage to property in the amount of RMB 5.07 million and crew injury in the amount of RMB 240,000.

　　ｄ.The entered ship MV “Hui Rong” sank off Zhoushan area on 17th March 2007 after collision with MV “Peng Yan”. Only 12 out of 29 crew members were rescued, 9 died and 8 went missing. The collision resulted in serious oil pollution. The two companies had paid US$1.9 million respectively to the MSA as clean-up costs. Besides the crew claims and oil pollution claim, there were cargo claim for US$7.46 million and bunker claim for US$ 260,000.

　　ｅ.The entered ship M.V. “Jin Hai Kun” collided with M.V. “Harvest” near Taizhou on 8th April 2007, while en route from Zhangjiagang to Singapore. The latter vessel sank with 20 crew members onboard and resulted in oil pollution in that area. The shipowner and the Association provided cash security in the amount of US$400,000 and Club LOU in the amount of US$1.6 million to the MSA respectively. The family members of the crew on M.V. “Harvest” lodged suit at Ningbo Maritime Court. The Association provided guarantee in the amount of RMB 14.4 million. The cases were settled at RMB11.54 million.

　　ｆ.The entered ship M.V. “Fu Zhou” collided with “Zhong Chang 118” off Wusongkou Shanghai on 20th December 2007. M.V. “Fu zhou” sustained minor damage with no crew injuries. The latter vessel grounded after water entering into hold No.5 and engine room. All crews on the latter vessel were rescued. After the accident, the Shanghai MSA requested the shipowner to provide guarantee in the amount of RMB 16million to cover clean-up costs and oil pollution compensation. Through negotiation, an agreement was reached with the shipowner and the Association provided cash guarantee of RMB 6million and LOU of RMB 5million to the MSA respectively.

　　In the cases mentioned above, the collisions in Zhoushan area, Zhejiang Province all occurred during March and April 2007. There were no fewer than 6 collisions during the two month period, among which 3 vessels sank with a heavy loss of lives of crew members and property. The collisions can often be attributed to human errors by the crew.

　　The Association has published several issues of Loss Prevention Circulars and Advisory Service, focusing on prevention measures of such incidents and has provided some technical guidance. The Association would like to remind all Members again to pay attention to the characteristics of these cases and take relevant loss prevention measures in accordance with the Association’s Loss Prevention Circular 2006 No.2, 2007 No.2, No.7, No.9.

B. Criminal liability of Master and crew in marine casualties in Chinese waters

　　In policy year 2006, the entered ship M.V. “Yue Shun” collided with the M.V. “Sheng Song 1” near Wai Gao Qiao, Shanghai on 18 January 2007. The latter vessel sank due to water ingress, and 14 crew members fell into the water. The 165 containers with an aggregated value of RMB 20 million carried on the M.V. “Sheng Song 1” were all lost in the Yangzi River. Investigations revealed that, after passing “Yuan Yuan Sha” light ship, the master of M.V. “Sheng Song 1” sailed in negative direction with high speed in spite of poor visibility and heavy traffic on that area, which resulted in the collision.? The Maritime Policy Department of Shanghai detained the master of the M.V. “Sheng Song 1” on charges of causing traffic casualties.

　　Furthermore, it is learned that a master who was responsible for a collision accident in Changjiangkou area which resulted in death of 2 crew members and the other 2 missing, was sentenced for 3 years imprisonment with probation of 3 years by a court in Shanghai.

　　The Supreme People’s Procuratorate of the People’s Republic of China jointly with three other Ministries issued the Opinion Regarding the Timely Transfer of Cases in Administrative Enforcement that are Suspected of Involving Crimes (referred hereafter as the Opinion) on 26 January 2006. The Opinion urges administrative authorities to transfer cases which have reached the standard for criminal prosecution or suspected involvement in crimes to law enforcement organizations. In the marine casualty section, the Opinion attracted the attention of the Administration of Maritime Affairs on the criminal liability of master and crew and the timely transfer of the master or crew who may be involved in the crime of causing traffic casualties.?

　　Under such circumstances, the Association issued Loss Prevention Circular 2007 No.4. The Association suggests Members instruct their masters and crews to study the contents of the Circular so that they can enhance their safety awareness and navigate the vessels with due diligence. By doing so, it may prevent the occurrences of such accident and avoid the criminal liability and financial loss.
The Association learned that a master was sentenced to 5 years imprisonment by a court in Shanghai this April for a collision accident on 30th January 2007.

C. Serious marine casualties due to high moisture content of mineral concentrates

　　Some entered ships carrying mineral concentrates suspected with high moisture content encountered heavy seas in their voyage, free flow liquid surface developed in hatches due to constant shifting at sea, resulting in capsizing of the vessel. These accidents brought huge financial loss as well as adverse effects to Members.

　　a. The M.V. “Wen Qiao” of Dalian Suntime International Transportation Co., Ltd. capsized off the Wonsan anchorage, North Korea on 17th September 2007, while carrying iron ore fines bound for Tianjin. One crew died in the accident. Following the accident, serious oil pollution occurred. The Port Authority raised huge claim for clean-up costs and fines. They ordered compulsory wreck removal. To date, the consignee has lodged suit in Qingdao Maritime Court for cargo claim. The shipowner challenged the jurisdiction. The Association is now assisting the member to prepare the defense.

　　ｂ.　The M.V. “Chang Le Men” of Nanjing Ocean Shipping Co., Ltd. carried iron ore fines from India to Bangladesh on 7th September 2007. The vessel developed a list after leaving the port. And the master had to ground the vessel. In order to re-float the vessel, the shipowner signed LOF 2000 contract with SCOPIC Clause. The Association arranged guarantee for US$ 1.2 million under the SCOPIC Clause. The cargo interests requested guarantee in the amount of US$ 500,000 for salvage contribution plus 30% interests and costs. The Association is under negotiation with the cargo interests.

　　ｃ.The M.V. “Heng Tai” of Ningbo Beilun Marine Shipping Co. capsized on high seas on 2nd October 2007 while carrying iron ore from India to Bangladesh. The accident was due to shifting of the cargo at sea. Among the 28 crews on board, 26 were rescued and 2 died. In December 2007, the bills of lading holder China Building Materials & Equipment Import & Export Company raised claim of US$ 1.18 million against the shipowner. The Association is now preparing for the defense.

　　Mineral concentrates are cargo which may liquefy. Fine particles and high liquidity are the main characteristics of dry mineral concentrates. This makes the cargo prone to shifting during the voyage at sea. Therefore, the cargo must be stowed in strict accordance with relevant regulations. In the carriage of mineral concentrates, the moisture content of cargo is a very important index. The shipper is responsible to provide valid moisture content certificates. The certificate must expressly state the actual moisture content of cargo and the TML of such cargo. When the actual moisture content of cargo is beyond the TML, the cargo will be in a free flowing state. This can expose the vessel to serious danger.

　　To ensure safe carriage of mineral concentrates, the master must ensure that the actual moisture content of cargo is below the TML. This requires the moisture content certificate to be valid and state the actual moisture content of cargo before shipment. If the certificate is issued at the warehouse, and later the cargo is stored in open storage without cover. Then the rain may affect the actual moisture content of cargo, makes it close to or above the TML. Such cargo onboard may develop free flow liquid surface during the voyage and result in capsizing of the vessel.

　　The Association suggests masters on entered ships taking extra care when loading such cargo in bulk. They must notify immediately Members when there is doubt about the moisture content of the cargo. The charterers or cargo interests may urge the master to load the cargo and sail as soon as possible but, for the sake of safety of vessel and crew, the master ought to refuse such requirements and notify the Association immediately. The Association will arrange surveyor to take samples of the cargo. The cargo can only be loaded onboard after it is confirmed that its actual moisture content is below TML.

　　The Association would issue a Loss Prevention Circular in this respect to Members in order to avoid such accidents in the future.

D. Shortlanding claims on oil tankers

　　In policy year 2007, several oil tankers encountered with claims for cargo shortage. Listed hereunder are some cases of this kind occurred on entered ships.

　　ａ.　The M.V. “Hebei Warrior” of Hebei Ocean Shipping Co., Ltd. carried 200,000 mts of crude oil to Thailand. After discharge on 10th December 2007, the consignee alleged there was a shortage of 3000mts of cargo, approximately 1.4% of the bills of lading figure. The survey arranged by the Association revealed that there was a shortage of 380mts against bills of lading quantity when loading was finished. Before discharge began, the test performed by the surveyor of cargo interests and the representative of vessel showed that quantity of cargo was slightly above the loading port figure. The shortage based on shore figure may be attributed to residuals in the shore pipelines.

　　ｂ.　The M.V. “Hebei Mountain” of Hebei Ocean Shipping Co., Ltd. carried 280,000mts of crude oil to India from Iran. After discharge was finished on 1st November 2007, a shortage of 840mts occurred according to the figure on board. However, according to the shore figure, the shortage was 2100mts. The charterers had put forward a claim of US$500,000 for cargo shortage.

　　ｃ.　The M.V. “Hebei Mountain” of Hebei Ocean Shipping Co., Ltd. arrived Maoming, China on 7th December 2007 to discharge 3 kinds of crude oil from the meddle east. Before discharge started, the CIQ went onboard to measure the quantity of the cargo. The survey showed that there were shortage of 3,668 barrels (approximately 436 mts) of Iranian light crude oil, and shortage of 6,473 barrels (approximately 770 mts) of Soroosh crude oil. However, the Iranian heavy Crude oil was in excess of 4,885 barrel (approximately 581 mts). The consignee raised shortlanding claim for the Iranian light crude oil and Soroosh crude oil. To avoid arrest of the vessel, the Association provided guarantee in the amount of US$1.08 million. The Association is currently in negotiation with the consignee.

　　ｄ.　The M.V. “Ai Ding Hu” of Dalian Ocean Shipping Co. discharged crude oil at Jinzhou on 28th January 2008. A shortage of cargo was found. The Association appointed surveyor to carry out joint survey with the charterer and consignee. The survey revealed that the remained cargo in cargo hold solidified, which in turn prevent the dipstick to reach the bottom of the cargo hold. The surveyor of the consignee considered the shore figure should prevail under such circumstances. The reason for oil solidification may be the cold weather and the inherent vice of the cargo. The charterer withheld the freight of US$470,000 as compensation for the shortage claim.

　　The loading and discharge of oil are carried out through pipelines. This gives the special characteristics to the carriage and measurement of oil cargo. Under the precondition of high quality of carriage of cargo, the tanker owners should take great care to the loading and discharging operation. Special attention should be given to the normal function of heating system and pump system. The vessel should be maneuvered sufficiently so that the cargo could be pump out smoothly. When pumping in ballast water, the master should take actions to avoid residuals formed on the walls of cargo hold due to quick drop of cargo temperature. Furthermore, the tanker owners should employ efficient crude washing plan so as to avoid residuals in cargo holds.

　　In the trade of crude oil, the consignee normally would apply for quantity certificate to be issued before discharge by inspection organizations or notary companies. The certificate is normally based on shore figure. These certificates are important evidence to facilitate the consignees’ shortage claim.
The Association would like to remind all Members that when cargo shortage becomes a potential concern, the master ought to notify the Association immediately so that surveys can be arranged. The master and crew should provide full cooperation to the surveyor to investigate into the cause of such shortage and issue the OBQ/ROB, so that this can be used as evidence against the quantity report from the consignee.????

Attachment: “major claims incurred in the 2007 policy year”

　　<1> The M.V. “Tian He” of Tianjin International Marine Shipping Co. grounded in heavy weather off Inchon anchorage, South Korea on 4th March 2007 while waiting to enter the port. The 20 crews on board were all rescued by the South Korea Coast Guard, only 4 of them suffered minor injuries. There were 30mts of fuel oil and 15mts of diesel oil on board at material time. The Association had paid US$980,000 for cleaning-up costs and oil pollution compensation. Furthermore, the Association provided LOU in the amount of US$1.8 million to the two consignees in South Korea. The cases were settled later at US$170,000.

　　<2> The M.V. “Hui Rong” of Tianjin Tianhui Shipping Enterprises Co., Ltd. collided with M.V. “Peng Yan” of Shenzhen Ocean Shipping Co., Ltd. off the coast of Zhoushan on 17th March 2007. M.V. “Hui Rong” sank after the collision. Among the 29 crews on board, 12 were rescued, 9 died and 8 went missing. The accident resulted in serious oil pollution. The two companies had paid US$1.9 million respectively to the MSA as clean-up costs. Besides the crew claims and oil pollution claim, there were cargo claim for US$7.46 million and bunker claim for US$ 260,000. The case is handled by the Association now.

　　<3> The M.V. “Jin Hai Kun” of Fujian Shipping Co. collided with M.V. “Harvest” near Taizhou on 8th April 2007, while en route from Zhangjiagang to Singapore. The latter vessel sank with 20 crew members onboard and resulted in oil pollution in that area. The shipowner and the Association provided cash security in the amount of US$400,000 and Club LOU in the amount of US$1.6 million to the MSA respectively. The family members of the crew on M.V. “Harvest” lodged suit at Ningbo Maritime Court. The Association provided guarantee in the amount of RMB 14.4 million. These cases were settled at RMB11.54 million. Because the shipowner refused to pay the compensation, the Association had to bear all the compensation under the joint liability. At present, the Association is engaged in negotiation with relative parties for crew claim, oil pollution and wreck removal.

　　<4> The M.V. “Bao Yue Da” of HTM Shipping Co., Ltd. carried steel cargo bound for Italy on 8th May 2007. It was found that fuel oil entered into No.9 hold and contaminated the cargo in that hold. To minimize the damage, cargo in No.9 hold was transferred to No.7 and No.8 hold in the previous discharging port. The consignee arrested the vessel at the final destination and demanded for guarantee of Euro 800,000 for damages sustained. The surveyor appointed by the Association was of the opinion that the total loss of cargo would not exceed Euro 300,000. Based on that, the Association was able to release the vessel on LOU of Euro 400,000.

　　<5> The M.V. “Chipobrok Moon” of Chinese-Polish Joint Stock Shipping Co. carried steel cargo to Antwerp, Belgium on 6th June 2007. Part of the cargo was found wet damaged and deformed upon discharge. The consignee applied for court survey on the damaged cargo. The cargo was designed for special purpose. Therefore, the consignee requested the damaged cargo to be treated as total loss. They filed suit in local court for a claim of Euro 680,000. The Association provided guarantee of Euro 416,000, and are preparing for the defense of the case.

　　<6> The M.V. “Bao Qing Men” of HTM Shipping Co., Ltd. collided with M.V. “Gang Tai No.1” off the port Lianyuangang on 6th June 2007. The vessel subsequently went into contact with Quay No.27 under construction. The two vessel both sustained damage and the Quay was severely damaged in the collision. The building contractor of the Quay arrested M.V. “Bao Qing Men” and lodged suit. The H&M insurer of the vessel provided guarantee of RMB 30 million to release the vessel. The Association provided counter guarantee to the H&M insurer for the portion of indirect loss. The Association finally reached agreement with the claimant to settle the indirect loss for RMB 5 million under the mediation by the court in December 2007.

　　<7> The M.V. “J. Ocean” of Jiangsu Ocean Shipping Co., Ltd. arrived at Pyongtaek, South Korea to discharge coconut meal on 10th June 2007. Part of the cargo was found discolored upon discharge. The consignee arrested the vessel through local court. The Association provided guarantee for US$1.15 million to release the vessel.

　　<8> The M.V. “Pacific Paradise” of Hong Kong Mingwah Shipping Co., Ltd. arrived Fangcheng on 20th June 2007 to discharge Soya beans. The cargo was found contaminated with foreign substances. The consignee raised claim for 2000mts of cargo and requested guarantee for US$ 660,000. The surveyor appointed by the Association was of the opinion that the damage was not due to fault of the carrier. The shipowner should not be held responsible for the damage. The shipowner dispatched personnel to handle the case on spot. Finally an agreement was reached to release the vessel against guarantee of US$495,000.

　　<9> The M.V. “Shou Chang Hai” of Cosco Bulk Carriers Co., Ltd. arrived Portugal to discharge steel cargo on 7th August 2007. Cargo damage was found upon discharge. The surveyor concluded that the damage was mainly loose bundle and deformation which was attributed to improper stowage. The charterer should be held responsible for the losses. Furthermore, the loss should be limited to re-bundling costs. Notwithstanding these facts, the consignee filed suit in local court and demanded for Bank Guarantee of Euro 1.86 million. The vessel was released after the Association provided the bank guarantee. The Association is now requesting counter guarantee from the charterer and seeking recovery according to the ICA clause in the charter-party.

　　<10> The M.V. “Fu Jin” of Pacific King Shipping Holding Pte.Ltd. collided with the Quay No. 22 while berthing in Bandar Abbas, Iran on 19th August 2007 due to fault of the pilot. The crane on Quay No.22 sustained severe damage. The Port Authority detained the vessel and put forward a claim for US$44 million. The claim was later reduced to US$ 15 million. The Port Authority demanded bank guarantee for that amount. The vessel was only insured for US$ 5 million. Therefore, it gave raise to the issue of underinsurance. The Association is now in negotiation with the Port Authority.

　　<11> The M.V. “Chang Le Men” of Nanjing Ocean Shipping Co., Ltd. carried iron ore fines from India to Bangladesh on 7th September 2007. The vessel developed a list after leaving the port. And the master had to ground the vessel. In order to re-float the vessel, the shipowner signed LOF 2000 contract with SCOPIC Clause. The Association arranged guarantee for US$ 1.2 million under the SCOPIC Clause. The cargo interests requested guarantee in the amount of US$ 500,000 for salvage contribution plus 30% interests and costs. The Association is under negotiation with the cargo interests.

　　<12> The M.V. “Wen Qiao” of Dalian Suntime International Transportation Co., Ltd. capsized off the Wonsan anchorage, North Korea on 17th September 2007, while carrying iron ore fines bound for Tianjin. One crew died in the accident. Following the accident, serious oil pollution occurred. The Port Authority raised huge claim for clean-up costs and fines. And they ordered compulsory wreck removal. To date, the consignee has lodged suit in Qingdao Maritime Court for cargo claim. The shipowner challenged the jurisdiction.

　　<13> The M.V. “Huai Lai He” of Cosco Container Lines Co., Ltd. collided with fishing vessel “Leone” off Viennese, Italy on 25th September 2007. One crew on the fishing vessel died in the accident and the fishing vessel sustained damage. The Association provided two Letters of Undertaking, one in the amount of Euro 1.5 Million for crew death, the other in the amount of Euro 800,000 for damage to property to the fishing vessel. The collision accident was still under investigation.

　　<14> The M.V. “Tai An Hai ” of Cosco Bulk Carrier Co., Ltd. discharged steel cargo at Spain on 27th September 2007. Wet damage was found. The vessel subsequently discharged steel cargo in the UK and Belgium. The Association arranged surveys at those ports. The surveys revealed that there was trace of water ingress. The consignees in Spain and the UK authorized lawyer in the UK to put forward their claims and requested guarantees. The Association provided Guarantee in the amount of UK sterling 300,000.?

　　<15> The M.V. “Heng Tai” of Ningbo Beilun Marine Shipping Co. capsized on high seas on 2nd October 2007 while carrying iron ore from India to Bangladesh. The accident was due to shift of the cargo in cargo hold. The vessel encountered heavy seas during the voyage; free flow liquid surface developed in hatches due to constant shifting at sea, and finally resulted in capsizing of the vessel. Among the 28 crews on board, 26 were rescued and 2 died. In December 2007, the bills of lading holder China Building Materials & Equipment Import & Export Company raised claim of US$ 1.18 million against the shipowner.

　　<16> The M.V. “Hebei Spirit” of Hebei Ocean Shipping Co., Ltd. carried 200,000 mts of crude oil to Daesan, South Korea. At 7 a.m. on 7th December 2007, the vessel was hit on starboard by tug “Samsung No.1”, while mooring at the anchorage. The collision resulted in cracks in hold No.1, No.3, No.5. Approximately 12,000 mts of crude oil leaked into the sea. The oil spill affected 20kms coastline of South Korea. The marine environment, fishing industry, and tourism industry suffered losses of various extents. The clean-up costs and oil pollution compensation are estimated at US$350 million.

　　<17> The M.V. “Hebei Mountain” of Hebei Ocean Shipping Co., Ltd. arrived Maoming, Guangdong Province on 7th December 2007 to discharge 3 kinds of crude oil from the meddle east. Before discharge started, the CIQ went onboard to measure the quantity of the cargo. The survey showed that there were shortage of 3,668 barrels (approximately 436 mts) of Iranian light crude oil, and shortage of 6,473 barrels (approximately 770 mts) of Soroosh crude oil. However, the Iranian heavy Crude oil was in excess of 4,885 barrel (approximately 581 mts). The consignee raised shortlanding claim for the Iranian light crude oil and Soroosh crude oil. To avoid arrest of the vessel, the Association provided guarantee in the amount of US$1.08 million. The Association is currently in negotiation with the consignee.

　　<18> The M.V. “Fu Zhou” of China Shippping Development Co. Ltd., Tramp Co. (Coastal) collided with “Zhong Chang 118” off Wusongkou Shanghai on 20th December 2007. M.V. “Fu zhou” sustained minor damage with no crew injuries. The latter vessel grounded after water entering into hold No.5 and engine room. All crews on board the latter vessel were rescued. After the accident, the Shanghai MSA requested the shipowner to provide guarantee in the amount of RMB 16million to cover clean-up costs and oil pollution compensation. Through negotiation, an agreement was reached with the shipowner and the Association provided cash guarantee of RMB 6million and LOU of RMB 5million to the MSA respectively.

　　<19> The M.V. “Ai Ding Hu” of Dalian Ocean Shipping Co. discharged crude oil at Jinzhou on 28th January 2008. A shortage of cargo was found. The Association appointed surveyor to carry out joint survey with the charterer and consignee. The survey revealed that the remained cargo in cargo hold solidified, which in turn prevent the dipstick to reach the bottom of the cargo hold. The surveyor of the consignee considered the shore figure should prevail under such circumstances. The reason for oil solidification may be the cold weather and the inherent vice of the cargo. The charterer withheld the freight of US$470,000 as compensation for the shortage claim.

　　<20>The M.V. “Pacific Bangcheng” of Pacific King Shipping Holding Pte.Ltd. carried cement machines from Shanghai to Turkey. The cement machines packed in wood plates were stowed under some steel structures. This resulted in damage to the packing of cement machines. The vessel sailed after part of the cargo was reloaded on deck and cargo in the hold was relashed. The charterer issued bills of lading without incorporation of remarks on the Mate’s Receipts. After the vessel arrived it destination on 14th February 2008, the consignee demanded guarantee of US$ 3.5 million and threatened to arrest the vessel. The shipowner had negotiation with the charterer and the consignee, and had avoided issuing the guarantee.?

Financial Statements

1. Claims in all policy years and assessment of liability

　　For all policy years since the establishment of the Association on 1st January 1984 to 20th February 2008, there are currently 2,184 open cases with a total claim amount of US$ 664.68 million. The Association’s estimated liability in these claims is US$ 222.03 million（including co-insurance apportionment, net liability US$31.8 million）, with an estimated loss ratio of 33.4%. In comparison with the prior policy year, there has been seen a decrease of 189 cases (representing 8%), an increase of US$371.86 million in terms of claim amount (representing 127%), which was mainly due to the “Hebei Spirit” oil spill. The estimated liability increased by US$153.41million (representing 224%). The estimated loss ratio increased by 10%. This represents a substantial deterioration in the claims.

2. Assets
　　

　　According to the Audit Report of the 2007 policy year, the total assets of the Association were US$395.29million. This represents an increase of 81.2% compared to the previous policy year, a net increase of US$ 177.15 million. This increase is mainly attributed to the substantial increase in the net assets of the listed companies the Association invested in. In addition, the increased value of the Chinese RMB against US Dollars also explains the rise on assets of the Association.

3. Free Reserves

　　The free reserves of the Association stood at US$355.67 million, an increase of US$191.19 million when compared to the US$164.48 million last year, Equivalent to a net increase of 116.24%. This increase is primarily attributed to the gains from various investments.

　　At a total tonnage of 16.51 million GT in the 2007 policy year, the free reserves per GT is US$21.54. This is an increase of 89.4%, or a net increase of US$10.17 per GT, compared to US$11.37 per GT in the previous policy year. Had the calculation been based on the total tonnage of 14.46 million GT in the previous policy year, the free reserves per GT would have been US$24.6 per GT, indicating a net increase of 116.3%.

Free Reserves Per GT (US$)

　　Note: The increase rate was 2007/2006 figure

　　According to data in the above table, the Association would be ranked first for the past seven years, compared with all Clubs in the International Group of P&I Clubs.