THAT the Rules be amended as set out hereafter, the amendments to be effective as from noon, 20 th February 2006.

The Shipowners Protection Limited St Clare House, 30-33 Minories London EC3N 1BP TO ALL MEMBERS Managers of The Shipowners Mutual Protection and Indemnity Association (Luxembourg) NOTICE OF EXTRAORDINARY GENERAL MEETING NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of The Shipowners Mutual Protection and Indemnity Association (Luxembourg) will be held at the Shangri-La Hotel, 11 Jalan Sultan Ismail 50250 Kuala Lumpur, Malaysia, on Thursday 8 th December 2005, at 09.00 hours for the purpose of considering, and if thought fit, passing the following as a SPECIAL RESOLUTION: SPECIAL RESOLUTION THAT the Rules be amended as set out hereafter, the amendments to be effective as from noon, 20 th February 2006. The proposed amendments to the Rules follow overleaf. By order of the Board F.W.F. Tombs Manager 4 th November 2005 NOTE: A Member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and on a poll to vote instead of him. The proxy need not be a Member of the Association. 1

RULE 2 SECTION 4 DIVERSION EXPENSES Expenses incurred as a result of diversion or delay of an insured vessel (over and above the expenses that would have been incurred but for the diversion or delay) which was made necessary for the following reasons: Expenses incurred as a result of diversion or delay of an insured vessel (over and above the expenses that would have been incurred but for the diversion or delay) which was made necessary for the following reasons: D For the purpose of saving or attempting to save life at sea. This change is intended to clarify that the cost of fuel and other additional costs in proceeding to the rescue of and searching for persons in distress can be recovered from the Association. RULE 2 SECTION 7 COLLISION WITH OTHER VESSELS D PROVISOS v Where the insured vessel is a fishing vessel, nothing shall be recoverable from the Association in respect of loss of or damage to the outboard fishing gear of another vessel unless otherwise agreed by the Managers in writing. D PROVISOS v Where the insured vessel is a fishing vessel, nothing shall be recoverable from the Association in respect of loss of or damage to the outboard fishing gear of another vessel unless otherwise agreed by the Managers in writing. The exclusion has its roots in the perceived moral risk that individual fishermen would collude with other owners to manufacture claims in the hope of replacing worn out fishing gear from insurance proceeds. The face of the fishing industry has changed considerably over the years. It has become more corporate and the number of individual vessels involved has fallen significantly. The moral risk is now considered to be greatly reduced and owners are much more conscious of their loss records. This restriction should be removed to provide our Members with the widest possible cover. 2

RULE 2 SECTION 9 POLLUTION F PROVISOS i.. ii.. iii.. F A Member insured in respect of a vessel which is a relevant ship as defined in the Small Tanker Owners Pollution Indemnification Agreement (STOPIA) shall, unless the Managers otherwise agree in writing, be a party to STOPIA for the period of entry of the vessel in the Club. Unless the Managers have agreed in writing or unless the Directors otherwise determine there shall be no cover under Rule 2 Section 9 in respect of such a vessel so long as the Member is not a party to STOPIA. G PROVISOS i.. ii.. iii.. This change provides for automatic entry into STOPIA (Small Tanker Owners Pollution Indemnity Agreement) of a qualified ship by virtue of that ship s entry in the Club. The amendment also provides that there shall be no cover as a right in respect of oil pollution where a Member has either refused to become a party to STOPIA or has withdrawn from STOPIA. This latter provision has been applied by all Clubs to enable the International Group to comply with the terms of the agreement with the IOPC Fund. RULE 2 SECTION 10 TOWAGE NOTE TO SECTION 10C ii A WHERE THERE IS A CONTRACT WITH THE OWNER OF THE TOW i the United Kingdom, Netherlands or Scandinavian standard towage conditions; i the United Kingdom, Netherlands, or Scandinavian or German standard towage conditions; The German standard towage conditions have been added to the list of approved towage conditions. Although the German towage conditions are not as beneficial to the owners of the towing vessel, they represent the best protection available under German law. 3

RULE 2 SECTION 14 CARGO LIABILITIES E PROVISOS i HAGUE AND HAGUE-VISBY RULES Unless the Member has previously obtained appropriate special cover by agreement with the Managers or the Board in its discretion otherwise determines, there shall be no recovery from the Association in respect of liabilities which would not have been incurred or sums which would not have been payable by the Member if the contract of carriage had incorporated the Hague Rules, the Hague-Visby Rules, or terms at least as favourable to the Member as the Hague-Visby Rules. viii DECK CARGO There shall be no right of recovery from the Association in respect of claims arising from the carriage of cargo on deck unless either: a The cargo is carried under a contract of carriage which permits the cargo to be carried on deck, states that the cargo is being carried on deck and exonerates the Member from all liability in respect of such cargo or; b Such cargo has otherwise been agreed by the Managers in writing. NOTE TO SECTION 1E viii DECK CARGO CLAUSE Members are recommended to use the following wording in stating that the cargo is being carried on deck and exonerating themselves from liability: The cargo is carried on deck at the sole risk of the shipper and the carrier shall have no liability whatsoever for loss or damages of whatsoever nature arising during carriage, even if caused by unseaworthiness of the vessel or negligence of the carrier or his servants or agents. Members should note that in many jurisdictions the carriage of cargo on barges is considered legally equivalent to carriage on deck. E PROVISOS i HAGUE AND HAGUE-VISBY RULES Unless the Member has previously obtained appropriate special cover by agreement with the Managers or the Board in its discretion otherwise determines, there shall be no recovery from the Association in respect of liabilities which would not have been incurred or sums which would not have been payable by the Member if the cargo had been carried on terms no less favourable to the Member than those laid down in the Hague or Hague-Visby Rules, save where the contract of carriage is on terms less favourable to the Member than those laid down in the Hague or Hague- Visby Rules solely because of the relevant terms of carriage being of mandatory application. viii DECK CARGO There shall be no right of recovery from the Association in respect of claims arising from the carriage of cargo on deck unless either: a The cargo is carried under a contract of carriage which permits the cargo to be carried on deck, states that the cargo is being carried on deck and exonerates the Member from all liability in respect of such cargo or; b Such cargo has otherwise been agreed by the Managers in writing. NOTE TO SECTION 1E viii DECK CARGO CLAUSE Members are recommended to use the following wording in stating that the cargo is being carried on deck and exonerating themselves from liability: The cargo is carried on deck at the sole risk of the shipper and the carrier shall have no liability whatsoever for loss or damages of whatsoever nature arising during carriage, even if caused by unseaworthiness of the vessel or negligence of the carrier or his servants or agents. Members should note that in many jurisdictions the carriage of cargo on barges is considered legally equivalent to carriage on deck. 4

The Club has always been wary of the risks associated with the carriage of deck cargo on small vessels with restricted freeboard. As a consequence it has maintained a requirement within the Rules that deck cargo should be carried at shipper s risk. While remaining wary about the carriage of deck cargo on small vessels it is recognised that the current Rule is unnecessarily restrictive and does not take account of the needs of Members operating container feeder services, nor does it take account of legislative changes in many jurisdictions which prevent owners opting out of liability for loss of or damage to deck cargo. It is recommended that the Rule is widened to reflect the cover given by the Pooling Agreement. The Club will continue to recommend deck cargo is carried at shipper s risk wherever possible. RULE 2 SECTION 22 SUE AND LABOUR AND LEGAL COSTS A Extraordinary costs and expenses (other than those set out in paragraph B of this Section) reasonably incurred on or after the occurrence of any casualty, event or matter liable to give rise to a right of recovery from the Association and incurred solely for the purpose of avoiding or minimising any liability or expenditure against which the Member is wholly or, by reason of a deductible or otherwise, partly insured by the Association. B Legal costs and expenses relating to any liability or expenditure against which the Member is wholly, or by reason of a deductible or otherwise, partly insured by the Association, but only to the extent that those costs and expenses have been incurred with the agreement of the Managers or to the extent that the Board in its discretion decides that the Member should recover from the Association. A Extraordinary costs and expenses (other than those set out in paragraph B of this Section) reasonably incurred on or after the occurrence of any casualty, event or matter liable to give rise to a right of recovery from the Association and incurred solely for the purpose of avoiding or minimising any liability or expenditure against which the Member is wholly or, by reason of a deductible or otherwise, partly insured by the Association. B Legal costs and expenses relating to any liability or expenditure against which the Member is wholly, or by reason of a deductible or otherwise, partly insured by the Association, but only to the extent that those costs and expenses have been incurred with the agreement of the Managers or to the extent that the Board in its discretion decides that the Member should recover from the Association. PROVIDED THAT There shall be no right of recovery under this Rule for any cost or expense related to ransom demands, extortion, blackmail, bribery or any illegal payments. This change is designed to clarify the Club s position in relation to piracy. The Club provides cover to Members for legal liabilities they may have arising out of an act of piracy, however Club cover will not normally extend to include payment or ransom demands, particularly in relation to kidnapped crew. Specialist kidnap and ransom policies are available to cover this risk. The Rules contain a loophole which in certain circumstances can allow a ransom payment to be characterised as a sue and labour expense. The change is designed to close that loophole. 5

RULE 25 LIABILITY EXCLUDED FOR WAR, BIO-CHEM AND COMPUTER VIRUS RISKS 4 Any chemical, biological, bio-chemical or electromagnetic weapon. 5 The use or operation, as a means of inflicting harm, of any computer, computer system, computer software programme, malicious code, computer virus or process or any other electronic system. Following the upsurge in terrorist activity in recent years the reinsurance market has introduced a blanket exclusion for claims arising out of chemical, biological, bio-chemical or electromagnetic weapons or computer viruses or similar software. It is anticipated that this exclusion will be applied to the Club s reinsurance cover from 20 th February 2006 and consequently a similar exclusion must be introduced into the Club Rules to prevent possble exposure to claims for which there is no reinsurance. RULE 30 LIABILITIES EXCLUDED IN RESPECT OF LIVE ANIMALS There shall be no right of recovery from the Association in respect of the carriage of live animals, unless the Managers otherwise agree in writing. There shall be no right of recovery from the Association in respect of the carriage of live animals, unless the Managers otherwise agree in writing. Shipowners is the only Club in the International Group which retains an exclusion of cover for liabilities arising out of the carriage of live animals. It has little relevance to our current Members and this unnecessary restriction in our ability to provide the widest possible cover to Members should be removed. RULE 30 LIABILITIES EXCLUDED IF AS A RESULT OF WILFUL MISCONDUCT There shall be no right of recovery of any claim from the Association if it arises out of wilful misconduct on the part of the insured (being an act intentionally done or a deliberate omission by the insured owner with knowledge that the performance or omission will probably result in injury or loss, or an act done or omitted in such a way as to allow an inference of a reckless disregard for the probable consequences). 6

The removal of the exclusion in respect of live animals provides an opportunity to insert a straightforward and simple exclusion for wilful misconduct. The Rules incorporate English law and the Marine Insurance Act which have always prevented people recovering under an insurance policy when the cause of the loss was their own misconduct. This principle has however never been clearly and unambiguously stated within the Association s Rules. The Rule now proposed also mirrors the provisions contained within the International Group Pooling Agreement which forms our primary reinsurance. RULE 40 JOINT ENTRIES 6 There shall be no right of recovery from the Association in respect of any liabilities, costs and expenses arising directly or indirectly from disputes between joint Members. The Managers have encountered an increasing number of situations where a joint assured has tried to avail themselves of Club cover (particularly in relation to FD & D) in relation to disputes between joint assureds. The purpose of Club cover is to protect assureds from third parties and the object of this Rule change is to make that point clear. RULE 62 SETTLEMENT OF CLAIMS The Board shall meet as often as may be required for the settlement of claims on the Association and any other matters relating to the business of the Association, but the Board shall have power from time to time to authorise the Managers to effect payment of such claims, without prior reference to the Board, of such types and up to such sums as the Board may determine. 1 The Board shall meet as often as may be required for the settlement of claims on the Association and any other matters relating to the business of the Association, but the Board shall have power from time to time to authorise the Managers to effect payment of such claims, without prior reference to the Board, of such types and up to such sums as the Board may determine. 2 Where a Member s claim is settled in a currency other than the currency of the original payment, then that payment shall be converted to the settlement currency at the rate of exchange prevailing on the day the original payment was made. 3 Payment of a claim by the Association to a Member s broker, manager or to any other agent of the Member shall fully discharge the Association s liability to the Member. 7

There have been a number of occasions where disputes have arisen over rates of exchange, particularly if a Member has been slow in submitting a claim and the rate of inflation in the Member s country has been high. This addition to the Rules is intended to clarify the Club s position. The Club is increasingly being asked to pay claims to Members brokers. The purpose of this change is to protect the Club from the possibility of having to pay the claim twice should a broker or other agent of the Member misappropriate funds or become insolvent. RULE 64 DISPUTES PROCEDURES 1 If any difference or dispute shall arise between a Member and the Association out of or in connection with these Rules or arising out of any contract between the Member and the Association or as to the rights or obligations of the Association or the Member thereunder or in connection therewith or as to any other matter whatsoever, such difference or dispute shall in the first instance be referred to and adjudicated by the Board. Such reference and adjudication shall be on written submission only, but this reference and adjudication may be waived at the discretion of the Board. 2 If a Member concerned in such difference or dispute does not accept the decision of the Board following such reference and adjudication it shall be referred to the arbitration in London of two arbitrators, one to be appointed by the Association and the other by such Member, and an umpire to be appointed by the arbitrators, and the submission to arbitration and all the proceedings therein shall be subject to the provisions of the English Arbitration Acts 1950 and 1979, and any statutory modification or re-enactment thereof. 3 No Member may bring or maintain any action, suit or other legal proceedings against the Association in connection with any such difference or dispute unless he has first obtained an arbitration award in accordance with this Rule. 1 If any difference or dispute shall arise between a Member and the Association out of or in connection with these Rules or arising out of any contract between the Member and the Association or as to the rights or obligations of the Association or the Member thereunder or in connection therewith or as to any other matter whatsoever, such difference or dispute shall in the first instance be referred to and adjudicated by the Board. Such reference and adjudication shall be on written submission only, but this reference and adjudication may be waived at the discretion of the Board. 2 If a Member concerned in such difference or dispute does not accept the decision of the Board following such reference and adjudication or if adjudication is waived at the discretion of the Board it shall be referred to arbitration in London, one arbitrator to be appointed by the Association, one by the Member, and a third to be appointed by the arbitrators. The submission to arbitration and all the proceedings therein shall be subject to the provisions of the English Arbitration Act 1996 and any statutory modification or reenactment thereof. 3 No Member may bring or maintain any action, suit or other legal proceedings against the Association in connection with any such difference or dispute unless he has first obtained an arbitration award in accordance with this Rule. This brings the Club Rules into line with recent changes to the relevant legislation under English law. It also clarifies the position of the parties if adjudication is waived at the discretion of the Board. 8