Details of the Charter Party Agreements or other relevant contracts are disclosed tounder writers; and a legal opinion is provided to ensure that they have been legally executed and comply with local law. Checks are also made to verify that contracts are subject to (e.g.) English jurisdiction and arbitration. The policy excludes any loss arising from any dispute under these contracts –unless and until such dispute has been resolved or a final and binding arbitration or court award is obtained in the Insured’s favour in accordance with the arbitration/jurisdiction provisions set out in these contracts. The policy shall additionally indemnify the Insured for loss of the insured interest up to the sum insured hereunder arising from failure of the(applicable) courts/authorities to uphold the court/arbitration award.
Waiting period is normally 180 days but 45 days from date of arbitration/court award.
Scope:
A significant risk faced by operators trading in areas where political risk maybe an issue, is the risk of Expropriation and Confiscation. Where state-controlled private joint venture companies are involved this may however, come in many forms. A standard format of seeking protection against risks associated with this is having a London Arbitration Clause in the contracts. However, you will still need to collect the proceeds of the arbitration award and are therefore only halfway there. A Failure to Honour Arbitration Award Insurance (often purchased alongside a Confiscation, Expropriation and Deprivation Insurance)completes this picture.
Applies to:
Anyone who has business in areas where political risk may be an issue, or those who are in joint ventures with state-controlled private companies.
How it works:
Details of the Charter Party Agreements or other relevant contracts are disclosed tounder writers; and a legal opinion is provided to ensure that they have been legally executed and comply with local law. Checks are also made to verify that contracts are subject to (e.g.) English jurisdiction and arbitration. The policy excludes any loss arising from any dispute under these contracts –unless and until such dispute has been resolved or a final and binding arbitration or court award is obtained in the Insured’s favour in accordance with the arbitration/jurisdiction provisions set out in these contracts. The policy shall additionally indemnify the Insured for loss of the insured interest up to the sum insured hereunder arising from failure of the(applicable) courts/authorities to uphold the court/arbitration award.
Waiting period is normally 180 days but 45 days from date of arbitration/court award.
Markets:
Lloyd’s.
Price Range:
1-2% depending on country.
Self Retention:
Normally 5-10% co-insurance.
Time to market:
Minimum 60 days.
