The Inter-Club Agreement (ICA) is a tried and tested mechanism for apportioning cargo claims between owners and charterers under the NYPE and ASBATIME charterparties. When the ICA is incorporated by the parties, it becomes part of the contractual framework to support the efficient and uniform handling of cargo claims.
Key updates at a glance
The updates to the ICA 2025 ultimately aim to reduce legal uncertainty and subsequent disputes around costs recovery and the ICA’s apportionment mechanisms.
New wording has been added to clauses 3(c) and 4(c) of the ICA 2011 (amended July 2025) as below.
Clause 3 “…(c) all legal, Club correspondents’ and experts’ costs reasonably incurred in the defence of or in the settlement of the claim made by the original person, even if the claim is successfully defended, withdrawn or otherwise not pursued but shall not include any costs of whatsoever nature incurred in making a claim under this Agreement or in seeking an indemnity under the charterparty.”
It is now clear that, pursuant to clause 3(c), reasonable costs for legal fees, Club correspondents and expert advice are recoverable in the event that the claim is successfully defended, withdrawn or not pursued. The clarity which the new wording provides is to be welcomed and is intended to avoid further disputes arising regarding costs.
Importantly, clause 3(c) still does not apply to costs associated with making or pursuing a claim under the ICA itself, or otherwise seeking an indemnity under the relevant charterparty.
Clause 4 “…(c) the claim has been properly settled or compromised and paid. Settled includes but is not limited to, claims adjudicated by any court or tribunal, or those resolved through an amicable settlement between the parties.”
The need to update clause 4(c) was clear in the face of uncertainty concerning the applicability of apportionment under the ICA where “the claim has been properly settled or compromised and paid”. The original intention appears to have been for the word “settled” to include court judgments and arbitration awards. However, some parties have sought to argue otherwise in an attempt to narrow the scope of clause 4(c), thereby undermining the clause and increasing ambiguity.
In response, the new wording added to clause 4(c) clarifies the meaning of “settled” and expressly includes matters resolved by way court judgements and arbitration awards within its scope. Reference is also made to claims which are resolved through amicable settlement efforts. The amendment leaves little room for ambiguity surrounding when a claim is “settled”.
Applicability of the updates
The new ICA 2025 will be effective from 14 July 2025. As such, it will apply to all NYPE and ASBATIME charterparties, which refer to the ICA, entered into on or after 14 July 2025. The reference to the ICA may be with specific reference to (i) ‘ICA 2011 (as amended July 2025)’, or (ii) the ‘ICA 1996 or any amendments thereto’ (or similar wording).
The position is somewhat less certain in relation to charterparties entered into before 14 July 2025 which contain the wording above, incorporating the ‘ICA 1996 or any amendments thereto’. Parties will need to consider whether, on a proper construction of the charterparty, the intention was for “any amendments” to refer to amendments made at the time the charterparty was entered into (in which case the 2025 amendments would not apply), or at the time the particular cargo claim arises (in which case the 2025 amendments may apply).
In our view, the latter construction is most likely to apply in most instances, but this may not always be the case.
Where the amendments have not expressly been incorporated into a charterparty, the parties may agree to adopt them in any event by means of an addendum or by agreement at the time a cargo claim arises. This approach is recommended by the IG P&I Clubs.
What has not changed?
The ICA 2025 amendments leave clause 9 (Security) unchanged, despite there being calls for reform following the decision in London Arbitration 18/18.
London Arbitration 18/18 concerned a charterparty clause stating that cargo claims would be “apportioned/settled as specified by the ICA”. The Tribunal in that instance ruled that the wording was too narrow to incorporate the security provisions of the ICA, and incorporated the apportionment and settlement provisions only.
The consequence of this is that, if parties intend the ICA to apply as a whole (including the reciprocal security provisions in clause 9), the clause in the charterparty incorporating the ICA may need to state that liabilities to third parties are to be governed by, apportioned, settled and secured in accordance with the ICA.
The narrow construction applied in Arbitration 18/18 has been subject to criticism but in circumstances where the issue remains unresolved by the 2025 amendments, it remains one which owners and charterers must be alive to.
Conclusion
The latest clarifications to the ICA provide helpful clarification and reinforce the ICA’s practical value to parties seeking a streamlined process for handling cargo claims.
Parties should however be aware of the uncertainty that remains around incorporation, both in terms of which version of the ICA will apply and whether all provisions have been effectively incorporated into the charterparty.
Key Contacts
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at July 2025.