The Standard Club Europe Ltd www.standard-club.com Registered in England No. 17864. Authorised and regulated by the UK Financial Services Authority Managers’ London Agents: Charles Taylor & Co. Limited. Registered in England No. 2561548 Charles Taylor & Co. Limited is an appointed representative of Charles Taylor Services Limited, which is authorised and regulated by the UK Financial Services Authority Registered Address: Standard House, 12–13 Essex Street, London WC2R 3AA, UK Telephone: +44 20 3320 8888 Email: pandi.london@ctplc.com TO ALL MEMBERS 22 October 2012 Dear Sirs Australian pollution law – Oil pollution indemnity clause for penalties and fines The Australian Government introduced increased penalties for pollution from ships and damage to the marine environment by way of new legislation – the Maritime Legislation Amendment Act, 2011 – that came into effect on 4 December 2011. The Act amends the Australian Navigation Act 1912 and the Protection of the Sea (Prevention of Pollution from Ships) Act, 1983. As a result of these recent amendments, longstanding criminal liability imposed on owners and masters for oil discharge or threat of discharge in Australian waters has been extended to charterers. Owners, charterers and masters are now severally and jointly liable with offences punishable by fines. The maximum penalty for these offences is increased from 500 penalty units to 20,000 penalty units (AUD 2.2 million (USD 2.3 million)) for an individual. This may be multiplied by a further factor of five for a corporation, taking the maximum penalty to AUD 11 million (USD 11.5 million). In order to address concerns raised by both owners and charterers relating to the new law, the International Group has drafted, in consultation with BIMCO, a recommended clause for inclusion in charterparties. The clause wording is not country-specific however and is capable of broader application. The clause addresses the specific situation of criminal fines and civil penalties. The International Group is aware that, pending publication of this clause, some charterers have sought to use pollution indemnity clauses that do not preserve an owner’s right to limit and have other provisions that render the clauses uninsurable by clubs. Members are therefore strongly urg ed to use this new clause in their charterparties. The text of the clause and explanatory notes are attached. .. /... If members have any questions regarding this clause or its application they should contact the managers in the normal way. All clubs in the International Group of P&I Clubs will be issuing similar circulars. Yours faithfully Alistair Groom Chief Executive Charles Taylor & Co Limited Direct Line: +44 20 3320 8899 E-mail: alistair.groom@ctplc.com 2 ANNEX Oil Pollution Indemnity Clause for penalties and fines (a) Subject to the terms of this Charterparty, as between Owners and Charterers, in the event of an oil pollution incident involving any discharge or threat of discharge of oil, oily mixture, or oily residue from the Vessel (the “Pollution Incident”), Owners shall have sole responsibility for responding to the Pollution Incident as may be required of the vessel interests by applicable law or regulation. (b) Without prejudice to the above, as between the parties it is hereby agreed that: i. Owners shall indemnify, defend and hold Charterers harmless in respect of any liability for criminal fine or civil penalty arising out of or in connection with a Pollution Incident, to the extent that such Pollution Incident results from a negligent act or omission, or breach of this Charterparty by Owners, their servants or agents, ii. Charterers shall indemnify, defend and hold Owners harmless in respect of any liability for criminal fine or civil penalty arising out of or in connection with a Pollution Incident, to the extent that such Pollution Incident results from a negligent act or omission, or breach of this Charterparty by Charterers, their servants or agents, provided