Direct Action Against P&i Clubs By Third Party

The Protection and Indemnity Clubs(P&I Clubs)are premised on the concept of“mutuality”.The core idea is simple: a group of shipowners whose vessels face common risks come together in an insurance organization,or a “club”,which enables them to spread their risks.However,a member’s right to indemnification is strictly limited if the club rules are not completely complied with.This can lead to a significant legal consequences for both the member and an injured third party seeking coverage under the P&I insurance as a result of the member’s liability.Especially,when the member is insolvent,or when the member is a single-ship company and the insured ship is its only assets,or when the whereabouts of the shipowner is unknown after the accident,the shipowner is unable to indemnify the injured third party.Moreover,based on the doctrine of privity of contract and the principle of indemnity,the injured third party has no legal right to directly sue the P&I Club.Under such a situation,the injured third party’s rights and interests are under no protection.The direct action system has been set up by international conventions,especially in the field of oil pollution liability.However,under the non-mandatory liability insurance,the direct action system is still in blank.Thus,how to regulate this issue under Chinese law is the subject of this thesis.The thesis mainly uses the comparative analysis and case analysis method.On the one hand,it deeply studies the third-party’s direct action against P&I clubs by a comparison of the legislation and practice under common law and civil law.On the other hand,it explores the conditions of third party’s direct action set by different country and the scope of defense that could be quoted by the P&I clubs,from the perspective of the injured third party and the P&I clubs respectively.By analyzing the legislative value reflected in the direct action legislation of different legal system and evaluating the different paths adopted to achieve the above value,it is concluded that China should enact its own direct action laws based on its domestic situation,that is,firstly exploring and expanding the multiple goals of liability insurance,and establishing the direct action system under liability insurance system;then,reconsidering the nature of P&I clubs and P&I insurance and defining the P&I insurance as liability insurance;finally,making suggestions on the conditions for the realization of direct action against P&I clubs and the scope of defense that P&I clubs could quote as well.