Freight Demurrage and Defence (FD&D)

Why does a Shipowner or Charterer need FD&D?

Shipowners P&I and Charterers P&I insurance both include coverage for the legal and associated costs of defence that directly relate to a liability claim covered by the terms of those insurances. However, shipping business claims and disputes often arise that are outside the scope and terms of these covers. As an example, it is not uncommon for Shipowners and Charterers to become adversaries in laytime and demurrage disputes. FD&D, which is essentially legal expenses insurance, will pay for the cost of expert legal advice and the mediation, arbitration or litigation processes required to accomplish resolution. However, FD&D does not cover the cost of the underlying claim award or ultimate settlement amount.

The principal FD&D matters covered by Maritime Mutual entry are as summarised below – specific details are contained in Maritime Mutuals Rules of Entry, Class II, Rule 5, Matters Covered.

Bill of Lading and Charterparty Contracts

Disputes relating to:

  • Shipowners alleged obligation to issue clean bills of lading under the specific terms of a charter party.
  • Charterparty cancellation or entitlement to withdrawal from a charter.
  • Exercise of liens against cargo for non-payment of freight.
  • Hire payment, off-hire and rights of set-off.
  • Laytime, demurrage and dispatch.
  • Vessel misdescription and/or underperformance.

Supply and Service Contracts

Disputes relating to:

  • Supply of inferior bunker or ships supplies.
  • Repair and/or modification of a ship.
  • Provision of agency services.
  • Detention of the ship by third parties.
  • Contracts for the sale, building or mortgage of a ship.

Miscellaneous

Disputes relating to:

  • Passenger and crew claims.
  • Claims for salvage and general average contributions.
  • Costs of protecting the members’ position at official enquiries and inquests.

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