The Third Party's Right Of Direct Action Against The P&I Club

Many counties authorize a third party's right to direct sue an insurance company.Also international conventions as the CLC 1969, the HNS and some other conventions recognize the right of direct action against the insurer.The stand of the injured party is the right to full reparation of damages.Based on tort law they can claim reparation from the tortfeasor but due to the risk of insolvency or even fraud they prefer to address the insurer. So the rationale behind this right was to protect the interest of the injured party.The insolvency of the insured should not have negative effects on the person whom he has already caused damage to.But we can see the idea of a direct action is contrary to what the important general principle -- the privity of the contract expresses: a person who is not party to a contract cannot benefit from it nor can he be burdened by a contract to which he is not a party.Actually the idea of a direct action is defended as being a derogation from the principle of privity of contract but a derogation that represents a remedy to the negative effects of this theory.By comparing the relevant provisions in the laws of UK, America, France and other countries and some international conventions, as well as through a briefly discussion of the nature of a P&I Club in providing coverage for sea incidents, this thesis analyzes the importance of the establishment of the direction action against the P&I club and how it should be established, as we see the right to direct action is an important instrument to help the injured party to be reimbursed, and ship owners and P & I Clubs will profit from the introduction of this right in the long run.This system will serve both the law and economics.First of all the number of judicial actions can be reduced.In the case of compulsory insurance, the income of the P & I Clubs will increase with the number of the members.If there still remains a lack of money because of higher expenses, the members will be willing to contribute as they profit from the right to direct action indirectly.Another strong argument for it is that the right to direct action adds to the standards on vessels and will be a factor lowering the number of incidents.Another main discussion is the policy defenses that can be opposed to a third party.First there are the defenses that the tortfeasor himself can invoke against the injured person.These defenses concern the rules that lead to the liability of the insured, i.e.the liability that the insurer promised to cover.Secondly, are the defenses that are based on the insurance contract.Those defenses can clearly distinguish between two groups: those terms that can be seen as contractual preconditions for the right of direct action to exist and then the defenses that limit the scope of the insurance cover.Under the first, this thesis will concentrate on the arbitration clause, the payment clause and the limitation clause.This thesis will discuss whether or not the underwriter can re-litigate on the liability of his member and the possibility for the P & I Clubs to rely on the legal limitation of liability that is granted to ship owners.The aim of the study of the defenses of the liability insurers is to analyze the rights of third parties under a direct action against liability insurers.The rule that apply to the direct actions is it claims both to protect the injured party and to avoid the insurance companies taking on the full liability of their members themselves.We could see from the decision of the legislate and the court that between the protection of the weaker party and the interests of the P & I Clubs, the jurisprudence clarity and the justice which one takes the lead over the other.