Circular No. 5/99 - The Millennium Bug - Recent Developments



MARCH 5, 1999


Dear Member:


Reference is made to previous Circulars on this important subject, resting with the Club's last update contained in Circular No. 23/98 of December 15 last year. In order to keep Members fully abreast of further developments, this Circular sets out various recent initiatives. Similar notices are being issued by other members of the International Group.


U.S. Coast Guard (USCG) sponsored meeting - London

The U.S. Coast Guard recently hosted a meeting at the International Maritime Organization's headquarters in London on March 3 and 4, 1999. The meeting was convened, following a Y2K gathering at the United Nations late last year, to address a number of issues facing the global maritime transportation system.

Representatives from over a dozen organizations (both shipping and offshore interests) attended. The aims of the meeting were:

(a) to produce a series of checklists for different types of vessels; (b) to produce model contingency plans; (c) to devise a method of distributing the meeting's conclusions.

The International Group was invited to attend and sent a small team. Any noteworthy outcomes of the meeting will be reported to Members in due course.


Contingency Planning - Code of Good Practice

Even the most thorough and conscientious program may not achieve millennium compliance. It is an inescapable reality that even those who are successful and whose own systems function perfectly may nonetheless be at risk from the failure of others - third party suppliers, business partners or even customers. In the shipping industry it is now becoming generally recognized that contingency plans against the possibility of failure on board, on other ships, at ports or by navigational aids are an essential part of Y2K preparations.

The preparation of appropriate contingency plans will be one of several factors indicating whether a Member has acted prudently in relation to millennium related problems. Members will be aware of the continuing need to take all prudent steps to ensure their own millennium compliance.

The International Chamber of Shipping (ICS) is drawing up a Code of Good Practice for shipowners to follow. The International Group of P&I Clubs is assisting them in this work. This Code of Good Practice will, however, only be effective if it has been agreed and is ready to be implemented by as many sides of the industry as possible. It is the aim of the ICS to achieve this and the Code was submitted for discussion at the USCG meeting, together with the immunity and port and harbor issues mentioned below.


Immunity Clause

In certain circumstances the Code of Good Practice could require the master or owner of a vessel to take steps such as delaying entry into a port, avoiding a congested seaway, declining to load or discharge cargo etc., which might normally constitute a breach of contract. An initiative is under way, supported by the ICS and the International Group of P&I Clubs among others, to formulate an immunity agreement which will commit signatories on different sides of the industry to waive their right to bring claims for deviation and delay where the party who would otherwise be in breach has implemented the Code. If this receives sufficient backing, the same might also be used as the basis of a liberty clause in individual charterparties, bills of lading and other contracts of carriage.

In addition, if the Code of Good Practice and the immunity agreement were to be accepted by a sufficient number of interested parties the effect could be significant. Legal advice indicates that in such an environment if a master decided to follow the Code unilaterally, there would be a reasonable prospect that a court would decide that the taking of such steps did not constitute unreasonable deviation.


Ports and Harbors

Port operators and harbor and waterway authorities around the world have been considering the problems they may face during the critical date periods.

Several authorities have already indicated that they will be seeking details of Y2K compliance and programs by questionnaire or other means and are likely to use the information received to determine whether vessels will be allowed passage through their waters. Others have said that they will be restricting navigation at critical periods during this year and next (which might include: August 21/22, 1999 for the GPS rollover, September 9, 1999, December 31, 1999/January 1, 2000 and February 29/ March 1, 2000 since 2000 is a leap year).

It seems that many of the authorities are looking for either somebody or some association (e.g. Classification Society, P&I Club or hull insurer) to provide shipowners with a "Certificate of Compliance" or are expecting the shipowner himself to confirm compliance. Neither solution is practical as no one will issue such a document and no responsible shipowner can claim to be totally risk free.

It will be to the advantage of the whole industry if ports can be persuaded to act in concert with the rest of the industry to support and accept the Code of Good Practice being developed by the ICS.

In addition, there is a further initiative underway to agree to a standard form of exchange of information between vessels, their owners and port or harbor authorities in relation to millennium readiness. If this can be achieved it will result in a common standard and avoid unnecessary duplication.


New Publications

"Guidelines for Year 2000 Projects" is available free of charge from local Lloyd's Register offices or by contacting the Control Engineering Department on: Telephone 44-181-681-4781, Fax +44-181-681-4870. The publication can also be downloaded from their Web site (

If any Member should require further details, the Managers will be pleased to respond.

Yours faithfully,

Joseph E.M. Hughes, Chairman & CEO 
Shipowners Claims Bureau, Inc., Managers for