Circular No. 16/98 - The Millennium Bug



SEPTEMBER 17, 1998



Dear Member:



Reference is made to Circular No. 8/98 of March 26, 1998 issued by all Clubs in the International Group. This is attached for ready reference and it is requested that Members read it again.

Through this Circular, and the Millennium Conferences which the International Group organized in June (see Circular No. 10/98 of April 28, 1998), the Clubs have tried to alert Members to the scale of the problem. Only Members themselves, however, can take action to resolve their own problems and take appropriate steps according to published best practice, invoking independent expert advice when required.

So far as cover is concerned, your Board of Directors recently approved a Rule change addressing the way in which millennium-related claims will be assessed with effect from February 20, 1999. As from that date a new Section 21 will be added to Rule 1, as follows:


Section 21

In relation to any claims arising directly or indirectly from millennium non-compliance, a Member will be expected to demonstrate to the satisfaction of the Directors that it has taken such steps as an uninsured person acting reasonably in similar circumstances would have taken to avoid such a claim. The Directors shall have sole discretion to reject or reduce any claim when it appears that the Member has not so acted.


It is expected that all Clubs in the International Group will handle the issue of cover for claims arising from millennium non-compliance in a similar way.

Members are urged to take careful note of these matters and to act prudently, failing which cover may be prejudiced.

Yours faithfully,

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