The International Group of P&I Clubs (IG) has announced an update to the Inter-Club New York Produce Exchange Agreement (ICA), with the 2025 amendment (ICA 2025) set to take effect on 14 July 2025. This marks the fourth revision of the ICA since its inception in 1970.
As is well-known, the ICA is a widely adopted mechanism used to apportion cargo claims between owners and charterers under NYPE and Asbatime charterparties. The historic purpose of this agreement was to streamline dispute resolution, reduce legal costs and promote uniformity in handling cargo claims across the industry. If and once properly incorporated into a charterparty, the ICA becomes a contractual agreement between the parties.
Changes in ICA 2025
Following text in bold has now been added:
Clause 3 (c): all legal, Club correspondents’ and experts’ costs reasonably incurred in the defence of or in the settlement of the claim made by the original person, even if the claim is successfully defended, withdrawn or otherwise not pursued but shall not include any costs of whatsoever nature incurred in making a claim under this Agreement or in seeking an indemnity under the charterparty. Clause 4 (c): the claim has been properly settled or compromised and paid. Settled includes but is not limited to, claims adjudicated by any court or tribunal, or those resolved through an amicable settlement between the parties.
Applicability
The ICA 2025 will apply to all charterparties entered into on or after 14 July 2025, if they reference the updated ICA. This will also apply to older charterparties only if they include wording such as “ICA 1996 or any amendments thereto” or if parties agree to adopt the new version via an addendum.
Despite the formal applicability of rules, IG Clubs, in accordance with the second paragraph of the preamble to the 2025 Agreement, recommend applying the ICA 2025 universally to all NYPE and Asbatime charterparties, regardless of when they were signed.
Purpose of the amendment
The need for the ICA 2025 arose from disputes over the interpretation of Clause 4(c) of the last version of the amended ICA that was introduced in 2011. Clause 4(c) states that apportionment under the ICA applies only where: “the claim has been properly settled or compromised and paid.” The intended meaning, according to the IG, was that the term “settled” includes court judgments and arbitration awards. However, in practice, some parties argued that “settled” did not include such awards, potentially excluding them from ICA apportionment.
Although this would be construed as a very narrow interpretation of this clause, it did create legal uncertainty and risked undermining the ICA’s purpose of avoiding litigation and simplifying cargo claim resolution.
To eliminate ambiguity and to ensure contractual certainty, the IG has now amended Clause 4(c) to explicitly include court judgments and arbitration awards. Clause 3(c) has further been amended to clarify costs recovery in cases where claims are withdrawn or not pursued. These changes are intended to prevent future disputes and reinforce the ICA’s role as a reliable framework for cargo claim apportionment. Unlike other famous contracts where the latest versions of historic clauses/agreements are not so widely used, we consider that ICA 2025 will be warmly welcomed and adopted by all parties alike.
An opportunity missed?
While the amendment deals with an area of the ICA that arguably falls under a very strict and narrow interpretation of the clause, it fails to consider another key issue regarding security, which in fact has been scrutinized in past arbitration proceedings.
Clause 9 of the ICA states:
- If a party to the charterparty provides security to a person making a Cargo Claim, that party shall be entitled upon demand to acceptable security for an equivalent amount in respect of that Cargo Claim from the other party to the charterparty, regardless of whether a right to apportionment between the parties to the charterparty has arisen under this Agreement provided that: a) written notification of the Cargo Claim has been given by the party demanding security to the other party to the charterparty within the relevant period specified in Clause (6); and (b) the party demanding such security reciprocates by providing acceptable security to the other party to the charterparty if requested to do so.”.
London Arbitration 18/18 has caused concern, especially for owners, as it undermined the enforceability of Clause 9 unless explicitly incorporated.
Indeed, the ICA mainly deals with apportionment which is its main (if not only) feature, and all other terms (security/time-bar) are peripheral. It is only natural, therefore, when incorporating the ICA to state that the parties’ liabilities to a third party are to be “apportioned” in accordance with the ICA.
It is submitted that it would be counterintuitive to have to state separately (when incorporating the ICA) that a party’s liabilities to a third party are to also be “secured” under the ICA in the same way that it would also be counterintuitive to have to also state that these liabilities are to also be “time-limited” by way of the ICA time-bar provision.
Whilst the position may be considerably more straightforward when IG Clubs are involved for both owners and charterers, as it currently stands, the security issue remains unresolved, leaving parties exposed to the same interpretative risks.
The 2025 amendment could have been a chance to codify the IG’s recommended clause and bring finality to the Clause 9 debate. Until this is dealt with, it is advisable that owners and charterers should explicitly incorporate the full ICA, using the IG’s recommended clause that includes the words “governed by, secured, apportioned and settled”.
Perhaps the next step would be to add “time-limited” as well?
Source: Hill Dickinson
