IG Letters of Indemnity

Members are often asked to accept letters of indemnity (LOIs) from their shippers or charterers in return for the delivery of cargo without presentation of original bills of lading, the delivery of cargo at a port other than that named in the bill of lading (or both) and in various other circumstances. It is common in the industry for such letters to be accepted even though the risks associated with their use are well known. The following two UK P&I Club articles highlight some of these risks and recommend caution when Members agree to accept LOIs;

While liability arising from the delivery of cargo without presentation of bills, delivery of cargo at a port other than the port named in the bill of lading and other circumstances in which LOIs are accepted may not be covered under Club Rules, in order to try to give Members as much assistance as possible, the IG Clubs have recommended standard forms of LOIs for Members' use.  It is recommended that any LOI accepted by Members is counter-signed by a first class bank.

In using these LOI wordings, Members are also referred to the UKP&I Club’s Circular 4/01 and Circular 18/10, and to Rule 2 Section 17, proviso c.

The IG standard forms of LOIs may be downloaded from Circular 4/01.

Jacqueline Tan

Date10/09/2020

Source Legal Services Manager