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 their members as much assistance as possible, the IG Clubs recommended standard forms of LOIs for their members' use. See Circular 4/01 dated May 2001.  Subsequently, following the English Commercial Court’s decision in The Bremen Max case, all the IG Clubs recommended to their members to take two further precautions when accepting a Letter of Indemnity for delivery of cargo without production of the original bill of lading; see Circular 18/10 dated October 2010 for full details.  

When deciding to accept any LOI, Members are referred to Rule 2 Section 17, proviso c, and are recommended to obtain an LOI that is counter-signed by a first class bank. It is essential that if the Member is asked to provide any security to a claimant that the Member makes his own demand for security under Clause 3 of the LOI issued to him first before he provides any security to the claimant.

Members may download the IG standard form LOI wordings below: 

Int Group A (updated)

For delivering cargo without production of the original bill of lading.

Int Group AA (updated)

For delivering cargo without production of the original bill of lading incorporating a bank's agreement to join in the LOI.

Int Group B

For delivering cargo at a port other than that stated in the bill of lading.

Int Group BB

For delivering cargo at a port other than that stated in the bill of lading incorporating a bank's agreement to join in the LOI.

Int Group C (updated)

For delivering cargo at a port other than that stated in the bill of lading and without production of the original bill of lading.

Int Group CC (updated)

For delivering cargo at a port other than that stated in the bill of lading and without production of the original bill of lading incorporating a bank's agreement to join in the LOI.

Downloads

Jacqueline Tan

Date10/09/2020

Source Legal Services Manager