8th edition, approved 14th Oct. 2009
CHAPTER I. GENERAL PROVISIONS
ARTICLE 1 [NAME]
① The name of the association is "The Korea Shipowners' Mutual Protection and Indemnity Association"(hereinafter called "the Association").
② The English name is "The Korea Shipowners' Mutual Protection & Indemnity Association" abbreviated as the Korea P&I Club.
ARTICLE 2 [PURPOSE AND BUSINESS]
The purpose of the Association is to protect the interest of Members, to promote the sound development of the Association and to contribute to secure stabilized management of the shipping and relative maritime industry by carrying on business of non-life insurance under a system of mutual insurance to cover the expenses and liabilities incidental to the operation of ships by registered owners, demise charterers, charterers or other person engaged in such operation. The business of the association is conducted within Korea and foreign countries.
ARTICLE 3 [JURIDICAL PERSONS AND DOMICILE]
① The Association is a juridical person incorporated in compliance with "The Shipowners' Mutual Insurance Association Law" (hereinafter called "the Law").
② The principal office of the Association is at the Metropolis of Seoul. The Association may also establish local offices, representative office, etc. in certain areas in case of need.
ARTICLE 4 [BUSINESS YEAR]
The business year of the Association shall be one(1)year from any 1st January to the next following 31st December.
ARTICLE 5 [TOTAL AMOUNT OF CONTRIBUTION FUND]
① The total amount of the contribution fund of the Association shall be not less than One billion (1,000,000,000) Korean won.
② The contribution funds of the Association are constituted by investment funds, donation, contribution and etc.
ARTICLE 6 [JURISDICTION]
The Law Court which has jurisdiction over the principal office of the Association shall have jurisdiction for all suits to be brought against the Association.
ARTICLE 7 [METHOD OF PUBLIC NOTICE]
Public notice of the Association shall be published in the Daily Financial Paper published in the Metropolis of Seoul .
CHAPTER II MEMBERSHIP
ARTICLE 8 [QUALIFICATION FOR MEMBERSHIP]
Persons qualified for Membership shall be registered owners, demise charterers, charterers, operators, management companies or manning companies of ships.
ARTICLE 9 [ENTRY AND CONCLUSION OF INSURANCE CONTRACT, ETC.]
① A person wishing to become a Member of the Association in respect of non-life insurance business shall submit an application, in the prescribed form, stating therein matters regarding qualification for membership, the number of shares for which he assumes the responsibility in the contribution fund, description of the ship which is to be the subject of insurance (a ship which is defined as a ship in the Shipping Law and/or other laws, and which is recognized as a ship by the Association. Hereinafter called an "Entered Ship") and other items specified in the said form, and shall affix signature on his seal thereto. When the application is accepted by the Association and when the full amount of subscribed shares is either paid in cash or covered by the transfer of shares from other Member and also when calls or premiums are paid in full or part, then the insurance contract between such person and the Association shall become effective and such person shall become a Member of the Association.
② A transferee of an Entered Ship may become a Member upon approval of the Association as to entry of and by succeeding to the insurance contract to the ship. In such a case, the transferee must cover full amount of his subscribed shares by the time of succession of the insurance contract, either by payment in cash or by receiving transfer from other Member.
ARTICLE 10 [CONTRIBUTION FUND]
① Amount of one share in the contribution fund shall be One Hundred Thousand (100,000) Won.
② Each Member shall hold not less than Ten (10) shares in the contribution fund; but the number of shares to be held by one Member shall not exceed Fifty (50) out of One Hundred(100) of the total number of shares in the fund.
③ The contribution fund shall be paid in full to the Association or the financial organization designated by the Association. The contribution fund shall not be paid by the property other than cash.
ARTICLE 11 [JOINT MEMBER]
① A person among the persons who do not conclude the insurance contract with the Association or an organization designated by the presidential decree become a Joint Member of the Association in respect of non-life insurance business when contribution fund is paid to the Association by the person or the organization.
② A person wishing to become a Joint Member of the Association shall submit an application, in the prescribed form, stating therein matters regarding the name, the domicile, the number of shares for which he assumes the responsibility in the contribution fund and other items specified in the said form, and shall affix signature on his seal thereto. When the application is accepted by the Association and when the full amount of subscribed shares is either paid in cash.
③ A Joint Member may present to state his opinion to the General Meeting or the board of directors under the approval of the board of directors. The Association shall notify the result of its measure to the joint Member in respect of the opinion if necessary.
④ Within 10 years after the foundation of the Association, a Joint member, who is qualified for g a Membership, wishing to become a Member may become a Member by converting the donation fund to the contribution fund within the extent of his full donation fund. the number of the shares granted to him shall be decided by the board of directors. However, the number of the shares shall not exceed fitfty (50) out of One hundred (100) of the total shares.
ARTICLE 12 [TRANSFER OF SHARES]
A member may transfer, upon approval of the Association, the whole or a part of his shares to another Member or person who is qualified for membership or Joint Member
ARTICLE 13 [PROHIBITION OF CO-HOLDING OF SHARES]
No Members shall hold share in common.
ARTICLE 14 [WITHDRAWAL FROM THE ASSOCIATION]
① Member or quasi-Member may withdraw from the Association at the end of the business year by giving an advance notice of three months or more.
② In addition to the cases provided the clause ① of this Article, a Member deems to withdraw in any one of the following cases:
(1) Forfeiture of the qualification of membership.
(3) Death, dissolution, bankruptcy of the Member.
(4) Transfer of all his shares.
(5) Extinction of all insurance contracts due to expiration of insurance period, loss or transfer of the Entered Ship or other causes.
③ In addition to the cases provided the clause ① of this Article, a quasi-Member deems to withdraw in any one of the following cases.
(1) One of (1) through (4) of the clause ① of this Article
(2) Refund of shares
ARTICLE 15 [DISQUALIFICATION AND EXPULSION]
① When extinction of all insurance contracts due to expiration of insurance period, cancellation of the insurance contract, loss of the Entered Ship or other causes, a member deem to be automatically disqualified.
② A Member may be expelled from the Association by resolution of a General Meeting of Members (hereinafter called "General Meeting") in case the interest of the Association is considered remarkably injured by the willful act or gross negligence of that Member. A Member may also be expelled from the Association by falsely stating any important materials and information on his application.
ARTICLE 16 [RESOLUTION AND BANKRUPTCY]
① The Association shall be dissolved in any one of the following cases:
(1) Resolution at a General Meeting
(2) Bankruptcy of the Association
(3) Revocation of an incorporation permit
(4) Where the business fund is short for the amount provided for in Aticle 5
(5) Where the number of members and the number of vessels(after the second general meeting) do not meet the numbers defined in Article 10.②.
② The assets of the Association which has been dissolved may, with the resolution of the general meeting and the permission of the Minister, dispose of the assets for the purposes similar to those of the Association. Any property which is not disposed of shall revert to the National Treasury.
ARTICLE 17 [REFUND OF SHARES]
① A member who has withdrawn from the Association is entitled to receive a refund of his shares when there is, at the end of the business year to which the date of secession belongs, any surplus of asset over the liabilities, in the proportion which the amount of his contribution bears to the total amount of the contribution fund; but the amount of such refund shall in no case exceed the amount of the shares.
② In computing the amount of such refund as above, where the total assets do not cover the total liabilities, the Association can claim against the Member who withdrew any deficit computed in accordance with Article 52,②
ARTICLE 18 [NOTIFICATIONS AND DEMAND NOTICES]
Notifications or demand notices to Member or quasi-Member shall be made to his domicile stated in the list of Members and quasi-Members. But it does not applie if the notifications or demand notices are related to the insurance contract.
CHAPTER III ORGANS
SECTION I GENERAL MEETING OF MEMBERS
ARTICLE 19 [CONVENING OF GENERAL MEETING]
① The chairman shall convene an ordinary General Meeting within four months after expiration of each business year. Member who is on the list of Members dated on 31st December of each business can exercise his voting right in the General Meeting.
② In case the chairman deems it necessary, he may convene an extraordinary General Meeting at any time.
③ In case Members of not less than one fifth (1/5) in number of the whole Members have demanded the convening of general meeting, submitting to the chairman a document which contains subject matters to be considered thereat and the reason for convening General Meeting, the chairman shall convene an extraordinary General Meeting within twenty days from the day on which such demand was made.
④ The convening of General Meeting shall be notified, stating the matters to be considered thereat, to the Members two weeks or more prior to the day on which it is to be held.
ARTICLE 20 [MATTERS TO BE RESOLVED]
The Association needs to have the resolution from a general meeting for doing below matters.
① Alteration of this memorandum.
② Alteration of contents on basic documents.
③ Reduction of the insurance money and additional collection of premium.
④ Approval of inventory, balance sheet, profit and loss account, business reports and proposal for disposition of surplus or loss.
⑤ Election and release of directors.
⑥ Expulsion of Members.
⑦ Dissolution or merger of the Association.
⑧ Salary of directors.
ARTICLE 21 [PROCEDURE FOR A RESOLUTION]
① A resolution at a general meeting, except in the case provided for in the clause ③ of this Article, shall be adopted by a majority vote of the Members present and voting when at least one-half (1/2) of all Members are present.
② The chairman of the board of directors shall be the chairperson of the General Meeting.
③ The matters listed in items ①, ③, ⑥, ⑦ and the release of officers prescribed in item ⑤ of Article 20 shall be resolved by the agreement of not less than three-fourths (3/4) of the Members present and voting when at least one-half (1/2) of all Members are present.
④ The members who have special interest to the resolution of the general meeting shall have no right to participate in the General Meeting.
ARTICLE 22 [VOTING RIGHT]
① Each Member shall, irrespective of the number of shares in the contribution fund, have one voting right at a general meeting.
② Notwithstanding the clause ① of this Article, additional voting right can be given to the members who have 3 or more vessels entered into the Association or whose entered tonnage is more than 10,000 gross tons. In this case, the number of additional voting right is subject to the attachment 1, however, under any circumstances, the number of voting right given to a member cannot be more than 10.
ARTICLE 23 [EXERCISE OF VOTING RIGHT BY PROXY]
① A member may exercise his voting by a proxy.
② A member's exercising of his voting right can be delegated to the Association, and in this case, the association exercise the delegated voting right by decision of the board of directors.
③ The proxy under the clause ② of this Article shall submit to the general meeting a document showing his right of representation.
SECTION II BOARD MEMBERS AND BOARD OF DIRECTORS
ARTICLE 24 [DIRECTORS AND AUDITORS]
① Board members consist of 10 ~ 25 Directors and 2 Auditors.
② Directors shall execute the business of the Association, and auditors shall inspect the Directors' execution of their duties.
③ 1 or 2 among the Directors described in the clause ① of this Article can be operating officer(s).
④ Directors and auditors shall be elected amongst the Members (one of its board members if the Member is a corporate body) at a General Meeting, however the operating officers of the Association may be elected from others than the Members. If the board member of the Member elected as a director loses his position in the company, he loses his position as a director of the Association and his successor takes over the position for the remained term.
⑤ The term of directors and auditors is three years, and consecutive terms are available. However, the term of directors and auditors who are elected in an inaugural General Meeting is until when the ordinary general meeting is over after 3 years of their tenure.
⑥ In case vacancies occur in the directors or auditors, their successors may be assigned at a General Meeting, and persons so elected shall hold the directors for the remaining periods of the predecessors. The directors and /or auditors who are retired from his resignation or completion of duty have right and duty as directors and/or auditors until they are taken over by their successors.
⑦ Board members are honorary positions except operating officers.
⑧ Severance pay can be paid to the operating officers, and details for that payment shall be decided by resolution of board of directors.
ARTICLE 25 [CHAIRMAN, VICE CHAIRMAN, CHIEF OPERATING OFFICER AND MANAGING DIRECTOR]
① Directors can elect from among them a chairman, a vice chairmen, a president, a chief operating officer and a managing director etc. who shall represent the Association.
② The chairman shall preside over the Association and shall convene the meeting of directors, which shall be chaired by the Chairman.
③ The vice chairman shall assist the chairman in his duty and shall deputize for the chairman when the chairman is unable to act.
④ The operating officers shall execute the day-to-day business of the Association.
⑤ If the chairman loses his position as a board member in his company, he simultaneously loses his position in the Association. In this case, the board of directors should elect new chairman without delay, and the term of the succeeding chairman shall be the remained of the predecessor.
ARTICLE 26 [BOARD OF DIRECTORS]
① The board of directors shall consist of the directors and shall decide by its resolution the important affairs of the Association.
② A majority of the directors shall constitute a quorum and a concurrence of a majority of the directors present and voting shall be necessary for decision.
③ No director having an interest in the subject matter of the vote shall have voting right at the meeting.
④ The board of directors entrusts day-to-day business of the Association to the chief operating officer.
ARTICLE 27 [COUNSELOR]
The Association may appoint, if necessary, counselors by the resolution of the board of directors.
CHAPTER IV. INSURANCE
ARTICLE 28 [RULES]
① The Association shall make Rules stipulating the cover and any terms and condition of insurance afforded by the Association to a Member in respect of ships entered by him with the Association.
② The Association may amend Rules of the Association by special resolution passed by the board of directors and shall make a report on such amendments to Minister of Maritime Affairs and Fisheries.
③ The Association may adopt Rules and insure a Member against the risks without a resolution at a General Meeting, which are in use by the International Group of P&I Clubs and separate Clubs in the Group and/or in the international P&I insurance market.
ARTICLE 29 [DUTIES OF DISCLOSURE AND NOTIFICATION]
① A Member shall correctly and accurately complete an application form either for Membership or for entry of a ship for insurance in the Association. The Association may refuse any application as above or may cancel an existing insurance contract if a Member insufficiently or falsely disclosed or failed to disclose any important materials and information on his application either for Membership or for the entry of a ship.
② A member shall notify without delay the Association in writing of any alternation to the particulars and information requested on the application forms as stipulated in the clause ① of this Article whenever such an alteration occurs. Whenever the Member fails to give written notice to the Association of any alteration in respect of important items of the particulars and information as stipulated above, the Association may cancel an existing insurance contract and is entitled to refuse or reduce the amount of its indemnification in respect of loss of or damage to the Entered Ship under the insurance contract for the ship.
ARTICLE 30 [POLICY YEAR]
The Policy Year of the Association shall be one (1) year from 2100 KST on any 20th February (noon GMT on 20th February) to 2100 KST on next following 20th February (noon GMT on 20th February).
ARTICLE 31 [INSURANCE PERIOD]
① Unless otherwise agreed at the time of entry, the insurance period shall be one (1) year from 2100 KST on the 20th February (noon GMT on 20th February ) to 2100 KST on the next following 20th February.
② The insurance contract shall continue to run from Policy Year to Policy Year except for the case that the insurance terminates for the reasons stipulated in the Rules of the Association.
ARTICLE 31-1 [COMMENCEMENT OF LIABILITY OF THE ASSOCIATION]
The Association's liability commences from the time when the initial calls or premiums have been paid.
ARTICLE 32 [AMOUNT INSURED]
There shall not be established any fixed sum insured in the contract of insurance, provided always that, subject to an agreement between a Member and the Association, a Member may conclude an insurance contract with a fixed sum insured.
ARTICLE 33 [CALLS AND PREMIUMS]
① In respect of an insurance contract with no fixed sum insured, the Members who have Entered Ships for insurance by the Association shall pay annual Call before the start of a Policy Year. Upon due consideration of the loss record relating to a Policy Year, etc., the Association may levy Supplementary Calls at any time or times during or after the end of each Policy Year and/or return part of the Advance Call levied and paid by the Members in respect of that Policy Year after the end of the Policy Year. If the Association considers that the Association is to pay a contribution to any Overspill Claim which exceeds or may exceed the maximum sum recoverable in respect of that claim under the General Excess Loss Reinsurance Contract effected by parties to the Pooling Agreement as stipulated in Article 44, the Association may levy Overspill Calls on all Members in respect of ships insured with no fixed sum insured.
② In respect of an insurance contract with no fixed sum insured, if a Member ceases to be insured in respect of an Entered Ship for any reason whatsoever, the Association may collect Release Calls from such Member.
③ In respect of an insurance contract with fixed sum insured, the Members who have Entered Ships for insurance by the Association shall pay fixed premiums before the start of a Policy Year.
ARTICLE 34 [DEFAULT IN PAYMENT OF CALLS OR PREMIUMS]
If any Member fails to pay any due calls or premiums or part thereof on or before the due date, the Association may ask the Member to pay interest from and including the due date to the date of actual payment, and/or suspend the Member’s voting rights and/or cover of the Member’s claim, and/or cancel or cease all the contracts of insurance in accordance with the provision of the Rules of the Association.
ARTICLE 35 [SET-OFF]
The Association shall be entitled to set off full or a portion of the amount of calls and premiums payable by the Member that remains unpaid against the insurance money that the Association owes to the Member.
ARTICLE 36 (FINALIZATION OF CALLS)
① In respect of an insurance contract written on mutual terms, if the Association decides that it is unnecessary to collect Supplementary Calls and Overspill Calls and to return part of the annual Call levied and paid by the Members in respect of a Policy Year after the end of each Policy Year, then the calls for that Policy Year shall become final.
② When the calls for a Policy Year become final according to the clause ① of this Article, the Association shall notify the Members to that effect.
ARTICLE 37 [CANCELLATION OF INSURANCE CONTRACT]
The Association and a Member may cancel the insurance contract in respect of an Entered Ship in accordance with the provision of the Rules of the Association.
ARTICLE 38 [RISKS COVERED]
① The Association shall indemnify a Member according to the stipulations under this Article against liabilities in respect of losses, damages and expenses, which arise in respect of his interest in an Entered Ship, out of events occurring during the period of entry of the ship in the Association and in connection with the operation of the ship by or on behalf of the Member, for which the Member has become liable to pay and has paid, except cases approved by the board of directors.
② The Association shall indemnify a Member the following liabilities, costs and expenses according to the stipulations of Article 3 of the Law listed below. The extent of risks cover provided by the Association and the terms and conditions of insurance for a Member are as set out in the Rules of the Association.
(1) Liabilities arising out of the loss of or damages to any built, moveable, immoveable or fishery objects such as harbour, dock, pier, jetty, land etc.
(2) Liabilities, costs and expenses which a Member may incur in respect of raising, removal or destruction, etc. of the wreck of the Entered Ship, its fuel, cargo or property therein in the event of marine casualty such as sinking, stranding, dereliction etc. of the Entered Ship.
(a) Liabilities, costs and expenses which a Member may incur in respect of death, missing, injury or illness (hereinafter collectively called "death or injury") of a seaman.
(b) Wages or compensation paid by a Member to seamen during unemployment under a statutory obligation or under the terms of a contract which arise because of marine casualty on an Entered Ship.
(c) Compensation in respect of the loss or damage to the seamen’s personal effects.
(d) Expenses necessarily incurred in repatriating a seaman who is unfit for duty because of death or injury and/or in providing a substitute for that seaman.
(e) Extra expenses incurred by a Member by the deviation of an Entered Ship by reason of seamen’s death or injury.
(f) Expenses born by a Member under statutory obligation in respect of distressed seamen by reason of desertion, strike or otherwise.
(4) Liabilities, costs and expenses which a Member may incur in respect of passengers on an Entered Ship.
(5) Liabilities, costs and expenses which a Member may incur in respect of the death or injury of any person other than a seaman or passenger.
(6) Costs necessarily incurred in landing or repatriating stowaways or persons saved at sea.
(7) Extraordinary expenses incurred by a Member as a direct consequence of an outbreak of infectious disease, for disinfection of an Entered Ship or the cargo or persons on board such ship, or in respect of quarantine.
(a) Liabilities in respect of the other ship, its cargo or property on board arising from a collision between a Member’s ship and other ship.
(b) Liabilities for loss of or damage to cargo carried in an Entered Ship arising out of the collision with another ship caused by the fault both of the Entered Ship and of the other ship for which the Member is held responsible jointly and severally, where the "Both to Blame Collision Clause" is held invalid by the competent court.
(c) Liabilities to the other ship in respect of life, personal injury of the seamen, passengers and other person on board the other ship, the damage to property or by pollutant other than properties covered by (a) as a result of a collision between an Entered Ship and any other ship.
(9) Liabilities for loss of or damage to the any ship, cargo or property of a third party occasioned otherwise than by contact or collision with the Entered Ship.
(a) Liabilities for compensation payable to a third party arising out of damages caused by an escape or discharge of oil, bunker or other pollutants.
(b) The costs of any measures reasonably taken for the purpose of preventing, minimizing or cleaning up an escape or discharge of oil or other pollutants, and any liability for losses or damages arising out of the measures so taken.
(c) Liabilities for loss, damage or expenses for which the Member is liable as a party to CLC Conventions concerning liability for an escape or discharge of oil.
(d) The costs or liabilities incurred as a result of compliance with any order or direction given by any government or government authority for the purpose of preventing or reducing an escape or discharge of oil or other pollutants.
(e) Liabilities of the Member to pay special compensation to a salvor of an Entered Ship in respect of work done or measures taken to prevent or minimize damage to the environment according to any Convention or salvage contract.
(11) (a) Liabilities in respect of cargo carried in an Entered Ship, which arises out of a breach by the Member of the Member’s obligations or duties as a carrier to properly load, handle, stow, carry, keep care for, discharge or deliver the cargo or out of any other similar causes approved by the Association.
(b) The additional costs of discharging and disposing of or restowing damaged cargo.
(c) The additional costs of discharging, disposing of or restowing cargo which are necessarily incurred in order to continue the safe prosecution of the voyage.
(d) Liabilities for loss of or damage to cargo carried under a contract of through carriage pertaining to the carriage of goods by sea, including transit by land, water or air to or from the Entered Ship.
(12) Cargo’s or some other party’s proportion of general average, which was born by the Member because of irrecoverability from the others, ship’s proportion of general average.
(13) Liabilities arising out of the towage of an Entered Ship or of the towage operation of any ship or object by an Entered Ship.
(14) Liabilities which a Member may incur for death of or injury to any person other than seamen or passengers or for loss of or damage to cargo or other property, arising under the terms of a contract made by the Member.
(15) Fines which are imposed in respect of an Entered Ship by any public authorities such as immigration bureau or quarantine office or customs upon the Member or such fines upon any seamen for which the Member is liable to pay.
(16) Costs and expenses for lawyers and surveyors appointed for defending or minimizing the Member’s liability, as well as for lawsuits, and expenses necessarily incurred by the Member in consequence of occurrence of any casualty, and additional costs, expenses and losses which a Member may be required to incur by special direction of the Association.
(17) Liabilities and costs incidental to the operation of the Entered Ship, when the Association consider it appropriate at its sole discretion to indemnify them in case by case.
③ The Association may not indemnify the liabilities, costs and expenses arise out of the following events or circumstances by stipulating so in the Rules of the Association.
(1) Liabilities, costs, and expenses arising out of the following events or circumstances.
(a) Wilful misconduct or gross negligence of the Member or his agent.
(b) War and other similar incident.
(c) Radioactive, explosive and other hazardous properties.
(d) Blockade running, an unlawful trade and other similar trade.
(e) Voyage as imprudent and indiscreet.
(f) Drilling, core sampling, dredging or other special operation.
(g) Other events which the Association in its discretion decides to exclude from the scope of cover.
(2) Liabilities costs and expenses arising out of the following events or circumstances in connection with an Entered Ship.
(a) Loss of or damage to hull, engine or other equipment of the Entered Ship.
(b) Loss of freight or hire relating to the Entered Ship.
(c) Demurrage or detention damage or loss by delay.
(d) Other events which the Association in its discretion decides to exclude from the scope of cover.
④ The Association may make a special terms and conditions as a provision of the Rules of the Association in respect of the deductibles and the limit of cover according to any laws pertaining to limitation of shipowners’ liability stipulated in the clause ② of this Article.
ARTICLE 39 [SETTLEMENT AND PAYMENT OF CLAIMS]
① When a Member presents claim for insurance money against the Association, he must produce documents properly proving the fact that an accident occurred resulting in liabilities, costs and expenses for which he became liable, together with a voucher as a proof showing completion of payment.
② In case any untrue statement or wilful concealment or omission of fact is made in the documents stipulated in the clause ① of this Article, the Association shall no be liable to indemnify.
③ The Association shall pay insurance money without delay after necessary investigation.
ARTICLE 40 [REDUCTION OR REJECTION OF PAYMENT OF CLAIMS]
The Association is entitled to reduce the amount of, or reject the payment of claims due to the reasons stipulated in the Rules of the Association including but not limited to Member’s breach of his duty concerning notification to the Association.
ARTICLE 41 [SUBROGATION]
When the Association has indemnified a Member for any liabilities, costs and expenses, the Association shall have the full subrogation to the right of the Member to the extent the Association’s indemnification to the Member.
ARTICLE 42 [ARBITRATION]
① Should any dispute arise between the Association and a Member in respect of the scope of the cover, the Member should apply for mediation to the board of directors.
② In case the Member raises objection to the decision on medication of the board of directors, the Association and the Member shall refer dispute to the arbitration of the Korean Commercial Arbitration Board. One arbitrator shall be appointed by each party and the arbitrators so appointed shall appoint a third arbitrator. Other procedures shall follow Arbitration Rules of Korean Commercial Arbitration Board.
③ Except any dispute in respect of the scope of the cover, other disputes shall be settled at the Law Court with its legal procedures.
ARTICLE 43 [REINSURANCE]
The Association may enter into reinsurance contracts.
ARTICLE 44 [INTERNATIONAL GROUP AGREEMENT AND POOLING AGREEMENT]
The Association may become a party to the International Group Agreement or participate in the Pooling Agreement (the agreement concluded among Associations and/or insurers whereby the parties undertake to share in agreed portions the burden for claims or outgoings exceeding an agreed retention), may become a party to any other agreement or a similar nature/purpose.
ARTICLE 45 [SPECIAL COVER]
① The Association may, by a resolution passed by the board of directors, insure a Member against the risks which are more extended or more restricted than the scope of the cover as stipulated in Chapter 2 of the Rules of the Association.
② The Association may, by a resolution passed by the board of directors and upon obtaining a prior consent of the Minister of Maritime Affairs and Fisheries, conclude the insurance contract with special conditions, which are different from the special cover stipulated in the preceding paragraph and the Rules of the Association.
CHAPTER V ACCOUNTS
ARTICLE 46 [FILING OF DOCUMENTS ON CLOSING THE ACCOUNT AND SUPPORTING DOCUMENTS]
① The Association shall close its books at the end of each fiscal year, and shall make out and, by a resolution passed by the board of directors, submit to the Auditor balance sheet, profit and loss account, business report and draft resolution relating to the disposition of surplus or loss 6 weeks before the ordinary General Meeting.
② The Auditor shall provide the report of audit to the Executive Director in 4 weeks after the date of receiving the documents mentioned in the foregoing paragraph.
③ The Executive Director shall keep the documents mentioned in the clause ① and ② of this Article at the main and sub offices 1 week before the ordinary General Meeting. A Member may, at any time, inspect the documents mentioned in the clause ① and ② of this Article and may demand the copying of such documents or an abstract thereof, by paying fees fixed by the Association.
④ The Executive Director shall submit the documents mentioned in the clause ① and ② of this Article to the ordinary general meeting and shall request the approval thereof. If The Executive Director have obtained the approval from the ordinary General Meeting in respect of the above documents, he shall give public notice of the balance sheet without delay.
ARTICLE 47 [RESERVE FOR MAKING UP FOR LOSSES]
The Association shall accumulate a reserve account from over one-twentieth (1/20) of the surplus of each business year to make up for losses until the amount of the reserves reaches half of the amount of the contribution fund.
ARTICLE 48 [RESERVE FUNDS AND EMERGENCY-RISK FUNDS]
① The Association shall establish and maintain a reserve account to provide a source of funds to pay unpaid claims or return calls in order to meet the liabilities under the insurance contracts at each term for closing the account.
② The Association shall establish and maintain an emergency-risk account in order to prepare for future catastrophe claims. under the insurance at each term for closing the account.
③ Necessary matters concerning a reserve account and an emergency-risk account shall be prescribed by Laws and Ordinance ot the Ministry of Strategy and Finance.
ARTICLE 49 [DISPOSITION OF SURPLUS]
① The disposition of surplus shall be made in the itemized order as shown below; however, some other disposition may be made by resolution of an ordinary General Meeting of the Association.
(1) Reserve for offsetting losses.
(2) Special reserve.
(3) Bonus for officers.
(4) Pension fund for retiring officers.
(5) Reduction of calls and premiums
(6) Surplus carried forward to the next year.
② In order to secure business stability and strengthen its ability to pay out insurance proceeds, the Association shall allot all amount of the surplus of each business year except the reserve for offsetting losses, the bonus for officers and the pension fund for retiring officers to the special reserve in terms of the reserve fund for business stability for 5 years from commencement of its business.
③ After 6 years from commencement of its business, the Association shall accumulate more than one-third (1/3) of the surplus mentioned in the foregoing paragraph to the reserve fund for business stability.
④ Other matters concerning special reserve shall be prescribed by resolution of an ordinary general meeting of the Association
ARTICLE 50 [REDUCTION OF THE INSURANCE MONEY]
Article 49,①,(5) should be applied to members as of 31st December in the previous year of the annual General Meeting.
ARTICLE 51 [DISPOSITION OF DEFICIT]
The whole or a part of the deficit shall be carried to next year and/or shall be covered by the items in the order as below.
① Reserve fund.
(a) Special reserve.
(b) Reserve for offsetting losses.
② Reduction of the insurance money, or collection of additional calls and premiums.
ARTICLE 52 [REDUCTION OF INSURANCE MONEY AND COLLECTION OF ADDITIONAL CALLS OR PREMIUMS]
① The sum to be deducted from the insurance money of a Member pursuant to Article 51,② shall be subject to proportion of the insurance money of each Member toward gross insurance money payable to all Member for the same business year.
② The collection of additional calls and premiums as prescribed in Article 51,② shall be made in the manner where the deficit is allotted to each Member in a proportion which each Member’ calls or premiums bear to the total amount of calls or premiums during the current business year.
③ Where the Association demands additional calls or premiums provided for in the preceding paragraph, the Members shall pay it within two (2) weeks on receipt of such demand.
④ The Association is empowered to reduce the insurance money and/or collection of an additional calls or premiums only by resolution of General Meeting and with approval of the Ministry of Maritime Affairs and Fisheries minister.
ARTICLE 53 [APPROPRIATE IN THE COST FOR INCORPORATION]
① The cost for the Association of incorporation and registration of incorporation shall appropriate in the net worth of assets of a balance sheet.
② The cost as prescribed in clause ① of this Article shall be paid off more than equal amount at each settlement term within 5 years after the date of the Association of incorporation.
③ Concerning the expense chargeable to the Association, the cost as prescribed in Clauses ① of this Article, it shall be investigated by the board of directors, reported the inaugural meeting, and permitted by the General Meeting.