P&I insurance provides protection against certain third-party liabilities and expenses arising from the operation of a ship. However, the occurrence of an accident does not mean that the club will pay every claim. The insured vessel, the member, the relevant insurance year, the club rules and any special terms must be reviewed together. In Türkiye, direct claims, letters of undertaking, foreign law and arbitration issues must also be assessed on their own legal bases.
This article is written for foreign shipowners, P&I clubs, insurers, injured companies and foreign law firms handling files in Türkiye. Its aim is to direct a claim to the correct legal relationship, rather than assume that “the club exists, so the loss is covered.” The ship’s own physical damage under the H&M policy must be kept separate from this cover, as must the cargo owner’s goods insurance.
What liabilities can P&I cover?
Protection and Indemnity (P&I) cover is commonly known in practice as protection and indemnity insurance. Items such as personal injury or death, cargo liability, pollution, wreck removal, certain collision liabilities and damage to port installations may fall within cover under the relevant club rules. However, not all clubs, insurance years and special entry conditions are identical. For the procedure for objecting to an administrative sanction for pollution, see objection to a marine pollution fine. For the employment and labour claims of yacht crew, see Yacht Captain and Crew Employment Rights.
The UK P&I Club 2026 Rules divide standard cover into several liability headings and separately regulate general exclusions, limitations and the effect of special agreements. This structure shows that a specific claim cannot be resolved by its general category name alone. The actual file must contain the vessel’s entry document, its endorsements and the rules in force on the date of the incident.
| Claim | Core review | Result that must not be assumed automatically |
|---|---|---|
| Port facility damage | Member’s liability, nature of the facility and scope | Every quay invoice being paid by the club |
| Cargo damage | Carrier’s status, transport documents and defences | Cargo damage alone creating liability |
| Injury or death | Status of the claimant, the incident and special rules | All personal injury claims being subject to the same regime |
| Pollution or wreck | Applicable contract, legislation and cover | Every environmental fine or removal cost being covered |
| Collision liability | Contractual sharing between H&M and P&I | A fixed ratio applying under all policies |
P&I is not a general property insurance that pays for repairs to the ship’s own hull. Claims for freight, demurrage or charter disputes, and the legal defence costs of such disputes, may follow different rules. It should be checked whether separate defence cover, such as “Freight, Demurrage and Defence” or similar, is in place. It should not be assumed that standard P&I membership covers all commercial disputes.
Which club and which insured are identified in the file?
The starting document is usually the Certificate of Entry. It identifies the insurer company, the ship, the insured interest, the period and any special terms. The club’s trade name and the full legal name of the company that takes on the obligations may not appear in identical form. In structures with entities in different countries, it is important to direct the claim or notice to the correct legal entity.
Owners, charterers, managers and co-assured parties may also have different positions under the cover. Being the registered owner does not mean being an insured for all operational liabilities under every policy. Likewise, adding a technical management company as a co-assured party does not make it the principal debtor for all debts relating to the ship. The insurance relationship and the substantive liability must be examined separately.
A club correspondent, surveyor or lawyer in Türkiye may provide local coordination. Their involvement does not mean that the club has accepted cover or liability. Whether the correspondent has authority to bind the club to a settlement, payment or guarantee must also be verified separately. The presence of a correspondent alone may not show that the insurer has a branch established in Türkiye.
The first correspondence should state the ship’s IMO number, the date and place of the incident, the capacity of the parties, a summary of the claim and any urgent need for evidence or security. Sharing documents must not be framed as a waiver of the claimant’s own legal rights. A request from the club for documents should not be treated as acceptance of the claim.
What does the “pay to be paid” rule mean?
The “pay to be paid” approach often found in P&I contracts means that the club pays the member’s liability to the third party, rather than paying compensation before the member has paid. However, the scope and exceptions of this rule are determined by the relevant contract. The club may have discretion, direct payment arrangements or special provisions for particular persons and categories of loss.
For example, Gard Rule 87 regulates together the principle of payment by the member first, the conditions for determining liability, and exceptions for certain crew claims. This example does not justify transferring one club’s rule unchanged to all P&I contracts. In particular, the rules for the relevant year and any changes specific to the ship must be examined.
The repayment condition between the member and the club is not the same as the claimant’s direct claim, which may arise from law or from another legal relationship. Therefore, a general conclusion such as “the owner has not yet paid, so no action can be brought in any country” cannot be drawn. Conversely, saying “the claimant applied to a Turkish court, so all policy conditions are ineffective” is also incorrect. The applicable law, the nature of the claim and the dispute resolution conditions must be considered together.
Can an injured party in Türkiye claim directly against the club?
Article 1478 of the Turkish Commercial Code (TTK) allows the injured party to claim directly from the liability insurer, up to the insured amount, for its loss within the relevant limitation period. In a file with foreign elements, the law applicable to this claim and the jurisdiction of the Turkish court must be determined first. It cannot be concluded for all P&I policies that the same result follows merely because the accident took place in Türkiye.
Article 34/4 of the Private International and Procedural Law No. 5718 (MÖHUK) allows the injured party to direct its claim to the liability insurer of the responsible person, where the law applicable to the tort or to the insurance contract permits it. These two legal connections must be examined together. The fact that the policy is governed by foreign law does not make it unnecessary to assess the law applicable to the tort.
The right of direct claim, the international jurisdiction of the Turkish court and the substantive acceptance of the claim are three separate questions. Articles 40 and 46 of the same Law, which concern insurance contracts, are examined according to the nature of the dispute. The restriction in Article 47(2) of Law No. 5718 on displacing certain protective jurisdiction rules by agreement should not be read as making every arbitration clause automatically invalid. The parties to the arbitration agreement, its scope and its effect on the injured party are examined separately.
In Turkish practice, direct action against a P&I club, the “pay to be paid” rule and the conditions of a given letter of undertaking remain subjects of debate. Mustafa Okan Yağcı’s 2026 academic study criticises some procedural dismissal approaches and argues that Article 34/4 in particular must be examined. This view is not a binding court decision showing that direct action will be accepted in every file. It is a debate which shows that the claim must be founded on concrete legal bases.
Some international conventions contain special rules for direct claims. The 2001 Bunker Convention.aspx) includes provisions for direct claims against the insurer or the provider of financial security for bunker oil pollution damage within its scope. This special regime must be checked against the connections of the event, place and time, and the states parties involved. It does not give rise to a general right of direct action for all collision, cargo or port damage claims.
What does a club letter of undertaking provide?
A Letter of Undertaking (LOU) may contain the club’s payment undertaking for a specific claim. In practice it is negotiated to remove the risk of attachment or to secure the release of a ship. However, the fact that the ship has P&I cover does not mean that the club must issue the requested letter in every case.
Gard Rule 88 addresses the club’s obligation to provide security and its discretion within its own rules. Providing a guarantee and the confirmation of the member’s right to reimbursement under the cover are not the same. The club may request counter-security from the member, or reserve its rights on the scope of cover. In a concrete file, the rules of the club concerned must be taken as the basis.
The following points should be clarified in the LOU text:
- The full identity of the beneficiary and of the insurer giving the undertaking.
- Which incident, ship and claim items are secured.
- The maximum amount, currency, interest and treatment of costs of proceedings.
- The final judgment, arbitral award or settlement that triggers payment.
- The applicable law, place of proceedings, time limits and notification arrangements.
- The scope of the consideration for avoiding attachment or lifting an existing attachment.
These points matter so that the claimant does not inadvertently narrow its main claim. For example, a payment condition tied only to a judgment of a particular foreign court, while the main dispute is heard elsewhere, may make it harder to benefit from the guarantee. A general “all rights reserved” wording does not automatically remove the effect of other conditions that have been expressly accepted.
In Turkish law, not every club letter is automatically equal to a court security. TTK 1372 allows the parties to agree on the type and amount of the security; the procedural steps needed to lift an existing attachment are completed separately. Under TTK 1373, providing security to release a ship cannot be interpreted as an acceptance of liability or a waiver of objections, defences and limitation rights. However, the security may arise from the terms of its own payment undertaking.
How are foreign arbitration clauses and anti-suit decisions assessed?
In P&I disputes, foreign law and arbitration clauses may become important especially where a third party brings a direct claim. How far a person who has not signed the insurance contract is bound by its terms when it benefits from the policy may be assessed differently depending on the country and the legal nature of the claim. Therefore, the possibility of suing in Türkiye and the steps that may be taken abroad must be considered together.
The English Court of Appeal’s decision of 20 April 2016 in The Yusuf Çepnioğlu, [2016] EWCA Civ 386 illustrates this tension. Giving weight to the fact that the claim directed at the club in Türkiye derived from the insurance contract, the court accepted the effect of English law and the London arbitration clause, and dismissed the application to set aside the anti-suit injunction directed at the claimant. This historic decision shows that a foreign arbitration clause may be disputed even in a third-party claim. It does not mean that the jurisdiction of Turkish courts has ceased automatically because of an English decision.
An anti-suit injunction generally aims to prevent the counterparty from starting or continuing proceedings elsewhere. It should not be treated as a direct order to a foreign court. The counterparty’s activities abroad, its assets and the consequences of non-compliance may matter. Turkish procedural law, the effect of a foreign decision and the arbitration clause each require separate examination. A single foreign decision does not produce an automatic result for all later files.
How are the claim file and time limits managed?
A well-prepared P&I file separates the basis of liability from the basis of cover. The first section contains the incident, the claimant’s status, the responsible person, causation and the calculation of loss. The second section contains the Certificate of Entry, the club rules, special terms, deductibles and limits. The third section assesses direct application, security, authority, arbitration and time limits.
Where Turkish law governs a liability insurance, the notification provisions of TTK 1475 and the ten-year limitation provision of TTK 1482, running from the event, are taken into account. This does not mean that ten years may be awaited for all claims. TTK 1420, its relationship with the claim, the nature and maturity of the claim, and separately the limitation period of the principal claim against the liable party, are examined individually. Recourse, cargo, contract and insurance claims do not share the same timetable.
For example, where a foreign ship damages a terminal in Türkiye, the terminal’s claim against the shipowner, the possibility of a direct action against the club, and the claim arising from an LOU that has been issued may rest on different bases. The time limit for the principal claim must not be missed while security negotiations are ongoing. Forwarding documents to the club’s correspondent does not in every case replace a valid lawsuit, arbitration or an act interrupting limitation.
The engagement of a foreign law firm and a local team should set out who represents whom, who has decision-making authority, approval of any settlement, the cost budget and the sharing of documents. Where a dispute arises about scope, the interests of the club and the member may diverge. A technical review carried out jointly at the outset does not mean common legal representation at every stage.
Conclusion
A P&I file requires three questions to be answered separately: why the member is liable, under what conditions that liability is insured, and to whom and where the injured party may direct its claim. When the Certificate of Entry, the club rules, the evidence of the incident and the security wording are reviewed together, this distinction can be drawn. Early coordination of claims in Türkiye with foreign law and arbitration issues helps protect the rights of the claimant, the shipowner and the insurer alike.
Related articles: First steps after a ship accident in Türkiye; Fault and compensation in ship collisions; Hull and machinery insurance claims and rejections; Precautionary attachment and security for ships.
Frequently Asked Questions
Does P&I replace H&M cover?
No. H&M mainly covers the ship’s own physical damage, while P&I covers the third-party liabilities and expenses defined in the contract. For some collision items, sharing is determined by the policies.
Is notifying the club’s Turkish correspondent the same as filing a lawsuit?
No. Notice to the correspondent and delivery of documents may allow the file to be reviewed. They do not automatically take the place of a legal application for the purposes of jurisdiction, service or limitation.
If the owner has not paid, can no claim be made against the club?
No general rule of that kind can be established. The “pay to be paid” provision, its exceptions, the applicable law and the claimant’s basis for a direct claim are assessed together.
Does issuing an LOU mean that the club accepts the full loss?
No. The scope of the security and the payment conditions are understood from the text. Providing security and accepting the final payment obligation under the cover are different things.
Does every accident dispute in Türkiye go to a Turkish court?
No. Jurisdiction and the applicable law are examined separately for tort, insurance and security relationships. The effect of any valid arbitration clause must also be assessed.
Which document should be requested first in a P&I file?
Together with the ship and incident information, the Certificate of Entry for the relevant period, the club rules and the special terms should be requested first. Without them, the correct insurer, the insured interest and the scope of cover cannot be determined with confidence.
Sources and legal bases
1 — Turkish Commercial Code No. 6102 (6102 sayılı Türk Ticaret Kanunu), in particular Articles 1372–1373, 1420, 1473–1475, 1478 and 1482. Ministry of Trade text.
2 — Private International and Procedural Law No. 5718 (5718 sayılı Milletlerarası Özel Hukuk ve Usul Hukuku Hakkında Kanun), Articles 24, 34/4, 40 and 46–47. Ministry of Justice text.
3 — UK P&I Club, Rules 2026, in particular Rules 1–2 and the relevant scope conditions.
4 — Gard, Rule 87: Payment first by Member and Rule 88: Payments and undertakings to third parties.
5 — Court of Appeal (Civil Division), Shipowners’ Mutual Protection and Indemnity Association (Luxembourg) v Containerships Denizcilik Nakliyat ve Ticaret AS (The Yusuf Çepnioğlu), 20.04.2016, [2016] EWCA Civ 386, in particular paras. 33–38 and 47–58. The National Archives judgment text.
6 — Mustafa Okan Yağcı, “Üçüncü Kişinin Kulüp (P&I) Sigortacısına Karşı Açtığı Davalarda Usulden Ret Sebepleri” (Procedural Grounds for Dismissal in Third-Party Actions against a P&I Club), Balıkesir Üniversitesi Hukuk Dergisi, 2026, 3(1), pp. 1–37, in particular pp. 17–18. Article record and full text.
7 — International Maritime Organization, International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001.aspx), in particular the direct claim provision in Article 7.