Sister ship clause. The object of this clause is to ensure that in the event the insured vessel comes into collision or receives salvage services from another vessel belonging wholly or in part to the same owners or under the same management, the assured shall have the same rights under the policy as they would have had if the other vessel was entirely the property of other shipowners.
The clause in the Institute Time Clauses (Hulls) 1983 reads:
“Should the vessel hereby insured come into collision or receive salvage services from another vessel belonging wholly or in part to the same owners, or under the same management, the assured shall have the same rights under this insurance as they would have were the other vessel entirely the property of owners not interested in the vessel hereby insured; but in such cases the liability for the collision or the amount payable for the services rendered, shall be referred to a sole arbitrator to be agreed upon between the underwriters and the assured.”
The purpose of the sister ship clause is to indemnify the shipowner for insured perils otherwise he would not be able to bring an action for collision or salvage against himself.
