Letter of Undertaking (for the Release of the Vessel) and the Role of Protection and Indemnity (P & I) Clubs

Merchant (trading) vessels may be arrested for various reasons and often by the claimant (plaintiff) in order to secure their relief, especially in actions relating to bodily injuries, property damages and collisions. While the ship is under arrest, shipowner has duty to pay necessary and irrevocable expenses. On the other hand, the ways of release of the vessel for the shipowner are not a lot. Shipowner may, for example by tendering a bail bond or paying the money (often with the calculation of punitive damages), release the ship from arrest. One of the ordinary methods to release the vessel and to have the permission to continue her activity is to get a letter of undertaking issued by the protection and indemnity clubs to the claimant. This paper with descriptive and analytical perspective tries to introduce the letter of undertaking, express its object, benefits, form, legal nature, requirements for achieving it, the subject of acceptance and non-acceptance of the letter of undertaking with regard to the claimants and the courts views and finally the effects of this type of letters.