GENERAL AVERAGE

When a marine casualty arises steps may need to be taken to protect or save the ship and cargo from serious damage or total loss. The steps taken may result in expenditure being incurred and/or deliberate loss or damage to some of the property at risk, but result in the saving of other property.

Example: A ship has suffered a fire in the cargo hold. Water is poured into the hold to extinguish the fire and prevent it spreading through the ship and cargo. Other cargo that was in the hold but not on fire is damaged by the water used to extinguish the fire. Who pays?

General Average is designed to provide an equitable distribution of these losses or sacrifices between the Parties that have benefited.

All the property that has been saved at the completion of the voyage contributes to the financial compensation for the water damage suffered. But how is the compensation determined?

The YORK ANTWERP RULES have been developed to provide a uniform approach to the handling of General Average losses. Many contracts of carriage provide for the application of these Rules. Where they do not apply General Average claims and compensation are determined by local law.

At the time the voyage is completed the level of the sacrificial losses will not normally be known. Shipowners will usually call for security from cargo interests against which the assessed contributions can be enforced. The amount of the claim is usually calculated by Average Adjusters, appointed by Shipowners. The contribution of each Party is calculated pro rata to the value of their property at the end of the voyage.

The YORK ANTWERP RULES provide:

There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure.

HOW CAN WE HELP?

• Initial Casualty Advice
  

  Prompt action

  Early investigation

  Minimise delay

  
  
• Casualty Investigation
  

  What happened

  How did it happen

  Why did it happen

  
  
• Advice on Security Requirements
  

  Average Bonds

  GA Guarantees

  Non Separation Agreement

  
  
• Negotiation with Adjusters
  

  Security wordings

  Allowances

  Cargo sacrifice

  
  
• Provision of Guarantees
  

  Swift provision

  Favourable wordings

  Appropriate timing

  
  
• Calculation of Contributory Values
  

  CIF value

  Delivered value

  Allowable deductions

  
  
• Review of Adjustment
  

  Basis of GA

  Correct forum

  Valid allowances

  
  
• Defences available
  

  Cause of casualty

  Breach of contract

  Unseaworthiness

For more information or to seek our assistance CONTACT US.