INTRODUCTION TO GENERAL AVERAGE Average adjuster Bjørn Slaatten, Oslo The Nordic Association of Marine Insurers 1

INTRODUCTION TO GENERAL AVERAGE

Average adjuster Bjørn Slaatten, Oslo

The Nordic Association of Marine Insurers1The Nordic Association of Marine Insurers

Bjørn Slaatten

P. O. Box 1252 Vika

0111 Oslo

Telephone +47 2301 1440

Mobile +47 9587 0831

Email [email protected]

The Nordic Association of Marine Insurers 2

Literature.

Lowndes and Rudolf:

General Average and York-Antwerp Rules

Geoffrey Hudson:

The York-Antwerp Rules

MarIus 214 (1994 Rules)

MarIus 329 (2004 Rules)


General average.

What is General Average?

Sacrifice in order to save ship and cargo from a

common peril. Apportionment over the interests –

Normally ship, cargo, bunkers and freight.

Particular average – damage to ship or goods.

”The loss stays where it falls”.


General average – long traditions

Rhodian Law – More than 2000 years old.

”If in order to lighten a ship merchandise has been

thrown overboard, that which has been given for all

should be replaced by the contribution of all”.

Glasgow Rules 1860, revised in 1864 ”York-Rules”

Antwerp 1877 (”York-Antwerp Rules”)

1890, 1924, 1950, 1974, 1990, 1994 and 2004.

Focus on the 1994 Rules.


General average

General average – average adjustment.

Average adjuster

Norway - Felleshavari – Dispasje - Dispasjør

Denmark – Havari Grosse – Dispache - Dispacheur

Sweden – Gemensamt haveri – Dispasch - Dispachör

Finland – As Sweden


General average

Not insurance, but a provision in the freight contract.

Private set of rules administrated by CMI.

Incorporated in Norwegian Maritime Law Chapter 17.

In most countries the average adjustment can

be tried in court.


General average

Lettered rules A - G

Numbered rules I – XXII

Rule of interpretation:

In the adjustment of general average the following

Rules shall apply to the exclusion of any Law and

Practice inconsistent therewith.

Except as provided by the Rule Paramount and

the numbered Rules, general average shall be

adjusted according to the lettered Rules.


Rule Paramount

In no case shall there be allowance for sacrifice

or expenditure unless reasonably made or incurred.

Court case ”Alpha” 1991


Common safety / Common benefit.

Rule A – Common safety

Numbered Rules – Common benefit


Rule A

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.

General average sacrifices and expenditures shall be

borne by the different contributing interests on the

basis hereinafter provided.


Perils


GA situations


GA situations


GA situations


GA situation?


”Crew negligence”?


Rule C

Only such losses, damages or expenses which are

the direct consequence of the general average act shall

be allowed as general average.

Exclusions:• Damage to the environment.• Loss of market, due to delay etc.


Rule D, E and F.

• Rule D – Fault on one of the parties to the adventure does not affect right to contribution.

• Rule E – Onus of proof is on the party claiming in G.A. to show that the loss or expense claimed is properly allowable.

• Rule F – Expense versus expense. Often ”abused” provision. Not expense versus damage.

• Substituted expenses.


Rule G.

• General average shall be adjusted as regards both losses and contribution upon the basis of values at the time and place when and where the adventure ends.

• Section 2 – ”Non separation agreement”.


General average – practical steps

Who is involved, what has happened? B/L / Freight contract – YAR version? Place for issuance

of GA statement. Notification to cargo owners that GA is declared. Concerned in cargo – B/L. Manifest of cargo. Cargo insurers? Non-insured – Cash deposit? Guarantees – Average bond / average guarantee. Carriers obligations under the freight contract. Forwarding of the cargo? Non-Separation Agreement.


Average bond / average guarantee

• Collection of security.• Copy of the B/L and the commercial invoice. • Power of signing guarantees• Insured / uninsured cargo – collection of deposits - Rule

XXII


The numbered rules.

Special rules – Conflict with the lettered rules - See Rule of interpretation.

Rule III Extinguishing Fire on Shipboard. Rule VI Salvage Remuneration. Rule VII Damage to Machinery and Boilers. Rule X Expenses at Port of Refuge etc. Rule XI Wages and maintenance of crew and other

expenses bearing up for and in Port of Refuge. Rule XVII Contributory values.


Rule III Extinguishing Fire on Shipboard.

Fire onboard will normally be a particular damage but damage done to ship and or cargo in extinguishing the fire shall be made good in general average.

Also beaching or scuttling a burning ship.

No compensation for: Damage by smoke however caused Damage by heat of the fire


Rule VI Salvage Remuneration

Salvage remuneration is redistributed in GA. 2004 Rules – The costs stays were it falls


Rule VII Damage to Machinery and Boilers

Refloating – damage to machinery.

Afloat - no compensation howsoever caused.


Rule X Expenses at a Port of Refuge etc.

”Port or place” – not defined in the Rules. Loading port can be port of refuge. In consequence of accident, sacrifice or other

extraordinar circumstances. Must be for the common safety.

Section (a) – Costs of entering and leaving the port.


Rule X Expenses at a Port of Refuge, etc.

Section (b) – Costs of handling on board or discharging cargo, fuel or stores.

Necessary for the common safety, or

to enable repair of damage caused either by sacrifice or accident.

Necessary for the safe prosecution of the voyage. Damage discovered in port of loading or call. Section (c) Reloading and storage costs. When ship is condemned or voyage is abandoned.


Rule XI Wages and Maintenance of Crew and other Expenses bearing up for and in a Port of Refuge, etc.

Wages and maintenance of crew Fuel and stores consumed During deviation to / from the port (section a) and in the

port of refuge (section b). Section (c) – definition of ”wages”. Section (d) – The cost of measures undertaken to

prevent or minimise damage to the environment.


Damage to cargo, ship etc.

Rule XII Damage to cargo in Discharging Rule XIII Deduction from Cost of repairs ”New for old” – >15 years – deduction of 1/3. No deductions in way of anchors and chain cables,

provisions and stores. Drydock and slipway dues – allowed in full. Painting of bottom – Paint not older than 12 months –

50% allowed.


Rule XIV Temporary repairs.

Temporary repairs at a port of loading, call or refuge shall be admitted if

Necessary for the common safety, or Of damage caused by general average sacrifice. Section 2: Temporary repairs of particular damage in order to

complete the voyage


Rule XVII Contributory values

Contribution to a general average shall be made upon the actual net values of the property at the termination of the adventure (ref Rule G).

Cargo – the commercial invoice or shipped value including freight and insurance.

Including freight and insurance? Freight contract / sales terms. FOB, CIF CIP etc.

Ship - value to be assessed without taking into consideration any effect of a charterparty.

Freight Bunkers


Rule XX Commission

2 % commission on general average disbursements. Except crew wages and maintenance and fuel and

stores not replaced during the voyage. Section 3 – Average disbursements insurance.


Rule XXI Interest on Losses made good in General Average.

Interest rate is 7 % p.a. Until three months after the date of issue of the GA

adjustment.


York-Antwerp Rules 2004

IUMI – Working Group - ”How should it be changed”? Proposal - Limit the rules to ”Common safety” situations. IUMI - Vancouver meeting 2004


York-Antwerp Rules 2004

The exclusion of salvage from general average Rule XI – Crew wages would no longer be allowed while

at a Port of Refuge Rule XIV – Temporary repairs Commission Interest rate Time bar


General average – Hull policies

G.A. – salvage costs The Norwegian Plan § 4-8 ITCH 1.10.83 – Section 11 International Hull Clauses 01/11/02 - Section 8

General average ”Absorption Clauses” NSPL § 4-8,3 (a). ”Any loss, damage, liability or costs which would have

been recoverable in the general average up to a fixed sum stipulated in the policy”


General average – Hull adjustment

GA adjustment - Implemented in the PA adjustment Cargo’s contribution deducted Interest on GA contributions falling on hull insurers – YAR 1974, 1994


Introduction to general average

Thank you for your attention.


Documents

INTRODUCTION TO GENERAL AVERAGE Average adjuster Bjørn Slaatten, Oslo The Nordic Association of Marine Insurers 1