Shipping

July 2016
YORK-ANTWERP RULES 2016:
A SUMMARY

This article first appeared in Shipping & Trade Law on 15 July 2016, and is reproduced with permission.
http://www.shippingandtradelaw.com/practice-and-policy/regulation/york-antwerp-rules-2016-a-
summary-118407.htm

Introduction In reflection of the efforts made to resolve the

controversy between ship and cargo, York-
On 5 May 2016 a new version of York-Antwerp Antwerp Rules 2016 makes few, if any, ‘root and
Rules, the contractual regime governing the branch’ changes to the principles according to
ascertainment of general average contributions, which general average is presently adjusted.
was settled at a conference convened by Comité Rather, the changes are mostly concerned with
Maritime International1. The new rules, entitled improving, from the point of view of both time
York-Antwerp Rules 2016, are the culmination of and expense, the processes by which general
a drafting process which began in 2012. Having average is adjusted and contributions collected,
been approved by the shipowners’ association, including through the prescription of a strict
BIMCO, these rules stand a good prospect one-year timebar. In addition, two features of the
of being adopted in place of York-Antwerp 1994 Rules which were especially deprecated
Rules 1994, the rules which are at present by cargo as outdated – the 2% commission on
most commonly incorporated by reference into disbursements and the 7% fixed interest rate –
charterparties and bills of lading. In so doing, have now been redressed through abolishing the
York-Antwerp Rules 2016 will fill the gap created former and by making the latter variable.
by the failure of the 2004 Rules which, whilst
promoted by cargo concerns, never found For the first time, the new rules are also
acceptance in the ship-owning community. accompanied by a guidance document entitled

1 Both the Rules and the CMI Guidelines may be found

on the website of Comité Maritime International at
www.comitemaritime.org
“CMI Guidelines relating to General date upon which the general average Wreckhire ’99 where payment is made
Average”. These guidelines, which adjustment is issued. There is then a solely by the shipowner) salvage
are not intended to be of binding “long stop date” for commencement remuneration will only be allowed in
force, provide information as to the of proceedings within six years from general average if one or more of
basic principles of general average the date of termination of the common certain stipulated criteria are fulfilled,
adjustment and the collection of maritime adventure. This rule, which and if they are significant. Despite
security. They also explain the rôles of applies also to claims under average attempts at the drafting stage, no
the average adjuster and the general bonds and guarantees, marks an definition has been provided of the
interest surveyor and, in so doing, seek important departure from the current word “significant”, which appears five
to set out best practice. position. Not only does it impose a times in the new rule. It is therefore
short one-year time bar, but the use of anticipated that the adjuster will
This following summary aims to review the “long stop date” foreshortens the exercise his or her discretion when
the main changes. limitation period which would otherwise judging whether a criterion is fulfilled.
Expedition of procedures be applicable to claims under average
bonds and guarantees. Ordinarily, a One of the criteria is the situation of
Two principal changes have been six year time period, counting from so-called ‘differential salvage’ whereby
made with the aim of reducing the time the date of the adjustment, would ‘a significant proportionment of the
taken in adjusting general average and otherwise apply to claims under GA parties have satisfied the salvage claim
collecting contributions. security -- The “Potoi Chau” [1984] 1 on substantially different terms’. That
AC 226. general average adjustment should
Since 1994, Rule E has afforded seek to equalise advantages obtained
the adjuster the power to make Treatment of salvage by one party through the strength of
assumptions as to the amounts of its negotiating might seem surprising
allowances and contributory values in It has been an especially vexed to some. Indeed, it was the subject of
order to fill in gaps in the information question whether or not to allow debate at the Conference. However,
available. Where such assumptions salvage remuneration in general such equalisation was already a feature
are made, the status of the adjustment average. Whilst salvage might seem of adjustment under the 1994 Rules,
is no longer merely a matter of the quintessential general average and can come to the assistance of
non-binding opinion, but instead of expense, there is a concern that, parties who are not in a position of
incontrovertible fact. The time limit if the ship and cargo have already parity as regards their powers of
which must elapse before this power paid salvage separately (in particular negotiation with salvors.
arises has been tightened up in the under Lloyd’s Open Form of Salvage
new rules (particulars of value and Agreement, or “LOF”) based on The intention of the new rule is clearly
particulars in support of a claim to salved values at the termination of the to avoid the cost of re-apportionment
GA contribution must be provided salvors’ services, the allowance of if the difference in result would not
within 12 months failing which the salvage in general average, requiring merit it. Whilst the wording is new, it
adjuster shall be at liberty to make re-apportionment over contributory has been suggested that the difference
such estimations) and there is now values assessed at the termination of in practice will not be great. As the
also an express obligation to supply the adventure, may only give rise to CMI Guidelines explain, many leading
to the adjuster full particulars of any additional cost and delay. Whilst, in adjusters will, when appropriate,
recoveries from third parties within 2 the 1994 Rules, salvage was generally already propose to the parties that
months of receipt of the recovery. allowable, under the 2004 this if re-apportionment of salvage as
allowance was radically curtailed. general average would not produce
In addition, York-Antwerp Rules a meaningful change in the figures or
2016 has taken up the time bar first In the 2016 Rules an attempt has would be disproportionately costly,
contained in the 2004 Rules. This been made to reach a compromise. salvage should be omitted from the
extinguishes rights to general average If the parties to the adventure have a adjustment. As such, the new rule
contribution unless an action is brought separate contractual or legal liability serves primarily to approbate and
within a period of one year after the to salvors (i.e. under LOF or under regularize this practice.
the common law, but not under e.g.

02 Shipping
Express recognition for the parties involved in a common maritime forward it to destination. By virtue
discretion of the adjuster adventure.” of the NSA in Rule G, the cargo
owner will be obliged to contribute to
Rule VI, with its undefined references to Resolving points of uncertainty general average as though the cargo
“significance”, is by no means the only remained in situ; such allowances
new rule which invokes the exercise As may be expected, the new rules
additionally seek to resolve certain could include detention expenses
of the adjuster’s discretion. The and cargo handling costs. In addition,
discretion of the adjuster is expressly points of controversy, although the
number of these clarifications is the forwarding expenses would
alluded to on numerous occasions. themselves be allowable in general
The fortified power of the adjuster relatively few.
average under Rule F, insofar as they
to make binding assumptions and The most important concerns the avoid general average expenses which
estimations has already been noted operation of the cap (also known would otherwise have been incurred
above. In addition, it is now stated as the “Bigham clause”) on cargo’s at the port of refuge. The question
in Rule XVI that the average adjuster contribution to general average was whether the amount of cargo’s
may deem the commercial invoice to allowances made under the Non- contribution to allowances made
reflect the value of cargo at the time Separation Agreement element (“the under Rule F and under the NSA in
of discharge irrespective of the place NSA”) in Rule G. Whilst the NSA has Rule G should be aggregated before
of final delivery under the contract of the advantage of permitting cargo applying the cap, or else whether
carriage – a provision which may assist owners promptly to recover their cargo the cap should only apply to cargo’s
in cases of multimodal bills where there in circumstances where delay might contribution to allowances made under
is subsequent transportation by land. otherwise ensue whilst at the same the NSA. In the new wording it has
Even more significantly, under Rule XVI time obliging them to contribute to been confirmed that the cap should
it is now provided, “Any cargo may be general average for as long as it would apply only to the latter, endorsing the
excluded from contributing to general otherwise be owing, the Bigham clause view which had been held by most
average should the average adjuster places a cap on cargo’s contribution to British adjusters.
consider that the cost of including it such allowances by providing that they
in the adjustment would be likely to “shall not exceed the cost which would Financial matters
be disproportionate to its eventual have been borne by the owners of the
contribution” – an idea borrowed Principal amongst cargo’s complaints
cargo if the cargo had been forwarded about the York-Antwerp Rules 1994
from the assessment of salvage at their expense”.
awards under clause 15 of the Lloyd’s were the high interest rate (at a rate
Standard Salvage and Arbitration As explained in the working papers of 7 per cent per annum until three
Clauses. produced for the CMI meeting in months after the date of issue of the
Istanbul on 6-7 June 2015, an issue general average adjustment) and
Even if the exercise of discretion has requiring clarification was whether the the allowance of a commission for
doubtless been a feature of adjusting cap should apply only to allowances the provision of funds (2 per cent on
since time immemorial, adjusters made under the non-separation general average disbursements).
have been afforded express powers agreement wording, or else whether it
under York-Antwerp Rules 2016 York-Antwerp Rules 2016 has done
should apply to both those allowances away with the commission, which
which were not mentioned in previous and to allowances under Rule F, such
versions. A proposal that the Rules was considered by many to be an
as the expense of forwarding cargo to unnecessary anachronism, and a boon
should therefore explicitly state that destination aboard substitute tonnage.
the adjuster must act impartially and for shipowners. As for the high level
independently was not adopted. By way of example, suppose a ship of interest, this has now been pegged
Instead, such pronouncements have has put into a port of refuge, and it is at 4% above ICE LIBOR (or US Dollar
been left to the CMI Guidelines which estimated that repairs necessary for ICE LIBOR where the adjustment is
state some best practices, including the safe prosecution of the voyage will prepared in a currency for which no
that the adjuster is “expected to last some considerable time. Instead ICE LIBOR is announced) and is, as
act in an impartial and independent of the cargo languishing during the such, no longer fixed but floating.
manner in order to act fairly to all period of the repairs, it is decided to

Shipping 03
In addition, new provisions have will promote efficiencies in time and
been made for the treatment of cash cost. It remains to be seen whether
deposits, in particular through the these rules will now become universally
constitution by the average adjuster of adopted.
a special account to be held separately
from its own funds. This replaces the
previous practice of setting up of joint For more information, please
accounts, a practice which was not contact the author of this article:
routinely followed and which had been Alex Kemp
made more problematic by recent anti- Senior Associate, London
money laundering legislation. T: +44 (0)20 7264 8432
Conclusion E: alex.kemp@hfw.com

A drafting process of 3 ½ years’ This article was co-written with

duration, in which unprecedented Richard Sarll, Barrister at 7, King’s
access was granted to stakeholders Bench Walk2.
via the CMI website, has concluded
with the formulation of York-Antwerp
Rules 2016. The new rules withdraw 2 The authors, who are both Associates of
certain advantages from shipowners the Association of Average Adjusters, are,
respectively, a barrister at 7, King’s Bench Walk
(in particular the old commission and a solicitor at Holman Fenwick Willan LLP.
and interest rate) but they have also They were appointed to sub-committees of,
respectively, Association of Average Adjusters
reinstated some of the allowances and British Maritime Law Association which
which had been restricted in the 2004 were convened to respond to consultations by
the CMI Working Group.
Rules (salvage under Rule VI; crew
wages and maintenance during a
general average detention at a port of
refuge under Rule XI; and temporary
repairs to accidental damage under
Rule XIV). It is suggested that no
radical change has been made to
the principles according to which
general average is adjusted, even
when taking account of the important
alterations to Rule VI. Rather, the
achievement of this project has been
to negotiate a compromise with which
representatives of ship and cargo
are in principle content. In so doing,
advantageous changes have been
made adjectivally which, it is hoped,

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