LO4 - 2a General & Particular Average

GENERAL AVERAGE
York-Antwerp Rules
http://www.dailymail.co.uk/news/article-1223392/Inferno-Battle-extinguish-blaze-Japanese-naval-destroyer-hits-container-ship.html
General Average
Ensures that the owner of a ship or cargo that has suffered loss
(expenditure or sacrifice) receives a contribution from the other parties
that have benefitted from his loss.
Principle: ‘That which has been sacrificed for the good of all shall be
made good by the contribution of all in a common maritime adventure.’
York-Antwerp Rules
Unlike Hague-Visby rules, these are not incorporated into national legislation,
but voluntarily accepted (commercially) by shipowners, shippers and insurers.
There are three versions: 1994, 2004 and 2016.
1994 still appear to be preferred as favourable to shipowners.
https://www.gard.no/web/updates/content/53071/york-antwerp-rules-2004
General Average &

New Jason Clause
(second yellow
highlighted section)
From GENCON 94:

York-Antwerp Rules
Require that:
1. The sacrifice or expenditure must be extraordinary

2. The sacrifice or expenditure must be reasonable
3. The act must be intentional or voluntary, and not inevitable
4. There must be an imminent peril
5. The action taken must be for the common safety and not merely
for the safety of part of the property involved
‘New Jason Clause’

Essentially requires that even if the incident
resulting in damage was caused by the negligence
of the ship (carrier), the cargo owner (shipper)
must still contribute in the general average.
York-Antwerp Rules
Sacrifice – eg jettisoning cargo to protect other cargo, to
refloat/correct angle of lol or pay for machinery damaged during the
above operations.
Expenditure – eg salvage costs or costs incurred entering, staying in

and leaving a port of refuge.
Extraordinary – not every day loss or expense in running a ship.

Losing an anchor to prevent grounding in not extraordinary as that’s
it’s purpose. Losing one while re-floating would be extraordinary!
Intentional – accidentally running aground is not intentional, but

beaching a holed ship to prevent sinking is!
Parties in the Common Maritime Adventure - shipowner, cargo and

owners (all).
Average Bond
Signed undertaking by cargo
receivers, agreeing to pay
their proportion of the
General Average charges.
Average Guarantee
Cargo Underwriter’s guarantee
of payment to the shipowner
or Average Adjuster
Average Adjuster
Determines the total value of
loss and the level of
contributions of each party.
http://www.shapiro.com/assets/Cargo-insurance-What-is-General-Average1.pdf
Further Reading on General Average/ York Antwerp Rules
The P&I Club Gard generally produces some very interesting reading, and
for the need for changing the York Antwerp Rules, a good place to start is:
https://www.gard.no/web/updates/content/20734089/the-evolution-of-th
e-york-antwerp-rules-on-hold-until-2016
Gard produce succinct and good advice on many topics, definitely worth a
look - https://www.gard.no/web/updates/insight
Particular Average
Partial loss or damage to a ship or its cargo that must be borne by
the interest or goods sustaining it, without benefiting from the
contribution from other interests
Marine insurance provision under which damages or expenses

incurred by a single shipper are borne by that shipper only.
Such damages or expenses occur by direct harm to the ship and/or

cargo, or in a course of action to prevent initial or additional harm to
them.
• It is accidental, not voluntary

• Paid only by the insurer affected
Otherwise they may be stowed in the wrong place…
…underdeck beside an engineroom bulkhead.
M/V HYUNDAI FORTUNE

Why pyrotechnics should be disclosed in the DG manifest…
General Average or Particular Average?

QUESTIONS
1. Explain the principle behind a General Average loss.
2. What do the York Antwerp rules require for general
Average to apply?
3. What is Particular Average?
4. What is an Average Bond?
Is Piracy claimable
as General Average?
Rule A of the York-Antwerp Rules defines General Average:
‘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.’
Piracy Definition:
‘Piracy is forcible robbery at sea, whether committed by marauders from
outside the ship, or by mariners or passengers within it. The essential
element is that they violently dispossess the Master, and afterwards carry
away the ship itself, or any of the goods, with a felonious intent.‘
Is Piracy claimable
as General Average?
GA Essential features, expenditure/sacrifice must be:
1. For Common Adventure

2. For Common Safety
3. Voluntary/intentional
4. Extraordinary
5. Reasonable
Piracy Elements:
1. Must be at sea
2. Must be a robbery (taking or attempting to take property)
3. Must be force or the threat of force
Is Piracy claimable
as General Average?
Ransom Payments:
In return for release of the vessel, its crew, cargo and property is given to the
pirates. Payment of a ransom is most common.
In the recent Somalia cases, in addition to the ransom, there are other
considerable ancillary costs:
• Payments to a negotiation team
• transporting the ransom
• insuring the ransom money
• as well as the initial search expenses.
Is Piracy claimable
as General Average?
Definitely to be excluded from GA
During the hijack:
• Crew wages
• Maintenance
• Fuel and stores consumed
• Damage to the vessel, and/or its cargo, by the pirates deliberately or
through neglect.
This is because York-Antwerp Rules, Rule C states:

‘Demurrage, loss of market, and any loss or damage sustained or expense
incurred by reason of delay, whether on the voyage or subsequently, and any
indirect loss whatsoever, shall not be admitted as general average.’
Is Piracy claimable
as General Average?
Legality under English Law

Under English law, payment of a ransom is not illegal per se and can be
admitted in general average provided all 5 features the York-Antwerp Rules
are met.
Is piracy terrorism?
However, under modern anti-terrorism legislation, funding to support
terrorism directly or indirectly is illegal.
Can ransom be covered under GA?

Conclusion of leading firm of
Average Adjusters (Richards,
Hogg, Lindley)
‘General Average is a recognised, respected and accepted way of dealing with

sacrifice and expenditure incurred to safeguard and recover ships and cargo at
sea.
It is entirely natural that there should be concern that money paid to criminals
for this same purpose should be allowed in General Average.
However, the payment of a ransom complies with the defined tests for General
Average and has the support of the courts.’
So, Yes!

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GENERAL AVERAGE

General Average &

From GENCON 94:

1. The sacrifice or expenditure must be extraordinary

‘New Jason Clause’

Expenditure – eg salvage costs or costs incurred entering, staying in

Extraordinary – not every day loss or expense in running a ship.

Intentional – accidentally running aground is not intentional, but

Parties in the Common Maritime Adventure - shipowner, cargo and

Marine insurance provision under which damages or expenses

Such damages or expenses occur by direct harm to the ship and/or

• It is accidental, not voluntary

M/V HYUNDAI FORTUNE

General Average or Particular Average?

1. For Common Adventure

This is because York-Antwerp Rules, Rule C states:

Legality under English Law

Can ransom be covered under GA?

‘General Average is a recognised, respected and accepted way of dealing with

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