General Average or Average
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- BCAS: 7103-1001
- admiraltypractice.com
General average is a principle in maritime law wherein all parties involved in a sea voyage proportionately share any losses resulting from voluntary sacrifices of part of the ship or cargo to save the whole in an emergency. This doctrine is based on the notion of equity and fairness among the parties involved in the maritime adventure.
Legal Framework and Historical Context
The concept of general average can be traced back to ancient maritime codes, such as the Rhodian Law, which influenced Roman law. This principle was later incorporated into various maritime laws across different jurisdictions. Modern interpretations of general average are largely governed by international agreements, notably the York-Antwerp Rules.
The York-Antwerp Rules
The York-Antwerp Rules were established in 1890 and have undergone several revisions, with significant versions adopted in 1924, 1950, 1974, 1994, and 2004. These rules provide a standardized method for calculating and adjusting general average claims, ensuring consistency and fairness in the distribution of losses among the parties.
Criteria for General Average
For a loss to be considered general average, certain criteria must be met:
Extraordinary Sacrifice or Expenditure: The loss must be unusual and not a routine operational expense.
Intentional and Voluntary Act: The act must be deliberate, rather than accidental.
Perilous Situation: The sacrifice must occur in response to a danger threatening the entire venture.
Common Adventure: The act must benefit all parties involved in the maritime venture.
Reasonableness: The action must be reasonable under the circumstances.
Legal Provisions in Admiralty Law
Under Section 4 (1) (q) of the Admiralty Act (2017), general average claims are specifically addressed, providing legal backing for the recovery of such contributions. This section aligns with international norms, reinforcing the principle within national legal frameworks.
Shipowner's Lien on Cargo
At common law, shipowners have a possessory lien on the cargo for the contribution due in general average. This lien allows the shipowner to retain possession of the cargo until the required contribution is paid. However, due to practical difficulties in assessing the contribution amount and the time required for general average adjustments, shipowners often opt for alternative security measures.
Alternative Security Measures
Rather than exercising the lien, shipowners typically deliver the cargo in exchange for:
General Average Bond: An agreement by the cargo owner to pay their share of the general average contribution.
General Average Deposit: A monetary deposit made by the cargo owner to cover the estimated contribution.
Judicial Interpretation and Case Law
Several landmark cases have shaped the understanding and application of general average. Some of these cases include:
The Case of The Astral (1939): This case emphasized the requirement for the loss to be extraordinary and the act to be voluntary.
Birkley v. Presgrave (1801): Established the foundational principles of general average, including the need for a perilous situation and the benefit to all parties.
*Cargo ex Galatia (1974): Highlighted the procedural aspects and the role of general average bonds in securing contributions.
Practical Challenges in General Average
One of the main challenges in general average is the complexity and time-consuming nature of adjustments. Determining the exact contributions involves meticulous documentation and calculation, often necessitating the involvement of average adjusters.
Role of Average Adjusters
Average adjusters are specialists who calculate the contributions due from each party in a general average incident. Their role is critical in ensuring accurate and equitable distribution of losses. The adjuster's report forms the basis for the settlement of claims.
Impact on Cargo Owners and Insurers
General average has significant implications for cargo owners and their insurers. Cargo owners are required to contribute to the losses even if their goods are not directly affected. Insurance policies often cover general average contributions, mitigating the financial burden on cargo owners.
Legal Distinctions Between General and Particular Average
It's essential to distinguish between general average and particular average. General average involves a collective sacrifice for the common benefit, while particular average pertains to individual losses borne by specific parties without a shared burden.
Role of Maritime Arbitration
Disputes related to general average often lead to arbitration. Maritime arbitration provides a specialized forum for resolving such disputes efficiently and with expertise in maritime law. Arbitral awards in general average cases ensure that the principles of equity and fairness are upheld.
International Conventions and Harmonization
International conventions, such as the Hague-Visby Rules and the Rotterdam Rules, complement the York-Antwerp Rules by providing additional legal frameworks for maritime operations. These conventions aim to harmonize practices and reduce conflicts in international shipping.
Future Developments and Reforms
The maritime industry continues to evolve, and so does the concept of general average. Ongoing discussions and reforms aim to address contemporary challenges, such as the impact of technology on shipping practices and the need for more efficient dispute resolution mechanisms.
General average remains a cornerstone of maritime law, embodying the principles of mutual sacrifice and shared risk. The legal framework provided by international rules and national statutes ensures that this ancient principle continues to adapt to modern shipping practices, maintaining fairness and equity in maritime adventures.
The lien on cargo for general average charges can be exercised only by the shipowner in possession of the goods and, where necessary, it is his duty to other cargo owners to protect their interests by retaining possession of any goods in respect of which a contribution in general average is outstanding. However, owing to the difficulty of assessing the amount of such contributions and the time required for general average adjustment, it is not usual for shipowners to avail themselves of the right of lien in these circumstances. The customary procedure is for the goods to be delivered in exchange for the security afforded by a general average bond, a general average deposit, or both.
Section 4 (1) (q) of the Admiralty Act (2017) deals with the above subject claim on average or general average.
York Antwerp Rules of 1974 established the standard basis for adjusting general average and stated the rules for adjusting claims.
In order to constitute a general average the sacrifice or expenditure made or incurred and in respect of which contribution in general average is sought must have been extraordinary; have been made intentionally or voluntarily; in time of peril; for the common adventure; have been reasonable.
There is no maritime lien in respect of a claim for general average. However, at common law, a shipowner has a possessory lien over the cargo for cargo owners proportion of general average which is enforceable against the consignee of the cargo even though the consignee is under no personal liability to contribute in general average, not being the owner of the cargo when the general average act occurred.