General Average
General average is the maritime burden sharing mechanism which provides for an allocation of intentional and reasonable costs (and sacrifices) made in the common interest of the vessel and cargo in order to protect the vessel and cargo from danger.
Frequently asked questions are:
- Is there general average?
- Who determines whether that is the case?
- Am I to pay or am I entitled to payment? And, if so, how much?
The classic example of general average is jettison of cargo. This situation no longer occurs frequently. Nowadays, the allocation of damages and costs in general average more often concerns extinguishing fires aboard vessels, stranded vessels that require refloating and vessels with engine problems that have to be towed to a port of refuge in order to be repaired.
The apportionment in general average is done by an average adjuster, usually on the basis of one of the versions of the York-Antwerp Rules (‘YAR’), the worldwide standard conditions for the adjustment of average general disbursements. However, the YAR are not always applicable. Moreover, there are different versions and the YAR do not provide for a full general average regime. The question whether a specific version of the YAR is applicable and, if so, which version, may make a big difference in the outcome of the payment to be made or, vice versa, received. After all, also other parties than shipowners that have made costs or have suffered damages may be entitled to payment.
Moreover, if a damage or expense is qualified as general average, this does not automatically imply that the claim shall be paid immediately. If the party claiming general average is liable for the event that caused the general average expenses (so for instance the fire or the grounding of the vessel), most legal systems allow that defence are raised. Whether or not there is a situation of general average and whether or not a contribution is to be paid, is decided by the court.
In the event of a general average situation, securities are invariably requested for the amount that will become payable at a later point in time. Under some legal systems, the carrier is even obliged to arrange for such security on behalf of all parties with a general average claim. The wording of the security documentation (‘average bond’ and ‘average guarantee’) are often essential for the outcome of the case. Therefore, in order to avoid that are prejudiced it is of importance to closely review the wording of the average bond and average guarantee.
Van Traa assists cargo interested parties, shipowners, charterers as well as their respective insurers in general average cases. Especially since the average adjuster is viewed as an agent of the shipowner in some jurisdictions, legal assistance for other interested parties is not a luxury.
Our lawyers are very experienced in general average cases. In specific Jolien Kruit acts, teaches and publishes a lot on the subject. She wrote a PhD on the subject and is a member of the general average committee of the Dutch Transport Law Association (Nederlandse Vereniging voor Vervoerrecht), for which purpose she was involved in the drafting of the most recent version of the York-Antwerp Rules, the YAR 2016.
