General average; important mechanism for a new economy
July 2019
General average; important in practice and for academic purposes
General Average or abbreviated "GA" is the maritime concept of apportionment of extraordinary sacrifices or expenditures 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. Regardless of its impressive age, the concept is still alive and kicking. In maritime practice, general average is declared almost on a daily basis. In addition to its frequent application in practice, the concept is currently the subject of extensive research into risk management.
Risk spreading to facilitate trade
Like insurance, general average is in essence a form of risk-spreading to facilitate trade. Unlike insurance, little research has been done on general average from that perspective. The European Research Council funded project "Average - Transaction Costs and Risk Management during the First Globalization (Sixteenth-Eighteenth Centuries)" is changing this.
General average as a mechanism for a new economy
The purpose of the project is to examine the historical application of general average with the purpose of establishing the possibilities, if any, for a new way of distributing future risks. Not so much for general average or for shipping purposes, but for the whole economic system. General average and its various applications are being studied as a potential mechanism for a new economy. In the words of project leader Prof. Maria Fusaro, "We can learn a great deal from the long-term development of GA to analyze the best possible way to govern transactions and markets”.
In other words, general average is a source for future innovation. Who would dare to say that the concept is outdated?
More information about the project can be found at: http://humanities.exeter.ac.uk/history/research/centres/maritime/research/avetransrisk/
During the congress held in Genoa on 16 to 18 May 2019, the various researchers involved presented their findings to date. Jolien Kruit participated in the 'round table discussion' in which practitioners talked about current practice and current concerns.
