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Maritime Forum

TOPIC: What is General Average

What is General Average 14 Jul 2013 00:26 #4252

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Imagine a situation at sea like a fire or severe storm or the Kraken or any other life threatening situation.. Under such circumstances, the master of the ship (as a last resort) might be forced to jettison (throw overboard) some or all cargoes that are on the ship in order to save part or whole of the ship..

When such situation occurs, the ship declares a legal principle of Maritime Law termed “General average”.. Under this principle, all parties who are involved in that voyage, shall be asked to proportionally share the losses resulting from such sacrifice.. All parties including all merchants whose cargo landed safely would also be called to contribute a portion, based upon a share or percentage, to the merchant or merchants whose goods had been jettisoned in order to avert danger to the whole ship/crew..

General Average is defined by York Antwerp rules 1994 and these rules lay guidelines for the distribution of loss in the event of General Average..

The rule states the apportionment of losses amongst the parties involved in any maritime adventure in case of an extra ordinary sacrifice or if the expenditure is made intentionally with proper justification that the causes for the same involved preserve the other property from risk of being lost.

The underlying cause which led to introduction of General Average was, in event of the grave situations where safety of ship, crew members and cargo was jeopardized.

It’s always a difficult decision for ship’s crew to take appropriate action to save the interests of cargo owners and the ship. The time constraints in such exigencies don’t allow the ship’s crew to decide which cargo to jettison and which to leave. Consequently there would be a hot debate arising among cargo and ship owners as to whose cargo has been jettisoned and whose interests compromised. The loss being totally on the account of the person whose cargo has been discharged.

Thus, in order to regulate unprejudiced interests of all those parties who enter into a common maritime venture, a powerful tool named General Average was introduced, in the York Antwerp rules of 1890 and later reviewed and amended recently in 1994.

The clauses of General Average under the York Antwerp Rules 1994 can be simplified as under

1. A loss is deemed to be considered under general average if and only if the reason of sacrifice is extraordinary or the sacrifice is reasonably made for the purpose of common safety for preserving the property involved .E.g. Capsizing due to inclement weather condition, shifting of cargo leading to excessive listing of vessel

2.When two or more vessels are pushing or towing and are involved in a commercial reason, then general average applies if they disconnect from each other in order to preserve the vessel and the cargo.

3.General average shall be applied only for those losses which are linked directly with the material value of the cargo carried or the vessel. Any claims arising due to the delay, a loss or expense caused due to loss of market or any indirect loss must not be accounted into general average

4.Each party’s share in the general average should not be determined by fault based approach. The risk borne by all should be equal in all aspects. Though if one of the parties actions has resulted in the loss, legal actions can be taken against those actions

5.Average adjusters are individuals or institutions looking after claims arising due to general average. The parties of a general average claim should send a written notice to them within 12 months from the date of termination of the common maritime agreement between the partiesinvolved. If they do not receive this notice the adjusters are entitled to proceed with all available information with them

6.If a vessel or cargo is damaged by water, including damage by beaching or sinking a burning ship in order to extinguish the fire, then that damage shall be countable as general average. Also if a vessel is grounded intentionally for common safety, it excludes damage caused by smoke or heat of fire.

7.When two or more vessels are pushing or towing and are involved in a commercial reason, then general average applies if they disconnect from each other in order to preserve the vessel and the cargo

8.General average shall be applied only for those losses which are linked directly with the material value of the cargo carried or the vessel. Any claims arising due to the delay, a loss or expense caused due to loss of market or any indirect loss must not be accounted into general average

9.Each party’s share in the general average should not be determined by fault based approach. The risk borne by all should be equal in all aspects. Though if one of the parties actions has resulted in the loss, legal actions can be taken against those actions
Average adjusters are individuals or institutions looking after claims arising due to general average. The parties of a general average claim should send a written notice to them within 12 months from the date of termination of the common maritime agreement between the partiesinvolved. If they do not receive this notice the adjusters are entitled to proceed with all available information with them

10.If a vessel or cargo is damaged by water, including damage by beaching or sinking a burning ship in order to extinguish the fire, then that damage shall be countable as general average. Also if a vessel is grounded intentionally for common safety, it excludes damage caused by smoke or heat of fire
Last Edit: 14 Jul 2013 00:27 by admini.
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