Review of General Average

General Average is a method of allocating and spreading the costs of dealing with a maritime casualty among the parties that benefit from the ship and cargo being saved. The York Antwerp Rules of General Average (YAR) set out rules for the distribution of losses and expenses, for example in incidents when cargo is jettisoned in order to save the ship and the remaining cargo. The system ensures that cargo gets to its destination and the voyage is not abandoned, and that the costs are evenly distributed.

The YAR are not compulsory, rather they take effect by incorporation into contracts of carriage. This is important because although the YAR were last revised in 2004, most contracts of carriage still incorporate the 1994 version because the 2004 version is considered unsatisfactory by shipowners.

The Comité Maritime International (CMI), the international association of maritime lawyers, is the custodian of the YAR. CMI is carrying out a general review of the YAR and has requested its International Sub-Committee to draft a new set of rules which ‘will meet the requirements of the ship and cargo interests and their respective insurers’ with a view to adoption at the CMI Conference in New York in May 2016.

ICS has a longstanding role in representing shipowners’ views whenever issues related to General Average are discussed and is therefore representing shipowners’ interests during the current review, co-ordinating its position with other interested shipowner associations through the ICS Maritime Law and Insurance Committees.

After nearly four years’ work, the project is now in the concluding stages. The final draft text for a new set of YAR was recently circulated for consideration by the national Maritime Law Associations at the CMI Conference. There has been little appetite for a comprehensive overhaul of the present, well-functioning system. Instead work has been focused on making practical improvements, for example on financial issues (commission, interest, currency of adjustment), and on areas that have been controversial in the past, including the rules concerning salvage, and the wages and maintenance of crew at a place of refuge. Draft guidelines have also been prepared to assist Average Adjusters in interpreting the proposed new Rules and the enhanced discretion that would be accorded to them.

Throughout the discussions, ICS has taken the position that any changes proposed must deliver clear improvement on the present system and not touch on fundamental principles if a new set of Rules is to be supported. The proposed ‘YAR 2016’ must continue to ensure an equitable balance between the interests of all parties in order to achieve consensus and ultimately be utilised in commercial contracts of carriage.

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