Prof. Dr. Klaus Peter Berger, LL.M.transnational lawtransnational law (lex mercatoria or international business law) and "Adjustment of general average in maritime transport"2024-06-17 10:22:05https://www.trans-lex.org/img/logo_ball.png
No. X.2 - Adjustment of general average in maritime transport
The York-Antwerp Rules apply to the adjustment of general average („avarie grosse“, „havarie grosse“) in maritime transport to the exclusion of any domestic law and practice inconsistent with these Rules.
1 The law on General Average (GA) concerns the sharing of certain types of losses and expenses between ship owner and cargo owners in the event of a casualty during a sea voyage. The assessment of allowable losses and expenses is carried out by an independent professional called an average adjuster, who is usually appointed by the shipowner and who then divides the total GA amount in proportion to the value of all property that has been saved and reaches destination, in a final adjustment report (dispache).
2 The legal rules on GA are based on the understanding that the potentially dangerous nature of a sea transport, which affects all parties to a sea voyage in an equal way, must be reflected in the liability for losses and expenses that occur during such a transport. According to the legal principles of GA, all stakeholders in a sea transport (shipowners, charterers, masters, etc.) are members of a risk-sharing community and, for that reason, must proportionately share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency situation. For instance, should the crew jettison some cargo to lighten the ship in a storm, the loss would be shared, according to traditional GA principles, pro rata by both the carrier and the cargo-owners. The same would apply in case of terrorist attacks, a problem which has become very acute in recent years.
3 The legal principle of jettison of cargo as part of GA has been a generally accepted legal principle of maritime law since ancient times. The noun jettison comes from Anglo-French geteson, which means literally "action of throwing" and is related to the Latin verb jactare, meaning "to throw." Today, it refers to a voluntary sacrifice of cargo to lighten a ship's load in time of distress, and it is the source of the word jetsam, the name for goods jettisoned. Early traces of legal principles relating to jettison can be found in the Rhodian Sea Law of 800-600 BC („Lex Rhodia de iactu“) which was subsequently adopted by Roman jurisprudence in Title 14.2 of Emporer Justinian‘s Digest dating from the sixth century AD: „When for the relief of a ship in distress at sea (laborante nave), goods have been thrown overboard, the loss caused by the casting at sea shall be compensated by the contribution what has been given for all (pro omnibus)". Even today, this solidarity aspect of the ancient Lex Rhodia de iactu forms the basis of GA as a fundamental principle based on the idea of a maritime risk-sharing community of those involved in a maritime sea transport.
4 Reference to the jettison principle of Roman law was later made in Artt. 8, 9 and 35 of the highly influential Rȏles d’Oléron which were written between 1160 and 1286. Through the dissemination of the Rȏles in Europe, the legal principles on jettison found their way into the English Black Book of the Admiralty of circa 1360 and into the Wisbuy Sea Law (Waterrecht tho Wisby). The Sea Law was created in the 1400s and was based on the Gotland Sea Law and on the Flemish/Dutch translation of the Rôles d’Oléron (Vonnesse van Damme) which was created in the town of Damme, at that time the outer port of Bruges. Through the Wisbuy Sea Law, the Rôles influenced the Sea Law of the Hanseatic League of May 1614, as well as the Marine Ordinance ("grande ordonnance de la marine", „code de la marine“) of August 1681 of the French King Louis XIV. In addition, the Rôles provided a model for the many maritime ordinances or similar texts and compilations of important seaports of those days: Arles (1150), Marseille (1162), Genoa (1186), Venice (1205, 1255), Aragon (1270 and 1340), Hamburg (1301/06), Barcelona (1434, 1458, 1461 and 1484); Florence (1523), Burgos (1538), Bilbao (1560), Middleburg (1600), Rotterdam (1604, 1635 and 1655), and Rouen („Le Guidon de la Mer“, 1666). These and other early non-statutory rules and regulations in the area of maritime law are described in more detail in the Introduction.
5 In light of their very long history dating back thousands of years, the legal principles governing GA must be qualified as the archetype of legal rules of both the ancient as well as the modern Lex Maritima, which forms a sub-category of transnational commercial law.
6 From their early manifestations, the principles on GA („iactus“) have found their way into the maritime laws of many countries. However, in global maritime practice, the York-Antwerp Rules (the Rules) have long since replaced these statutory provisions of domestic law: „These non-legal, non-binding Rules seem to have indirectly bound most maritime contracts and have gained general acceptance as the laws of the subject“ (Foster, General Average - A Unique Indemnification Feature of Admiralty, N.C.Cent.L.J. 1972, 114, 124; see also Simonds v. White 2 B. & C. 805, 811, 107 Eng. Rep. 582, 584 (1824), per Abbott, C.J.: "The principle of general average ... is of very ancient date, and of universal reception among commercial nations. The obligation to contribute, therefore, depends not so much upon the terms of any particular instrument as upon a general rule of maritime law." The Swiss legislature has expressly acknowledged the legal nature of the Rules as a substitute for domestic law. Art. 122 (2) of the Swiss Law on Shipping under Swiss Flag provides that „[t]he provisions of the York-Antwerp Rules apply to General Average.“ Other legislatures have either followed the Swiss example or have incorporated the Rules into their own law as non-mandatory statutory provisions.
7 Discussions about drafting non-statutory uniform rules on GA began in the English seaport of York in 1864 and were continued in the Belgian seaport of Antwerp in 1877. As a result of these and other debates, the York-Antwerp Rules were first published by the International Law Association in 1890 together with a recommendation that all charterparty contracts should be based on them. A revised and expanded version of the Rules was published by the Comité Maritime International (CMI), one of the most influential formulating agencies in global maritime law, in 1974. Further revised versions were published by the CMI in 1994 and 2004. However, the 2004 Rules, although very popular in North America, were only rarely used in charters and bills of lading drafted in the United Kingdom. They were therefore substituted by the 2016 version of the Rules, with a necessary technical alteration (to the interest provision in Rule XXI) made at the CMI Conference in Antwerp in October 2022.
8 There is no uniformity in the application of the different versions of the Rules in maritime practice. Art. 63 together with Annex IV of the Swiss Maritime Shipping Ordinance provide that the 1974 version of the Rules shall apply to GA for ships sailing under Swiss flag. The highly influential BIMCO (Baltic and International Maritime Council) master charterparty contracts used to contain GA clauses that referred to the 1994, or to a lesser extent, to the 1974 version. At its meeting of May 10, 2016, BIMCO’s Documentary Committee decided that all new BIMCO charterparties, bills of lading and waybills shall refer to the 2016 version of the Rules and that references to earlier versions of the Rules shall be gradually replaced in the online versions of these documents by a reference to the 2016 version. In light of the fact that, as stated at Para. 6 above, maritime practice prevails over statutory law in the field of GA, the 2016 version of the York-Antwerp Rules represents today the transnational legal standard of GA in global maritime law. Consequently, the English Commercial Court has held in the Star Antares judgement of 2023 that a clause in a bill of lading providing that GA shall be adjusted, stated and settled according to the York-Antwerp Rules 1994, „or any subsequent modification thereof…“ must be interpreted today as referring to the 2016 version of the Rules (Star Axe I LLC v Royal and Sun Alliance Luxembourg S.A. - Belgian Branch and others (the “STAR ANTARES”) [2023] EWHC 2784 (Comm)).
9 In an effort to make the complex system of GA more accessible to parties not familiar with the subject, the Standing Committee on GA of the CMI, produced a handbook (CMI GA Guidelines) which, in its Annex, also contains recommended standard security forms for GA cases. The Guidelines as well as the security forms have also been approved by the International Union of Marine Insurance (IUMI) and the International Chamber of Shipping (ICS).
10 Pursuant to Rule A of the York-Antwerp Rules a GA act requires that an extraordinary sacrifice or expenditure is 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. GA sacrifices and expenditures shall be borne by the different contributing interests on the basis provided in the Rules. Pursuant to Rule C.1 of the Rules, only such losses, damages or expenses which are the direct consequence of the GA act shall be allowed as GA. According to the „Rule Paramount“ of the Rules, in no case shall there be any allowance for sacrifice or expenditure unless reasonably made or incurred. Rule I provides that no jettison of cargo shall be allowed as GA, unless such cargo is carried in accordance with the recognized custom of the trade. Examples of damages in case of GA are stranding (e.g. the ship running aground on a sandbank), collision of a ship with reefs, rocks or icebergs, fires on board the ship, engine or rudder damage to the ship, or sticking of the ship due to low water, especially near ports. As a rule, compensation in general average is no longer settled today on a pro rata basis, but is calculated according to internal insurance standards, to be determined by an expert, the average adjuster (Rule E).
11 Pursuant to Rule D of the Rules, rights to contribution in GA shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the common maritime adventure, but this shall not prejudice any remedies or defences which may be open against or to that party in respect of such fault. Likewise, under English law and the law of several other countries, a shipowner is entitled to a GA contribution from cargo interests when the GA incident is caused by the fault of the owner or crew, provided the owner is not liable for that same conduct under the rules governing the contract of carriage. However, under US law, the default position is that an owner is not entitled to a GA contribution from cargo when the GA- event is caused by the owner’s or his agent’s fault or neglect. A standard New Jason Clause inserted in marine insurance policies confirms that cargo interests are required to contribute to GA when the event results from any cause whatsoever, whether due to negligence or not, or for the consequence of which the owner/carrier is not responsible by statute, contract, or otherwise. Thus, provided a New Jason Clause is incorporated into the marine insurance policy, the position under US law is like the position under English law.
12 After a GA has occurred, shipowners will usually demand security for the cargo’s proportion of the GA before they release the cargo to a consignee. Alternatively, and more frequently in maritime practice, shipowners will accept an underwriter’s guarantee procured by the consignee under which the underwriter agrees to pay the GA contribution due when the adjustment is completed.
Please cite as: "Commentary to Trans-Lex Principle , https://www.trans-lex.org/945200"
2 The legal rules on GA are based on the understanding that the potentially dangerous nature of a sea transport, which affects all parties to a sea voyage in an equal way, must be reflected in the liability for losses and expenses that occur during such a transport. According to the legal principles of GA, all stakeholders in a sea transport (shipowners, charterers, masters, etc.) are members of a risk-sharing community and, for that reason, must proportionately share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency situation. For instance, should the crew jettison some cargo to lighten the ship in a storm, the loss would be shared, according to traditional GA principles, pro rata by both the carrier and the cargo-owners. The same would apply in case of terrorist attacks, a problem which has become very acute in recent years.
3 The legal principle of jettison of cargo as part of GA has been a generally accepted legal principle of maritime law since ancient times. The noun jettison comes from Anglo-French geteson, which means literally "action of throwing" and is related to the Latin verb jactare, meaning "to throw." Today, it refers to a voluntary sacrifice of cargo to lighten a ship's load in time of distress, and it is the source of the word jetsam, the name for goods jettisoned. Early traces of legal principles relating to jettison can be found in the Rhodian Sea Law of 800-600 BC („Lex Rhodia de iactu“) which was subsequently adopted by Roman jurisprudence in Title 14.2 of Emporer Justinian‘s Digest dating from the sixth century AD: „When for the relief of a ship in distress at sea (laborante nave), goods have been thrown overboard, the loss caused by the casting at sea shall be compensated by the contribution what has been given for all (pro omnibus)". Even today, this solidarity aspect of the ancient Lex Rhodia de iactu forms the basis of GA as a fundamental principle based on the idea of a maritime risk-sharing community of those involved in a maritime sea transport.
4 Reference to the jettison principle of Roman law was later made in Artt. 8, 9 and 35 of the highly influential Rȏles d’Oléron which were written between 1160 and 1286. Through the dissemination of the Rȏles in Europe, the legal principles on jettison found their way into the English Black Book of the Admiralty of circa 1360 and into the Wisbuy Sea Law (Waterrecht tho Wisby). The Sea Law was created in the 1400s and was based on the Gotland Sea Law and on the Flemish/Dutch translation of the Rôles d’Oléron (Vonnesse van Damme) which was created in the town of Damme, at that time the outer port of Bruges. Through the Wisbuy Sea Law, the Rôles influenced the Sea Law of the Hanseatic League of May 1614, as well as the Marine Ordinance ("grande ordonnance de la marine", „code de la marine“) of August 1681 of the French King Louis XIV. In addition, the Rôles provided a model for the many maritime ordinances or similar texts and compilations of important seaports of those days: Arles (1150), Marseille (1162), Genoa (1186), Venice (1205, 1255), Aragon (1270 and 1340), Hamburg (1301/06), Barcelona (1434, 1458, 1461 and 1484); Florence (1523), Burgos (1538), Bilbao (1560), Middleburg (1600), Rotterdam (1604, 1635 and 1655), and Rouen („Le Guidon de la Mer“, 1666). These and other early non-statutory rules and regulations in the area of maritime law are described in more detail in the Introduction.
5 In light of their very long history dating back thousands of years, the legal principles governing GA must be qualified as the archetype of legal rules of both the ancient as well as the modern Lex Maritima, which forms a sub-category of transnational commercial law.
6 From their early manifestations, the principles on GA („iactus“) have found their way into the maritime laws of many countries. However, in global maritime practice, the York-Antwerp Rules (the Rules) have long since replaced these statutory provisions of domestic law: „These non-legal, non-binding Rules seem to have indirectly bound most maritime contracts and have gained general acceptance as the laws of the subject“ (Foster, General Average - A Unique Indemnification Feature of Admiralty, N.C.Cent.L.J. 1972, 114, 124; see also Simonds v. White 2 B. & C. 805, 811, 107 Eng. Rep. 582, 584 (1824), per Abbott, C.J.: "The principle of general average ... is of very ancient date, and of universal reception among commercial nations. The obligation to contribute, therefore, depends not so much upon the terms of any particular instrument as upon a general rule of maritime law." The Swiss legislature has expressly acknowledged the legal nature of the Rules as a substitute for domestic law. Art. 122 (2) of the Swiss Law on Shipping under Swiss Flag provides that „[t]he provisions of the York-Antwerp Rules apply to General Average.“ Other legislatures have either followed the Swiss example or have incorporated the Rules into their own law as non-mandatory statutory provisions.
7 Discussions about drafting non-statutory uniform rules on GA began in the English seaport of York in 1864 and were continued in the Belgian seaport of Antwerp in 1877. As a result of these and other debates, the York-Antwerp Rules were first published by the International Law Association in 1890 together with a recommendation that all charterparty contracts should be based on them. A revised and expanded version of the Rules was published by the Comité Maritime International (CMI), one of the most influential formulating agencies in global maritime law, in 1974. Further revised versions were published by the CMI in 1994 and 2004. However, the 2004 Rules, although very popular in North America, were only rarely used in charters and bills of lading drafted in the United Kingdom. They were therefore substituted by the 2016 version of the Rules, with a necessary technical alteration (to the interest provision in Rule XXI) made at the CMI Conference in Antwerp in October 2022.
8 There is no uniformity in the application of the different versions of the Rules in maritime practice. Art. 63 together with Annex IV of the Swiss Maritime Shipping Ordinance provide that the 1974 version of the Rules shall apply to GA for ships sailing under Swiss flag. The highly influential BIMCO (Baltic and International Maritime Council) master charterparty contracts used to contain GA clauses that referred to the 1994, or to a lesser extent, to the 1974 version. At its meeting of May 10, 2016, BIMCO’s Documentary Committee decided that all new BIMCO charterparties, bills of lading and waybills shall refer to the 2016 version of the Rules and that references to earlier versions of the Rules shall be gradually replaced in the online versions of these documents by a reference to the 2016 version. In light of the fact that, as stated at Para. 6 above, maritime practice prevails over statutory law in the field of GA, the 2016 version of the York-Antwerp Rules represents today the transnational legal standard of GA in global maritime law. Consequently, the English Commercial Court has held in the Star Antares judgement of 2023 that a clause in a bill of lading providing that GA shall be adjusted, stated and settled according to the York-Antwerp Rules 1994, „or any subsequent modification thereof…“ must be interpreted today as referring to the 2016 version of the Rules (Star Axe I LLC v Royal and Sun Alliance Luxembourg S.A. - Belgian Branch and others (the “STAR ANTARES”) [2023] EWHC 2784 (Comm)).
9 In an effort to make the complex system of GA more accessible to parties not familiar with the subject, the Standing Committee on GA of the CMI, produced a handbook (CMI GA Guidelines) which, in its Annex, also contains recommended standard security forms for GA cases. The Guidelines as well as the security forms have also been approved by the International Union of Marine Insurance (IUMI) and the International Chamber of Shipping (ICS).
10 Pursuant to Rule A of the York-Antwerp Rules a GA act requires that an extraordinary sacrifice or expenditure is 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. GA sacrifices and expenditures shall be borne by the different contributing interests on the basis provided in the Rules. Pursuant to Rule C.1 of the Rules, only such losses, damages or expenses which are the direct consequence of the GA act shall be allowed as GA. According to the „Rule Paramount“ of the Rules, in no case shall there be any allowance for sacrifice or expenditure unless reasonably made or incurred. Rule I provides that no jettison of cargo shall be allowed as GA, unless such cargo is carried in accordance with the recognized custom of the trade. Examples of damages in case of GA are stranding (e.g. the ship running aground on a sandbank), collision of a ship with reefs, rocks or icebergs, fires on board the ship, engine or rudder damage to the ship, or sticking of the ship due to low water, especially near ports. As a rule, compensation in general average is no longer settled today on a pro rata basis, but is calculated according to internal insurance standards, to be determined by an expert, the average adjuster (Rule E).
11 Pursuant to Rule D of the Rules, rights to contribution in GA shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the common maritime adventure, but this shall not prejudice any remedies or defences which may be open against or to that party in respect of such fault. Likewise, under English law and the law of several other countries, a shipowner is entitled to a GA contribution from cargo interests when the GA incident is caused by the fault of the owner or crew, provided the owner is not liable for that same conduct under the rules governing the contract of carriage. However, under US law, the default position is that an owner is not entitled to a GA contribution from cargo when the GA- event is caused by the owner’s or his agent’s fault or neglect. A standard New Jason Clause inserted in marine insurance policies confirms that cargo interests are required to contribute to GA when the event results from any cause whatsoever, whether due to negligence or not, or for the consequence of which the owner/carrier is not responsible by statute, contract, or otherwise. Thus, provided a New Jason Clause is incorporated into the marine insurance policy, the position under US law is like the position under English law.
12 After a GA has occurred, shipowners will usually demand security for the cargo’s proportion of the GA before they release the cargo to a consignee. Alternatively, and more frequently in maritime practice, shipowners will accept an underwriter’s guarantee procured by the consignee under which the underwriter agrees to pay the GA contribution due when the adjustment is completed.
Please cite as: "Commentary to Trans-Lex Principle , https://www.trans-lex.org/945200"