The York-Antwerp Rules 2016 were adopted by the Comité Maritime International in May 2016 without any resistance from any interests. The marine insurance industry was instrumental in revision. The 2004 rules were not accepted by ship owners. Even the Baltic and International Maritime Council did not want to incorporate the 2004 rules into its standard contracts. On approval by the CMI, BIMCO received the 2016 version with open arms. Though,York Antwerp Rules do not have status of International Convention, they do become effective when incorporated in contract of affreightment.
The lettered rules are in respect of general principles that constitute GA. The numbered rules on the other hand provide specific examples of sacrifice and expenditure. The priority is given to the numbered rule in case of a conflict with lettered rules. Thus for example, rule C excludes losses due to delay but rule XI states that certain (related / connected) detention expenses at a port of refuge (e.g. port charges, wages and maintenance) can be allowed. Thus, rule XI takes priority over rule C and such expenses can therefore be allowed. Following is the explanation to the numbered rules.
The examples of sacrifices in the York-Antwerp rules include: jettison of cargo; loss or damage by sacrifices for the common safety; extinguishing fire on shipboard; cutting away wreck; voluntary stranding; damage to machinery and boilers; cargo / ship’s materials and stores used for fuel; damage to cargo in discharging; loss of freight; etc
The examples of expenditure in the York-Antwerp rules include: salvage remuneration; expenses in lightening a ship when ashore, and consequent damage; expenses of port of refuge; wages and maintenance of crew and other expenses bearing up for and in a port of refuge; temporary repairs; etc.
Jettison of Cargo The principle of jettison is traced back to ancient Greece but the idea of GA may be even older. In 1860, the ground work for the first YAR was done at Glasgow Resolutions. The first numbered rule is the Jettison of cargo. It states, ‘No jettison of cargo shall be allowed as general average, unless such cargo is carried in accordance with the recognized custom of the trade’.
Loss or Damage by Sacrifices for the Common Safety
Loss of or damage to the property involved in the common maritime adventure by or in consequence of a sacrifice made for the common safety, and by water which goes down a ship’s hatches opened or other opening made for the purpose of making a jettison for the common safety, shall be allowed as GA
Thus, where a hatch is opened to jettison the cargo and seawater enters the hold, the damage caused by water to cargo within hold is allowed in GA.
Extinguishing Fire on Shipboard
Damage done to a ship and cargo, or either of them, by water or otherwise, including damage by beaching or scuttling a burning ship, in extinguishing a fire on board the ship, shall be allowed as GA; except that no allowance shall be made for damage by smoke however caused or by heat of the fire. Thus, during or before extinguishing the fire in lower hold, the damage caused to the tweendeck cargo by smoke from lower hold is not allowed in GA.
Cutting Away Wreck
Loss or damage sustained by cutting away wreck or parts of the ship which have been previously carried away or are effectively lost by accident shall not be allowed as GA.
When a ship is intentionally run on shore for the common safety, whether or not she might have been driven on shore, the consequent loss or damage to the property involved in the common maritime adventure shall be allowed in GA. Thus, to prevent sinking, if sacrifice is made by beaching the vessel, hull may get further damaged. The subsequent damage to property to the extent allowed in rules is allowed as GA.
Expenditure incurred by the parties to the common maritime adventure in the nature of salvage, whether under contract or otherwise, shall be allowed in GA, provided that the salvage operations were carried out for the purpose of preserving from peril the property involved in the common maritime adventure and subject to certain provisions:
There are a few changes done here to the earlier YARs. Thus, if the ship and cargo have already paid salvage separately (in particular under Lloyd’s Open Form of Salvage Agreement, or “LOF”) based on salved values at the termination of the salvors’ services, the allowance of salvage in GA, requiring re-apportionment over contributory values assessed at the termination of the adventure, may only give rise to additional cost and delay. This was generally allowed in 1994 Rules, whereas under the 2004 this allowance was curtailed. An intermediate attempt is made by the 2016 Rules. If the parties to the adventure have a separate contractual or legal liability to salvors ( say, different amount paid), salvage remuneration will only be allowed in GA if one or more of certain stipulated criteria are fulfilled, and if they are significant. No definition has been provided of the word “significant”, which appears several times in the new rule. The adjuster will exercise his or her discretion when judging whether a criterion is fulfilled.
The idea being, in salvage apportionment of charges according to stakes is already done so the cost of re-apportionment may be avoided if the difference in result is not substantial. As the CMI Guidelines explain, if re-apportionment of salvage as GA would not produce a reasonable change in the figures or would be disproportionately costly, salvage should be omitted from the adjustment. For example if there is a subsequent accident or other circumstances resulting in loss or damage to property during the voyage and the value of salved property itself changes considerably the reapportionment and allowing of salvage would be necessary.
Additionally, the following must be considered:
1. Salvage expenditures shall include any salvage remuneration in which the skill and efforts of the salvors in preventing or minimising damage to the environment such as is referred to in Article 13 paragraph 1(b) of the International Convention on Salvage, 1989
2. Special compensation payable to a salvor by the shipowner under Article 14 of the International Convention on Salvage, 1989 to the extent specified in paragraph 4 of that Article (over and above article 13 reward) or under any other provision similar in substance (such as SCOPIC) shall not be allowed in general average and shall not be considered a salvage expenditure.
Damage to Machinery and Boilers
Damage caused to any machinery and boilers of a ship which is aground trying to refloat, shall be allowed in GA when there is intention to float the ship for the common safety; but where a ship is afloat such loss or damage is not allowed as GA.
Thus, a ship that never ran aground cannot attribute damage to machinery or boiler to refloating efforts.
Expenses in Lightening a Ship when Ashore, and Consequent Damage When a ship is aground and cargo and ship’s fuel and stores or any of them are discharged as a general average act, the extra cost of lightening, lighter hire and reshipping (if incurred), and any loss or damage to the property involved in the common maritime adventure in consequence thereof, shall be allowed as GA.
Thus, not only the lightening expenses but even the damge to cargo during loading / unloading is considered in GA.
Cargo, Ship’s Materials and Stores Used for Fuel
Cargo, ship’s materials and stores, or any of them, necessarily used for fuel for the common safety at a time of peril shall be allowed as GA, but for this, the estimated cost of the fuel which would otherwise have been consumed in prosecuting the intended voyage.
Thus, if an expensive material burnt will not fetch a price morethan the equivalent cost of regular fuel. This stipulation is however, for ship’s material and not cargo.
Expenses at Port of Refuge, etc.
When a ship enters a port or place of refuge or place of loading after an accident, sacrifice, etc for the common safety, the expenses shall be allowed as GA; also the expenses of leaving such port or place shall likewise be allowed as GA. Thus, POR expenses would be allowed subsequent to extreme heavy weather, collision, machinery break down, etc.
If repairs cannot be carried out in the first port or place, the similar provisions will be applied to the second port or place. The cost of such removal including temporary repairs and towage shall be allowed as GA. Wages, etc shall be applied to such prolongation of the voyage.
Any handling or discharge was necessary for the common safety or to repair damage caused by sacrifice or accident to and necessary for the safe prosecution of the voyage is allowed but if damage to the ship is discovered at such port or place without any accident or other extraordinary circumstances connected with such damage is not considered. Relevant cost for stowage, wages and insurance is also allowed as GA.
Thus, if a ship gets grounded. Having considered the various options, Master decides to jettison the cargo of ‘A’. The ship gets damaged during the grounding. She comes to port of refuge discharges more cargo and undergoes repairs. This way the ship and the other cargoes become safe. Ship is able to complete the rest of the voyage now. In order to complete the voyage and the cargo to reach destination the expenses at port of refuge were necessary so must be allowed. Thus, reaching a place of safety only meant, the success only partly achieved. The aim of the adventure was to reach destination with cargo rather than safety at intermediate place. Hence the expenses directly connected to GA expenses or sacrifice also must be considered in GA. If restowage due to shifting during the voyage, is not for common safety, it is not allowed.
When the ship is condemned or does not proceed on her original voyage, storage expenses shall be allowed as GA only up to the date of the ship’s condemnation or of the abandonment of the voyage or up to the date of completion of discharge of cargo if the condemnation or abandonment takes place before that date.
Wages and Maintenance of Crew and Other Expenses Putting in to and at a Port of Refuge, etc.
Wages, etc of ship’s staff, during the prolongation of the voyage caused on account of port or place of refuge or returning to her port or place of loading shall be allowed as GA when the relevant expenses are allowable in GA. In such place or port if detention is necessary for the common safety, or to enable damage to the ship caused by sacrifice or accident to be repaired, ( necessary for the safe prosecution of the voyage), the wages, etc incurred during the extra period of detention shall be allowed in general average. Even the port charges fuel and stores consumed during the extra period of detention shall be allowed.
Above stated costs for extra period are not allowed when damage to the ship is discovered at a port or place of loading without any accident or other extraordinary circumstance connected with such damage.
When an operation is performed by a party outside the common maritime adventure, to prevent or minimise damage to the environment which entitles such party to a salvage reward, expenses are allowed as GA. However, when there is an actual escape or release of pollutant substances, the cost of any additional measures required on that account to prevent or minimise pollution or environmental damage shall not be allowed as GA;
Damage to Cargo in Discharging, etc.
Damage to or loss of cargo, fuel or stores sustained in consequence of their handling, discharging, storing, reloading and stowing shall be allowed as GA, when and only when the cost of those measures respectively is allowed as GA.
Deductions from Cost of Repairs
Repairs to be allowed in GA shall not be subject to deductions in respect of “new for old” where old material or parts are replaced by new unless the ship is over fifteen years old in which case there shall be a deduction of one third.
Thus if the replacement during the repairs are done for a ship that is less than 15 years of age, no deductions are done for the cost of replacement.
The deductions shall be made only from the cost of the new material or parts when finished and ready to be installed in the ship. No deduction shall be made in respect of provisions, stores, anchors and chain cables. Drydock and slipway dues and costs of shifting the ship shall be allowed in full. The costs of cleaning, painting or coating of bottom shall not be allowed in GA unless the bottom has been painted or coated within the 24 months preceding the date of the general average act in which case one half of such costs shall be allowed.
Loss of Freight
Loss of freight arising from damage to or loss of cargo shall be allowed as GA, either when caused by a general average act, or when the damage to or loss of cargo is so allowed. Deduction shall be made if the sacrifice is not incurred.
Amount to be Allowed for Cargo Lost or Damaged by Sacrifice
The amount to be allowed as GA for damage to or loss of cargo sacrificed shall be based on the value at the time of discharge, ascertained from the commercial invoice rendered to the receiver or if there is no such invoice, from the shipped value, which may be deemed to reflect the value at the time of discharge.
Thus, the contributory values and GA losses in the value of the property to its owner are considered at the termination of the adventure. In the case of goods there is an exception to this under the York-Antwerp Rules, in that they contribute on the basis of their invoice or shipped value. This is for the practical ease and economy. Due to this the amount of contribution may be varied by further loss or damage to the property between the time of the GA act and the termination of the adventure. Normally, the adventure is considered as terminated on completion of discharge of cargo at the port of destination. If there is an abandonment of the voyage at an intermediate port then the adventure terminates at that port.
In computing the GA contribution two very important principles are used:
1. Charges incurred on property after GA act must be deducted so that owner of property contributes according to the actual benefit he has received by deducting relevant expenses to get that benefit.
2. The owner of property sacrificed and the owner of saved property must contribute in similar way. Thus, contributory value of property lost or damaged by GA sacrifice is added to the amount allowed in GA in respect of sacrifice.
To the values in respect of cargo and ship, shall be added the amount allowed as GA for property sacrificed, if not already included, deduction being made from the freight and passage money at risk of such charges and crew’s wages as would not have been incurred in earning the freight had the ship and cargo been totally lost at the date of the general average act and have not been allowed as GA; deduction being also made from the value of the property of all extra charges incurred in respect thereof subsequently to the general average act, not allowed in GA, where payment for salvage services has not been allowed as GA. Where cargo is sold short of destination, however, it shall contribute upon the actual net proceeds of sale, with the addition of any amount allowed as GA. Mails, passengers’ luggage and accompanied personal effects and accompanied private motor vehicles shall not contribute to GA.
Provision of Funds
The capital loss sustained by the owners of goods sold for the purpose of raising funds to defray general average disbursements shall be allowed in GA. The cost of insuring GA disbursements shall also be allowed in GA.
Interest on Losses Allowed in General Average
Interest shall be allowed on expenditure, sacrifices and allowances in GA until three months after the date of issue of the GA adjustment, due allowance being made for any payment on account by the contributory interests or from the GA deposit fund.
Treatment of Cash Deposits
Where cash deposits have been collected in respect of GA, salvage or special charges, such sums shall be remitted forthwith to the average adjuster who shall deposit the sums into a special account, earning interest where possible, in the name of the average adjuster.
Following are sample examples to show the methodology used in GA computation:
Ex1. A ship of value Rs 60,000k (Rs 60 million), carried cargo worth Rs 122,000k of 3 consignees as follows:
A: Rs 22,000k, B: 60,000k & C: 40,000k. A large fire occurred on the vessel. The vessel had to be scrapped. The cargo destroyed was as follows:
A: Complete, B: 14,000k & C: Nil.
The salved value of ship was 7500k. The costs of extinguishing the fire and getting the vessel safely back to port cost Rs 25500k. Miscellaneous legal, office, etc expenses made in respect of the incident were Rs2000k. Make a GA statement.
Vessel worth prior to the fire = 60,000k
Cargo worth prior to the fire = 122,000k
Total value prior to the fire = 182,000k…………………..(1)
Salved value of ship after the fire = 7500k (loss = 52500k)
Salved value of cargo after the fire = 122,000k-36,000k = 86000k
Total salved value of ship and cargo after the fire = 93,500k…………………….(2)
Loss of value of ship and cargo = (1) – (2) = 88,500k
The costs of ext. fire getting the vessel safely back = 25500k
Administrative cost = 2,000k
Total losses = 116,000k…………………… (3)
Percentage loss = %
Transactions will be as follows:
A: will get Rs 22,000k as GA proceeds and will be charged 63.73626% of value(22,000k) i.e. Rs 14021.98k. Thus will receive 22,000k – 14021.98k = 7978k………(4)
B: get Rs 14,000k as GA proceeds and will be charged 63.73626% of value(60,000k) i.e. Rs 38241.76k Thus, must pay (38241.76k-14,000k)= 24241.76……………….(5)
C: Will be charged 63.73626% of value (40,000k) i.e.25494.5k……………(6)
Ship owner will be charged 63.73626% of 60,000k = 38241.76k. He will get GA proceeds re loss and expenses = 52500k + 25500k + 2000k = 80,000k. Thus, he will receive 80,000k – 38241.76k = 41758.24k………..(7)
Note: (4) + (7) = (5) + (6)
Ex 2 A ship ran aground loaded with cargo. In attempt to refloat she incurred damage to hull and machinery. Some cargo was jettisoned but to no avail. Thereafter some cargo was offloaded into barge to load later. Salvage tug assisted in refloating. Later vessel sailed to destination port after reloading. The details as follows:
Cost of repairs of damage to machinery Rs 13750k
Cost of discharging to barge and reloading Rs 5000k
Salvage to tugs Rs 55200k
Value of cargo jettisoned to refloat Rs 22500k
Damage to cargo in load / discharging Rs 4400k
Arrived value of ship at destination (damaged) Rs 337500k
Invoice value of cargo after deduction of loss / Damage Rs 804000k
Make a GA statement.
Ship owner’s losses, expenses, etc = Cost of [repairs + disch / reloading + salvage]
= Rs 13750k + Rs 5000k + Rs 55200k]
= Rs 73950k
Cargo owner’s losses = Value of cargo jettisoned to refloat +
Damage to cargo in load / discharging = Rs 22500k + Rs 4400k
= Rs 26900k
Tot losses, expenses = 100850k………………………………(1)
Value of ship at termination of adventure = Value damaged + allowance for repairs
= Rs 337500k + Rs 13750k
Invoice value of cargo after deduction of loss / Damage + allowance for jettison and loss in disch / reload = Rs 804000k + Rs 22500k +Rs 4400k
= Rs 830900k…………………………(3)
Total of 2 & 3 = Rs 1182150k……………………….(4)
(1) x 100 / (4) = 8.53%
Shipowner will have to pay 8.53% of (2) = 29961.62k but will receive credit for GA losses and expenses = Rs 73950k and thus, will receive = 43988.37k……….(5)
Cargo owner will receive credit for GA losses = Rs 22500 k + Rs 4400 k = 26900k. He will pay 8.83% of (3) = Rs 70875.77k. Thus, he will pay 70875.77 k – 26900 k = 43975.77k………(6)
(5) approximately (6). Slight difference is due to rounding of percentage decimal to two digits.
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