The York-Antwerp Rules: The Principles and Practice of General Average Adjustment

N. Geoffrey Hudson, Michael Harvey

• Publisher: Informa Law from Routledge
• Year: 2017
• ISBN:
  9781351853354
• Edition: 4
• Topic: Droit
• Subtopic: Droit maritime

Written from the perspective of the Average Adjuster, and updated to include a detailed analysis of the new rules adopted in 2016, this book is an essential read for practitioners in maritime law and marine insurance.

The book contains:

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• historical references regarding the establishment of General Average from Roman Law onwards;

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• details of the establishment of International rules to achieve uniformity in the adjustment of General Average and their development:

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  • the Glasgow Resolutions of 1860;

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  • the York rules of 1864; and

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  • the York-Antwerp Rules 1877, 1890, 1924, 1950, 1974, 1994, 2004 and 2016;

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• a detailed analysis of the York-Antwerp Rules 2016;

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• CMI Guidelines relating to General Average;

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• general average security;

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• general average absorption clauses; and

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• new to this edition: insurance of average disbursements.

PART I
BACKGROUND

CHAPTER 1

General Average – Ancient and Modern

O hear us when we cry to Thee

For those in peril on the sea.

1.01 The stirring words of the well-known hymn remind us that the transport of the world’s produce over the oceans from one country to another is still a hazardous undertaking. Despite all the advances in ship construction and marine engineering, and the technical sophistication of modern navigational equipment, the sea continues to take its toll on the ships and cargoes which ply their trade on the great waters. Any system which has as its object the prevention of loss by maritime peril therefore deserves the support and understanding of all who earn their living by seaborne trade.

1.02 General average is such a system. It has to do with losses suffered and expenses paid by the parties to a common maritime adventure in order to avert a peril which threatens it. Furthermore, the system provides within itself for the equitable redistribution of the cost of the loss prevention measures by dividing that cost over the value of the property involved.

1.03 In this respect the system of general average has a great deal in common with maritime salvage: at root both are a form of ransom from total loss, but whereas salvage has to do with the payment of a reward for the exertions of a party who stands outside the common maritime adventure, general average is concerned to regulate the position as between the parties to the adventure inter se. Of the two systems, that of general average is by far the older and, as we shall see when we examine their interrelationship,¹ it is also more flexible and sophisticated.

The origin of general average

1.04 Historical records tell us that systems of general average, involving a contribution from the interests involved in a common maritime adventure, have been in existence since the earliest days of seaborne traffic. The object of the system was to encourage ship masters and others who sailed with them to exert themselves to save the ship and its cargoes whenever a peril threatened the joint adventure. The prime example is the consent given by the owners of cargo to the ship master to make a judicious and timely sacrifice of their property, in the knowledge that their loss would be made good to them by rateable contribution from the other interests on the completion of the voyage.

1.05 Legal recognition of this consent, accorded the status of custom, appears in Justinian’s Digest,² and reads as follows:

The Rhodian Law provides that if in order to lighten a ship merchandise is thrown overboard, that which has been given for all shall be replaced by the contribution of all.³

1.06 Sir James Allan Park opined⁴ that although the above-quoted extract from the Digest of Justinian was promulgated in ad 553, the law of the sea on which this passage was based may well have been in existence since the ninth century bc. Readers of the New Testament will know that on St. Paul’s journey as a prisoner to Rome, his ship was wrecked on the coast of Malta. It is recorded in the Acts of the Apostles that the Master, after consulting with the merchants, ordered the tackle on deck to be jettisoned, unfortunately without avail.⁵ This was a general average act, even though it failed in its aim to save the maritime adventure.

General average in the Middle Ages and after

1.07 Despite the collapse of the social and economic regimes that had been preserved for so long by the Roman empire, the customs of seafarers changed little, and the notion that a sacrifice of goods or other property for the common safety should be made good by a general contribution, was one of the customs that was common to all recorded sea law. Of course these customs developed in different ways in different times and trades, as is evidenced from the records of decisions which survived and which have been analysed with great diligence by writers in the nineteenth and early twentieth centuries. These records include:

• The Rolls of Oleron, which date from the late eleventh century.

• The Consolado del Mare, which consolidate the customs of seafarers in the western Mediterranean.

• The Farmannalog, which is a codification of Norse sea law established about 1270 under the authority of the Norwegian king Magnus Haakonson.

• The ordinance of Amsterdam, ascribed to a conference of shipowners and merchants in that port in 1407.

• The Laws of Visby, which were a kind of compilation of existing sea law derived from earlier sources.

1.08 The customs of Mediterranean origin emphasise that before a sacrifice of property could be made in time of peril, there had to be a measure of consultation between the master and the merchants who accompanied their cargoes. Perhaps because of this real community of interest, it was also common for the master and merchants to agree to bring into contribution other kinds of losses and expenses which had as their object the successful prosecution of their joint adventure. In this category there were such expenses as the engagement of a pilot, or the hire of lighters when a ship arrived deeply laden at her port of destination. Ultimately, two different classes of expenditure were distinguished: those which derived from an accident which threatened the adventure, as when the ship was driven into a port of refuge; and those which were incurred merely for the inconvenience of the voyage. The former came to be included within general average, whereas the latter class of expense became known as petty average, which under the Prussian maritime code of 1727, for example, was borne in the proportion of one third to ship and two thirds to cargo.

1.09 With the increase in commerce that accompanied the Renaissance, merchants no longer considered it necessary to accompany their goods and were prepared to rely upon the confidence they reposed in the master of the ship, backed by the legal rights which they enjoyed under the bill of lading concept. Even so, the laws of many Mediterranean countries continued to provide that there should be consultation between the master and members of the crew in order to justify making a sacrifice of property or engaging upon a general average act.

1.10 These formal remnants from olden times demonstrate the extent to which the institution of general average was founded upon the consensus of the parties to the adventure. In the author’s opinion, this is significant since, as we shall see, the development and refinement of the basic principles of general average that have taken place in the nineteenth and twentieth centuries, through the adoption of the York-Antwerp Rules, resulted from the influence of commercial interests, rather than the dictate of governments.

General average in English law

1.11 Beginning with the Ordonnance de la Mer of 1681,⁶ the majority of European countries proceeded to publish codes of maritime law which incorporated provisions as to general average. This has not been the route followed in the common law countries. No code of general average exists in England or the United States. Since the earliest times, English law and practice have developed hand in hand: even now the records of decisions in the courts of law combined with the Rules of Practice of the Association of Average Adjusters (which in many instances are derived from the customs of Lloyd’s) provide in themselves an adequate working system, based upon knowledge acquired by actual experience.

1.12 However, there is also a statutory definition of general average which is provided in section 66 of the Marine Insurance Act 1906, reading as follows:

(1) A general average loss is a loss caused by or directly consequential on a general average act. It includes a general average expenditure as well as a general average sacrifice.

(2) There is a general average act where any extraordinary sacrifice or expenditure is voluntarily and reasonably made or incurred in time of peril for the purpose of preserving the property imperilled in the common adventure.

(3) Where there is a general average loss, the party on whom it falls is entitled, subject to the conditions imposed by maritime law, to a rateable contribution from the other parties interested, and such contribution is called a general average contribution.

Examples of general average sacrifices and expenditure under English law

1.13 The following are examples of sacrifices and expenditure which may be admitted in general average under English law and practice:

Sacrifices

CARGO AND FREIGHT

1. Jettison from under deck.

2. Jettison from on deck, provided that on-deck stowage is in accordance with the recognised custom of the trade in which the ship is engaged.

3. Damage by water or other means used to extinguish a fire on board ship.

4. Discharge and reloading of cargo for the purpose of floating a stranded ship when in a position of peril.

SHIP’S MATERIALS

5. Masts, spars, sails or rigging cut away for the common safety.

6. Chains and anchors slipped to avert a threatening peril.

7. Damage to a vessel’s machinery, ropes, winches, windlass and other gear sustained in endeavours to float a stranded ship when in a position of peril.

8. Damage sustained in the efforts to extinguish a fire on board or in the process of jettisoning cargo.

Expenditure

9. Expenses incurred in floating a stranded ship if in peril.

10. Inward expenses entering a port of refuge to repair damage to ship.

11. Cost of discharging cargo at a port of refuge for the common safety or to repair damage to ship.

12. Cost of warehousing, warehouse rent on cargo, reshipment of cargo and outward expenses leav...