General Average NHC Marine Insurance Workshop
NHC targets Establish communication lines Mobilize NHC contingency NHC personnel to Owners / Managers Operational Intelligence Policy Conditions Casualty Investigation Particular Average NH Repairs Specifications / Tenders Contract Salvage Collision liability / Legal Considerations General Average Loss of Hire
LOF 2011 signed Two vessel collided Salvor 1 CLAIMS SECURITY Third party/ pollution Tort Tort Tort Security Security Security GA Claim LOF & Salvage claim Security Security M/T Tanker M/V Bulker Intership claim Salvage claim Security Security Contract claim GA claim Security Security Cargo Tort Claim The winners: Lawyers & Surveyors Cargo Security Contract claim No salvage claim No salvage claim Salvor 2 Wreck removal claim Local law 3
GENERAL AVERAGE
The origin and development
Boat worth 100,000 pays 7,693 Merchant 1 10,000 pays 769 Merchant 2 10,000 pays 769 Merchant 3 10,000 pays 769 Merchant 3 receives 10,000 pays 769 Result = All happy and on the same boat!
Rhodian Law Year 800 B.C ut, si levandae navis gratia jactus mercium factus est, omnium cintributione sarciatur quod pro omnibus datum est. Rhodian Law 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. Rhodian Law
Slaves as cargo Jettison of cargo
Y.A.R. The system LETTERED RULES : A-G General rules NUMBERED RULES: I XXII Special rules Expenses incurred after the vessel is in safety, which are to the common benefit of ship and cargo, are only recoverable when positive included in the numbered rules. EXAMPLE: Rule X b. Discharge/storage of cargo EXAMPLE: Rule X I b. Crew wages during detention at port of refuge.
Y.A.R. The system Rule of Interpretation Except as provided by the Rule Paramount and the numbered Rules, general average shall be adjusted according to the lettered Rules. Rule Paramount In no case shall there be any allowance for sacrifice or expenditure unless reasonably made or incurred.
York Antwerp Rules (YAR) Rule A There is a general average act when, and only when, any 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. York Antwerp Rules (YAR) Revisions: 1924 1950 1974 1990 1994 2004
Numbered Rules - Examples Rule I Jettison of Cargo Rule III Extinguishing Fire on Shipboard (PA and GA damage) Rule V Voluntary Stranding (cargo vessel beached) Rule VI Salvage Remuneration (LOF 2000)
Numbered Rules - Examples Rule VII Damage to Machinery and Boilers (refloating vessel) Rule VIII Expenses lightening a Ship when Ashore, and Consequent Damage (Barges etc.) Rule X Expenses at Port of Refuge, etc.
Numbered Rules - Examples Rule XI Wages and Maintenance of Crew and other expenses bearing up for and in a port of refuge, etc. Rule XVIII Damage to Ship (Refloating damage).
M/V Norwegian Hull Target List GA Collecting all charter parties and B/L s Evaluation of GA clauses (YAR 1974, 1994, 2004) Policy conditions GA Absorption clause Evaluating GA expenditure Transshipment of cargo Evaluating contributory values DECISION Appointing GA Adjusters & declare GA Appointing GA surveyors Collecting security Average Bonds GA disbursement insurance GA Adjustment
General Average and freight contracts What have the shipowner and the cargo owner agreed? A presumption for use of the YAR Rules is that the charter party and/or bill of lading includes a clause referring to the Y.A.R. Rules. Today this is a standard incorporation.
B/L General Average Clauses
T/C and C/P General Average Clauses
General Average Security from Cargo Shipowner has a possessory lien for GA contribution / security Average Bond Cash deposit / Average Guarantee Non Separation Agreement (Not if YAR 1994 applicable)
H&M Policy conditions GA An important coverage for the ship owner. Vessels contribution included in the Nordic Marine Insurance Plan Cargo contribution cargo owners/insurers No deductible on GAcosts. Early notification Coverage
M/V Norwegian Hull General Average Absorption Clause GA absorption amount agreed pursuant to NMIP 4.8.3.(a) shall be USD 350.000. NMIP 4.8.3. (a)..if the assured chooses not to claim contributions from the other interests in the general average, the insurer is, at the assured s option, liable either: (a) for any loss, damage, liability or costs which would have been recoverable in the general average up to the amount stipulated in the policy
NMIP 4-11 Assumed General Average The insurer is liable for loss incurred for the purpose of saving a ship in ballast, or completing a voyage in ballast, provided that he would have been liable for the ship s proportion of such costs in accordance with a general average adjustment under the York-Antwerp Rules
General Average Costs M/V Norwegian Hull? Tow permision class Towage costs to port Transshipment costs Hire generator / shore power Towage to repair yard Pilotage, mooring, harbour dues, etc. Agency fees Garbage Crew wages and maintenance Commission Interest Total USD 700.000,-
GENERAL AVERAGE
Case Study
NHC Casualty Presentation M/T VLCC Heavy weather damage on Laden voy Mongstad Canaport, Canada
Deviation to Lisbon Docking for repairs What are potential GA Costs?
GA values and costs
GA Apportionment Approved GA Costs USD 15.995.563,00 Apportionment Ship USD 5.217.985,50 Cargo USD 10.508.843,02 Time Charterers net Voyage freight at risk. USD 109.867,50 Time Charterers Bunkers. USD 158.867,36
Summary
Owner s role in a GA situation It is within the authority of the owner to declare General Average, and to give proper notification to involved parties. Owners formally to appoint General Average adjuster. Provide the adjuster with necessary information, like copy of c/p, bills of lading, manifest of cargo, C.I.F. invoices, log books, statement from master, survey reports, disbursement accounts etc.
The role of the Average Adjuster Assist in collecting average bonds from the cargo interests, before the cargo is released. Give advise to involved parties about GA related issues. Adjust the General Average and apportion GA costs over the interests. Collect cargo`s contribution to General Average.
The role of the H&M Underwriter Advise Owners upon request when to declare or not to declare General Average. Recommend use of average adjuster. Give advice throughout the General Average adventure. Attempt to simplify matters, if possible (GA Absorption clause). Pay ship`s contribution to General Average.
EXPECT MORE