Andrew Robinson, Director at Norton Rose Fulbright and Malcolm Hartwell, Head of Transport, Africa; Master Mariner; Director.
The following is a summarised version of an article authored by Andrew and Malcolm. The full version can be found here
The concept of General Average (GA) in maritime law involves the contribution by parties to a maritime adventure to cover extraordinary costs incurred by a carrier in ensuring the safe arrival of cargo at its intended port of discharge.
GA situations often arise from incidents such as ship casualties, acts of piracy, or engine breakdowns. Once a vessel reaches its intended port or a place of refuge, cargo interests, charterers, and insurers face challenges as shipowners may withhold cargo until secured by GA bonds and guarantees. The adjustment period for determining contributions from various parties can span years.
The York-Antwerp Rules (YAR), dating back to the 1880s, regulate the complex process of determining GA contributions. Over time, different versions of YAR have been introduced to adapt to changes in shipping practices and other aspects of maritime law. The case of Star Antares [2023] EWHC 2784 (Comm) highlights the importance of specifying the applicable version of YAR in contracts.
The case involved a dispute over whether YAR 1994 or YAR 2016 applied to a 2021 event, as stipulated in a clause of the standard Congenbill 1994 form, a common charterparty for bulk product carriage. The carrier argued for YAR 1994, while the cargo insurers insisted on YAR 2016.
The court considered the language of the contract and contextual factors. It agreed with the insurers that the term “modification” in the clause had a broad connotation, encompassing not only amendments but also entirely new sets of rules. The court found that a reasonable person, considering the industry’s background and without specific textual guidance, would understand the clause to include new versions of YAR.
This decision has significant implications as it clarifies that YAR 2016, perceived as an improvement over the outdated YAR 1994 and 2004, is applicable. YAR 2016 aims to make GA adjustments more efficient and certain, addressing concerns about delays, costs, and alignment with commercial reality.
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The timing issue was also addressed in the judgment. Parties must provide particulars of the value and support for GA claims within 12 months, with a two-month period for notifying the adjuster after receiving recovery. The shipowner, claiming GA, has 12 months from the adjustment issue to commence proceedings against non-paying contributing parties, and these proceedings must be initiated within six years of the voyage termination leading to the GA declaration.
YAR 2016 also addresses differences in salvage approaches between YAR 1994 and 2004, making adjustments more straightforward and cost-effective. The adjuster now has more discretion, with terms like “significant” appearing in various YAR sections related to values, expenses, and allowances.
Additionally, clarity has been provided on the Bigham clause, limiting cargo owners’ contributions. The 2016 YAR clarified that this cap applies only to expenses allowed under the non-separation agreement, not all expenses, creating certainty while potentially increasing cargo interests’ exposure.
The 2016 YAR further abolished the 2% commission on cash deposits and capped interest at the secured overnight financing rate (SOFR) plus 4%, streamlining the process and reducing costs.
This judgment is crucial for the South African insurance market, which has dealt with significant casualties leading to GA payments. It ensures that guidance in handling GA-related matters is based on a commercially minded set of YAR, potentially simplifying and expediting the resolution of maritime insurance claims in the region.