General Average

Page 50


Qualifying Losses

I Introduction

3.1 The party claiming a general average contribution must prove that the relevant loss was a general average loss and that it was caused by a general average act, which in turn can be said to be a response to a general average event. Such events commonly include grounding, fire, shifting of cargo in heavy weather, machinery breakdown or accident, requiring possibly jettison, lightening, salvage, towage, offloading and reloading, repairs and port of refuge expenses. General average losses include, obviously, general average sacrifices and general average expenditures. In addition, they include other losses resulting from general average acts, such as incidental damage occurring in attempting to rectify the situation, e.g. from flooding a hold and damaging cargo in order to extinguish a fire. Losses which qualify for claims for general average contributions are commonly said to be “admissible” or “allowed” in general average and, therefore, referred to as “allowances”.

II Causation and Remoteness

3.2 Despite its traditional exclusion from general average of acts done after the property has been brought to a place of safety, English law has always included within general average both losses caused by the initial general average act and expenses necessarily incurred in consequence of it.1 Thus, the Marine Insurance Act 1906, s.66(1) provides that: “A general average loss is a loss caused by or directly consequential on a general average act”. Therefore, a claimant can recover a contribution for such loss as he can show was the direct2 consequence of a general average act,3 and if there has been no breach in the chain of causation.4

Page 51

3.3 In particular, loss of freight is a common consequence of jettison of cargo.5 The cost of ensuing legal proceedings6 and, in practice, the costs of employing an average adjuster are also treated as general average losses. 3.4 Mathew J has said that “it is not necessary that a particular loss should have been contemplated, if it be incidental to the general average act”.7 Thus, where the vessel is tipped to repair the propeller and cargo is damaged by seawater, the damage gives rise to a general average contribution.8 Similarly, if, to facilitate the carrying ship’s refloating or reaching a port of refuge, cargo is put into lighters which sink before reaching shore, contribution is due for the loss suffered;9 but, if lightered cargo is saved and the ship is lost, the cargo owners are not bound to contribute to the loss suffered by the ship owners, because the ship’s loss resulted from the danger, not from a general average act.10 Furthermore, if cargo was never in peril, and was damaged during unloading to facilitate particular average repairs to the ship, the cargo owner is not entitled to a general average contribution from the ship.11 3.5 Mathew J’s comment raises the perennial difficulty of the distinction and relationship between requirements of causation and remoteness. Both requirements exist in general average, though they have not been clearly distinguished in the cases and, in particular, there has not been close scrutiny of the test of remoteness.12 The two

Page 52

requirements are generally subsumed in the requirements that, to qualify for a right to contribution, the loss must have been caused by the action taken, and that action must have been a general average act. Although they do not totally eliminate the need to consider, for example, whether an “incidental” loss was reasonably foreseeable or within the master’s reasonable contemplation, the criteria for a general average act (e.g. that the action be taken reasonably and intentionally for the benefit of the imperilled property) generally fulfil the functions of remoteness tests in other areas of the law for controlling the extent of liability.13

III York-Antwerp Rules

3.6 Not surprisingly, many of the York-Antwerp Rules are framed to make specific provision for losses which shall or shall not be treated as general average losses. They have been described as recognising two main types of allowance: “common safety” allowances made while the property is in the grip of peril; and “common benefit” allowances, incurred while the vessel is at a port of refuge and incurred in order to enable resumption of the common adventure.14 The York-Antwerp Rules also define, enlarge or restrict the qualifying losses.15 3.7 Thus, Rule C excludes from general average claims for demurrage, loss of market,16 loss or damage caused by delay,17 and indirect losses generally.18 3.8 Rule II of the York-Antwerp Rules 2004 and 2016 provides that “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 general average”.19

Page 53

3.9 Rule III of the York-Antwerp Rules 2004 and 201620 (“extinguishing fire on shipboard”) provides that: “Damage done to a ship and cargo, or either of them, by water21 or otherwise, including damage by beaching or scuttling a burning ship, in extinguishing a fire22 on board the ship, shall be allowed 23 as general average; except that no allowance 24 shall be made for damage by smoke however caused25 [or by heat of the fire26].” 3.10 In respect of voluntary stranding, Rule V restricts contribution to “the consequent loss or damage to the property involved in the common adventure”.27 3.11 In relation to claims respecting damage to machinery and boilers, Rule VII28 requires that damage to ship’s engines should have been sustained while the vessel was aground and in a position of peril, while trying to refloat the vessel, and from an actual intention to float the ship at the risk of such damage.29 3.12 Rule VIII of the York-Antwerp Rules 2004 and 201630 provides that: “When a ship is ashore and cargo and ship’s fuels and stores or any of them are discharged as a general average act, the extra cost of lightening, lighter hire and reshipping (if incurred),

Page 54

and any 31 loss or damage to the property involved in the common maritime adventure in consequence thereof,32 shall be allowed 33 as general average”. 3.13 Rule XII of the York-Antwerp Rules provides for damage to cargo in discharging etc. Thus, it is stated in Rule XII of the 2016 Rules:34

Damage to or loss of cargo, fuel or stores sustained in consequence of 35 their handling, discharging, storing, reloading and stowing shall be allowed 36 as general average, when and only when the cost of those measures respectively is allowed 37 as general average.

The rest of this document is only available to i-law.com online subscribers.

If you are already a subscriber, click Log In button.

Copyright © 2024 Maritime Insights & Intelligence Limited. Maritime Insights & Intelligence Limited is registered in England and Wales with company number 13831625 and address 5th Floor, 10 St Bride Street, London, EC4A 4AD, United Kingdom. Lloyd's List Intelligence is a trading name of Maritime Insights & Intelligence Limited.

Lloyd's is the registered trademark of the Society Incorporated by the Lloyd's Act 1871 by the name of Lloyd's.