The “General Average” Rules in Maritime Industry

“General Average” is a phrase used in the marine industry to describe shares in a common loss at the time of accidents. According to the rule, the distribution of losses between the parties caught up in any maritime adventure in the event of an unusual sacrifice or if the expenses are made deliberately with proper explanation that the causes involved preserving other property from risk of being misplaced or lost.

The sections of General Average under the York Antwerp Rules 1994 has been simplified and presented in this write-up. These are:

  • When a loss is deemed

A loss under general average is considered only if the sacrifice is logically made for the intention of preserving the property involved as a matter of common safety or reason of sacrifice is extraordinary. For example – Capsize due to stormy weather condition, shifting of cargo resulting in unnecessary listing of vessel.

  • Preserving the cargo or vessel

When two or more than two vessels are used for commercial purposes and are towing or pushing, then general average is applicable if the vessels get disconnected from one another to protect the vessel and the cargo.

  • Risk is equal in each party’s share

The share of each party under general average should not be set on using a faulty approach. The risk created by all should be same in every aspect. If the action of one party has led to the loss, legal steps can be taken for those actions.

  • Claims due to delay

General average is applicable only for those losses that are directly connected with the value of the cargo or the vessel. Any claims crop up due to the delay, expense or loss occurring due to market loss or any other loss should not be considered into general average.

  • When a vessel or cargo is damaged

If cargo or vessel is damaged by water, which also includes sinking a burning vessel to put off the fire, then that damage will also be considered under general average. Besides, if a vessel is ashore deliberately for general safety, it excludes damages caused by fire or heat.

  • Salvage Operations

If salvage operations are performed in order to prevent or save the loss of cargo, or to reduce or prevent an environmental damage, the expenses implicated and the remuneration to salvors should be counted in general average

  • When cargo is sold in damaged condition

If the selling of the cargo is initiated when it is damaged, the general average amount is the subtraction between the net damaged value and net sound (undamaged) value.

If you are looking to know more in detail, ship broker companies in Norway can help you out.

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