General Average

General Average law is codified in the York-Antwerp Rules, and has ancient traits. The YAR rules define GA as follows: "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."

The property involved in a common maritime adventure is typically vessel, cargo and bunkers.

Examples of General Average situations and General Average losses include:

• Situations where the vessel needs assistance from tugs or other vessels. 

• Salvage situations, e.g. costs for tugs to refloat vessel after grounding, lightering and reloading costs to re-float the vessel.

• Machinery damages that influence the navigational safety where extraordinary costs are incurred for common safety. 

• Damages to hull and machinery in connection with refloating, jettison/discharging/ lightering of cargo to lighten the vessel.

• Costs related to sacrificing cargo in order to save the vessel. The typical example is when cargo is jettisoned in order to save the vessel from sinking, or as part of a firefighting effort.

• Damages to vessel or cargo due to firefighting. 

• Calling at port of refuge and detention at port of refuge. 

• Costs of using the ship's equipment and crew wages during GA. This may also include running the main engine and other equipment for example in order to refloat the vessel.  

On several occasions we have experienced vessels being in a general average situation without the Master being aware of it. A laden vessel is in a GA situation, or instance, if it approaches a harbour with escort tugs as per standard port procedure, and then experiences a temporary technical problem with the steering gear and requests the tug to make fast. 

This may cause a problem for the shipowner if the Master discharges the cargo without obtaining security from the cargo owner(s). The problem arises when the tug owner claims for salvage. In such cases, the shipowner risks lacking a General Average Contribution from the cargo. 

The above is meant to assist the Master in identifying General Average Situations. When the Master finds himself in a possible GA situation he should notify his Managers (and/or Hull & Machinery underwriter) for advice on how to proceed regarding the cargo. H&M usually covers General Average for the ship’s proportion.

Cargo must NOT be delivered to the receiver until the GA issues are sorted out and agreed upon. If a General Average is to be declared, the Owner’s next step will be to formally appoint a General Average Adjuster. It is his task to prepare the General Average Statement.

Average Bonds (cf. item 5d in this text) from the consignees must also be signed by the Cargo Underwriters. Average Bonds in which reservations are made must not be accepted. 

If the cargo is uninsured, cargo owners should also provide a bank guarantee or pay a deposit as security for the cargo’s contribution before the cargo is delivered. Often the Average Agent will be able to assist and the Average Adjuster may give directives as to what form of security should be demanded in the given case. 

If the cargo has been damaged, the Average Adjuster or Owners / Leading Underwriter will appoint a General Average Surveyor.

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