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Friday, 07 July 17
SHOULD WE BE AVOIDING GENERAL AVERAGE? - ALEX KEMP
 KNOWLEDGE TO ELEVATE
Calls for general average to be abolished are nearly as old as the regime itself. A representative of Lloyd’s attended the eponymous Antwerp Conference in 1873 and latterly described general average as a “a nest of fraud and abuses, a lurking place for speculation and waste”. Even in 1913 commentators were complaining about the increasing size of vessels and the volume of bills of lading they created. The Chairman of the US Association of Average Adjusters said of general average that year “the time, trouble, expense and delay are out of all proportion to the benefit achieved”. These comments are surprisingly familiar and it is interesting to see that the same weakness in general average are made today.
Unsurprisingly those involved in transporting or insuring cargo have little love for the regime, when they are usually the paying party. There have been calls in the past for the loss to simply lie where it falls for the respective hull and cargo insurers to absorb. A key piece of research by Mr Matthew Marshall of the Institute of London Underwriters for the IUMI Tokyo conference in 1994 (updated to 1999) really energized the modern debate. His work highlighted the fact that 10% of the cost of general average was adjusters’ fees and another 10% commission (something that has now been abolished in the most recent rules). Perhaps most importantly it was suggested that the majority of general average events were the fault of the ship owner. This helped lead to the ill-fated York-Antwerp Rules 2004 which have now been replaced.
Whilst the York-Antwerp Rules 2004 may now have been replaced with a more moderate regime, the circumstances which give rise to criticism of general average are more relevant than ever. Many commentators have written about the increasing size of container ships, the increasing complexity of their contracts of carriage and the severe impact this has on the cost and time required to adjust such a general average event. This observations were again aired in the negotiations to the York-Antwerp Rules 2016.
For the time being, at least, general average does not seem to be in any grave threat of abolition and the status quo (broadly speaking) will continue. However, that doesn’t mean to say that the market is not evolving and adapting to meet the reality of modern general average. General average absorption clauses have long been a feature of H&M policies as a way to avoid low value general average events. Their limits have increased as vessel size and casualty complexity has increased. We have seen examples of such limits being as much as US$1 million.
However, more recently parties involved in container shipping have taken even more aggressive steps. Vessel sharing agreements and slot charters used in the management of container ships often now contain provisions which compel the parties to “consult” to determine whether they can absorb all the general average sacrifices and losses and to try and persuade the Owners not to declare general average. Often these agreements go further and compel the parties to absorb general average between the parties up to a limit of say US$0.5 million (this should be distinguished from a general average adsorption clause in a H&M policy). This shows a commercial decision in container shipping that general average, in principle, should be avoided as it is not in the interests of shippers, who are the customers of container lines.
It is easy to see why. With adjuster’s fees, through no fault of their own, to collect security often running into the hundreds of thousands of dollars and adjustments taking anything up to a decade, it is an unattractive way to deal with losses arising from a casualty in complex container casualties. As a result we have seen container lines go further than the provisions in their contractual agreements in the aftermath of a casualty and enter into bespoke agreements resolving to fund all general average expenses and sacrifice on certain terms. More often than not this prevents any need to collect general average security or obtain cargo documentation for the entire manifest. This simply leaves the carriers to deal with cargo claims (be them sacrifice or otherwise) in the usual way. One might say that this places a greater financial burden on the carriers who are absorbing cargo’s proportion of general average from their bottom line (such a voluntary liability would not ordinarily be insured by the carrier) as ordinarily, cargo’s proportion of general average would be reimbursed by cargo insurers. This may simply be the effect of what is undoubtedly an extremely competitive market place for container shipping, notwithstanding recent mergers.
Ultimately, whether parties should be considering more aggressive steps to avoid general average following an incident, will depend upon the nature of the casualty, the scale of expenses/sacrifice, the legal regimes involved and the number parties. Clearly, the benefits of modifying the “usual” general average process will be greatest in a container casualty scenario but that’s not say that it should not be considered when other types of vessel are involved.
By: Alex Kemp, Senior Associate at Solicitors Holman Fenwick Willan LLP and Associate of the Association of Average Adjusters
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Monday, 09 October 17
INDONESIAN COAL PRICE REFERENCE HITS NEW HIGH FOR 2017
COALspot.com: Indonesian coal benchmark price surges 2.13% in October month over month, the latest ministerial decree showed.
The benchmark pr ...
Monday, 09 October 17
INDIA'S COAL IMPORTS UP 10% IN SEPT AS POWER PLANTS FACE FUEL SHORTAGE - PTI
Coal imports rose by 9.5 per cent to 18.33 million tonnes (MT) in September, after having registered year-on-year decline for five months in a row, ...
Friday, 06 October 17
U.S. WEEKLY COAL OUTPUT HAS REBOUNDED AFTER DECLINING 5 WEEKS IN A ROW
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.3 million short tons ...
Wednesday, 04 October 17
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS
During the past couple of months the dry bulk market has displayed particularly strong momentum and we have been witnessing steady appetite and act ...
Tuesday, 03 October 17
VIETNAM'S COAL-FIRED THERMAL POWER DEPENDENT ON CHINA - VIETNAMNET BRIDGE
A report from the Green Innovation and Development Centre (GreenID) showed that, as of the end of last year, of 27 coal-fired thermopower plants, 1 ...
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Showing 1921 to 1925 news of total 6871 |
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- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Energy - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- Ministry of Transport, Egypt
- The Treasury - Australian Government
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Sarangani Energy Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Kumho Petrochemical, South Korea
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- Medco Energi Mining Internasional
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- The University of Queensland
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- Bhatia International Limited - India
- Australian Coal Association
- ICICI Bank Limited - India
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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