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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, 25 September 17
U.S WEEKLY COAL OUTPUT DROPS FOR THE FOURTH WEEK IN A ROW, EIA DATA SHOWS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.5 million short ton ...
Wednesday, 20 September 17
SHIPPING MARKET INSIGHT - INTERMODAL
An undoubtedly interesting market lately is the newbuilding market, in which we are witnessing numerous orders across all sectors and sizes. At the ...
Monday, 18 September 17
COAL PRICES WERE RELATIVELY UNCHANGED WEEK OVER WEEK - ANZ
COALspot.com: Coal prices were relatively unchanged, with most interest remaining in the thermal coal market said Daniel Hynes. However, falling st ...
Monday, 18 September 17
PROSPECTS ARE NOT SO CLEAR CUT FOR COAL - CLARKSONS
Prospects are not so clear-cut for coal. According to Clarksons, coal has been a key energy source since the Industrial Revolution and in 2016, ste ...
Friday, 15 September 17
U.S WEEKLY COAL OUTPUT DROPS FOR THE THIRD WEEK IN A ROW, EIA DATA SHOWS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.7 million short ton ...
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Showing 1936 to 1940 news of total 6871 |
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- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- London Commodity Brokers - England
- Grasim Industreis Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- European Bulk Services B.V. - Netherlands
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- PTC India Limited - India
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Indogreen Group - Indonesia
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- SMC Global Power, Philippines
- The University of Queensland
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Madhucon Powers Ltd - India
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Georgia Ports Authority, United States
- Bhatia International Limited - India
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Ministry of Mines - Canada
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Bukit Makmur.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Star Paper Mills Limited - India
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
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