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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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Friday, 08 September 17
MIXED SIGNALS ON REFINERY PREPARATIONS FOR 2020 FUEL CHANGES - IBIA
A recent consultancy survey has suggested that some 85% of refiners have not made plans for how to deal with the expected dramatic fall in g ...
Thursday, 07 September 17
CAPESIZE: EARNINGS FOR THE BIG SHIPS KEEP UP NICELY AS DIPS ARE MODERATE AND SHORT-LIVED - FEARNLEYS
Supramax
Fewer activities in the Atlantic in start of the week with the US holidays. Owners were asking around low USD 20k for trip ex USG to Far ...
Thursday, 07 September 17
TALK OF CONSTRAINTS ON CHINESE COAL OUTPUT PUSHED PRICES HIGHER - DANIEL HYNES
Commodity markets were largely higher as a weaker USD boosted investor appetite.
According to Daniel Hynes, Senior Commodity Strategist at ANZ ...
Wednesday, 06 September 17
LAYTIME - CHARTERERS' RIGHTS & PORT COSTS - NORTH P&I CLUB
KNOWLEDGE TO ELEVATE
In a recent London Arbitration decision (18/17) the Tribunal had to consider whether the owners were entitled to recover ...
Wednesday, 06 September 17
SHIPPING MARKET INSIGHT - STELIOS KOLLINTZAS
The impact of Hurricane Harvey, which made landfall on 25th of August in South East coastline of Texas area has been the major concern of the shipp ...
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Showing 1951 to 1955 news of total 6871 |
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- Ministry of Mines - Canada
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Kepco SPC Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- Australian Commodity Traders Exchange
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- GMR Energy Limited - India
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Gujarat Sidhee Cement - India
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Sical Logistics Limited - India
- MS Steel International - UAE
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- White Energy Company Limited
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
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