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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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Tuesday, 05 September 17
COAL: A STRONG MOVEMENT IN THE COAL MARKET OVER THE SUMMER MONTHS - GEORGE LAZARIDIS
We have been witnessing a strong movement in the coal market over the summer months something that has not only helped boost prices for the commodi ...
Friday, 01 September 17
U.S COAL OUTPUT DIPS WEEK OVER WEEK, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.7 million short ton ...
Thursday, 31 August 17
SUPRAMAX: INDO TO CHINA COAL TRIPS AT AROUND $9000, DELIVERY THAILAND - FEARNLEYS
Supramax
A bit slow start to the week with UK holidays on Monday. Still strong rates for cargoes out of Black Sea, where front hauls where done $ ...
Tuesday, 29 August 17
WEEKLY SHIPPING MARKET ANALYSIS - ALLIED
In the aftermath of Hurricane Harvey, one of the worst disasters to hit Texas, we are now looking to get a clearer picture of the possible disrupti ...
Tuesday, 29 August 17
U.S WEEKLY COAL OUT UP 3.4% WEEK OVER WEEK TO APPROX. 17 MMST, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 17 million short tonne ...
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Showing 1956 to 1960 news of total 6871 |
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- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- White Energy Company Limited
- Bhoruka Overseas - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- SMC Global Power, Philippines
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Mercuria Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Tata Chemicals Ltd - India
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
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