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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, 21 August 17
INDIA'S COAL IMPORTS DECLINE TO 192 MT IN FY17 - PTI
Import of coal saw a decline of 6.37 per cent to 191.95 million tonnes (MT) in 2016-17 on higher production by CIL that saw the country move to a r ...
Monday, 21 August 17
FIRM DEMAND FOR CAPES CONTINUE TO SUPPORT DRY BULK SHIPPING
COALspot.com: The freight market was continued to rose this past week compared to the previous weeks, as BDI, Cape and Panamax indexes show a posit ...
Friday, 18 August 17
U.S. WEEKLY COAL OUTPUT UP 2.1% WEEK OVER WEEK, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.5 million short ton ...
Thursday, 17 August 17
DESPITE A HOLIDAY-DISRUPTED WEEK IT HAS BEEN A NEW ACTIVE WEEK FOR THE PANAMAXES - FEARNLEYS
Supramax
A very quiet start to the week with holidays in several countries. USG still bringing good results supported by a tight tonnage availabl ...
Monday, 14 August 17
CENTURIES ON, AND DRY BULK STILL RULES THE WAVES... - SARAH HOLDEN | CLARKSONS
By the late 1800s, the shipping industry had been transformed by the introduction of steam power and iron ships. Coal and grain were two of the mos ...
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Showing 1966 to 1970 news of total 6871 |
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- Planning Commission, India
- Holcim Trading Pte Ltd - Singapore
- Singapore Mercantile Exchange
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Indonesian Coal Mining Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Edison Trading Spa - Italy
- PTC India Limited - India
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- White Energy Company Limited
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Renaissance Capital - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Wilmar Investment Holdings
- Economic Council, Georgia
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Malabar Cements Ltd - India
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Australian Coal Association
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- The Treasury - Australian Government
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- The University of Queensland
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Indogreen Group - Indonesia
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Gujarat Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- VISA Power Limited - India
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
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