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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, 14 August 17
THE FREIGHT MARKET CONTINUES ON AN UPWARD PATH
COALspot.com: The freight market was continued to rose this past week compared to the previous week, as BDI, Cape and Panamax indexes show a positi ...
Monday, 14 August 17
IN A PARIS AGREEMENT WORLD, COAL WILL MEET GROWING ASIAN ENERGY NEEDS - BENJAMIN SPORTON
When providing 41% of the world’s electricity, 85% of global cement, 74% of the world’s steel and 60% of the world’s aluminum, co ...
Friday, 11 August 17
KOMIPO INVITES COAL BIDS FOR BORYEONG POWER PLANT
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued an another new tender for total 1,280,000 Metric Tons of Bitumino ...
Friday, 11 August 17
U.S WEEKLY COAL OUTPUT ALMOST FLAT WEEK OVER WEEK, EIA SAYS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 16.1 million short tonn ...
Thursday, 10 August 17
GLOBAL COAL PRODUCTION FELL SIGNIFICANTLY IN 2016 - IEA
COALspot.com: Global coal production fell significantly in 2016, while global trade in natural gas was up. These are two of the key messages in Wor ...
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Showing 1971 to 1975 news of total 6871 |
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- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- The University of Queensland
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- South Luzon Thermal Energy Corporation
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- CIMB Investment Bank - Malaysia
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Minerals Council of Australia
- MS Steel International - UAE
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Attock Cement Pakistan Limited
- Straits Asia Resources Limited - Singapore
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
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