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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, 04 August 17
U.S. WEEKLY COAL OUTPUT UP 4.4% W/W - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 16.1 million short tonn ...
Friday, 04 August 17
IMPORTED COAL CONTINUES TO BE A COMPETITIVE, SAFE AND RELIABLE ENERGY SOURCE FOR GERMANY - VDKI
COALspot.com: Worldwide hard coal production in 2016 declined by 3.8% to 6.7 billion tonnes.
According to the Germany Coal Importers Associati ...
Thursday, 03 August 17
SUPRAMAX: INDO TO CHINA COAL ROUNDS ARE GETTING FIXED AROUND MID $8000 - FEARNLEYS
In the Pacific rates have remained weak and under pressure this week with most routes softening.
Indo/China coal rounds are getting fixed arou ...
Thursday, 03 August 17
BUMI RESOURCES COAL SALES RELATIVELY FLAT AT 41.5 MILLION TONS IN 1H' 17; REPORTS US$162.3 MILLION PROFIT IN FIRST SEMESTER
COALspot.com: The BUMI Resources, Indonesia’s one of the largest coal producer, has reported a net income of $162.3 million in 1H’ 17 c ...
Wednesday, 02 August 17
SHIPPING MARKET INSIGHT - GIANNIS ANDRITSOPOULOS
During the duration of the first half of the year, the dry bulk market saw intense buying interest that boosted SnP prices significantly. We saw a ...
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Showing 1986 to 1990 news of total 6871 |
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- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bhatia International Limited - India
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Singapore Mercantile Exchange
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Gujarat Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Chettinad Cement Corporation Ltd - India
- Eastern Energy - Thailand
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- New Zealand Coal & Carbon
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Indian Energy Exchange, India
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Madhucon Powers Ltd - India
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
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