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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, 31 July 17
KOMIPO INVITES BIDS FOR 750K MT OF 5,700 KCAL/KG NAR COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 750,000 Metric Tons of Bituminous coal for its B ...
Monday, 31 July 17
THE PORT OF NEWCASTLE SHIPPED 17.08 PERCENT LESS COAL IN JUNE 2017 COMPARED TO ITS MAY LOADING
COALspot.com: The Port of Newcastle, Australia’s major trading ports, and the world’s largest coal export port has shipped $AU 1,442.8 ...
Monday, 31 July 17
THE FREIGHT MARKET DECLINE THIS PAST WEEK
COALspot.com: The Freight market decline this past week compared to the previous week, as BDI and Panamax indexes show a negative trend week over w ...
Friday, 28 July 17
U.S. WEEKLY COAL PRODUCTION UP 1.4% WEEK OVER WEEK - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.5 million short tonn ...
Thursday, 27 July 17
CAMPBELL SHIPPING APPOINTS ISS FOR GLOBAL HUSBANDRY REPRESENTATION SERVICES CONTRACT - ISS
COALspot.com: Inchcape Shipping Services (ISS) is delighted to announce that it has secured a global husbandry representation contract with Campbel ...
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Showing 1991 to 1995 news of total 6871 |
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- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Larsen & Toubro Limited - India
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- Ministry of Finance - Indonesia
- Australian Coal Association
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Petron Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Semirara Mining Corp, Philippines
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
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