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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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Wednesday, 19 July 17
SHIPPING MARKET INSIGHT - NASSOS SOULAKIS
Referring back to a previous Intermodal insight that was written in the first quarter of 2017, the author at the time had claimed that MR tanker ra ...
Tuesday, 18 July 17
CHINA'S ECONOMY HAS BOOSTED OPTIMISM IN THE MARKET - GEORGE LAZARIDIS
COALspot.com: China’s economy has boosted optimism in the market as its recently announced GDP growth for the second quarter of the year exce ...
Friday, 14 July 17
IMPORTED COAL IS STILL A SAFE AND RELIABLE SOURCE OF ENERGY IN GERMANY - VDKI
COALspot.com: Imported coal is still a safe and reliable source of energy in Germany. World coal mining has reached a high plateau, but not yet a t ...
Friday, 14 July 17
U.S. WEEKLY COAL-OUTPUT IN SIGNIFICANT DECLINE, EIA FIGURES SHOW
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 13.4 million short tonn ...
Thursday, 13 July 17
BELT AND ROAD SHIPPING INDICES OFFICIALLY RELEASED - XINHUA
COALspot.com: The Shanghai Shipping Exchange (SSE) Tuesday officially launched the Belt and Road shipping indices to track freight trade data among ...
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Showing 2001 to 2005 news of total 6871 |
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- Attock Cement Pakistan Limited
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Sarangani Energy Corporation, Philippines
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Independent Power Producers Association of India
- Renaissance Capital - South Africa
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- Tata Chemicals Ltd - India
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Commonwealth Bank - Australia
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Global Green Power PLC Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Eastern Coal Council - USA
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- PTC India Limited - India
- Marubeni Corporation - India
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- The University of Queensland
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Economic Council, Georgia
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Merrill Lynch Commodities Europe
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