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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, 30 June 17
U.S. WEEKLY COAL OUTPUT SLIGHTLY DOWN
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.6 million short tonn ...
Wednesday, 28 June 17
SHIPPING MARKET INSIGHT - TIMOS PAPADIMITRIOU
From the beginning of the year until now SnP activity has changed significantly. To put things into perspective, after a fast and furious q1 on the ...
Monday, 26 June 17
PANAMAX/KAMARMAXES HAD A STRONG WEEK WITH RATES RISING IN MOST AREAS OF THE MARKET - BALTICEXCHANGE
Capesize
A dark cloud appeared to have descended over the market for the big ships with rates continuing to slide in all areas. There was a repor ...
Friday, 23 June 17
U.S. WEEKLY COAL PRODUCTION TOTALED APPROXIMATELY 15.8 MMST; UP 1.8% W/W
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.8 million short tonn ...
Wednesday, 21 June 17
MARKET INSIGHT - SHIPPING
Looking back at March and April shipping reports when the dry bulk indexes were starting to move up, a number of shipping analysts were stating tha ...
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Showing 2016 to 2020 news of total 6871 |
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- Minerals Council of Australia
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Ministry of Transport, Egypt
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Bangladesh Power Developement Board
- Global Green Power PLC Corporation, Philippines
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Lanco Infratech Ltd - India
- Electricity Authority, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- MS Steel International - UAE
- Australian Coal Association
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Toyota Tsusho Corporation, Japan
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Eastern Energy - Thailand
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
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