General Average

This page began as an information resource for those tracking the evolution of the York-Antwerp Rules, culminating in the 2004 version that emanated from the June 2004 CMI conference in Vancouver, then it became an archive of those changes. 

Subsequently, the CMI initiated a new review of the Rules, possibly culminating in a new, 2016, version.  The evolution of that work can be tracked on the CMI's own webpage dealing with the review.  Richard Cornah, Chairman of Richards Hogg Lindley, the average adjusting arm of Charles Taylor plc, who was a co-rapporteur of the CMI International Sub Committee, prepared a succinct commentary on the new Rules, which can be found on Charles Taylor's website. A commentary by Jonathan Spencer, the US member of the International Sub Committee, can be accessed here.

Jonathan Spencer's earlier analysis of the changes and comparison of the York-Antwerp Rules 2004 with those of 1994 can be accessed here.

GENERAL AVERAGE INTEREST UNDER THE 2004 RULES

Under Rule XXI of the York-Antwerp Rules 2004, the allowable rate of interest is to be determined each year by the Assembly of the Comité Maritime International, which has established the following rates:

  • 1st January 2005 to 31st December 2006: 4.5%
  • 1st January to 31st December 2007: 5.5%
  • 1st January to 31st December 2008: 5.75%
  • 1st January to 31st December 2009: 6%
  • 1st January to 31st December 2010: 4%
  • 1st January 2011 to 31st December 2012: 3%
  • 1st January 2013 to 31st December 2015: 2.75%
  • 1st January 2016 to 31st December 2017: 2.5%

DEBATE LEADING UP TO VANCOUVER

IUMI’s position can be found in three principal sources: Nick Gooding’s Oslo 1996 paper; the GA Working Group’s 1998 report at Lisbon; and Eamonn Magee’s CMI Singapore 2001 paper.

    Other IUMI papers in 1996 included:

The UK Association of Average Adjusters weighed in early with a position paper published in March 1996, authored by Charles Hebditch, John Macdonald and Phillip Stacey.

Meanwhile work went on at the CMI level and Geoffrey Hudson formulated a deft rebuttal to the IUMI position for the 2000 Toledo Colloquium, expanded upon for the Singapore conference – link to it here.   Thereafter a joint international working group was formed under the auspices of the CMI, chaired by Castine, Maine’s own Frank Wiswall, whose report embodies the remit to Bent Nielsen's 2002/2003 CMI Working Group on General AverageThis Working Group’s report was circulated in March 2003 and was addressed by a new International Sub Committee that met during the CMI’s June 2003 Bordeaux Colloquium.  Bent Nielsen, Chairman of the Committee, prepared a Summary of that meeting’s conclusions.

That Summary prompted some comment including a “Quick Response” from AIDE, the International Association of European Adjusters, the tone of which can be inferred from the following passage – “contrary to the opinion voiced by some, general average and the YAR can meet the challenges of today’s sea trade provided the management of general averages is thoroughly modernized and costs are thereby reduced.  Whilst the YAR can be improved, the basic principles and allowances should not be substantially modified.”  The entire AIDE response of November 15th 03 may be accessed here.

The Summary was the subject of further discussion at a meeting of the ISC in London in November 2003, following which the International Sub Committee’s report was published in final form under date of December 19th 2003 and can be accessed here.  This report is the document around which debate leading up to Vancouver revolved.

For the US market, the American Institute of Marine Underwriters organized a Forum on early February, 2004, where Howard McCormack, the US member of the ISC, and Fred Pietropola, were presenters and offered a potted version of the views embodied in their Chairman’s addresses, to which there are links below from the PAPERS section.  On behalf of IUMI, Nick Gooding, a cargo Underwriter at Lloyd’s, gave a paper comprising largely an historical account of previous unsuccessful attempts to do away with General Average, which can be accessed here.  Ben Browne, a lawyer, sketched out IUMI’s current views and proposals and the bullet points are posted here.

Jonathan Spencer prepared a brief discussion paper on the 2004 proposals.  Wider circulation was given to a further position paper from AIDE; a position paper from the Italian Maritime Law Association; and a paper from the International Chamber of Shipping, the only trade association known to have commented on the changes.

Changes were adopted during the CMI’s 38th Conference in Vancouver, BC during May 30th – June 5th, 2004.

POST VANCOUVER

The UK Association promptly published a newsletter addressing the new Rules, making the observation that “[t]he 2004 Rules represent the first occasion when a new set of Rules have been published without a consensus between Shipowning and other interests.”

The International Chamber of Shipping has given us permission to post their report on the Conference, the first part of which deals with the General Average work.

Shortly before the Vancouver conference, The Journal of International Maritime Law published, in its April/May 2004 issue, an article by Liverpool average adjuster Richard Cornah, a Fellow of the UK-based Association of Average adjusters, entitled “The road to Vancouver – the development of the York Antwerp Rules”, posted here with the permission of the author.  Mr. Cornah demonstrates clearly that the development of the Y/A Rules had been constructively evolutionary until what occurred in Vancouver.  More recently, he has authored Richards Hogg Lindley’s Commentary on the 2004 Rules – read it here.

Analysis of the new Rules shortly revealed an unintended consequence of the drafting of the new Rule VI dealing with salvage – parties advancing sums by way of salvage on behalf of other parties to the adventure might no longer receive an allowance for interest on those sums.  The Association of Average Adjusters of the United States responded to this circumstance with commendable alacrity, adopting a Rule of Practice to right the apparent wrong.  This development and the text of the new Rule are described in a brief paper by Jonathan Spencer an edited version of which appeared in the Fall 2004 newsletter of the Marine Insurance Committee of the Association of Average Adjusters of the United States.

PAPERS

"General average - English and US law and practice, against the background of the York-Antwerp Rules, 1994", by John Macdonald, originally published in Gard News no. 161, available here as a PDF file.

The then-current state of the YAR debate was synthesized ably in Howard McCormack's 2002 address delivered as outgoing Chairman of the Association of Average Adjusters of the United States, available here as a PDF file.

Fred Pietropola, his successor, provided a continuing review of the YAR debate in his 2003 Chairman’s address to the Association of Average Adjusters of the United States and introduced an innovative and compelling proposal for salvage settlements to take place under the auspices of the P&I Clubs.

OTHER RESOURCES

BIMCO has taken the initiative in developing a model General Average absorption clause to be used in hull and machinery policies - click here to see it.

For immediate help with a casualty, please hit the Panic Button



or call JSS on mobile - +1 917 696 5467


Useful Links and Resources

       Read More