General Average

Dr Brijendra K. Saxena
Principal,
Tolani Maritime Institute,
Induri, Pune

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 General Average
The law of General Average exists as an independent
branch of the law.
It is different from Marine Insurance.
Connection with Marine Insurance:
- Marine Insurance Act 1963 ( India ); section 66
- ITC Hull 83; section 11.
- IHC 03; section 8.

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 General Average
Definition as per MIA1963 section 66 (2):
There is a general average act where any
extraordinary sacrifice or expenditure is voluntarily
and reasonably made or incurred in time of peril for
the purpose of preserving the property imperiled in
the common adventure.
MIA 1963 section 66 (1):
It includes GA expenditure & GA sacrifice.
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 General Average
Essential Elements of GA:
Common Maritime Adventure
Two or more interests
Common Safety / Peril must be real & substantial.
Expenses or sacrifice must be Extraordinary, Intentional &
Reasonable.
Act must be successful.
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 General Average
Examples of GA Sacrifice
Damage to ship & cargo by water used to extinguish fire.
Cutting of cargo hold bulkhead to reach the seat of fire.
Damage to propeller and engine in order to refloat a grounded
vessel.
Cargo jettisoned overboard to lighten a grounded vessel.

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 General Average
Examples of GA Expenditure
Charges paid to fire fighting tugs.
Fuels and stores consumed during refloating operation after
grounding.
Expenses of port of refuge which includes cost of entering and
leaving the port, cost of handling cargo (discharging and
reloading).
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 Assume that at the time of the accident, the value of
the property at risk was:

Ship …………………..…. 200

Merchant A ……..……… 100
Merchant B …………….. 200
Merchant C …………….. 300
800
and that Cargo B ………. 200 was jettisoned … 200
Value saved …………….. 600

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 The loss would be adjusted as follows?
Ship …………………. 200 pays 67
Merchant A…………. 100 pays 33
Merchant C…………. 300 pays 100
600 pays 200
Merchant B…………. 200 pays 0
800 pays 200

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 The loss would be adjusted as follows:

Ship …………………….. 200 pays 67 50

Merchant A……….……. 100 pays 33 25
Merchant C……….……. 300 pays 100 75
600 pays -- 150
Merchant B…………….. 200 pays -- 50
800 pays 200 200

Everyone whose property had been at risk sustained the same

degree of loss, i.e. 25%.

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 General Average
MIA 1963 section 66 (4 & 5):
The assured who has paid or is liable to pay, a GA contribution in
respect of subject insured … may recover the same from Insurer.
The Insurer is liable to reimburse the assured who has incurred the
expenditure or sacrificed the subject matter in GA act.

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 General Average
Forms of Security for payment of General Average
G A Bond
Underwriter’s Guarantee
Cash Deposit

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 General Average
Documents Required from Ship owner for GA Claim
Logbook Abstract.
Surveyor’s report for damages.
Bills of temporary & permanent repairs.
Details of expenses at port of refuge such as agent fee,
wages, victualing, fees & expenses of superintendent &
surveyors, communication expenses etc.
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 General Average
Documents Required from Cargo owner for GA Claim
Original Policy or Certificate of Insurance.
Bill Of Lading.
Commercial Invoice.
GA Deposit receipts .
Surveyor’s report for loss / damages.
Subrogation receipt.
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 General Average
Contributory Interests:
Ship
Cargo
Freight
Time charter bunkers
Containers

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 General Average
Sound value Partial loss GA loss GA Exp GA
Ship 10,000,000 1,000,000 150,000 950,000 1,100,000
Cargo A 1,500,000 20,000 20,000
Cargo B 4,000,000 1,000,000 70,000 70,000
Cargo C 200,000 50,000 50,000
Cargo D 500,000

TOTAL: 1,240,000

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 General Average

Sound value Partial loss GA loss GA Exp GA Net Contributory GA

Arrived value Contribution
value
Ship 10,000,000 1,000,000 150,000 950,000 1,100,000 8,850,000 9,000,000 785,915 8.73%
Cargo A 1,500,000 20,000 20,000 1,480,000 1,500,000 130,986 8.73%
Cargo B 4,000,000 1,000,000 70,000 70,000 2,930,000 3,000,000 261,972 8.73%
Cargo C 200,000 50,000 50,000 150,000 200,000 17,465 8.73%
Cargo D 500,000 500,000 500,000 43,662 8.73%

TOTAL: 1,240,000 14,200,000 1,240,000

8.73%

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 General Average
York Antwerp Rules:
They are voluntary code designed to maintain worldwide
uniformity in the treatment of General Average. Rules were first
implemented in 1924 then revised many times latest being 2004
Rule consists of: Rule of interpretation , Rule Paramount,
Lettered Rule ( A to G )
& Numbered rule ( I to XXII )
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 GA - York Antwerp Rules:
Numbered rules take priority of lettered rule.
Lettered Rule: They are re-statement of general principles
underlying the system of GA
Numbered Rule: They deal with specific and particular
aspect of GA. Examples:
Rule 1 : Jettison of Cargo says “No cargo shall be made good
unless it is carried in accordance with customs of trade”.
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