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Anchor & chain damage handled as GENERAL AVERAGE

When a part of the anchor chain breaks, it may be due to wear and corrosion or to over-stressing of its weakest part. Typically a ship owner arranges for anchors and chain damage inspection in a dry-dock, full range length, and can take a note on weakest links. A common defect is loose studs that reduce chain strength significantly. In all cases, the class surveyor should be consulted, and defective/ wasted chain be renewed as per surveyors' strict guidelines. It is a ship owner's routine expenditure for anchoring arrangement.

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Lack of inspection and maintenance of anchoring equipment can be fatal. When anchors are lost during navigation at sea, they can lead a ship to run aground or collide with other vessels. A shipowner might also incur additional charges for the recovery of a lost anchor. However, in the following cases, damage repair or recovery cost can be recovered from an insurance provider when treated as 'General Average' sacrifices loss. The Master should, in such cases, secure witness statements from external sources if Possible.
  1. When the anchor and chain were damaged by letting go in an emergency to avoid Collision with another vessel.
  2. When the weather suddenly changed to extraordinary Rough Weather while the vessel was in port and the anchor chains were cut intentionally as an urgent measure to avoid danger because there was not sufficient time to heave the anchor.
  3. When the Main Engine was started to avoid an Urgent Danger at anchor, the anchor could be sacrificed, and consequently, the anchor and chain were cut by an excessive force applied to them.
  4. Damage to the anchor and chain resulting when Refloating the stranded vessel by making use of the anchor's holding power.

This anchor was almost lost due to the pin
of the anchor shackle (D-shackle) falling out.
Image Source: Gard News

Note: To effect the 'General Average', the anchor must have been abnormally used for standard safety. Therefore, the following cases do NOT affect the general average.
Principals of general average

The main principles of the general average are contained in the York-Antwerp Rules, 1974. The rules define an average general act as follows: "There is an average general act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety to preserve from peril the property involved in a common maritime adventure."

In the context of marine insurance, the word "average" means a partial loss. The general average must be distinguished from "particular average," which means an insured loss. For example, if the fire is discovered on board a laden vessel, the following items make up the general average loss:
  1. Cost of damage caused by water or any other methods used to extinguish the fire
  2. Cost of repair if ship "s structure has to be altered to gain access to fire
  3. Value of any cargo damaged or jettisoned during efforts to control fire
  4. Cost of using the ship "s equipment and the wages of the crew during the general average incident
In another example, if a vessel runs aground in a dangerous position, the following items would make up the general average loss:
  1. Cost of tugs to refloat the vessel, including the value of any salvage award
  2. Cost of running ship"s engines and other equipment to assist refloating
  3. Cost of discharging cargo into lighters and the cost of reloading
  4. Cost of pollution removal if cargo has been jettisoned and the value of the lost cargo
  5. Stores consumed and wages paid to crew during the general average incident
It is important to note that items of particular average are not calculated as part of the general average loss. In the grounding and fire situation, for example, damage caused to vessel as a consequence of the grounding would not be a part of the general average loss but would form a hull a machinery claim.

General average - Assessment and interested parties

The "general average" incident will necessarily involve some part of the cargo or ship being sacrificed or extra expenditure being incurred to save the entire venture. The interested parties to the maritime venture, normally the shipowner, the cargo owner, and the charterer, will compensate the party who has suffered the general average loss by making contributions in proportion to the value of their relative interests in the venture as a whole.

The ship owner's interest in the venture is determined by the vessel's current value at the termination of the venture. Time charter hire is normally excluded from the owner's total interest but may be included depending on the terms of the charter. In voyage charters, the number of bunkers on board would be included in the ship owner's valuation.

The time charterer's interest in the venture is determined by the value of bunkers remaining on board at the time of the incident, plus the fright at risk on the voyage. The cargo owner's interest is determined by the sound market value of the cargo on the last day of discharge. The assessment of each party's contribution is called an "average adjustment." In recent times, the principles by which and adjustment are made are generally governed by the "York-Antwerp Rules, 1974". The rules ensure that all average adjustments conform to an international standard.

The adjustment is made by an average adjuster. The average adjuster is appointed by the shipowner to collect all the facts surrounding the incident, to collect guarantees from various parties before cargo is discharged, and to ensure payment of the contributions. The adjuster will have all the facts and figures at his disposal, and thus, in addition to calculating the contributions due from each party, he will be requested frequently to adjust any resulting hull claim.

When to declare ? The declaration is usually made by the shipowner, but in certain countries, any interested parties may initiate an adjustment. A declaration must be made before the delivery of the cargo. Shipowners usually will allow delivery of the cargo when the other interested parties to the venture provide suitable security (usually in the form of common bonds), sufficient to cover their contribution.

Agents / surveyors

Following a "general average" incident, ship agents and surveyors play a significant role. In addition to the normal duties of port and husbandry agency, a shipping agent will assist the Master in the aftermath of a general average incident to make a declaration, which complies with the local law and custom of the port.

The average adjuster, after confirming security paid by all the interested parties, the agent would be instructed by the shipowner to permit the delivery of cargo. If the cargo has been discharged to lighten the vessel, or cargo has been trans-shipped to a final destination, the agent will be responsible for keeping complete records of all movements and expenditure attributable to the general average.

After any incident, a large number of surveyors representing various interests will descend on the vessel. Some of these surveyors will not be involved directly in the general average process, for example, those acting on behalf of hull underwriters, the classification society, or state officials. However, if it has become necessary to sacrifice or discharge a part of the cargo before arrival at the final destination stated on the bill of lading, the shipowner will appoint surveyors to report on the condition and quantity of cargo. Such surveyors, usually called general average surveyors, will act in the interests of all the parties involved (and may also represent hull and machinery interests). If possible, the account representing expenditure incurred should be examined and approved by the general average surveyor before settlement.

On the other hand, surveyors appointed by cargo interests only represent the interests of their clients. They may criticize the action taken by the Master or allege that the vessel was unseaworthy. Therefore, if an incident occurs, which may give rise to a general average act and, if time permits (for example, in a grounding incident), the Master should consult owners and cargo interests to discuss the best possible course of action. Prior consultation may resolve disagreements and help to avoid later disputes.

Master's Role

The Master must be prepared to assume the broadest possible role in solving all the problems created by an incident if an urgent need to do so and assistance is not readily available. Apart from good seamanship and reasonable judgment, the Master must ensure that the history of the incident is recorded accurately and thoroughly. The record should include details of all actions taken by the various parties involved and include their names and organizations.

If possible, the Master should ensure that a photographic record of the events is made. The Master's evidence will be crucial as it is usual for a year or more to elapse between the incident and issue of the "Statement of General Average."

If salvage services are involved, the Master should ensure that a full record is made of the salvor's actions and the equipment used. This evidence, together with an assessment of the dangers involved, will determine the level of the salvage award.

In most general average cases, the main evidence used for the adjustment is obtained from the various survey reports. The Master should ensure that a clear and accurate account of events is given to surveyors. The survey reports will be supported by witness statements and the vessel "s records. When draft surveys and other calculations are performed, the Master should ensure that a responsible officer is on hand to guide and assist the surveyor.

Example checklist of required documents
  1. Casualty reports prepared by the Master
  2. Survey reports prepared by attending surveyors
  3. Log extracts and other available records from he vessel
  4. Copies of communications/instructions relating to the incident
  5. Statements, which are prepared by owner"s solicitors, taken from personnel involved in the incident
  6. Details of all expenses incurred as a consequence of the general average act fully supported by invoices (including onward charges for cargo if transshipped)
  7. Salvage award
  8. Copies of all port papers covering the period during which the incident occurred
  9. Full cargo manifest and valuation information for cargo
  10. Vessel"s valuation adjusted for any damage repairs allowable in general average
  11. Statement of fuels and stores consumed and labour used during the general average act
  12. All documentation covering the security provided by all interested parties

Further reading: Prerequisites for a General Average & The York Antwerp Rules ....

Related Information

How to recover a lost anchor ? ....

What is stranding ? Investigation of possibility of self-refloating and urgency of danger ....

Deck officers guideline for watchkeeping in anchorage

Deck officers guideline for safe anchoring

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Emergency procedure for ships main engine failure

What is gyro failure and countermeasures ? ....

How to deal with ships collision accident ? ....

How to deal with a damaged anchor? ....

How to recover a lost anchor ? ....

What is stranding ? Investigation of possibility of self-refloating and urgency of danger ....

What are the emergency procedures for loss of anchor and chain? ....

In case of damage to anchor and chain when to claim for '' general average"? ....

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