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Prerequisites for a General Average & The York Antwerp Rules

The law of General Average is a principle of maritime law whereby all stakeholders in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. It is a unique maritime concept. One of the most ancient aspects of shipping is the general average. When an intentional sacrifice of property is made onboard a ship to avoid a common peril, the general average law requires all of the parties to the maritime adventure that benefited by the intentional sacrifice to contribute money on a pro-rata basis. Who are the parties to the maritime adventure? They are of course, the vessel's owner, the charterer, as well as other parties such as the cargo interests.

General Average is old – it was referred to in the Digest of Justinian, in the 6th century A.D. Justinian attributed the following principle to the Rhodian Sea Code: The Rhodian Law decrees that if, to lighten a ship, merchandise has been thrown overboard, that which has been given for all should be replaced by the contribution of all. The principle of general average contributions was repeated in other old sea codes, such as the Rules of Oleron, and has found its way into the maritime law of nations worldwide.

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General Average is not limited to the carriage of goods under a charter party. It applies equally to the transport of goods under other forms of contract, such as a bill of lading.

Cargo ship ran aground
Cargo ship ran aground

Imagine that a fully laden vessel is sinking. She is trading under a time charter party, and bills of lading have been issued to various cargo interests. The master of the vessel must act quickly. To save the vessel and her cargo, the master orders that the vessel is lightened by tossing part of the cargo overboard (jettison). The intentional sacrifice promotes the saving of the vessel. Days later, the ship and her remaining cargo arrive safely at the destination. Who suffers the loss arising out of the jettison? Is it the owner of the jettisoned cargo? The shipowner? The charterer?

It seems natural that the most equitable solution will be to allocate the loss among the many parties that benefited by the intentional sacrifice. It is the rule of the general average. It shifts part of the loss suffered by the owner of the jettisoned cargo onto the various other parties that benefited by the intentional sacrifice, in this case, the vessel's owner, the charterer, as well as the other cargo interests onboard. All of the parties to the maritime adventure that benefited by the sacrifice must share in the loss. Everyone must contribute to the loss on a pro-rata basis.

General average contributions are, roughly speaking, determined by comparing the value of an individual's interest on board a vessel (such as the value of your cargo) with the overall valuation of the maritime adventure (ship and all of her cargo, bunkers, freight, etc.).

The general average is not limited to cases involving jettison of cargo. Nor is the sacrificed interest always the vessel's cargo. Most often, it is the vessel and her owners that seek contributions. In short, many intentional sacrifices and expenditures of an extraordinary nature may give rise to general average contributions.

Examples of general average sacrifices or expenditures include:
  1. A vessel that is in danger of sinking is intentionally grounded. The hull damage arising out of the grounding is the general average. It will require contributions from the other parties to the marine adventure. Everyone must pay their fair share of the hull damage.
  2. A vessel is removed from the ground by a tug. The costs of the tug will be a general average as ship and cargo were both in peril.
  3. The shipowner incurs expenses in calling a port of refuge to avoid extremely heavy weather. All parties must contribute to the intentional expenditures incurred.

The York Antwerp Rules

The fundamental application of the general average is now remarkably consistent throughout the world's maritime community. By the middle of the nineteenth century, the general average rules were incorporated into the statutory laws of most European nations, and they were fully recognized in the common law of the United States. However, the practice of general average throughout the world, and most notably in the European and Anglo-American systems still differed to some extent. For this reason, attempts were made during the latter half of the nineteenth century to establish uniformity. To provide the desired uniformity, the international shipping community created the York Antwerp Rules. These Rules are routinely merged into the contract of carriage by a charter party or bill of lading clause. An example follows:

General Average shall be adjusted, stated and settled according to the York Antwerp Rules 1994, and, as to matters not provided for by those rules, according to the laws and usages at the port of New York...." The York Antwerp Rules are used to identify those sacrifices, acts, and expenditures that should be considered a general average. They also provide guidelines for valuing property to determine the various contributions required by the parties.

Let us look at a couple of the Rules. Rule A of the York Antwerp Rules reiterates the basic requirements for a general average: "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. General average sacrifices and expenditures shall be borne by the different contributing interests on the basis starting now provided Rule III is more specific and states: 'Damage done to ship and cargo, or either of them, by water or otherwise, including Damage by beaching or scuttling a burning ship, in extinguishing fire on board the ship, shall be made good as general average except that no compensation shall be made for damages by smoke howsoever caused by heat of the fire.

Therefore, under Rule III, Damage done to the vessel arising out of efforts to fight a shipboard fire (such as seawater damage to the vessel's machinery) is general average and is to be shared by all parties to the marine adventure. However, the shipboard damage caused directly by the fire (and not due to the voluntary act of firefighting) is a particular average, which is strictly for the ship owner's account.

The York Antwerp Rules do not have the force of law unless they are expressly incorporated into the carriage contract, which they almost invariably are. Thus, the Rules represent a consensus of the international shipping industry as to how a general average should be adjusted.

The general average is a very specialized area of the shipping business. The general average adjuster, usually appointed by the shipowner, is the specialist that is called on to adjust. It is the job of the general average adjuster to:
  1. Identify the general average scenario and advise the parties (shipowner, charterer, cargo interests, underwriters, etc.) on all the steps that need to be taken to finalize accounts. It, by way of example, includes the posting of security by cargo interests for any general average contributions that cargo interests may have to pay. The shipowner has a lien on cargo for any general average payable and security for that contribution (letter of undertaking or cash escrow) will be required for the shipowner to release the cargo. The the general average adjuster will help facilitate this process.

  2. Prepare the general average adjustment according to the terms of the relevant contract of carriage, as evidenced in the bill of lading or charter party. To do so, the adjuster must understand the York Antwerp Rules, the shipping contract under which the general average arose, cargo documentation and values, vessel valuations, in terms of trade, etc.

  3. Collect contributions due under the general average adjustment.

  4. Provide advice to ship owners, charterers, etc. on language that might be found in charter parties, marine insurance policies and other shipping documents regarding the general average.

  5. All of the above, among other duties, to be performed by the average adjuster while maintaining the highest standards of ethics. The general average adjuster is a highly specialized expert that ship owners, charterers, cargo interests, and their insurers rely upon to create a timely and fair adjustment in the event of a general average.


  1. Further guideline available on the web site for the Association of Average Adjusters of the United States and Canada . Its purpose is to maintain the honor and dignity of the profession of Average Adjusting, and to promote correct principles in the adjustment of marine hull claims and uniformity of practice among Average Adjusters.

  2. Charles Taylor and Co. provides general average and other adjusting services with offices in New York and worldwide.

  3. Charles Taylor and Co. Guide to General Average has been available for free for years on the internet.

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