General Average Claims - Take Care!

If a ship suffers a casualty, and the shipowner incurs expense preserving the ship, its bunkers and cargo from peril, it will claim in general average (GA) from the cargo owners and time charterers their shares of the expense according to the pro-rated values of the ship, bunkers and cargo involved in the ‘common maritime adventure’.

The bill of lading contract with the cargo owner and the time charterparty contract with the time charterer apply the York-Antwerp Rules (YAR) to GA claims.

It has been thought by many that YAR 1994, not YAR 2016, apply to GA claims by the Congenbill 1994 bill of lading words “York-Antwerp Rules 1994 and any subsequent modification thereof” on the basis that YAR 2016 are a new set of the Rules, not a modification of YAR 1994.

The distinction is important because YAR 2016 makes numerous changes to YAR 1994 including time-bars not found in YAR 1994: (i) a 1-year time bar to commence proceedings for a GA claim from the date of issuing of the GA adjustment; and (ii) never longer than 6 years from the date of termination of the common maritime adventure.

But in The Star Antares, the English High Court has ruled that Congenbill 1994 applies YAR 2016 to GA claims:

1. The ship suffered a casualty whilst sailing to discharge cargo, and the owner brought a GA claim, arguing as per above that the Congenbill 1994 bills of lading applied YAR 1994.
2. But the judge agreed with the cargo interests that YAR 2016 applied instead: (i) ‘modification’ refers to changing something without altering its essential nature or character, in the case of the Rules extending to changes in approach and less focused on textual change than e.g. the word ‘amendment’; and (ii) Congenbill 1994’s words “any subsequent modification” would reasonably be understood as being capable of applying to a new version of the Rules. So, he decided, YAR 2016 are a ‘modification’ of YAR 1994 for the purposes of Congenbill 1994 and YAR 2016 apply under it.

It appears the High Court decision may be appealed, so readers will have to watch this space.

In the meantime, parties and GA adjusters will undoubtedly bear this important decision in mind.