1. INTRODUCTION

There is nothing better than maritime accidents being avoided. However, it is extremely diffi cult to avoid any and all occurrences of maritime accidents. Therefore, the establishment of rules for maritime accidents is fairly important. The writer explains the basic rules and expectations of general average which is used around the world to assist with maritime accidents.

2. BIG PICTURE OF GENERAL AVERAGE

Once a cargo vessel sailed from a port, the vessel and the cargo would share the same fate with each other. As a result, when they encountered maritime accidents during the voyage, they would both be at risk. For example, when the cargo-loaded vessel grounds, both of the vessel and the cargo simultaneously encounter the maritime accident, and if they are left without any help, there is a risk that they will be in total loss. However, in this grounding case, if a part of cargo is transferred to another vessel, both of the vessel and the left cargos may as a result be in safe condition by getting away from the grounding situation. When any extraordinary sacrifi ce or expenditure is intentionally and reasonably made for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure, such sacrifices and expenditures shall be borne by the different contributing interests on the basis of their values at the time of being safe. Any such extraordinary sacrifi ce or expenditure which is intentionally and reasonably made for the common safety for the purpose of preserving from peril shall be called a general average sacrifi ce and expenditure. The general average sacrifices and expenditures are distinguished from the particular accident which is the cause of the general average. “The time of being safe” is defi ned as “the time and place when and where the adventure ends” by Rule G of YAR which are the York Antwerp Rules, a set of rules which have been devised to govern general average as mentioned below.

1. Origin of YAR

   The rules for general average developed under general practices, and then unified rules for general average loss and the way of contribution were strongly expected, and then, York-Antwerp Rules (“YAR”) was adopted after the Glasgow Resolution, the York Conference and the Antwerp Conference. YAR is not a treaty, but the international rules which are managed by the Comite Maritime International (“CMI”). YAR has been modified and amended several times up to the present date in consideration of maritime practices. The latest adopted YAR is YAR2004.

   However, a lot of charter parties and Bs/L have a clause which provides that general average shall be adjusted in accordance with York-Antwerp Rules 1994. Also, the time charter form published by the Japan Shipping Exchange^[1] which is used for coastal shipping provides that general average shall be adjusted in accordance with YAR1994. The description ”or any subsequent modification thereof” after “York-Antwerp Rules 1994” in NYPE93 or the time charter published by JSE does not include YAR2004. However, for the avoidance of doubt, BIMCO strongly recommends that its members remove such references or similar wording in any charter parties they conclude and that they do not use YAR2004 itself.

2. Constitution of YAR1994

   YAR1994 consists of the Rule of Interpretation, the Rule Paramount, so-called the lettered Rules (from Rule A to Rule G) and so-called the numbered Rules (from Rule I to Rule XXII). The lettered Rules provide general rules and the numbered Rules provide rules for specific losses or damages being allowed as general average and rules for contribution. Main specific losses or damages set forth in the numbered Rules are as follows:

   • Jettison of Cargo (Rule I)
   • Loss or Damage by Sacrifices for the Common Safety (Rule II)
   • Damage by Extinguishing Fir on Ship-board (however, damage by smoke or heat of the fire shall be excepted.) (Rule III)
   • Voluntary Stranding (Rule V)
   • Salvage Remuneration (Rule VI)
   • Damage to Machineries by Overloading (Rule VII)
   • Cost of Lightening and Reshipping (Rule VIII)
   • Cargo etc. Used for Fuel (Rule IX)
   • Expenses at Port of Refuge (Rule X)
   • Wages and Maintenance of Crew and Fuel bearing up for and in a Port of Refuge (Rule XI)
   • Damage to Cargo in Discharging, etc. (only when the cost of those measures such as discharging, storing or reloading etc. is admitted as general average) (Rule XII)
   • Cost of Temporary Repairs (Rule XIV)
   • Loss of Freight (Rule XV)

   Damage or loss falling under the numbered Rules shall be allowed in general average. When the numbered Rules do not have a particular provision for the type of loss or damage, it will be adjusted by the lettered Rules (Rule of Interpretation, Article 2). At any rate, this Rule of Interpretation does not mean that the lettered Rules do not apply whenever the numbered Rules apply, and it will be adjusted on a case-by-case basis.

3. CHANGE OF YAR

In spite of the adoption of YAR2004, YAR1994 has been used as general average rule in many cases, as mentioned above. The main modifications from YAR1994 to YAR2004, which constitute the characters of YAR2004, are as follows:

1. Rule VI. Salvage Remuneration

   YAR1994 : Expenditure in the nature of salvage shall be allowed in general average.

   YAR2004 : Salvage payments shall not be allowed in general average. However, if one party to the salvage has paid all or any of the proportion of salvage due from another party, the unpaid contribution to salvage due from that other party shall be credited in the adjustment to the party that has paid it. This does not mean that the salvage payment is allowed in general average, but it allows a type of bailout measure for the collection by the party who has paid it. In case that the owners agree a towage contract, the owners have the obligation to pay all remuneration even though the towage is conducted for the purpose of salvage. Therefore, it is not “Salvage payments” set forth in Rule VI, but it shall be allowed in general average by Rule A.

   <Comment>
   There is a thought that Salvage Remuneration by LOF shall not be allowed in general average in England. Under LOF, the salved property owners shall each bear the salvage remuneration in proportion to the respective values of their properties at the time of being salved. Notwithstanding this, if salvage remuneration is allowed in general average, it will be needed to be re-adjusted. As a result of this re-adjustment, there would be some problems such as increase of time and cost, the delay of decision or approval, the possibility that there may be a difference between the values for general average and ones for salvage remuneration and the treatment of related costs such as arbitration cost.

2. Rule XI. Expenses at Port of Refuge

   YAR1994 : Wages and maintenance of crew in a port of refuge shall be allowed in general average.

   YAR2004 : Wages and maintenance of crew in a port of refuge shall not be allowed in general average.

   <Comment>
   There might be a problem that the vessel owners’ loss by reason of delay is allowed in general average, but the cargo owners’ loss by reason of delay is not allowed in general average (Rule C) even though the both of a vessel owners and cargo owners suffer loss or damage arising from the delay. Further to the above, Loss of Earning Insurance is common with vessel owners these days, and the owners’ benefi t by allowance of wages and maintenance of crew as general average has been decreasing.

3. Rule XIV. Temporary Repairs

   YAR1994 : Where temporary repairs of accidental damage are effected in order to enable the adventure to be completed, the cost of such repairs shall be allowed as general average without regard to the saving, if any, to other interests

   YAR2004 : The fi rst sentence (principal rule) of Rule XIV does not change. A second sentence (exemption rule) has been added. The recovery in general average of the cost of temporary repairs at a port of refuge is limited to the amount by which the estimated cost of the permanent repairs at the port of refuge exceeds the sum of the temporary repairs plus the permanent repairs actually carried out.

4. Rule XX. Provision of Funds

   YAR1994 : A commission of 2% on general average disbursements shall be allowed in general average.

   YAR2004 : The commission shall not be allowed in general average.

5. Rule XXI. Interest on Losses Allowed in General Average

   YAR1994 : 7% per annum

   YAR2004 : It shall be decided by annual meeting of CMI (2.75% in 2014)

6. Rule XXIII. Time Bar

   YAR1994 : No provisions.

   YAR2004 : 1 year after the date upon which the general average adjustment was issued or 6 years from the date of the termination of the common maritime adventure.

4. EXPECTATION TO YAR2016

Although YAR2004 has been adopted as the latest general average rule, a lot of CPs and Bs/L have the clause which provides that general average shall be adjusted in accordance with York-Antwerp Rules 1994. CMI, for the purpose of spread of YAR2004, had been considering this in coordination with BIMCO and IUMI. YAR2012 was proposed at the CMI’s Conference in Beijing as of October 2012, however it was not adopted. CMI has been considering for the adoption of YAR2016 and have been exchanging opinions with BIMCO, IUMI, Association of Average Adjusters UK, the Association Mondiale de Dispacheurs / International Association of Average Adjusters (AMD) and the International Group of P&I Club.

Further, International Sub-Committee regarding amendment of YAR2004 was held in September 2013 (Dublin Conference). The main clauses which were discussed for adopting YAR2016 are as follows:

1. Main points which are under discussion for YAR2016

   1. Salvage Remuneration

      The position supporting YAR1994 which provides that salvage remuneration shall be allowed in general average, the position supporting YAR2004 which it shall not be allowed in GA and the position supporting “ad hoc” approach countervail with each other. The parties supporting YAR2004 insist that the time and cost for re-adjustment will increase if salvage remuneration is allowed in general average even though salvage remuneration by LOF shall be defined by contracts or laws.

      A compromise, which suggested that the re-adjustment shall be conducted only when there is a clear difference between the values for salvage remuneration and the values for general average, as was explained at Dublin Conference apart from a resolution of the said three options, which are the positions of YAR1994, YAR2004 and ad hoc approach. The cases where there is clearly a difference are; (i) high amount of general average sacrifice, (ii) occurrence of damage due to another subsequent accident or (iii) incorrect values for deciding salvage remuneration.

   2. Wages and Maintenance of Crew in a Port of Refuge

      A number of countries supported YAR1994 that the wages and maintenance of crew are allowed in general average. This was left on the agenda.

   3. Temporary Repairs

      A number of countries supported YAR2004 that the saved amount of permanent repairs shall be omitted from the cost of temporary repairs. Easier wordings will be considered on the basis of provisions of YAR2004 and it will be left on the agenda which is better YAR2004 or YAR1994.

   4. Commission of 2%

      There were different positions to hold the commission (YAR1994) and the other position to remove the commission (YAR2004). This was left on the agenda.

   5. Interest

      The only country to support the fixed rate was Italy. A number of participating countries supported the variable interest rate. However, the interest rate determination method and the settlement currency were left on the agenda.

   6. Time Bar

      The large majority agreed to introduce the time bar clause. The introduction of the time bar clause and the wordings will be continuously considered. For your reference, Japan did not agree to introduce the time bar clause because the time bar should be determined with reference to the national laws of jurisdiction.

2. Main points which shall not be amended for YAR2016

   1. Rotterdam Rules

      Although the extent of the carriers’ liability will change if the Rotterdam Rules are adopted in carriage contracts, it was decided that there was no need to amend YAR. At any rate, although the Rotterdam Rules are not a particular problem, securing the cargo owners’ contribution in case that the carriers are negligent or GA dispute resolution services were left on the agenda.

   2. Rule of Application

      The draft wording for the Rule of Application put forward by CMI at Beijing Conference ”These York Antwerp Rules (2012) shall be considered to be an amendment or modification of previous versions of the York Antwerp Rules. Notwithstanding the foregoing, these York Antwerp Rules (2012) shall not apply to contracts of carriage entered into before the formal adoption of the Rules.” have not been decided as a matter to be considered. The consenting countries opined that if someone would like the application of YAR1994, it is only necessary to express it. However, we wonder the validity of the clause itself, and the position of the related parties will be unsustainable if some courts give different judgments regarding the validity of the clause.

   3. Damage to Environment

      Is there need to amend the wording “in respect of damage to the environment” set forth in Rule C in order to clarify that it includes losses, damages or expenses resulting from the taking of preventive measure to avoid damage to the environment? Our thought that “losses, damages or expenses in respect of damage to the environment” includes the said losses, damages or expenses resulting from the taking of preventive measure and has not changed. However, only upgrading of the wording was left on the agenda.

   4. General Rule regarding Piracy

      It has been accepted as a matter of law or practice that the payment of ransom is a legitimated expense allowed in general average as long as it is legitimate and reasonable although YAR does not have any provisions in connection with the payment of ransom. It was considered if express wording in YAR would be desirable to deal with the general principles or regulate specific allowances. However, it arrived at the conclusion that new clause regarding piracy is not need to be considered since many interested organizations indicated that such clause is not necessary.

3. Schedule in Future

   The writer mentioned only the overview and main points of amendment of YAR due to the space constraint. The adoption of broadly acceptable new YAR which is based on the current maritime practices is strongly expected and the matters remain are under discussion.

   As to the schedule at the moment of writing, IWG meeting will be held in March 2014, ISC meeting and IWG meeting will be held at Hamburg International Conference in June 2014 for discussing the matters regarding the adoption of YAR2016.