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Friday, 07 July 17
SHOULD WE BE AVOIDING GENERAL AVERAGE? - ALEX KEMP
 KNOWLEDGE TO ELEVATE
Calls for general average to be abolished are nearly as old as the regime itself. A representative of Lloyd’s attended the eponymous Antwerp Conference in 1873 and latterly described general average as a “a nest of fraud and abuses, a lurking place for speculation and waste”. Even in 1913 commentators were complaining about the increasing size of vessels and the volume of bills of lading they created. The Chairman of the US Association of Average Adjusters said of general average that year “the time, trouble, expense and delay are out of all proportion to the benefit achieved”. These comments are surprisingly familiar and it is interesting to see that the same weakness in general average are made today.
Unsurprisingly those involved in transporting or insuring cargo have little love for the regime, when they are usually the paying party. There have been calls in the past for the loss to simply lie where it falls for the respective hull and cargo insurers to absorb. A key piece of research by Mr Matthew Marshall of the Institute of London Underwriters for the IUMI Tokyo conference in 1994 (updated to 1999) really energized the modern debate. His work highlighted the fact that 10% of the cost of general average was adjusters’ fees and another 10% commission (something that has now been abolished in the most recent rules). Perhaps most importantly it was suggested that the majority of general average events were the fault of the ship owner. This helped lead to the ill-fated York-Antwerp Rules 2004 which have now been replaced.
Whilst the York-Antwerp Rules 2004 may now have been replaced with a more moderate regime, the circumstances which give rise to criticism of general average are more relevant than ever. Many commentators have written about the increasing size of container ships, the increasing complexity of their contracts of carriage and the severe impact this has on the cost and time required to adjust such a general average event. This observations were again aired in the negotiations to the York-Antwerp Rules 2016.
For the time being, at least, general average does not seem to be in any grave threat of abolition and the status quo (broadly speaking) will continue. However, that doesn’t mean to say that the market is not evolving and adapting to meet the reality of modern general average. General average absorption clauses have long been a feature of H&M policies as a way to avoid low value general average events. Their limits have increased as vessel size and casualty complexity has increased. We have seen examples of such limits being as much as US$1 million.
However, more recently parties involved in container shipping have taken even more aggressive steps. Vessel sharing agreements and slot charters used in the management of container ships often now contain provisions which compel the parties to “consult” to determine whether they can absorb all the general average sacrifices and losses and to try and persuade the Owners not to declare general average. Often these agreements go further and compel the parties to absorb general average between the parties up to a limit of say US$0.5 million (this should be distinguished from a general average adsorption clause in a H&M policy). This shows a commercial decision in container shipping that general average, in principle, should be avoided as it is not in the interests of shippers, who are the customers of container lines.
It is easy to see why. With adjuster’s fees, through no fault of their own, to collect security often running into the hundreds of thousands of dollars and adjustments taking anything up to a decade, it is an unattractive way to deal with losses arising from a casualty in complex container casualties. As a result we have seen container lines go further than the provisions in their contractual agreements in the aftermath of a casualty and enter into bespoke agreements resolving to fund all general average expenses and sacrifice on certain terms. More often than not this prevents any need to collect general average security or obtain cargo documentation for the entire manifest. This simply leaves the carriers to deal with cargo claims (be them sacrifice or otherwise) in the usual way. One might say that this places a greater financial burden on the carriers who are absorbing cargo’s proportion of general average from their bottom line (such a voluntary liability would not ordinarily be insured by the carrier) as ordinarily, cargo’s proportion of general average would be reimbursed by cargo insurers. This may simply be the effect of what is undoubtedly an extremely competitive market place for container shipping, notwithstanding recent mergers.
Ultimately, whether parties should be considering more aggressive steps to avoid general average following an incident, will depend upon the nature of the casualty, the scale of expenses/sacrifice, the legal regimes involved and the number parties. Clearly, the benefits of modifying the “usual” general average process will be greatest in a container casualty scenario but that’s not say that it should not be considered when other types of vessel are involved.
By: Alex Kemp, Senior Associate at Solicitors Holman Fenwick Willan LLP and Associate of the Association of Average Adjusters
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Tuesday, 05 September 17
COAL: A STRONG MOVEMENT IN THE COAL MARKET OVER THE SUMMER MONTHS - GEORGE LAZARIDIS
We have been witnessing a strong movement in the coal market over the summer months something that has not only helped boost prices for the commodi ...
Friday, 01 September 17
U.S COAL OUTPUT DIPS WEEK OVER WEEK, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.7 million short ton ...
Thursday, 31 August 17
SUPRAMAX: INDO TO CHINA COAL TRIPS AT AROUND $9000, DELIVERY THAILAND - FEARNLEYS
Supramax
A bit slow start to the week with UK holidays on Monday. Still strong rates for cargoes out of Black Sea, where front hauls where done $ ...
Tuesday, 29 August 17
WEEKLY SHIPPING MARKET ANALYSIS - ALLIED
In the aftermath of Hurricane Harvey, one of the worst disasters to hit Texas, we are now looking to get a clearer picture of the possible disrupti ...
Tuesday, 29 August 17
U.S WEEKLY COAL OUT UP 3.4% WEEK OVER WEEK TO APPROX. 17 MMST, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 17 million short tonne ...
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Showing 1956 to 1960 news of total 6871 |
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- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Tamil Nadu electricity Board
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- The University of Queensland
- Minerals Council of Australia
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Siam City Cement - Thailand
- Parliament of New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Kideco Jaya Agung - Indonesia
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
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