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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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Monday, 21 August 17
INDIA'S COAL IMPORTS DECLINE TO 192 MT IN FY17 - PTI
Import of coal saw a decline of 6.37 per cent to 191.95 million tonnes (MT) in 2016-17 on higher production by CIL that saw the country move to a r ...
Monday, 21 August 17
FIRM DEMAND FOR CAPES CONTINUE TO SUPPORT DRY BULK SHIPPING
COALspot.com: The freight market was continued to rose this past week compared to the previous weeks, as BDI, Cape and Panamax indexes show a posit ...
Friday, 18 August 17
U.S. WEEKLY COAL OUTPUT UP 2.1% WEEK OVER WEEK, SAYS EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.5 million short ton ...
Thursday, 17 August 17
DESPITE A HOLIDAY-DISRUPTED WEEK IT HAS BEEN A NEW ACTIVE WEEK FOR THE PANAMAXES - FEARNLEYS
Supramax
A very quiet start to the week with holidays in several countries. USG still bringing good results supported by a tight tonnage availabl ...
Monday, 14 August 17
CENTURIES ON, AND DRY BULK STILL RULES THE WAVES... - SARAH HOLDEN | CLARKSONS
By the late 1800s, the shipping industry had been transformed by the introduction of steam power and iron ships. Coal and grain were two of the mos ...
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Showing 1966 to 1970 news of total 6871 |
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- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Australian Coal Association
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Savvy Resources Ltd - HongKong
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- The University of Queensland
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Tata Chemicals Ltd - India
- CIMB Investment Bank - Malaysia
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- San Jose City I Power Corp, Philippines
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Jindal Steel & Power Ltd - India
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- ASAPP Information Group - India
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
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