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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, 14 August 17
THE FREIGHT MARKET CONTINUES ON AN UPWARD PATH
COALspot.com: The freight market was continued to rose this past week compared to the previous week, as BDI, Cape and Panamax indexes show a positi ...
Monday, 14 August 17
IN A PARIS AGREEMENT WORLD, COAL WILL MEET GROWING ASIAN ENERGY NEEDS - BENJAMIN SPORTON
When providing 41% of the world’s electricity, 85% of global cement, 74% of the world’s steel and 60% of the world’s aluminum, co ...
Friday, 11 August 17
KOMIPO INVITES COAL BIDS FOR BORYEONG POWER PLANT
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued an another new tender for total 1,280,000 Metric Tons of Bitumino ...
Friday, 11 August 17
U.S WEEKLY COAL OUTPUT ALMOST FLAT WEEK OVER WEEK, EIA SAYS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 16.1 million short tonn ...
Thursday, 10 August 17
GLOBAL COAL PRODUCTION FELL SIGNIFICANTLY IN 2016 - IEA
COALspot.com: Global coal production fell significantly in 2016, while global trade in natural gas was up. These are two of the key messages in Wor ...
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Showing 1971 to 1975 news of total 6871 |
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- Therma Luzon, Inc, Philippines
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Meralco Power Generation, Philippines
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Economic Council, Georgia
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Antam Resourcindo - Indonesia
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Xindia Steels Limited - India
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- Alfred C Toepfer International GmbH - Germany
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- The University of Queensland
- Commonwealth Bank - Australia
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Posco Energy - South Korea
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
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