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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, 08 August 17
COAL SALES DESTINATION IS DOMINATED BY DEVELOPING COUNTRIES IN ASIA - ADARO
COALspot.com: Adaro Energy has produced 13.27 million tonnes of coal during the second quarter of 2017, from the mines PT Adaro Indonesia, PT Semes ...
Tuesday, 08 August 17
KOMIPO INVITES BIDS FOR 5200 AND 5700 NAR COAL FOR Q4 2017
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued an another new tender for 420,000 Metric Tons of Bituminous coal ...
Monday, 07 August 17
INDIA'S THERMAL COAL IMPORTS HAVE FALLEN BY 16% YEAR-ON-YEAR IN THE FIRST FIVE MONTHS OF THIS YEAR
COALspot.com: The second quarter of 2017 was characterized by volatility in the coal market driven by policy measures and weather disruptions say A ...
Monday, 07 August 17
BUMA SIGNED $385 MILLION WORTH OF NEW CONTRACT WITH PT PADA IDI
COALspot.com: PT Delta Dunia Makmur Tbk., has announced that its subsidiary, PT Bukit Makmur Mandiri Utama ("BUMA"), has entered into min ...
Monday, 07 August 17
THE SHIPPING INDEXES BOUNCE BACK THIS PAST WEEK
COALspot.com: The Freight market rose this past week compared to the previous week, as BDI, Cape and Panamax indexes show a positive trend week ove ...
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Showing 1981 to 1985 news of total 6871 |
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- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Minerals Council of Australia
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- Energy Development Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Medco Energi Mining Internasional
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- MS Steel International - UAE
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Georgia Ports Authority, United States
- Energy Link Ltd, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- GAC Shipping (India) Pvt Ltd
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Dalmia Cement Bharat India
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Miang Besar Coal Terminal - Indonesia
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- CNBM International Corporation - China
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Intertek Mineral Services - Indonesia
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Planning Commission, India
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- GVK Power & Infra Limited - India
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