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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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Friday, 04 August 17
U.S. WEEKLY COAL OUTPUT UP 4.4% W/W - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 16.1 million short tonn ...
Friday, 04 August 17
IMPORTED COAL CONTINUES TO BE A COMPETITIVE, SAFE AND RELIABLE ENERGY SOURCE FOR GERMANY - VDKI
COALspot.com: Worldwide hard coal production in 2016 declined by 3.8% to 6.7 billion tonnes.
According to the Germany Coal Importers Associati ...
Thursday, 03 August 17
SUPRAMAX: INDO TO CHINA COAL ROUNDS ARE GETTING FIXED AROUND MID $8000 - FEARNLEYS
In the Pacific rates have remained weak and under pressure this week with most routes softening.
Indo/China coal rounds are getting fixed arou ...
Thursday, 03 August 17
BUMI RESOURCES COAL SALES RELATIVELY FLAT AT 41.5 MILLION TONS IN 1H' 17; REPORTS US$162.3 MILLION PROFIT IN FIRST SEMESTER
COALspot.com: The BUMI Resources, Indonesia’s one of the largest coal producer, has reported a net income of $162.3 million in 1H’ 17 c ...
Wednesday, 02 August 17
SHIPPING MARKET INSIGHT - GIANNIS ANDRITSOPOULOS
During the duration of the first half of the year, the dry bulk market saw intense buying interest that boosted SnP prices significantly. We saw a ...
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Showing 1986 to 1990 news of total 6871 |
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- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Barasentosa Lestari - Indonesia
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Deloitte Consulting - India
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- PTC India Limited - India
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Savvy Resources Ltd - HongKong
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Eastern Coal Council - USA
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
- White Energy Company Limited
- MS Steel International - UAE
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- GN Power Mariveles Coal Plant, Philippines
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
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