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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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- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- Bhushan Steel Limited - India
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- India Bulls Power Limited - India
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Coal and Oil Company - UAE
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- MS Steel International - UAE
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Carbofer General Trading SA - India
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
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