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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, 31 July 17
KOMIPO INVITES BIDS FOR 750K MT OF 5,700 KCAL/KG NAR COAL
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 750,000 Metric Tons of Bituminous coal for its B ...
Monday, 31 July 17
THE PORT OF NEWCASTLE SHIPPED 17.08 PERCENT LESS COAL IN JUNE 2017 COMPARED TO ITS MAY LOADING
COALspot.com: The Port of Newcastle, Australia’s major trading ports, and the world’s largest coal export port has shipped $AU 1,442.8 ...
Monday, 31 July 17
THE FREIGHT MARKET DECLINE THIS PAST WEEK
COALspot.com: The Freight market decline this past week compared to the previous week, as BDI and Panamax indexes show a negative trend week over w ...
Friday, 28 July 17
U.S. WEEKLY COAL PRODUCTION UP 1.4% WEEK OVER WEEK - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15.5 million short tonn ...
Thursday, 27 July 17
CAMPBELL SHIPPING APPOINTS ISS FOR GLOBAL HUSBANDRY REPRESENTATION SERVICES CONTRACT - ISS
COALspot.com: Inchcape Shipping Services (ISS) is delighted to announce that it has secured a global husbandry representation contract with Campbel ...
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Showing 1991 to 1995 news of total 6871 |
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- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Central Electricity Authority - India
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Sarangani Energy Corporation, Philippines
- Petron Corporation, Philippines
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Edison Trading Spa - Italy
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- SMC Global Power, Philippines
- PTC India Limited - India
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- White Energy Company Limited
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Leighton Contractors Pty Ltd - Australia
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Globalindo Alam Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- Heidelberg Cement - Germany
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
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