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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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Wednesday, 19 July 17
SHIPPING MARKET INSIGHT - NASSOS SOULAKIS
Referring back to a previous Intermodal insight that was written in the first quarter of 2017, the author at the time had claimed that MR tanker ra ...
Tuesday, 18 July 17
CHINA'S ECONOMY HAS BOOSTED OPTIMISM IN THE MARKET - GEORGE LAZARIDIS
COALspot.com: China’s economy has boosted optimism in the market as its recently announced GDP growth for the second quarter of the year exce ...
Friday, 14 July 17
IMPORTED COAL IS STILL A SAFE AND RELIABLE SOURCE OF ENERGY IN GERMANY - VDKI
COALspot.com: Imported coal is still a safe and reliable source of energy in Germany. World coal mining has reached a high plateau, but not yet a t ...
Friday, 14 July 17
U.S. WEEKLY COAL-OUTPUT IN SIGNIFICANT DECLINE, EIA FIGURES SHOW
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 13.4 million short tonn ...
Thursday, 13 July 17
BELT AND ROAD SHIPPING INDICES OFFICIALLY RELEASED - XINHUA
COALspot.com: The Shanghai Shipping Exchange (SSE) Tuesday officially launched the Belt and Road shipping indices to track freight trade data among ...
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Showing 2001 to 2005 news of total 6871 |
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- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- Ministry of Transport, Egypt
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Coal and Oil Company - UAE
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Wood Mackenzie - Singapore
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Vizag Seaport Private Limited - India
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- ASAPP Information Group - India
- Electricity Generating Authority of Thailand
- Eastern Coal Council - USA
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- PTC India Limited - India
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Minerals Council of Australia
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
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