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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, 14 June 17
HANDYSIZES AND PANAMAXES ENJOY THE TIGHTEST SUPPLY - PANOS TSILINGIRIS
The dry and the tanker shipping segments have dissimilar exposure to supply-driven opportunity (or risk). While the vintage (i.e., over 15 years ol ...
Tuesday, 13 June 17
THE TANKER FREIGHT MARKET IS STILL UNDER PRESSURE - GEORGE LAZARIDIS
News of U.S. inventory decline has hit the market by surprise with prices of the commodity showing some quick revival as OPEC continues to push wit ...
Monday, 12 June 17
THE BALTIC DRY INDEX TOOK A POSITIVE STEP
COALspot.com: The Freight market incline this past week compared to the previous week, as BDI, Cape and Panamax indexes show a positive trend week ...
Friday, 09 June 17
U.S WEEKLY COAL OUTPUT WAS FLAT WEEK OVER WEEK - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 15 million short tonnes ...
Wednesday, 07 June 17
INDO HBA INDEX SEE LARGEST DROP SINCE FEBRUARY 2017
COALspot.com: Indonesian coal benchmark price decline 9.96% in June, government data showed.
The benchmark price of Indonesian thermal coal de ...
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Showing 2026 to 2030 news of total 6871 |
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- AsiaOL BioFuels Corp., Philippines
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- CIMB Investment Bank - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Thiess Contractors Indonesia
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Cigading International Bulk Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Videocon Industries ltd - India
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Ambuja Cements Ltd - India
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- Coalindo Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Bukit Makmur.PT - Indonesia
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Mercator Lines Limited - India
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Australian Coal Association
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Indo Tambangraya Megah - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
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