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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, 28 April 17
DELTA DUNIA RECORDED $24 MILLION NET PROFIT FOR FIRST QUARTER OF 2017; UP 700% Y/Y
COALspot.com: PT Delta Dunia Makmur Tbk. has announced its financial results for the first quarter of 2017 yesterday. According to the ...
Thursday, 27 April 17
PACIFIC IS SOFTENING WITH MORE TONNAGE OPENING AND LESS COAL ORDERS AROUND - FEARNLEYS
Supramax
Relatively slow week, with both basins showing signs of cooling down. Although grain cargoes out ECSA and ECCA on Ultras still delivered ...
Wednesday, 26 April 17
IRON ORE PRICES HAVE BEEN ON A ROLLERCOASTER RIDE OVER THE LAST MONTH - CHRISTOPHER WHITTY
Iron ore prices have been on a rollercoaster ride over the last month. Prices started the year on a very positive note, surging up to their highest ...
Tuesday, 25 April 17
FIONA POUNDS: VALID TENDER OF NOTICE OF READINESS
KNOWLEDGE TO ELEVATE
In the recent English High Court case of MV Arundel Castle1, the Judge ruled that a vessel, that could not immediately pr ...
Tuesday, 25 April 17
SHIPPING MARKET - ALLIED
Over the weekend we witnessed a second win over the rising populism that has become present in global politics since last summer, Allied shipping s ...
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Showing 2061 to 2065 news of total 6871 |
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- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Planning Commission, India
- SMG Consultants - Indonesia
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- MS Steel International - UAE
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Australian Coal Association
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Price Waterhouse Coopers - Russia
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- Central Java Power - Indonesia
- PTC India Limited - India
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Aditya Birla Group - India
- Coastal Gujarat Power Limited - India
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
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