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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, 24 March 17
U.S COAL PRODUCTION ESTIMATE DECLINE 4.4% W/W - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 14.1 million short tons ...
Thursday, 23 March 17
CAPESIZE: TAKING A BREATHER AFTER RALLYING - BUT OUTLOOK FOR WEEKS TO COME NOT SCARY - FEARNLEYS
Supramax
In the Pacific the market seems somewhat slower this week, although healthy rates still being achieved said Fearnleys in its latest week ...
Thursday, 23 March 17
KOREA MIDLAND POWER COMPANY LIMITED INVITES BIDS FOR TOTAL 4.77 MILLION TONS OF BITUMINOUS COAL FOR ITS BORYEONG POWER PLANT
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 2,090,000 Metric Tons of Bituminous coal f ...
Wednesday, 22 March 17
THE DRY BULK MARKET HAS UNDOUBTEDLY REBOUNDED SINCE THE SAME PERIOD LAST YEAR - KONSTANTINOS KONTOMICHIS
The Dry Bulk market has undoubtedly rebounded since the same period last year and currently enjoys healthier freight rates. The positive reversal i ...
Tuesday, 21 March 17
DESPITE THE CHALLENGING MARKET SITUATION IN 2016 THE DELTA DUNIA MAKMUR HAS ACHIEVED A NET PROFIT OF US$37 MILLION
COALspot.com: PT Delta Dunia Makmur Tbk. has announced its financial results for the period ended December 31, 2016.
Despite challenging marke ...
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Showing 2091 to 2095 news of total 6871 |
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- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Energy Link Ltd, New Zealand
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Romanian Commodities Exchange
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Lanco Infratech Ltd - India
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Ambuja Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- AsiaOL BioFuels Corp., Philippines
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- MS Steel International - UAE
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- White Energy Company Limited
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Planning Commission, India
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
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