Principles of General Average

“That which has been sacrificed for the benefit of all shall be made by the
contribution of all”

The purpose is to ensure that the owner of a vessel or cargo who has incurred
an expenditure or suffered a sacrifice of his property in order to save the
vessel and cargo from a perilous situation receives a contribution from all
those who have benefited from it.

The History dates back to Rhodian Law from about 800 B.C
Elements of a General Average Act

In order for a contribution from all parties there must be a “common

maritime adventure” followed by a general average act.
Definition of GA act: Rule A, YAR rules
The essential elements of a GA Act are as follows.
• There must be a “sacrifice or adventure”.
•It must be “extraordinary”.
•It must be “intentionally” made or incurred.
•It must be “reasonable”.
•Must be made for the “common safety”.
•Must be made for the purpose of preserving the property from peril
Parties to the common maritime adventure

It could include the following:

• The shipowner
•Each Consignee of cargo on board.
• Owners of bunker fuel (if the vessel is on time charter)
•Recipient of freight (usually the shipowner or time charterer)
•The owners of equipment (i.e., if vessel is specially equipped, eg
diving systems).
Sacrifice or Expenditure

Examples of “Sacrifice”:
•Cargo jettisoned to refloat a grounded vessel
•Machinery damage sustained during a refloating operation.

Examples of “Expenditure”:
• Costs of Salvage operation , including the salvor’s award
•Costs of entering, staying at and leaving the port of refuge.
Extraordinary Nature of sacrifice or expenditure
Examples
• Losing an anchor laid out as a ground tackle during a refloating
operation.
• Damage to main engine in a refloating operation.

(Ordinary damage to prevent these incidents from happening is not

covered)
Expenditure Intentionally made

Examples
• CO2 cylinders discharged to extinguish a fire.
• Beaching a leaking ship to prevent foundering
•Costs of refloating an accidentally grounded ship.
Expenditure must be reasonably made

The expenditure must be reasonably made.

• Expenditure at a port of refuge “over and above” a reasonable
expenditure would not be allowed.
Expenditure for the common safety.

It must be made for the benefit of all parties to the common adventure.
E.g breakdown of a reefer plant.
The expenditure must be made to preserve the property from peril.

• It must be real and substantial. It need not be imminent.

York and Antwerp Rules
• A set of Internationally recognised rules drawn up by maritime
countries
• It allows each party to make an assessment to his general
average contribution.
• Unlike H/V rules they are not incorporated into the National
Law, but are VOLUNTARILY accepted by shippers, shipowners
and insurers.
• Incorporated into a contract of carriage by the General Average
Clause.
• If “not” incorporated, then the common law of the country
where the voyage is terminated following a GA act will apply.
This obviously could lead to a lot of difficulties.
• Consists of
1) 7 lettered rules (A-G) stating the General principles AND
2) 22 numbered rules ( I to XXIII) dealing with specific matters.
 Rule A:

Provides the definition of a General Average Act:

“There is a GA act when, and only when any
extraordinary sacrifice or expenditure is
intentionally and reasonably made or incurred for
the common safety for the purpose of preserving
from peril the property involved in a common
maritime adventure”.
Examples of GA “act” allowed under YAR rules

• Taking a tow to a POR following major machinery failure

•Jettisoning or discharging cargo to aid refloating after stranding
•Wetting previously undamaged cargo while extinguishing a fire.
(Damage caused by fire PA, Damaged caused by water, GA)
• Beaching a ship (Voluntary stranding) to avoid foundering
• Putting into a POR during a loaded voyage after a fire, shifting of
cargo, collision grounding, leakage etc.
•Putting into a POR to effect essential hull or machinery repairs
Examples of GA “sacrifices” allowed under YAR rules

• Damaging engine, propeller or hull in refloating

operations
•Jettison of cargo from underdeck
•Jettison of Cargo carried on deck by a recognised
custom of the trade.
•Slipping an anchor and cable to avoid collision.
 Examples of GA “expenditure” allowed under YAR rules

•Cost of hiring a tug to refloat a stranded vessel with cargo on

board.
•Cost of discharging cargo in order to refloat a stranded ship or
to carry out repairs at a POR
•Salvage Costs
•Agency Fees at POR
•Surveyor’s Fees
•Warehousing charges
•Port Charges
•Master’s and Crew wages while ship is being repaired.
•Average Adjuster’s fees.
Re cap:

•Principles
•Act of General Average
• Essential Elements of a General Average Act
•Nature and application of York Antwerp Rules
•Examples of GA acts allowed under YAR rules
•Examples of GA sacrifice
•Examples of GA expenditure