= The principles embodied in general av- erage (GA) &r the carriage of goods by the sea have existed from rime immemorial. The origin of GA is said to date from Rhodian law of approximately 80086 and waslater embod- ied In the Digest ofJustinian, which governed mercantile transactions in the Mediterranean and Adriatic seas. The haw of general average does not depend upon any pnicular written instrument bur on a general rule of maritime law which becomes operative on the existence of peril.

Despite the histari- cal provenance of GA m its declaration often comes as a shock to partics involved in a maritime incident. In

such security must be lodged before release ro receivers which could cawe further delay and disruption.

Large general awmgo absorption clauses

Bulk cargas do not generally c a m too many problem with regard to the collection of gen- eral average security, as there is usually only a handful ofcargo interests inwlvd, The prob- lem is really one for the container industry. Container ope ram wilI usually have large

p e r a l avenge absarp- tion clauses in their hull policies with some running into millions of dollars. Owners in major casualties (such

recent years the surprise has been somewhat contained by the inclusion of a general avcr- age absorption d a m in most hull covers. The general average can be recavered in full from hull underwriters, up to a pre-agreed amount, without the need to approach c a r p interests fortheir contribution. More recently the Baltic and International Marine Council (BIMCO) has endeavoured to introduce an avenge bond wording inm bills of lading to reduce time re- quired for GA securiry collection.

Some form af securlty In order ro ensun payment by interests in- volved in the common maritime adventure such as cargo, containers, height at risk and rime-charterers' bunkers on board, shipwn- ers need ro obtain some form dsecuiiry. This i s usually in the form of an unlimited guaran- tee from inswrs and a 'Band' (purely a paper document and not, for instance, a 'perform- ance' band) from cargo receiwm together with the commercial invoices involved, The wordings ofthese dacuments have been in ex- istence far some time and generally agreed in the distant p t by committees from Lloyd's, shipowning interests and adjusters and are acceptable inrernarionally. Cash dcposits are collected where cargo is uninsured or some doubta may be raised as to the solvcacy of the insurer concerned. Shipowners only have what is known as a possessory lien over the cargo so

as the recenr 'Hyundai ~brtune') may, how- eyer, find that the absorption covers are not sufficient and may not want ra dairn under them. Nevertheless there is no real option but to undertake a fulk~ale general average secu- rity collection.

In practical tetrns this means that cantact must be made with every insurer and receiver of all cargo and way container, noting its si7e and whether refrigerated, on board the v e s d The appointed a w e adjuster must emwe that fd security has been lodged by w r y in- tcresr involved.

Galledion Is a mammoth task With the larger clarsm of container carrier3 now being built h i s could inmlve in cxccss af 8,000 containers and acrual bills of lading holders - if not more. With a minimum of three documants p e ~ bill of lading this would amaunt to a staggering 24,000 ~ ~ C E B of pa- per. Golkction is a mammoth task cvtn in this electronic age. In cases involving sdvage, especially Lloyd's Open Form, it is likely that the appointed adjusters will also be collecring salvage sccurity fmm cargo interests as d l as general average sccuriry.

Although general average security is given, as per Rule D of the York/Antwerp Rules, rights as to contribution are not effected. A payment may still be avoided in the rase of agreed or proven unseaworthineac of the ves-

sel or b r e d in the contracts of earriye. Any major casualty is likely to k z challenge for shipowners and cargo interests alike and more so in eases involving multi-bill of lading ship ments. C a r p intereats will want their cargoes delivcrEd as s m as possible in order to meet market deldiinesand maintain cash flow. The carrier may wmc under considerable pressure from shippers who hold the threat of moving their (longstanding} custom eltewhcre.

Effects can be minimised in the first in- stance if shipowners ensure that they have adequate limits in their absorption clauses. Many hull policies renewed year on year without any thought to review or increase such amounts,

What wauld happen ... ? From a chartering perspecrive it is essential that there is more discussion as to what would happen in the went of a casualty with regard to general awmge. The owner or operator has sale discretion as to whether he will utilise the absorption cover or whether he will toquire general average security to he callectcd. Nevertheless it is prudent to ask the owner or opcator whether there b a general avcrage absorption clause in the hull c m r , whether a policy deductible is applicable and what these amounrs are.

Operators now sometimes have to rely on feeder vessels for final delivery given the ever in- creasing size of container ships. Whilst the original carrier may have sufficient general aver- age contingencies, the feeder operator may nor - small '

though this part of the car- riage may be in comparison to the werall voyage. Op-

'

erators and slot charterers also need to consider the , implications for car- goes carrid by f d e r '

vessels. For instance, 1

they should consider , introduction ofsame form of general av-

e tor contamer carrlers

emge absorption wvcr for cargoes shipped un- der heir bills ofiading on another vessel. This could also apply to wntainer vessels that arc shared by a number of dot charterers. W h l t this is an extra cost it can bc argucd that rhc savings fmm avoiding a potentially angry cli- ent base and possible loss to another carrier would far outweigh any premium paid.

Shipowners should also expect input front their appointed average adjusters and their underwriters. This requires a move from the traditional approach to security collection. It takes staunch resolve and accurate figures for an adjuster ro decide in the early stages of a casualty that security could only be collected from cargo a h a certain value. Such action would, hawever, reduce the casrs of adjust- ment and collections dramatically.

Mot the first time A recent case illustrates the scope for change. A relatively small general average, although ibove the absorption amount in the hull cover,

involved 200 containers on a feeder vessel car- r i d under five bills of lading - one for each of the slot charterers involved. Collection of securiry fmm 200 cargo intereats would hwe resulted in the costs ofdjwtmentbeingoneof the major allowances and was an unwelcome outcome. At the adjustcrs instigation theship- owncn and slot charterers (or representatives), eventually met and agreed to lodge security on behalf of 'their' cargo so that security was collected from the five, as opposed to 200, in- terests. Unforsunatcly this took aImosr three months to resolve. The situation would have been quite different if thought to such eventu- alities had been $ ' in at the time of the charter. Suitable clauses could have been agreed and inserted in the contracts, As already men- tioned, it is not as if this is the first rime that a maritime casualty has occurred where general average has been declared.

Small addltlanal work It would not bc tao difficult to incorporate a

general average dause into charter contracts. Itcrns detailed could indude the actual ab- sorption limit in the hulI policy, the format for security Iodged, proccdurer prior to cargo transhipment, the financing arrangements b r such tmshipment, incidence of storage charges on conminers awaiting provision of security and calculation of cargo values in the possible absence of cummercial invoices. The question of cargo values should be easier to resolve in future as more information is now required at the point of shipment, especially where cargoes to the United States are can- cerncd, in order to comply with the Maritime Transportation Security Act 2002 (MTSA). Inclusion of acost insurance and freight (CIF) value would seem to be a very small additional work load compared to the potential savings that could be made. Are there any container operators willing to sail on the new wave of general average? r