rule 2004
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York Antwerp Rules2004 and its Amendments
PREPEARED BY Md.Mizanur Rahman Parvez D1MC00468Abdul Jabbar Khan D1MC 00467Pandiaraj A/L Retenam D1MC 00466
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What is General Average?
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General Average
• A form of international maritime law/ practice - first incorporated in York Rules 1864.
• Exists irrespective of insurance or fault of any party.
• All parties contribute to sacrifices and expenditure for the common safety/ safe prosecution of the voyage.
• Contribution based on values at end of voyage.
• Property lost subsequently on voyage does not contribute.
• Security = Underwriters’ Guarantee or cash deposit or Bank Guarantee + Average Bond signed by Consignees.
• Terms incorporated in Charter Parties & Bills of Lading.
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Typical GA Sacrifices
For common safety:
• Jettison of cargo at a time of peril• Loss/ damage to ship or cargo extinguishing a
fire • Damage to main engines refloating a laden
vessel which is aground and in peril• Loss/ damage to property owned by third
parties in consequence of refloating operations
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Typical GA Expenditure
• Salvage costs • Port charges at port of refuge • Crew wages at port of refuge• Cargo discharge for repairs• Cargo storage/ reloading costs • Temporary repairs• Overtime on repairs
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Expenditure allowable
York Antwerp Rules:
1974/ 1994Expenditure for common safety and for common benefit (safe prosecution of voyage)
2004 For common safety but certain expenditure for common benefit now limited
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Reasons leading to 2004 Rules
• Perceived widening of scope of GA in 1994, such as anti-pollution measures
• Cargo often contribute more than Vessel due to higher values
• Reapportionment of Salvage in GA considered unnecessary and expensive
• Desire to restrict GA to Common Safety and to limit Common Benefit
• First set of YAR Rules introduced without consensus between Shipowning and other interests
• 2004 Rules only applicable if incorporated in Charter Parties/ Bills of Lading.
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Effects of 2004 Rules
Who wins?
Who loses?
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Salvage awards inGeneral Average
• Salvage based on values at termination of salvage services.
• Contribution to General Average based on values at end of voyage.
• Further losses/ damage/ sacrifices after termination of salvage services and before end of voyage affect contributions ultimately payable for salvage in GA.
• Limits under YAR 2004.
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Salvage allowable in GA
York Antwerp Rules……..1974/1994 2004
negotiated settlements
paid by all parties Yes No
Paid by one party on
behalf of all Yes Yes
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Independently negotiated Salvage awards 1974/ 1994 Rules
Salved value Settlement GA
Ship $ 3,000,000 $200,000 (6.7%) $250,000
Cargo 9,000,000 800,000 (8.9%) 750,000
$12,000,000 1,000,000 1,000,000
= 8.3%
Under 2004 Rules payments remain as settled
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Salvage awardSHIP Sound value US$10,000,000Deduct fire damage 1,000,000 Salvage
US$ 9,000,000 pays US$468,750CARGO1st consignment Sound value US$3,250,000Deduct fire damage 250,000
US$ 3,000,000 pays US$156,2502nd consignmentSound value US$3,250,000Deduct:-Fire damage US$250,000Extinguishing damage 600,000
850,000 US$ 2,400,000 pays US$125,000
US$14,400,000 pays US$750,000
= 5.2% of values
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Reapportionment of salvage in GA SHIP Sound value US$10,000,000Deduct fire damage 1,000,000 GA (Salvage)
US$ 9,000,000 pays US$450,000CARGO1st consignment Sound value US$3,250,000Deduct fire damage 250,000
US$3,000,000 pays US$150,0002nd consignmentSound value US$3,250,000Deduct:-Fire damage US$250,000Extinguishing damage 600,000
850,000 US$2,400,000
Add backExtinguishing damage 600,000
US$3,000,000 pays US$150,000 US$15,000,000 pays US$750,000
= 5% of values
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Effects of reapportioning salvage costs in GA
• Benefits of a favourable settlement by one interest shared by others – 2004 Rules Individual Hull or Cargo Underwriters could gain or lose depending on figures. No change for Owners.
• Uninsured/ unrepresented interests share in salvage arbitration costs- 2004 Rules Hull and Cargo Underwriters lose. No change for Owners.
• Disproportionate legal costs representing time charterers’ bunkers or freight shared by Ship and Cargo – 2004 Rules Hull and Cargo Underwriters gain. No change for Owners.
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Excluding Salvage from GA
• Underwriters save the costs and time required to reapportion salvage although still necessary to collect GA security.
• Individual Hull or Cargo Underwriters could gain or lose as a favourable salvage settlement or disproportionate legal costs not shared.
• Hull and Cargo Underwriters lose because uninsured/ unrepresented interests do not share salvage arbitration costs.
• Beneficial for Owners as exclusion makes GA absorption clauses in Hull policies more effective.
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Crew wages
York Antwerp Rules……… 1974/1994 2004
Crew wages:Deviating to port of refugeand resuming voyage Yes Yes
While detained effectingrepairs Yes No
Likely considerable losses to Shipowners under YAR 2004
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Temporary repairs (1974/1994)
Temporary repairs to complete voyage US$100,000
Assumed savings:-Cost of handling cargo…….US$50,000Extra detention expenses to effect permanent repairs………. 25,000 Allowance in GA…..US$75,000
Excess US$25,000 not allowable.
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Temporary repairs (2004)
• Temporary repairs …..US$100,000• Permanent repairs…… 400,000
US$500,000
If estimated permanent repairs at port of refuge:-A. If US$500,000 = no GA allowanceB. If US$450,000 = US$50,000 allowable, subject to GA savings.
2004 Rules result in higher claim PA claim on Hull Underwritersbut lower costs to Cargo Underwriters.
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Transhipment/ forwarding cargo1974/ 1994/ 2004 Rules
• Owners not normally obliged to forward cargo
• Requires special agreement• Savings in costs allowable• Allowances under 1994/2004
Rules limited to costs which cargo interests would incur forwarding at their own expense
(Hull Underwriters may be liable for the extra costs which not GA)
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GA Commission and Interest2004 Rules
• No commission allowable under 2004 Rules to party paying GA expenditure.
Benefit to Underwriters but considerable loss to Shipowners as they usually incur the expenditure (previously 2% excluding crew wages and fuel replaced after the voyage).
• Rate of interest on GA expenditure and sacrifices to be set annually by CMI under 2004 Rules. Previously 7% fixed rate under 1974/ 1994 Rules.
Likely benefits to Underwriters but considerable losses to Shipowners.
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Time Bar
New rule in 2004 – Subject to mandatory rule on time limitation under any applicable law:- Rights to GA contribution cease unless party claiming brings legal action within 1 year of GA Adjustment issue date.- No action can be brought after 6 years from termination of GA voyage.- These periods can be extended by agreement of the parties.- Rule does not apply between the GA parties and their Underwriters.
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Summary of changes in 2004
• Salvage excluded except when paid by one party.
• No crew wages during detention at port of refuge.
• Different treatment of temporary repairs.
• No commission (previously 2%)
• CMI set rate of interest annually (previously 7% p.a.).
• Time bar provision.
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Example comparing GA allowances
Allowance 1994 2004
Salvage US$ 500,000 Remains as paid
Wages to port of refuge 2,500 2,500
Wages at port of refuge 17,500 ----
Temporary repairs 75,000 50,000
Commission 11,500 -----
Interest 40,000 2,000 (if 4%)
US$ 646,500 54,500
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General Average in future
• Shipowners may continue to insist on YAR 1974 or 1994 as more favourable than 2004.
• B/Ls providing for 1994 YAR still apply as YAR 2004 are new set of rules, not an amendment or modification of 1994 Rules.
• Absorption clauses could reduce number of GA claims against cargo.
• BIMCO Average Bond Clause may reduce time and costs of collecting GA security.
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End of Voyage
GOOD LUCKTHANKX!!!!