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York Antwerp Rules2004

York Antwerp Rules 2004






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    York Antwerp Rules2004 York Antwerp Rules 2004 Presentation Transcript

    • York Antwerp Rules 2004 prepared by ABDUL JABBAR KHAN D1MC34
    • What is General Average?
    • 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.
    • 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
    • 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
    • Expenditure allowable York Antwerp Rules: 1974/ 1994 Expenditure for common safety and for common benefit (safe prosecution of voyage) 2004 For common safety but certain expenditure for common benefit now limited
    • 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.
    • Effects of 2004 Rules Who wins? Who loses?
    • Salvage awards in General 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.
    • Salvage allowable in GA York Antwerp Rules……..1974/1994 2004 LOF/ negotiated settlements paid by all parties Yes No Paid by one party on behalf of all Yes Yes
    • Independently negotiated Salvage awards 1974/ 1994 Rules Salved value Ship $ 3,000,000 Settlement GA $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
    • LOF Salvage award SHIP Sound value Deduct fire damage US$10,000,000 1,000,000 US$ 9,000,000 Salvage pays US$468,750 US$ 3,000,000 pays US$156,250 US$ 2,400,000 US$14,400,000 pays US$125,000 pays US$750,000 CARGO 1st consignment Sound value US$3,250,000 Deduct fire damage 250,000 2nd consignment Sound value US$3,250,000 Deduct:Fire damage US$250,000 Extinguishing damage 600,000 850,000 = 5.2% of values
    • Reapportionment of salvage in GA SHIP Sound value Deduct fire damage US$10,000,000 1,000,000 US$ 9,000,000 GA (Salvage) pays US$450,000 US$3,000,000 pays US$150,000 CARGO 1st consignment Sound value US$3,250,000 Deduct fire damage 250,000 2nd consignment Sound value US$3,250,000 Deduct:Fire damage US$250,000 Extinguishing damage 600,000 850,000 US$2,400,000 Add back Extinguishing damage 600,000 US$3,000,000 US$15,000,000 pays US$150,000 pays US$750,000 = 5% of values
    • 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.
    • 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.
    • Crew wages York Antwerp Rules……… 1974/1994 2004 Crew wages: Deviating to port of refuge and resuming voyage Yes Yes While detained effecting repairs Yes No Likely considerable losses to Shipowners under YAR 2004
    • Temporary repairs (1974/1994) Temporary repairs to complete voyage US$100,000 Assumed savings:Cost of handling cargo…….US$50,000 Extra detention expenses to effect permanent repairs………. 25,000 Allowance in GA…..US$75,000 Excess US$25,000 not allowable.
    • 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 allowance B. If US$450,000 = US$50,000 allowable, subject to GA savings. 2004 Rules result in higher claim PA claim on Hull Underwriters but lower costs to Cargo Underwriters.
    • Transhipment/ forwarding cargo 1974/ 1994/ 2004 Rules • Owners not normally obliged to forward cargo • Requires special agreement • Savings in costs allowable • Allowances under 1994/2004 Rules limited to costs which cargo interests would incur forwarding at their own expense (Hull Underwriters may be liable for the extra costs which not GA)
    • GA Commission and Interest 2004 Rules • No commission allowable under 2004 Rules to party paying GA expenditure. Benefit to Underwriters but considerable loss to Shipowners as they usually incur the expenditure (previously 2% excluding crew wages and fuel replaced after the voyage). • Rate of interest on GA expenditure and sacrifices to be set annually by CMI under 2004 Rules. Previously 7% fixed rate under 1974/ 1994 Rules. Likely benefits to Underwriters but considerable losses to Shipowners.
    • Time Bar New rule in 2004 – Subject to mandatory rule on time limitation under any applicable law: - Rights to GA contribution cease unless party claiming brings legal action within 1 year of GA Adjustment issue date. - No action can be brought after 6 years from termination of GA voyage. - These periods can be extended by agreement of the parties. - Rule does not apply between the GA parties and their Underwriters.
    • Summary of changes in 2004 • Salvage excluded except when paid by one party. • No crew wages during detention at port of refuge. • Different treatment of temporary repairs. • No commission (previously 2%) • CMI set rate of interest annually (previously 7% p.a.). • Time bar provision.
    • Example comparing GA allowances Allowance Salvage 1994 US$ 500,000 Wages to port of refuge Wages at port of refuge Temporary repairs Commission Interest 2,500 17,500 75,000 11,500 40,000 US$ 646,500 2004 Remains as paid 2,500 ---50,000 ----2,000 (if 4%) 54,500
    • 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.
    • End of Voyage