General average/New version

Average in maritime commerce to signify damages orexpenses resulting from the accidents of navigation. Average is either general or particular. General average arises when sacrifices have been made, or expenditures incurred, for the preservation of the ship, cargo and freight, from some peril of the sea or from its effects. It implies a subsequent contribution, from all the parties concerned, rateably tothe values of their respective interests, to make good the loss thus occasioned. Particular average signifies the damage or partial loss happening to the ship, goods, or freight by some fortuitous or unavoidable accident. It is borne by the parties to whose property the misfortune happens or by their insurers. The term average originally meant what is now distinguished as general average; and the expression particular average, although not strictly accurate, came to be afterwards used for the convenience of distinguishing those damages or partial losses for which no general contribution could be claimed.

Although nothing can be more simple than the fundamental principle of general average, that a loss incurred for the advantage of all the coadventurers should be made good by them all in equitable proportion to their stakes in the adventure, the application of this principle to the varied and complicated cases which occur in the course of maritime commerce has given rise to many diversities of usage at different periods and in different countries. It is soon discovered that the principle cannot be applied in any settled or consistent manner unlessby the aid of rules of a technical and sometimes of a seeminglyarbitrary character. The difficulty, which at one time seemed nearly insuperable, of bringing together the rules in force in the several maritime countries, has been to a large extent overcome not by legislation but by framing a set of rules covering the principal points of difference in such a manner as to satisfy, on the whole, those who are practically concerned, and to lead them to adopt these rules in their contracts of affreightment and contracts of insurance (see INSURANCE: Marine). The honor of the achievement belongs to a smallnumber of men who recognized the flistorj of need of uniformity. The work began in May 1860 at the Yorka congress held at Glasgow, under the presidency of Aiweip Lord Brougham, assisted by Lord Neaves. Further congresses were held in London (1862), and at York (1864), when a body of rules known as the York Rules was agreed to. There the matter stood, until it was taken up by the Association for the Reform and Codification of the Law of Nations at conferences held at the Hague (1875), Bremen (1876) and Antwerp (1877). Some changes were made in the York Rules; and so altered, the body of rules was adopted at the last-named conference, and was styled the "York and Antwerp (orYork-Antwerp) Rules". The value of these rules was quickly perceived, and practical use of them followed. But they proved to be insufficient, or unsatisfactory, on some points; and again, in the autumn of 1890, a conference on the subject was held, this time at Liverpool, by the same Association, under the able presidency of Dr F. Sieveking, president of the Hanseatic High Court of Appeal at Hamburg. Important changes were then made, carrying further certain departures from English law,already apparent in the earlier rules, in favor of views prevailing upon the continent of Europe and in the United States The new rules were styled the York- Antwerp Rules 1890. In practice they quickly displaced those of 1877; and in 1892, at a conference of the same Association held at Genoa, it was formally declared that the only international rules of general average having the sanction and authority of the association were the York-Antwerp Rules as revised in I89o, and that the original rules were rescinded. It is this later body of rules which is now known as the York-Antwerp Rules. Reference is nowto be found in most English contracts of carriage and contracts of insurance, to these rules, as intended to govern the adjustment of G.A. between the parties; with the result that (so far as the rules cover the ground) adjustments do not depend upon the law of the place of destination, and so do not vary according to the destination, or the place at which the voyage may happen to be broken up, as used formerly to be the case.

Rules

The rules are as follows:

I. Jettison of deck cargo

No jettison of cargo shall be made good as general average, unless such cargo is carried in accordance with the recognised custom of the trade.

Every structure not built in with the frame of the vessel shall be considered to be a part of the deck of the vessel.

II. Damage by jettison and sacrifice for the common safety

Damage done to a ship and cargo, or either of them, by or in consequence of a sacrifice made for the common safety, and by water which goes down a ships hatches opened, or other opening made for the purpose of making a jettison for the common safety, shall be made good as G.A.

III. Extinguishing fire on shipboard

Damage done to a ship and cargo, or either of them, by water or otherwise, including damage by beaching or scuttling a burning ship, in extinguishing a fire on board the ship, shall be made good as G.A.; except that no compensation shall be made for damage to such portions of the ship and bulk cargo, or to such separate packages of cargo, as have been on fire.

IV. Cutting away wreck

Loss or damage caused by cutting away the wreck or remains of spars, or of other things which have previously been carried away by sea-peril, shall not be made good as G.A.

V. Voluntary stranding

When a ship is intentionally run on shore, and the circumstances are such that if that course were not adopted she would inevitably sink, or drive on shore or on rocks, no loss or damage caused to the ship, cargo and freight, or any of them, by such intentional running on shore, shall be made good as G.A. But in all other cases where a ship is intentionally run on shore for the common safety, the consequent loss or damage shall be allowed as G.A.

VI. Carrying press of sail damage to or loss of sails

Damage to or loss of sails and spars, or either of them, caused by forcing a ship off the ground or by driving her higher up the ground, for the common safety, shall be made good as G.A.; but where a ship is afloat, no loss or damage caused to the ship, cargo and freight, or any of them, by carrying a press of sail, shall be made good as.

VII. Damage to engines in refloating a ship

Damage caused to machinery and boilers of a ship which is ashore and in a position of peril, in endeavoring to refloat, shall be allowed in GA., when shown to have arisen from an actual intention to float the ship for the common safety at the risk of such damage.

=VIII. Expenses of lightening a ship when ashore and consequent da

When a ship is ashore, and, in order to float her, cargo, bunker coals and ships stores, or any of them, are discharged, the extra cost of lightening, lighter hire, and reshipping (if incurred), and the loss or damage sustained thereby, shall be admitted as G.A.

IX. Cargo, ships materials, and stores burnt for fuel

Cargo, ships materials and stores, or any of them, necessarily burnt for fuel for the common safety at a time of peril, shall be admitted as G.A., when and only when an ample supply of fuel had been provided; but the estimated quantity of coals that would have been consumed, calculated at the price current at the ships last port of departure at the date of her leaving, shall be charged to the shipowner and credited to the G.A.

X. Expenses at port of refuge, etc.

(a)When a ship shall have entered a port or place of refuge, or shall have returned to her port or place of loading, in consequence of accident, sacrifice, or other extraordinary circumstances, which render that necessary for the common safety, the expenses of entering such port or place shall be admitted as G.A.; and when she shall have sailed thence with her original cargo, or a part of it, the corresponding expenses ofleaving such port or place, consequent upon such entry or return, shall likewise be admitted as G.A.

(b) The cost of discharging cargo from a ship, whether at a port or place of loading, call or refuge, shall be admitted as G.A., when the discharge was necessary for the common safety or to enable damage to the ship, caused by sacrifice or accident during the voyage, to be repaired, if the repairs werenecessary for the safe prosecution of the voyage.

(c) Whenever the cost of discharging cargo from a ship is admissible as GA., the cost of reloading and storing such cargo on board the said ship, together with all storage charges on such cargo, shall likewise be so admitted. But when the ship is, condemned or does not proceed on her original voyage, no storage expenses incurred after the date of the ships condemnation or of the abandonment of the voyage shall be admitted as G.A.

(d) If a ship under average be in a port or place at which it is practicable to repair her, so as to enable her to carry on the whole cargo, and if, in order to save expenses, either sheis towed thence to some other port or place of repair or to herdestination, or the cargo or a portion of it is transshipped by another ship, or otherwise forwarded, then the extra cost of such towage, transhipment and forwarding, or any of them (tip to the amount of the extra expense saved), shall be payable by the several parties to the adventure in proportion to the extraordinary expense saved.

XI. Wages and maintenance of crew in port of refuge, etc.

When a ship shall have entered or shall have been detained in any port or place under the circumstances, or for the purposes of the repairs, mentioned in Rule X., the wages payable to the master, officers and crew, together with the cost of maintenance of the same, during the extra period of detention in such port or place until the ship shall or should have been made ready to proceed upon her voyage, shall be admitted as G.A. But when this ship is condemned or does not proceed on her original voyage, the wages and maintenance of the master, officers and crew, incurred after the date of the ships condemnation or of theabandonment of the voyage, shall not be admitted as G.A.

XII. Damage to cargo in discharging, etc.

Damage done to or loss of cargo necessarily caused in the act of discharging, storing, reloading and stowing shall be made good as G.A. when and only when the cost of those measures respectively is admitted as G.A.

XIII. Deductions from cost of repairs

In adjusting claims for GA., repairs to be allowed in GA. shall be subject to the following deductions in respect of new for old, viz.:—

:In the case of "iron or steel ships", from date of original register to the date of accident:—

::

:In the case of wooden or composite ships:—:*When a ship is under one year old from date of original register, at the time of accident, no deduction new for old shall be made. After that period a deduction of one-third shall be made, with the following exceptions:—:*Anchors shall be allowed in full. Chain cables shall be subject to a deduction of one-sixth only.:*No deduction shall be made in respect of provisions and stores which had not been in use.:*Metal sheathing shall be dealt with, by allowing in full the cost of a weight equal to the gross weight of metal sheathing stripped off, minus the proceeds of the old metal. Nails, felt and labor metalling are subject to a deduction of one third.

:In the case of ships generally:—:*In, the case of all ships, the expense of straightening bent ironwork, including labor of taking out and replacing it, shall be allowed in full.:*Graving dock dues, including expenses of removals, cartages, use of shears, stages and graving dock materials, hall be allowed in full.

XIV. Temporary repairs

No deductions new, for old shall be made from the cost of temporary repairs of damage allowable as GA.

XV. Loss of freight

Loss of freight arising from damage to or loss of cargo shall be made good as G.A, either when caused by a G.A. act or when the damage to or loss of cargo is so made good.,

XVI. Amount to be made good for cargo loss or damaged by sacrifice

The amount to be made good as G.A. for damage or loss of goods sacrificed shall be the loss which the owner of the goods has sustained thereby, based on the market values at the date of the arrival of the vessel or at the termination of the adventure.

XVII. Contributory values

The contribution to a G.A. shall be made upon the actual values of the property at the termination of the adventure, to which shall be added the amount made good as GA. for property sacrificed; deduction being made from the shipowners freight and passage money at risk, of such port charges and crews wages as would not have been incurred had the ship and cargo been totally lost at the date of the G.A. act or sacrifice, and have not been allowed as GA.;deduction being also made from the value of the property of all charges incurred in respect thereof subsequently to the G.A. act, except such charges as are allowed in GA.

Passengers luggage and personal effects, not shipped under bill of lading, shall not contribute to G.A.

XVIII. Adjustment

Except as provided in the foregoing rules, the adjustment shall be drawn up in accordance with the law and practice that would have governed the adjustment had the contract of affreightment not contained a clause to pay G.A. according to these rules.

The above rules differ in some important respects from English common law, and from former English practice. They follow ideas upon the subject of G.A. which have prevailed in practice in foreign countries (though often in apparent opposition to the language of the codes), in preference to the more strict principle of the common law applied by English courts. Thatprinciple requires that, in order to have the character of G.A. asacrifice or expenditure must be made for the common safety of the several interests in the adventure and under the pressure of a common risk. It is not enough that the sacrifice or expenditure is prudent, or even necessary to enable the common adventure to be completed. G.A., on the English view, only arises where the safety of the several interests is at stake. The idea of a common commercial adventure, as distinguished from the common safety from the sea, is not recognized. It is not sufficient that an expenditure should have been made to benefit both cargo owner and shipowner.~~i Thus expenses incurred aftership and cargo are in safety, say at a port of refuge, are notgenerally, by English law, to be treated Port of as GA.;although the putting into port may have refuge ex- been for safety, and therefore a G.A. act. If the putting into port has been necessitated by a G.A. sacrifice, as by cutting away the ships masts, the case is different; the port expenses, the expenses of repairing the G.A. damage, and the incidental expenses of unloading, storing and reloading the cargo are, in such a case, treated as consequences of the original sacrifice, and therefore subjects for contribution. But where the reason for puttingin is to avoid some danger, such as a storm or i Per Bowen. L.L. in Svensden v. Wallace. I88t 1 O.B.D. at o. 8a.

hostile, cruiser, or to effect repairs necessitated by some accidental damage to the ship, the GA. sacrifice is considered to be at an end when the port has been reached, if the ship and cargo are then in physical safety. The subsequent expenditure in the port is said not to flow from that sacrifice, but from the necessity of completing the voyage, and is incurred in performance of the shipowners obligation. under his contract. The practice of English average adjusters has indeed modifiedthis strict view by treating the expense of unloading as G.A.; but it may well be doubted whether that practice can be legally supported. Moreover, expenditure in the port which is incurred in protecting the cargo as in warehousing it, is by English practice treated as a charge to be borne by the cargo for whoso benefit it was incurred.

If we turn now to York-Antwerp Rule X., it will be seen that a much broader view is adopted. Whatever the reason for putting into the port of refuge, provided it was necessary for the common safety, the expenses of going in, and the consequent expenses of getting out (if she sails again with all or part of her original cargo), are allowed as GA., Rule X. (a). Further, the cost of discharging the cargo to enable damage to the ship to be repaired, whether caused by sacrifice or by accident during the voyage, is to be allowed as G.A., if the repairs were necessary for the safe prosecution. of the voyage Rule X. (b). And that is to be so even where stich repairs are done at a port of call, as well as where done at a port Of refuge. Again, when the cost of discharging is treated as G.A.; so also are to be the expenses of, storing the cargo on shore, and of reloading and stowing it on board, after the repairs have been done (Rule X. (c)), together with any damage or loss incidental to those operations (Rule XII.).

Further, by Rule XI. the wages of the master, officers and crew, and the cost of their maintenance, during the detention of a ship under the circumstances, or for the purpose of the repairs mentioned in Rule X., are to be allowed in GA. It is questionable whether English law allows the wages and maintenance of the crew at a port of refuge in any case. Where the detention is to repair accidental damage it seems clear thatthey are not allowed. And in practice under common law, the allowance is never made; so that Rule Xl. is an important concession to the shipowner. Like the changes introduced by Rule X., it is a change towards the practice in foreign countries.

It may be noted that the rules do not afford equal protection to a shipper in the comparatively infrequent case of his being put to expense by the delay at a port of refuge. Thus a shipper of cattle is not entitled to have the extra wages and provisions of his cattlemen on board, nor the extra fodder consumed by the cattle during the stay at a repairing port, made as good as GA. under Rules XI. and X. (Anglo-Argentine etc. Agency v. Tern perley Shipping Co., 1899, 2 Q.B. 403).

As to the acts which amount to GA. sacrifices, as distinguished from expenditures, the York-Antwerp Rules do not much alter English common law. They do, however, make definite General provisions upon some points on which authority was average scanty or doubtful. (See Rules 1.-IX.) And in Rule 1, sacrifices. as to Jettison of deck cargo, a change is made fromthe common law rule, for the jettison is not allowed as G.A. eventhough the cargo be carried on deck in accordance with an established custom of the particular trade.

Rule III. deals with damage done in extinguishing fire on board a ship. Modern decisions have cleared away the old doubts whether such damage to ship or cargo should, at law, be allowed in G.A. But recent cases in the United States have raised, the question whether the allowance should be made where the fire occurs in port, and is extinguished, not by the master, but by apublic authority acting in the interests of the public. Title Supreme Court of the United States decided against the allowance in i894 in a case of Ralli v. Troup (157 U.S. 386). The ship had there been scuttled to put out a fire on board, by the port authority, acting upon their own judgment, but with the assent of the master. It was held that the damage suffered by ship and cargo ought not to be made good by G.A. contributions; for the sacrifice had not been made by some one specially charged with the control and safety of that adventure, but was the compulsory act of a public authority. On the other hand, in the English case of Papayanni v. Gram pian SS. Co. (I. Corn. Ca. 448). Mathew, J., held that the scuttling of a ship at a port of refuge in Algeria, by orders of the captain of the port, was a GA. act. It had been done in the interest of ship and cargo, and there was no evidence of any other motive.

Rule V. deals with the question whether, and under what conditions, a voluntary stranding of the ship is a GA. act,in a manner which will probably be held to express the law in England when the matter comes up for decision.

Rules VI. and VII. deal with the damage sustained by the, ship, or her appliances, in efforts to force her off the ground when she has stranded. Such efforts involve an abnormal use which is likely to cause damage to sails and spars, or to engines and boilers; and they are treated as acts of sacrifice. The case of The Bona, 1895 (P. 125) shows that the rules are in accord withEnglish law upon the point. The court of appeal held that both the damage sustained by the engines while worked to get the ship, off, and the coal and stores consumed. were subjects for G.A. contribution at common law.

Rule VIII. allows as G,A. any damage sustained by cargo when discharged and, say, lightened for the purpose of gettingthe ship off a strand. And the corresponding damage in the case of cargo discharged at a port of refuge to enable repairs to be done to the ship is allowed by Rule XII. But in the latter case the allowance does not expressly extend to damage sustained while stored on land. Whether the law would require contribution to a loss of goods, say, by thieves or by fire, while landed for repairs, is not clear. Where the landing has been necessitated by a GA. act, as cutting away masts, it would seem that the loss ought to be made good, as being a result of the special risks to which those goods have thereby been exposed. The risks which they would have run if they had remained on board throughout are taken into account, as will, presently appear, in estimating how much of the damage is to be made good. Where cattle were taken into a port of refuge in Brazil, owing to accidental damage tothe ship, with the result that they could not legally be landed at their destination (Deptford), and had to be taken to another port (Antwerp), at which they were of much, less value, this loss of value was allowed in G.A. (Anglo-Argentine etc. Agency v. Temperley Shipping Co., 1899, 2 Q.13. 403).

The case of a stranded ship and cargo often gives rise to difficulty as to whether the cost of operations to lighten the ship, and afterwards to get her floated, should be treated as GA. expenditure, or as expenses separately incurred in saving the separate interests. The true conclusion seems to be that either the whole operation should be treated as one for thecommon safety, and the whole expense be contributed to by all theinterests saved, or else the several parts of the operation should be kept distinct, debiting the cost of each to the interests thereby saved. Which of these two views should be adopted in any case seems to depend upon the motives with which the earlier operations (usually the discharge of the cargo) were presumably undertaken. It may, however, happen that this test cannot be applied once for all. Take the case of a stranded ship carrying a bulky cargo of hemp and grain, but carrying also some bullion. Suppose this last to be rescued and taken to a placeof safety at small expense in comparison with its value. It may well be that that operation must be regarded as done in the interest simply of the bullion itself, but that the subsequent operations of lightening the ship and floating her can only be properly regarded as undertaken in the common interest of ship, hemp, grain and freight. In such a case there will be a G.A. contribution towards those later operations by those interests. But the bullion will not contribute; it will merely bear the expense of its own rescue (Royal Mail ~ P. Co. v. EnglishBanle of Rio de Janeiro, 1887, 19 Q.B.D. 362).

The York Antwerp Rules have not only had the valuable result of introducing uniformity where there had been great variety, and corresponding certainty as to the principles which will be acted upon in adjusting any GA. loss, but also they have introduced greater clearness and definiteness on points where there had been a want of definition. Thus Rule XIII. has laid down a careful and cJefioite~ scale to regulate the deductions from thecost of repairs, in respect of new for old, in place of the former somewhat uncertain customary rules which varied according to the place of adjustment; while at the same time the opportunity has been taken of adapting the scale of deductions to modern conditions of shipbuilding. And Rule XVII. lays down a rule as to contributory values in place of the widely varying rules of different countries as to the,amounts upon which ship and freight shall contribute (cf. Gow, Marine Insurance,305).

It may be of interest to refer briefly to one or two mainprinciples which govern the adjustment (q.v.) of general average, i.e. the calculation of the amounts to be made good and paid by the several interests, which is a complicated matter. The fundamental idea is that the several interests at risk shall contribute in proportion to the benefits they have severally received by the completion of the adventure. Contributions are not made in proportion to the amounts at stake when the sacrifice was made, but in proportion to the results when the adventure has come to an end. An interest which has become lost after the sacrifice, during the subsequent course of the voyage,will pay nothing; an interest which has become depreciated will pay in proportion to the diminished value. The liability to contribute is inchoate only when the sacrifice has been made. It becomes complete when the adventure has come to an end, either by arrival at the destination, or by having been broken up at some intermediate point, while the interest in question still survives. To this there is one exception, in the case of GA. expenditure. Where such expenditure has been incurred by the owner of one interest, generally by the shipowner, the repayment to him by the other interests ought not to be wholly dependent upon the subsequent safety of those interests at the ultimatedestination. If those other interests or some of them arrive, or are realized, as by being landed at an intermediate port, the rule (as in the case of GA. sacrifices) is that the contributions are to be in proportion to the arrived ~r realized values. But if all are lost the burden of the expenditure ought not to remain upon the interest which at first bore it; and the proper rule seems to be that contributions must be made by all the interests which were at stake when it was made, in proportion to their then values.

Again, the object of the law of G.A. is to put one whose property is sacrificed upon an equal footing with the rest, not upon a better footing. Thus, if goods to the value of 100 have been thrown overboard for the general safety, the owner of those goods must not receive the full 100 in contribution. He himself must bear a part of it, for those goods formed part of the adventure for whose safety the jettison was made; and it isawing to the partial safety of the adventure that any contribution at all is received by him. He, therefore, is made to contribute with the other saved interests towards his own loss, in respect of the amount made good to him for that. The full 100 treated as the amount to be made good, but the owner of the goods is made to contribute towards that upon the sum of 100 thus saved to him.

The same principle has a further consequence. The amount to be made good will not necessarily be the value of the goods r other property in their condition at the time they were 1sacrificed; so to calculate it would in effect be to withdraw those goods from the subsequent risks of the voyage, and thus to pu,t them in a better position than those which were not sacrificed. Hence, in estimating the amount to be made good, the value of the goods or property sacrificed must be estimated 25 on arrival, with reference to the condition in which they would probably have arrived had they remained on board throughout the voyage.

The liability to pay G.A. contributions falls primarily upon the owner of the contributing interest, ship, goods or freight. But in practice the contributions are paid by the insurers of the several interests. Merchants seldom have to concern themselves with the subject. And yet in an ordinary policy of insurance there is no express provision requiring the underwriter to indemnify the assured against this liability. The policy commonly contains clauses which recognize such an. obligation, e.g. a warranty against average unless general, or an agreement that G.A. shall be payable as per foreign statement, oraccording to York-Antwerp Rules ; but it does not directly 1tate the obligation. It assumes that. The explanation seems to be that the practice of the underwriter to pay the contribution. ias been so uniform, and his liability has been ,so fully recognized, that express provisions were needless. But one result has been :hat very differing views of the ground of the obligation have een held. One view has been that it is covered by the sue and abour clause of an ordinary policy, by which the insurer agrees :0 bear his proportion of expenses voluntarily incurred in and tbout the defence, safeguard and recoveryof the insured subject. But that has been held to be mistaken by the House of Lords (Ailchisonv. La/i re, I879,4A.C. 7.55). Another view is that the underwriter impliedly undertakes to repay sums which the law may require the assured to pay towards averting losses which would, by the contract, fall upon the underwriter. Expenses roluntarily incurred by the assured with that object are expressly nade repayable by the sue and labor clause of the policy. It night well be implied that paymentscompulsorily required rom the assured by law for contributions to G.A., or as salvage or services by salvors, will be undertaken or repaid by the inderwriter, the service being for his benefit.- But the decision n Aitchison v. Lohre negatives this ground also. The claim was against underwriters on a ship which had been so damaged that he cost of repairs had exceeded her insured value. A claim for the ships contribution to certain salvage and G.A. expenses rhich had been incurred, over and above the cost of repairs, was lisallowed. The view seems to have been that the insurer is iable for salvage and G.A.payments as losses of the subject nsured, and therefore included in the sum insured, not as collateral payments made on his behalf. This bases the claim igainst the insurer ~.ipona fiction, for there has been no loss of

Rule VIII. allows as G,A. any damage sustained by cargo when discharged and, say, lightered for the purpose of getting the ship off a strand. And the corresponding damage in the case of cargo discharged at a port of refuge to enable repairs to bedone to the ship is allowed by Rule XII. But in the latter case the allowance does not expressly extend to damage sustained while stored on land. Whether the law would require contribution to a loss of goods, say, by thieves or by fire, while landed for repairs, is not clear. Where the landing has been necessitated by a GA. act, as cutting away masts, it would seem that the loss ought to be made good, as being a result of the special risks to which those goods have thereby been exposed. The risks which they would have run if they had remained on board throughout are taken into account, as will, presently appear, in estimating how much of the damage is to be made good, Where cattle were taken into a port of refuge in Brazil, owing to accidental damage to the ship, with the result that they could not legally be landed at their destination (Deptford), and had to be taken to another port (Antwerp), at which they were of much, less value, this loss of value was allowed in G.A. (Anglo-Argentine etc. Agency v. Temperley Shipping Co., 1899, 2 Q.13. 403).

The case of a stranded ship and cargo often gives rise to difficulty as to whether the cost of operations to lighten the ship, and afterwards to get her floated, should be treated as GA. expenditure, or as expenses separately incurred in saving the separate interests. The true conclusion seems to be that either the whole operation should be treated as one for thecommon safety, and the whole expense be contributed to by all theinterests saved, or else the several parts of the operation should be kept distinct, debiting the cost of each to the interests thereby saved. Which of these two views should be adopted in any case seems to depend upon the motives witb which the earlier operations (usually the discharge of the cargo) were presumably undertaken. It may, however, happen that this test cannot be applied once for all. Take the case of a stranded ship carrying a bulky cargo of hemp and grain, but carrying also some bullion. Suppose this last to be rescued and taken to a placeof safety at small expense in comparison with its value. It may well be that that operation must be regarded as done in the interest simply of the bullion itself, but that the subsequent operations of lightening the ship and floating her can only be properly regarded as undertaken in the common interest of ship, hemp, grain and freight. In such a case there will be a G.A. contribution towards those later operations by those interests. But the bullion will not contribute; it will merely bear the expense of its own rescue (Royal Mail ~ P. Co. v. EnglishBanle of Rio de Janeiro, 1887, 19 Q.B.D. 362).

The York Antwerp Rules have not only had the valuable result of introducing uniformity where there had been great variety, and corresponding certainty as to the principles which will be acted upon in adjusting any GA. loss, but also they have introduced greater clearness and definiteness on points where there had been a want of definition. Thus Rule XIII. has laid down a careful and cJefioite~ scale to regulate the deductions from thecost of repairs, in respect of new for old, in place of the former somewhat uncertain customary rules which varied according to the place of adjustment; while at the same time the opportunity has been taken of adapting the scale of deductions to modern conditions of shipbuilding. And Rule XVII. lays down a rule as to contributory values in place of the widely varying rulesof differentcountries as to the,amounts upon which ship and freight shaji contribute (cf. Gow, Marine Insurance, 305).

It may be of interest to refer briefly to one or two mainprinciples which govern the adjustment (q.v.) of general average, i.e. the calculation of thamounts to be made good and paid by the several interests, which is a complicated matter. The fundamental idea is that the several interests at risk shall contribute in proportion to the benefits they have severally received by the completion of the adventure. Contributions are not made in proportion to the amounts at stake when the sacrifice was made, but in proportion to the results when the adventure has come to an end. An interest which has becomelost after the sacrifice, during the subsequent course of the voyage, will pay nothing; an interest which has become depreciated will pay in proportion to the diminished value. The liability to contribute is inchoate only when the sacrifice has been made. It becomes complete when the adventure has come to an end, either by arrival at the destination, or by having been broken up at some intermediate point, while the interest in question still survives. To this there is one exception, in the case of GA. expenditure. Where such expenditure has been incurred by the owner of one interest, generally by the shipowner, the repayment to him by the other interests ought not to be wholly dependent upon the subsequent safety of those interests at the ultimate destination. If those other interests or sOme of them arrive, or are realized, as by being landed at an interniediate port, the rule (as in the case of GA. sacrifices) is that the contributions are to be in proportion to the arrived ~r realized values. But if all are lostthe burden of the expenditure ought not to remain uponthe interest which at first bore it; and the proper rule seems to be that contributions must be made by all the interests which were at stake when it was made, in proportion to their then values.

Again, the object of the law of G.A. is to put one whose property is sacrificed upon an equal footing with the rest, not upon a better footing. Thus, if goods to the value of 100 have been thrown overboard for the general safety, the owner of those goods must not receive the full 100 in contribution. He himself must bear a part of it, for those goods formed part of the adventure for whose safety the jettison was made; and it isawing to the partial safety of the adventure that any contribution at all is received by him. He, therefore, is made to contribute with the other saved interests towards his own loss, in respect of the amount made good to him for that. The full 100 ~ treated as the amount to be made good, but the owner of the goods is made to contribute towards that upon the sum of 100 thus saved to him.

The same principle has a further consequence. The amount to be made good will not necessarily be the value of the goods r other property in their condition at the time they were 1acrificed; so to calculate it would in effect be to withdraw those goods from the subsequent risks of the voyage, and thus to put them in a better position than those which were not sacrificed. Hence, in estimating the amount to be made good,the value of the goods or property sacrificed must be estimated 25 on arrival, with reference to the condition in which they would probably have arrived had they remained on board throughout the voyage.

The liability to pay G.A. contributions falls primarily upon the owner of the contributing interest, ship, goods or freight. But in practice the contributions are paid by the insurers of the feveral interests. Merchants seldom have to concern themselves with the subject. And yet in an ordinary policy of insurance there is no express provision requiring the underwriter to inlemnify the assured against this liability. The policy commonly contains clauses which recognize such an obligation, e.g. a warranty against average unless general, or an agreement that G.A. shall be payable as per foreign statement, or according to York-Antwerp Rules; but it does not directly state the obligation. It assumes that. The explanation seems to be that the practice of the underwriter to pay the contribution. ias been so uniform, and his liability has been ,so fully recognized, that express provisions were needless. But one result has been that very differing views of the ground of the obligation have een held. One view has been that it is covered by the sue and abour clause of an ordinary policy, by which the insurer agrees to bear his proportion of expenses voluntarily incurred in and tbout the defence, safeguard and recovery of the insured subject. But that has been held to be mistaken by theHouse of Lords (Ailchisonv. La/i re, I879,4A.C. 7.55). Another view is that the underwriter impliedly undertakes to repay sums which the law may require the assured to pay towards averting losses which would, by the contract, fall upon the underwriter. Expenses roluntarily incurred by the assured with that object are expressly nade repayable by the sue and labor clause of the policy. It night well be implied that payments compulsorily required rom the assured by law for contributions to G.A.,or as salvage or services by salvors, will be undertaken or repaid by the inderwriter, the service being for his benefit.- But the decision n Aitchison v. Lohre negatives this ground also. The claim was against underwriters on a ship which had been so damaged that he cost of repairs had exceeded her insured value. A claim for the ships contribution to certain salvage and G.A. expenses rhich had been incurred, over and above the cost of repairs, was lisallowed. The view seems to have been that the insurer is iable for salvage and G.A. payments as losses of the subject nsured, and therefore included in the sum insured, not as collateral payments made on his behalf. This bases the claim igainst the insurer ~.ipona fiction, for there has been no loss of the subject insured; in fact, the payment has been for averting such a loss. And it suggests that the insurer is not liable for salvage where the policy is free of particular average, which does not accord with practice.

An important question as to an insurers liability for G.A. arose in the case of the Brigella (1893, P. 189), where a shipowner had incurred expenses which would have been the subject ofG.A. contributions, but that he alone was interested in the voyage. There were no contributories. He claimed from the insurers of the ship what would have been the ships G.A. contribution had there been other persons to contribute in respect of freight or cargo. The claim was disallowed on the ground that there could be no G.A. in such circumstances, and therefore no basis for a claim against the insurer. The liability of the insurer was thus made to depend, not upon thecharacter of the loss, but upon the fact or possibility ofcontribution. But this was not followed in Montgomery v. Indemnity Mutual M. I. Co. (1901, I K.B. 147). There ship, freight and cargo all belonged to the same person. He had insured the cargo but not the ship. The cargo underwriters were held liable to pay a contribution to damage done to the ship by cutting away masts for the general safety. The loss was in theory spread over all the interests at risk, and they hadundertaken to bear the cargos share of such losses. Their liability did not depend upon the accident of whether the interests all belonged to one person or not. This agrees with the view taken in the United States.

Etymology

"Average" is a term found in two main senses. (I) The first, which occurs in old law, is from a Law-Latin averagium, and is connected with the Domesday Book avera, the days work which the kings tenants gave to the sheriff; it is supposed to be a form of the 0. Fr. ovre (ceuvre), work, affected by aver, the 0. Eng. word for cattle or property, but the etymology is uncertain. As meaning some form of feudal service rendered by tenants to their superiors, it survived for a long time in the Scottish phrasearriage and carriage, this form of the word being due to a contraction into arage. "Average" in this usage corresponds with the Fr. avarie, and was early spelled averays, recurring also as avaria, averia, and meaning a certain tax on goods, and then more precisely in maritime law any charge additional to freight (see AFFREIGHTaLENT), payable by the owner of goods sent by ship. Hence the modern employment of the term for particular and general average (see below) in marine insurance. The essential of equitable distribution, involved in this sense, was transferred to give the word average its more colloquial meaning of an equalization of amount, or medium among various quantities, or nearest common rate or figure. (For a discussion of the etymology, see the New English Dictionary, especially the concluding note with reference to authorities.)

ee also

*Marine insurance
*Insurance
*Affreightment

References

*Lowndes on General Average (4th ed., London, 1888); Abbotts Merchant Ships and Seamen (14th ed., London, 1901); Arnoulds Marine Insurance (7th ed., London, 1901); Carvers Carriage by Sea (4th ed., London, 1905). (T. G. C.)
*http://www.1911encyclopedia.org/A/AV/AVERAGE.htm

External links

* [http://capeargus.co.za/index.php?fArticleId=245607 "Salvage Bill shocker", Henri Du Plessis, "Cape Argus & Independent Online", September 29, 2003]
* [http://www.mlaus.org/article.ihtml?id=662&folder=90 The Maritime Law Association of the United States, Committee on Marine Insurance and General Average]