General Average under the York Antwerp Rules 1994 and 2004


Published: 11 April 2014

The Association is grateful to Andrew Fox of Davies Johnson & Co for contributing to this update.

In order to avoid risks of disputes as well as missing time bars, Owners should seek to have charterparty and bill of lading clauses expressly choose one set of general average rules to the express exclusion of the other.

Background: General average

General Average (GA) is an ancient concept of maritime law, dating back to ancient Greece and founded on equitable principles.

The basic rule is well stated in a vintage English decision, as follows:

'... all loss which arises in consequence of extraordinary sacrifices made or expenses incurred for the preservation of the ship and cargo losses ... must be borne proportionately by all who are interested.'
(Birkley vs. Presgrave 1801)

This is further explained in the key tome to general average in "Lowndes and Rudolf: The Law of General Average and the York-Antwerp Rules":

"The rule of a general contribution, by rendering it immaterial whose property is taken in the first instance and material only that that should be taken which will most surely and effectually, and at least cost, save the whole, does away with [any] conflict in the captain's mind between interest and duty, leaves him alone with purely nautical considerations, and thus, no doubt, does more than any statesman or philanthropist can effect for the preservation of life and property at sea. The utility of the rule of General Average no doubt explains its universality and permanence."

Furthermore, in order to have a general situation, it is usually taken that there was an extraordinary sacrifice or expenditure which was incurred for the common safety or the preserving from peril of property involved in a marine adventure.

The York Antwerp Rules 1994 and 2004

General average is often "adjusted", i.e. : the calculation of what costs go "in" and shared by "whom" and to what "percentage", on the basis of one of two sets of modern versions of the York-Antwerp Rules (YAR).

In the attached note, Andrew Fox of Davies Johnson & Co explores some of the issues in relation to the common York Antwerp Rules 1994 and the revised 2004 Rules.

While it may seem a technical question as to whether a clause in a charterparty or bill of lading makes reference to either the 1994 or 2004 rules, it is one that has significant impact on the adjustment of general average. Shipowners in particular need to be well aware of the differences, as they can have a material effect on the final GA adjustment.

A key difference is the time bar provision under each rule set, with 1994 YAR (under English Law) having a general 6 year time limit, yet under 2004 YAR that limit would be just one year from the GA adjustment.

Given that English courts are not alone in approaching time bars in a strict fashion, it is important to be alive to such a key change between the different rules.

Practical Advice: Suggested Clause amendment

In order to be on the safe side - and avoiding dispute as to which rules may apply - it may be useful to amend a general average clause to specifically excluding the application of the YAR 2004, if it is intended to have only the YAR 1994 apply. This may be done for both charterparties as well as bills of lading, and the key is to be consistent across all documents.

"General Average shall be adjusted, stated and settled according to York-Antwerp Rules 1994, or any subsequent modification thereof. For the avoidance of doubt this excludes the application of the York-Antwerp Rules 2004...".

In case Members have further queries on this issue, they are asked to contact the Association.