General Average – Leena Mody

General Average & Salvage

There is a General Average (GA) act when any extraordinary sacrifice or expenditure is voluntarily or deliberately made or incurred for the purpose of saving the property i.e. Ship, Cargo, Freight or any other property onboard the vessel involved in common maritime adventure, for the purpose of preserving the same from a common peril e.g. jettison of cargo to lighten the ship for riding a storm and extinguishing the fire onboard a loaded tanker. Although, GA is a concept which traces its origin in ancient maritime law (Rhodian Law), even today it forms an integral part of the admiralty law of most countries. In order to achieve uniformity in treatment of GA, York Antwerp Rules (YAR) were first formed in 1877 and, over the last more than hundred years it has undergone various revisions, the last one being York Antwerp Rules, 2016. Most of the revisions made from time to time were to meet the demands of increase in trade and commerce, which led to progressive extension in the scope of GA. Today, invariably all Charter Parties incorporate a GA clause specifying that, ‘GA to be adjusted as per one of the versions of YAR’.

LMA provides following services in GA and Salvage cases:-

Identifying a GA situation and advising Shipowners on managing multiple interests involved in a major GA casualty;
Collection and Provision of GA Security / Deposits (Valuation Form, GA Bond and GA Security);
Estimating the GA Fund and percentage of GA Cash Deposit to be collected from uninsured cargo;
Issuing Release Orders for delivering cargo at destination;
Calculation of Contributory Value;
Apportionment of GA Fund between various Contributory Interests;
Recommendation for Payment on Account;
Calculation of GA Interest and Commission;
Preparation of GA Adjustment as per the provisions of Contract of Affreightment;
Claim on Policies of Insurances;
Apportionment of Recovery from Third Party;
Collection of GA Contributions and Settlement between parties to GA;
Advise on type of Salvage Contract; (Daily Hire v/s Lloyd’s Open Form – Lloyd’s Standard Form of Salvage Agreement, 2020)
Procedures to be complied under an LOF Contract;
Collection of Salvage Security / Bail Fees;
Calculation of Salvage Award on Salved Values;
Calculation of Salvage Award under Article 13 and 14 of International Salvage Convention, 1989;
Calculation and Verification under the SCOPIC Clause;
Assist in Salvage Arbitration (Lloyd’s Standard Salvage Arbitration Clause, 2020 alongwith Lloyd’s Procedural Rules);
Collection of Salvage Remuneration from various Interests;
Type of GA Absorption Clause (BIMCO Standard GA Absorption Clause, 2018) in the Hull & Machinery policy.