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Shipowners about to declare general average?

Apr 09, 2024|View:10

In recent years, there have been a number of incidents declared as general average in the shipping industry, such as the stranding of the "Long Give" and the fire on the container ship "INTERASIA CATALYST". Although general average is a relatively small probability event, forwarders and shippers must be aware of such situations!

What is general average?

General average refers to special sacrifice and special expenses paid as a direct result of deliberate and reasonable measures taken for the common safety of ships, goods and other property in common danger during the same maritime voyage.

In simple terms, general average means that if the ship has an accident, everyone has to bear the corresponding loss.

Conditions of general average

1. The ship is in danger or has been shipwrecked in the course of its voyage, and the master must take measures to maintain the safety of the cargo.

2. Shipwrecks and dangers must be real, not speculative.

3. The act of general average must be artificial and intentional.

4. Losses and expenses must be exceptional. For example, when a ship sails against a strong wind, the machinery is damaged due to overload, which is not general average; If the ship has run aground and the machinery is overloaded for the purpose of refloating, it is general average.

5. The general average act taken must be reasonable.

6. For the common safety of the cargo rather than the shipowners or any one owner alone.

7. Losses as a direct result of general average. For example, to extinguishing a fire with seawater, any goods with burn marks, etc., which are then damaged by seawater shall not be counted as general average. The loss of goods which were originally in good condition but damaged by seawater shall be counted as general average.

8. A general average act shall, in principle, be under the command of the master, but in the event of an accident, such as the master being seriously ill or captured, if the master is commanded by another person or even the captain of an enemy country, it shall be counted as general average if the seven conditions mentioned above are met.

The system of general average is designed to spread risks and losses in order to protect maritime transport. Only those losses which are truly in general average are apportionable by the benefiting parties, so the establishment of general average should meet certain conditions, that is, the danger at sea must be common and real; The measure of general average must be intentional, reasonable and effective; The loss in general average must be exceptional, extraordinary and caused directly by the general average measure.

What happens when general average is declared?

If general average occurs and insurance is purchased, then the insurance company will usually take care of the process that the owner should handle to ensure that the required security is in place and the goods are released at the port of destination.

If the goods are lost in an accident, the shipping company will ask the owner for the packing list and invoice at the time of customs declaration, check the value of the goods, and compensate part of the loss according to the proportion; If there is insured general average, the insurance company will also pay compensation.

If the goods are not lost, the main problems faced by the forwarder and the owner are as follows:

1. The most direct impact is that the goods are likely to be delayed.

The first thing the forwarder should do is to timely inform the owner of the delay of the goods, and keep the real-time status of the ship, and then keep communication with the owner.

2. the owner does not provide guarantee, can not pick up the goods.

When general average is declared, it will be adjusted. The contribution of the ship and its owners to the general average is calculated by the average adjusters on the basis of the destination value of the ship and the goods, and the owners have a lien on the goods under their control. But the adjustment requires a complicated process, and the shipowner cannot hold on to the owner's goods. Therefore, the shipowner can deliver the goods only after the shipowner has provided security to the average adjustor, made an undertaking to bear the general average together, and the adjustor has given instructions to release the goods.

3. The proportion of general average shall be assessed by a third party.

If insurance is not purchased, the owner shall bear it; If insurance has been purchased, it shall be guaranteed by the insurance company.