In May 2016 at the meeting of the CMI in New York agreement was reached on the form of the 2016 York-Antwerp Rules, which incorporate a number of important changes to the 2004 Rules. These changes are based predominantly on the older 1994 Rules, which, owing to the unpopularity of the 2004 revision, were more commonly used. This may continue to be the case, despite the latest revision.
The main changes are as follows-
1.Payments to third party salvors for the settlement of salvage claims are once again included in the General Average. (Under the 2004 Rules salvage payments were left out, unless one party had paid on another’s behalf; previously it used to be the practice to wait for any salvage claims to be settled before re-adjusting the amounts paid in salvage by the various parties and issuing the General Average adjustment.)
An exception is provided for Lloyd Open Form salvage payments, which are not included in the General Average unless one or more of five scenarios occur indicating that the exclusion would produce a significantly “inequitable result”. This carve out will avoid unnecessary delays and costs incurred during the adjustment process, so General Average adjustments under LOF contracts, which are the most common type, should be far less costly and time consuming.
2.Wages and maintenance of master, officers and crew reasonably incurred during periods of General Average detention will also be recoverable by the shipowners.
3.Interest on expenditure, sacrifice and allowances is now 4% above the 12- month ICE LIBOR for the currency in which the adjustment is prepared. Under the 1994 Rules, the interest is allowed at a fixed rate of 7%. This will still apply to contracts governed by the older rules.
4.The previous position abolishing the 2% commission for advancing funds in General Average has been preserved. As shipowners were normally the beneficiaries of this, the savings to cargo interests should continue under the 2016 Rules. However, the 2% commission still applies to contracts governed by the 1994 Rules.
5.Cargos of low value may be excluded from the General Average if their eventual contribution is likely to be disproportionate to the cost of including them in the adjustment. This should result in savings for cargo interests.
6.The commercial invoice may now be used to ascertain the value of the cargo “at the time of discharge”, even in the case of multi-modal transport where the discharge occurs beyond the final destination for the common adventure and the time when contributory values are calculated. The inflation, however, is not likely to be significant and saves adjustment costs.
7.An estimate will now be made, both to the extent of General Average and the contributory values, if figures are not provided either within 12 months of the termination of the common maritime adventure or the payment of the expense. Any challenge to the estimates must be brought within two months and only on the grounds that they are manifestly incorrect. This streamlined process will keep costs and delays to a minimum, resulting in savings to the cargo interests.
8.The timebar for contributions to GA, defined as one year from the date of the adjustment, or six years from the termination of the maritime adventure if this is sooner, has been retained. Although this can still be subject to variations in national laws, it brings finality sooner in many cases.
9.There are also a number of minor variations dealing with cash deposits and the treatment of temporary repair costs.
The changes are predominantly based on the 1994 Rules, although key aspects of the 2004 Rules (e.g. interest rate flexibility and time limits) are also reflected. Once these rules are more widely incorporated, the impact should be felt through speedier adjustments, with less time and costs incurred on the minutiae.
It is important to bear in mind that the parties to a contract of carriage are free to select which rules will govern any General Average claim that may arise. Therefore whilst we expect that some carriers will incorporate the new rules into their contracts of carriage quite soon, others may retain the 2004, or the 1994 rules either because they are slow to change the printed forms or because they perceive there to be an advantage for the carrier. BIMCO has been quick to announce its approval of the new rules which will be incorporated in all BIMCO standard form contracts going forward.
In all cases it is vital to remember that early investigations into the casualty can result in evidence being obtained that may result in the complete avoidance of GA in any event. It may also mean an easier and better recovery of any losses. Many GA claims we deal with are legitimately rejected completely on the grounds of unseaworthiness, and others are settled on a compromised basis. If you require our assistance, or if you have any questions, we are at your service.
Casualty & GA Department
