General Average

As a general rule, any loss which any of these interests sustains must be borne by that interest alone; this is known as particular average, i.e. loss to be borne by the particular interest incurring it.  If, for example, one of the ship’s boats is carried away in a storm, this is a particular average loss and must be borne by the shipowner alone. Where, however, extraordinary sacrifices are made or expenditure is incurred for the benefit of the whole adventure the loss is borne by all in proportion and is known as a General Average loss. Thus we can see that it is necessary to distinguish between particular and general average. A person is entitled to a general average contribution if certain requirements are fulfilled, i.e. in the case of General Average the party who has suffered the loss is entitled to a contribution from the other involved parties. Additionally, damage done to the property of third parties may be the subject of General Average. The conditions under which a General Average contribution may be claimed are: There must have been a common danger. An interest which was never in peril cannot be compelled to contribute. The danger must not be due to the default of the party claiming contribution. e.g. If goods are thrown overboard because they are dangerous their owner cannot claim for General Average contribution. The danger must be a real one. Where, therefore, the Master of a ship believed that the ship was on fire and caused steam to be turned into the hold to extinguish it and the ship was never in fact on fire, it was held that the resulting damage to the cargo was not a General Average loss. There must have been a voluntary and reasonable sacrifice of the property in respect of which contribution is claimed. This occurs when cargo is thrown overboard to lighten the ship in heavy weather. The interest called upon for contribution must have been saved. It should be noted that in relation to extra expenditure which is incurred to avert the danger, that expenditure must be extraordinary, i.e. unusual. General Average contribution is made by all who have benefited by a General Average act. Such parties are: The shipowner in respect of his ship and the freight payable under the charter party, if any, and, if not, under the Bills of Lading. The charterer in respect of freight payable under the Bills of Lading, if he uses the ship as a general ship to carry cargo. The cargo owner in respect of the cargo. In the case of a container ship, the owners of any containers not owned by the line or the cargo owners (i.e. leased-in containers). The liability is enforced by the shipowner on behalf of all interested parties, by exercising his lien over the cargo. If the shipowner fails to exercise his lien he may be sued by those entitled to contribution.