Emergency Contingency Procedures ECP General Average	Doc No.: ECP 05-11 Revision: 01 Date: 15 Oct 2024 Issued by: DPA Approved by: MD

5.11. GENERAL AVERAGE (G.A.)

(a) A general average loss is a loss caused by or directly consequential on a general average act. It includes a general average expenditure as well as a general average sacrifice.

(b) “There is a general average act where any extraordinary sacrifice or expenditure is voluntarily and reasonably made or incurred in time of peril for the purpose of preserving the property imperiled in the common adventure.”

(c) General Average is based on an ancient principle of equity in which all parties in a sea adventure (ship, cargo, and freight) proportionately share losses resulting from a voluntary and successful sacrifice of part of the ship or cargo to save the whole adventure from an impending peril, or extraordinary expenses necessarily incurred for the joint benefit of ship and cargo.

(d) For example, when jettisoning a portion of cargo is made in order to re-float a stranded ship, the cargo is considered to be a sacrifice to save other cargoes and the ship. Therefore, the loss due to the jettisoning is called a General Average Sacrifice. Salvage expenses are General Average Expenditure, when salvage services are used for the common safety of the ship or her cargo, like preventing her from stranding or sinking.

(e) The settlement of General Average act is made under York-Antwerp Rules. In cases of General Average, the master should always make sure that he has confirmation from the Company prior to releasing the cargo.

5.11.1. Procedure of General Average

(a) Decision on General Average
When a ship owner/operator gets a casualty report from the ship, they will decide whether to declare General Average or not after consulting with their insurance companies and considering the nature of the casualty & loss.

(b) Letter of Declaration of General Average
Before the ship arrives at the port of destination, the ship owner/operator must inform the cargo owner/consignees of the General Average accident and request them to submit necessary documents. This is the letter of declaration of General Average, and usually, the following items are mentioned therein:

• Name of ship and voyage number
• The date and place of the occurrence of the accident with details
• The ship’s movements after the accident
• Request for documents from consignee/cargo owners

(c) Appointment of Average Adjuster
When the ship owner/operator declares the G.A, they must appoint a qualified Average Adjuster (with the consent of all parties concerned) for settlement. The owners might also appoint a General Average Surveyor to investigate information necessary for settlement as the case demands.

(d) Documents / Record from Vessel
The Average Adjuster needs many documents to make the adjustment. The master should send the following minimum documents from the first port after the accident to the company:

• Abstracted Deck and engine log book from beginning of loading to completion of final discharge.
• Manifest of all cargo on board at the time of the accident
• Stowage plan
• Record of consumption of fuel oil and fresh water
• Vouchers for all expenses made by the ship including communication
• Sea protest
• Copy of B/L
• Crew list

(e) Documents from Consignees / Cargo Owners
Generally, ship owner/ operator gets the recoveries of General Average contributions from the cargo owners/ consignees/ owners after a considerable time, they must receive from the following documents as guarantee from cargo owners before delivering the cargo to them:

• (i) Average Bond: A bond prepared by the general average adjuster binding the owner of the goods to pay a proportion of the general average.
• (ii) General Average Deposit: A cash deposit may be required by a general average adjuster from the owners of goods to secure the payment of a proportion of the general average. The amount of the deposit is usually based on a percentage of the general average and is required in addition to the general average bond.
• (iii) Valuation Form: Documents issued by the consignees/cargo owners to declare values of cargoes in order to decide General Average Contributory Values.
• (iv) Letter of Guarantee / Cash Deposit: An insurer's written guarantee to a general average adjuster, guaranteeing payment of the proportion of general average finally assessed against the goods insured. This guarantee is usually accepted by the adjuster in lieu of a cash deposit and is additional security to a general average bond. However, a Cash Deposit may be required for non-insured cargoes, if any.

5.11.2. Losses & Expenses Covered under G.A.

Losses & expenses due to any extraordinary sacrifice or expenditure made or incurred intentionally and reasonably in consequence of a General Average Act for common safety are payable under York Antwerp Rule. Some of them are given below for reference:

(a) Losses

• (i) Jettison of cargo.
• (ii) Loss of or damage to the property in consequence of a sacrifice made and by water which goes down a ship's hatches opened, or other opening made for the purpose of making a jettison.
• (iii) Damage caused to a ship and cargo by water or otherwise, including damage by beaching or scuttling a burning ship, in extinguishing a fire on board the ship.
• (iv) When a ship is intentionally run on shore for the common safety.
• (v) Damage caused to any machinery and boilers of a ship which is ashore and in a position of peril, in endeavoring to re-float.
• (vi) Damage or loss of cargo, fuel, or stores sustained in consequence of their handling, discharging, storing, reloading, and stowing.

(b) Expenses

• (i) Expenditure of salvage operations.
• (ii) Expenses of lightening a ship when ashore/ aground and consequent damages to the property during this operation.
• (iii) Cargo, Ship's Materials and/or Stores used for fuel during GA act.
• (iv) Expenses of calling a Port of Refuge, including shifting to another port of refuge in case repairs cannot be carried out in the first port or place.
• (v) The cost of handling cargo, fuel when the handling or discharge.
• (vi) Wages and Maintenance of Crew and other expenses during this period.
• (vii) Temporary repairs effected to the ship at a port of refuge/port of loading or discharging for the common safety.
• (viii) Loss of freight arising from damage or loss of cargo.

5.11.3. Exceptions

Some of the losses & expenses which are not covered under York Antwerp Rules are as follows:

• (a) No compensation shall be made for damage by smoke, however caused, or by heat of the fire while extinguishing a fire on board during a G.A. act.
• (b) Special compensation payable to a salvor by the ship-owner under Article 14 of the International Convention on Salvage is not allowed in general average.
• (c) Where a ship is afloat, no loss or damage caused by working propelling machinery and boilers shall in any circumstances be made good as general average.
• (d) The cost of handling on board or discharging cargo, fuel, or stores shall not be admissible as G.A. when incurred solely for the purpose of restowage due to shifting during the voyage, unless such restowage is necessary for the common safety.
• (e) Loss or damage sustained by cutting away wreck or parts of the ship which have previously been carried away or are effectively lost by accident is not payable.