Average Bond.

In order to avoid withholding delivery of cargo to consignees or owners of same, until their general average contributions are ascertained and settled, it is customary to get an undertaking from the contributors that they will duly pay their legal contributions when called upon to do so. This undertaking is termed average bond," a common form of which is given in the appendix; and a deposit in cash may be also made where required.

In the case of regular line steamers carrying general cargoes, there may be a very large number of cargo owners, a large proportion consisting of regular shippers by the liner company owning the steamer under average, and in such cases, the individual amounts being small, deposits may not be considered necessary.

In view of the complicated adjustments required in cases of general average, it has been suggested by certain authorities that the principle should be done away with altogether, leaving each interest to recover losses from its own underwriters; but the strong objection is made that the impartiality of the master of a vessel, with whom lies the decision and responsibility of action in such cases, might be questioned. It is supposed that the master, being the shipowners' servant, would in cases where sacrifice was necessary, have a bias towards the sacrificing of the cargo rather than any portion of his owner's property, even if the latter course might be preferable from a seaman's point of view.

CHAPTER XV

PROTECTING AND INDEMNITY ASSOCIATIONS

FORMATION Of Protecting Society-Risks Covered-Defence of Members, Etc.-Provision during War.

UNDERWRITERS when insuring a vessel have always insisted that the owners should bear a portion of the risk arising out of negligence in navigation. In the shipping trade it is well known that, in the case of a collision, underwriters will pay only three-fourths of damage done, the owner having to bear one-fourth. The object of this will be obvious. When vessels were small and navigated, to a large extent, by their owners, it was no doubt necessary that some means should be adopted to ensure, as far as possible, safe navigation.

Formation of Protecting Society.

When trade developed, necessitating larger vessels being built and navigated by others than their owners, the liabilities were greatly increased, and it therefore became necessary for some means of cover to be adopted. This was arranged in the year 1855 by the shipowners themselves on the mutual basis. A Protecting Society was formed, which covered the one-fourth collision referred to, and as time went on undertook the protection of its members and the burdens that were cast upon them by legislation, which were not covered by the ordinary insurance policies, for loss of life and personal injury to passengers, either on board or on other ships, by improper navigation.

There are a number of these associations in existence to-day, and they meet the requirements of vessels engaged in the various trades.

Risks Covered.

The following are some of the more important risks covered in addition to that already referred to, with reservations.

The sums which a member may become liable to pay and shall pay in respect of

Life salvage of crew not recoverable from owners of cargo or underwriters on hull.

Loss of life or personal injury caused to any person other than those mentioned being carried in the steam-ship, or to any person in or about or getting or attempting to get to or from the steam-ship although not carried therein.

Hospital, medical, or funeral expenses incurred in consequence of personal injury or loss of life by accident on board the steam-ship. Hospital and medical expenses incurred in consequence of any master, seaman, or apprentice being on account of illness temporarily removed from the steam-ship pursuant to Section 34, sub-section 2, of the Merchant Shipping Act, 1906.

Funeral expenses of any master, seaman, or apprentice, consequent upon sickness.

Expenses, other than funeral expenses, in any one port incurred by reason of sickness of any master, seaman, or apprentice employed in the steam-ship.

Expenses incurred for repatriation of distressed seamen or apprentices.

Liabilities for loss of life or personal injury, whether arising under the Workmen's Compensation Act, 1906, the Employers' Liability Act, or any statutory modification or extension thereof, or at Common Law, are to be treated as being in respect of the steamship entered, and therefore covered by the association in the same way as if they had arisen in the actual work of loading or discharging when they occur—

(a) In receiving on the quay cargo intended for shipment, or in dealing with it after receipt and before loading.

(b) In dealing with cargo after discharge, and up to and including final delivery from the quay.

Extraordinary expenses in any port which may be incurred for disinfection of the steam-ship or persons or things on board her in consequence of plague or other contagious disorders on board, or for quarantine expenses (not being the ordinary expenses of loading or discharging, nor the wages and/or provisions of crew or passengers).

The damages which a member may in consequence of collision become liable to pay and shall pay in respect of loss or damage caused by a steam-ship, entered by him to any other ship or vessel, or to the freight thereof, or to any goods, merchandise, or other things whatsoever on board such other ship or vessel, to the extent of one-fourth part of such loss or damage, and of the costs, charges, and expenses incidental thereto, such damage not being covered by the ordinary form of policy with collision clause attached.

The damages which the member may become liable to pay and shall pay in respect of loss of life or personal injury caused by the improper navigation of the steam-ship, or by any other negligent act of those employed on board her, to any person on board any other ship.

The damages which the member may become liable to pay and shall pay in respect of loss or damage to any goods, merchandise, or other things on board the steam-ship, in so far as such loss or damage has been caused by collision, stranding, or contact of such steam-ship with some substance other than water.

Also the cargo's proportion of general average (other than sacrifice of the steam-ship, or her fittings or equipment) and/or of special charges consequent upon such collision, stranding or contact which may be not otherwise recoverable by reason of the nature of the occurrence or accident, or because of the inability of the captain, or foreign broker or agent, of the ship to comply with some legal formality, or through intervention of some irresistible circumstance other than failure to pay on the part of the person legally liable.

The damages which the member may become liable to pay and shall pay in respect of damage done by the steam-ship or by any person employed about the same, to any harbour, dock or pier, or quays or works connected therewith, or to jetties, erections, or any fixed or movable things, other than ships or vessels.

The costs, charges or expenses which the member may become liable to pay and shall pay or incur in or about or incidental to raising or removing the wreck of the steam-ship, less any value of the wreck itself, and/or stores and materials which may be saved to him. Also the costs, charges or expenses in or about or incidental to the raising or removal of the wreck of any other vessel with which the member's steamer may have been in collision, provided

that such costs, charges or expenses are not recoverable from underwriters.

The sums which the member may become liable to pay and shall pay for loss of life or personal injury of the master, seamen, apprentices, or pilots, under or by virtue of the Workmen's Compensation Act, 1906, or any statutory modification or extension thereof, also legal and medical expenses in connection therewith.

Claims which the member may become liable to pay and shall pay arising in relation to any cargo shipped or to be shipped on the entered steam-ship.

The excess of claims for damages, costs, charges and expenses covered by the policies or associations.

Government fines or penalties in connection with cargo resulting from innocent breaches of Customs laws and quarantine or other like regulations, by servants of the shipowner.

Government fines or penalties in connection with smuggling by the servants of the shipowner, which are not otherwise covered. Government fines and penalties consequent upon innocent breaches of the Immigration laws of any country by servants of the shipowner, provided that such breach could not have been foreseen.

Claims for the marine risk of loss of or damage to cargo shipped and carried on deck.

Defence of Members.

In cases of interference by the Government or Departments of the Government or by any lawful authorities of this or any other country, which the association shall consider unwarranted, oppressive, or as requiring investigation, the association agree to protect the member or owner by undertaking the defence, and by conducting proceedings for testing how far such interference is warranted, and in cases approved of by the directors for obtaining redress; but the association shall not pay expenses or repairs or alterations, or any demurrage or other damages incurred by such member or owner.

The association afford the benefit of protection and indemnity to members in respect of any other claims, losses, or expenses (which are not covered by any of the other associations, or under-writers) which in the opinion of the association have happened in