CHAPTER X

GENERAL AVERAGE, INCLUDING A COMPARISON OF THE YORK-ANTWERP RULES WITH THE RULES OF PRACTICE OF THE ASSOCIATION OF AVERAGE ADJUSTERS.

IT has frequently been emphasised that general average is a practice absolutely independent of the conduct of marine insurance. It arises out of the relationships existing between cargo, freight and ship. For a valid general average to arise it is not necessary that these interests should be separately owned, thus were a shipowner to employ his vessel in trading on his own account a general average act could take place. If there were no such thing as insurance, it would be unnecessary to consider this possibility, but in view of the fact that marine underwriters cover loss by a general average act undertaken to avert threat by a peril insured against, the importance to a shipowner of this ruling is apparent.

The origins of general average were considered in the first chapter, but it must be remarked that although the practice of general average in every country is based on the principles outlined in the Rhodian Law, each maritime state has developed its own law on the subject and many conflicting decisions have been reached in the various countries as to details of adjustment.

The cardinal principle governing the making up of a statement of general average is that in the absence of any agreement to the contrary in the contract of affreightment, i.e., the bill of lading, the adjustment must be made up according to the law and custom in operation at the port of termination of the venture, i.e., where the interests part company or the adventure is abandoned.

As a contract of marine insurance executed in this country, in the absence of any wording to the contrary, may bind the underwriter only as regards a statement after English practice, provision is made in the Institute Clauses for general average and salvage to be adjusted according to the law and practice obtaining at the place where the adventure ends; as if the contract of affreightment contained no special terms upon the subject, or if the contract so provides according to York-Antwerp Rules, or, in the case of wood cargoes, York-Antwerp Rules omitting the first word of Rule 1, "No," but, in all matters not specifically referred to in York-Antwerp Rules 1 to 17 inclusive, the adjustment shall be in accordance with the law and practice obtaining at the place where the adventure ends, and as if the contract of affreightment contained no special terms upon the subject. This full wording is inserted in the Time Clauses, but the Institute Cargo Clauses merely state "General Average and Salvage Charges payable according to Foreign Statement or per York-Antwerp Rules if in accordance with the contract of affreightment." The reference to the contract of affreightment is necessary as it is by law the bounden duty of the shipowner to see that if a general average act has occurred that a legal statement is made up, and that the parties to the adventure severally contribute their proportion of the loss. Shipowners therefore provide practically always as to what law shall govern adjustments by inserting a clause in the bills of lading to the effect that general average shall be adjusted according to the almost universally accepted York-Antwerp Rules.

In England the adjustment of general average has been built up on customs. Many of these have been confirmed by the law courts, and all have been considered and most adopted by the Association of Average Adjusters as Rules of of Practice. The Association in these Rules has also incorporated definitions of matters relating to particular average. As occasion arises new Rules are added or old ones altered or rescinded.

One of the most important of the Rules is numbered 43, and is as follows:

"That in all cases where the contract of affreightment provides for the application of YorkAntwerp Rules in any modified or mutilated form, and when the policies of insurance provide for the application of York-Antwerp Rules, if in accordance with the contract of affreightment, in applying the claim to such policies, no effect shall be given to York-Antwerp Rules.'

The section must be read literally, and provides that where the insurance contract and affreightment contract diverge on this point, the adjustment which, of course, will be made up as called for by the bills of lading, will not be binding on underwriters, who may claim to have their loss adjusted without reference to York-Antwerp Rules. Another point of which the student must take notice is that, whereas YorkAntwerp Rules embrace points in general average only, the Rules of Practice are not so restrictive.

It should be clearly understood that the contract of affreightment will govern the question as to what law shall be applied to the adjustment of a general average. If no mention at all appears the law will be that obtaining at the place where the interests part company. If there be several ports of discharge and these be in different countries, the law will be that of the final port of discharge. Provision in the contract of affreightment for a different basis of adjustment or the application of foreign law to the making up of the statement will not bind the insurer, in the absence of agreement to the contrary, to accept the adjustment on any except the provisions of the law of the country in which the policy is enforceable. This accounts for the clausing in the matter which appears in almost all policies underwritten in this country, to which reference has been made above.

There must be no default on the part of any person claiming contribution in general average. Thus a person who has wrongfully shipped dangerous goods cannot recover if the goods be jettisoned when their character is discovered. Nor is a shipowner entitled to recover expenses incurred to prevent loss arising out of his failure to make the ship seaworthy.

It is now proposed to consider the origin and pro

visions of the York-Antwerp Rules, 1890, and also the Rules of Practice of the Association of Average Adjusters. The York-Antwerp Rules will be considered first, together with those Rules of Practice relevant to the respective York-Antwerp Rules.

As noticed, those insured in the past have frequently been unable to collect from their underwriters amounts levied on account of general average contribution made up according to foreign law, as an underwriter in the absence of agreement to the contrary can only be sued for amounts rightly claimable by the law of the country in which he is domiciled. The hardship thus inflicted upon innocent assured is therefore obvious, and, as it is always unsatisfactory to leave such a large question to individual agreement, in the nineteenth century many attempts were made to place the law relating to general average on an international basis. Opinion, nevertheless, is still divided as to whether there exists a binding usage to the effect that insurers are bound by foreign statement.

For those who have the time and the inclination to study thoroughly the divergencies in the practice of various countries nothing better could be recommended than that they peruse Richard Lowndes' masterful and authoritative book on the subject.

In the year 1860 a conference took place at Glasgow, which was attended by representatives of all interested parties in the unification of dissimilar practices of adjustment, in this country and abroad. Further congresses took place in London in 1862, and at York in 1864. The divergencies were compared and tabulated, and at York a suggested set of international rules was compiled, but unfortunately was not put into effect. Matters drifted for more than a decade, but at Antwerp, in 1877, another conference revived the discussion, and, using the York Rules as a foundation, formulated a new collection of rules for world-wide application known as the York and Antwerp Rules, 1877.

The rules as adopted were inserted in many contracts of affreightment, and after some years of working their utility was discussed at a congress held at Liverpool in 1890. Several alterations and revisions were made as a result of the experience of the rules in operation, and the revised compilation was confirmed

at Genoa in 1892. It is this final draft which is now implied by the term York-Antwerp Rules.

The code consists of eighteen sections, the last of which is of importance as it reads:

Except as provided in the foregoing rules, the adjustment shall be drawn up in accordance with the law and practice that would have governed the adjustment had the contract of affreightment not contained a clause to pay general average according to these rules,"

i.e., according to the law obtaining at the port of termination of the venture. It should be clearly understood that although adjustment according to YorkAntwerp Rules is binding on shippers, if provided for in the bill of lading, the shipper cannot claim from his underwriters on this basis unless provision has been made in the policy of insurance.

Under York-Antwerp Rule 1 it is provided that jettison of on-deck cargo is not allowed in general average. Jettison of under-deck cargo is universally allowed, and English law admits the inclusion also of on-deck cargo if the deck load is carried according to usage of trade and not in violation of the contracts of affreightment, an exception being made in the case of cargoes of cotton, tallow, acids, and some other goods not specified (Rule of Practice 9). The Rules of Practice also state that jettison of water casks or tanks carried on a ship's deck are not paid for by underwriters as general or particular average; nor are warps or other articles when improperly carried on deck (Rule 7).

Jettison is, of course, a peril insured against by the Lloyd's S.G. Form, and in view of the exceptions proIvided above it is understood that underwriters would consider this custom in fixing rates of premium for these interests. Vessels engaged in the wood trade always have presented great difficulty, as a very large proportion of the load is carried on deck, the vessels being specially built to this end. This difficulty is overcome by the insertion of the wording previously quoted in the contracts of insurance and affreightment. When a jettison is admitted in general average, damage done to ship or cargo, by or in consequence of