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Rethinking the General Average and the York-Antwerp Rules, 1924

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Rethinking the General Average and the York-Antwerp Rules, 1924
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  Rethinking the General Average and the York-Antwerp Rules, 1924 General average has a long history. It can be said to have existed as long as the maritime transactions. It has also been developing with the changing of the world. General average is an ancient form of spreading the risk of sea transport. 1  The definition of general average has always been in dispute, which makes it quite hard to decide whether certain expenses are subject of general average or not. There is a classic definition of general average from the judgment of an English judge, Lawrence J, he said in the  Birkley v. Presgrave 2  that : "All loss which arises in consequence of extraordinary sacrifices made or expenses incurred for the preservation of the ship and cargo come within general average and must be borne proportionately by all those who are interested". The first version of York-Antwerp Rules was issued in 1877, which did not gave out a definition or concrete principles of the general average. When it came to the second stage of the York-Antwerp Rules' development 3 , big adjustments were given to the Rules. The whole Rules was separated into two parts, which are the Lettered Rules 4  and the Numbered Rules 5 . In the Lettered Rules of this 1924 version, a definition of general average was given: 6  "There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure." The background to the case which is going to be analyzed is called Vlassopoulos v. 1 Prof. William Tetley, Q.C. ' General average now and in the future ' <http://www.mcgill.ca/files/maritimelaw/genaverage.pdf> accessed 5 March 2014 2  Birkley v. Presgrave  [1801] 1 East 220, 229-230 3  There are four stages of the development of the York-Antwerp Rules, which are as follow. First stage, from 1860 to 1924. Second stage, from 1924 to 1949. Third stage, from 1950 to 1974. Fourth stage, from 1974 to 1994. 4  Issued by letters from A to G 5  Issued by Roman Numbers from I to XXIII 6  Rule A of the York-Antwerp Rules, 1924  1  British and Foreign Marine Insurance Company(The Makis), 7  It came into the court in 1929, shortly after the York-Antwerp Rules was amended in 1924. As Roche J. said in the judgment: 8  "The special case which comes before me for decision raises points of considerable interest and some novelty under the York-Antwerp Rules of 1924, which, so far as I am aware, have not yet arisen for decision." Before coming to the details of the case's facts and the judgment given by the court. More details about The York-Antwerp Rules, 1924 needs to be mentioned. It was a version which is like a milestone. When the Rules issued in 1877 were first adjusted in 1890, they consisted of eighteen numbered Rules, the purpose of which was to dispose of differences existing in the law and practice, on certain specific questions,  between nations 9 . A lot of new and complicated situations kept arising, the Rules soon  became inadequate. Then in 1924 a new set of Rules was produced. Per Roche J., the York-Antwerp Rules, 1924, are framed in order that the parties, if they choose to adopt the Rules by way of contract, may not be troubled with any question as to what, if any, general law is to apply. 10  As mentioned above, this 1924 version consists of two parts. The Lettered Rules contained a general declaration of the principles of general average so that they could be applied to circumstances not provided for in the numbered Rules. All cases provided for in the Numbered Rules should be considered as general average, and that the Lettered Rules laid down general principles to be applied in those cases not specifically covered by the Numbered Rules. 11  But there is conflict between the two parts. The conflict has its historical reason. During that  period, there were mainly two schools arguing about the definition and scope of general average. One is School of Thought For the Common Safety, represented by England. The other one is represented by France called School of Thought For the Common Good/Common Interests. The former one thought that the series of expenses 7   Vlassopoulos v. British and Foreign Marine Insurance Company(The Makis) [1929] 1 K.B. 187   8   The Makis (n 7) 194 9  J.Kenneth Goodacre,  Marine Insurance Claims , (3rd edn, London: Witherby, 1996) 803 10   The Makis (n 7) 189 11  D.J.Wilson, J.H.S.Cookie, The Law of General Average and The York-Antwerp Rules , (12th edn,London Sweet&Maxwell) 54  2 spent after the danger to the cargo and ship has disappeared should not be count as the general average. The latter one stood for the opinion that the danger was just removed for the time being before the ship became seaworthy again. So, all the expenses spent during this period should be taken as general average. Since these two opinions are totally different. The 1924 Rules combine them together to satisfy both the Schools. So there exist conflicts between the Lettered Rules and the Numbered Rules. However, this preconceived idea was upset by the decision of the court of the case The Makis . Not surprisingly, many of the York-Antwerp Rules are framed not only to make specific provision for losses which shall or shall not be treated as general average losses, but also define, enlarge or restrict the qualifying losses. 12  Through discussing this case, we may know more about the general average as well as the York-Antwerp Rules, 1924. The inter-relationship of the general law, the Lettered and the Numbered Rules was considered by Roche. J in The Makis.  The expenses incurred in this particular case specifically fall under Rule X 13  and Rule XI 14  of the York-Antwerp Rules, 1924. In this case, a ship named SS.Makis was under a charterparty made on January 8, 1927. Her voyage started from Hamburg towards her port of loading named Bordeaux, at 4 A.M. on January 10, 1927. There were two casualties happened from then on right after the charterparty came into force. The first one happened while she was at the cargo loading port, the foremast broke and fell on to the main deck doing damage, and in consequence of the breakage of a derrick, which was attached to the foremast, fell into a hold and was damaged.  Makis  was then moved to be repaired at the port called Bordeaux. The second casualty happened after the ship was repaired after the first casualty and during her voyage to the destination. While at sea she collided with some submerged wreckage and damaged the blades of her propeller. As a result of this ,  Makis  was certainly deemed to be unfit to encounter the ordinary perils of the sea which she might encounter during her voyage, and accordingly she was taken into 12  F.D.Rose, General Average: Law and Practice (2nd edn,LLP 2005) 55 13  Rules X: "Expenses at port of refuge, etc." 14  Rules XI: "Wages and maintenance of crew in port of refuge, etc."  3 Cherbourg for inspection and repairs. Due to the two accidents happened, many kinds of expenses were incurred. These expenses include payments made by the owner in the ports of Bordeaux 15  and Cherbourg 16 . Both the charterparty and the policy of insurance in respect of the ship provided that average was to be adjusted according to the York-Antwerp Rules, 1924. In this case, the underwriters argued that those expenses incurred at the port of refuge fall into the coverage of the lettered rules, the specific numbered rules could not be applied. However, the shipowners argued that the particular rules should prevail on the general rules. The two opposite reasons given by the two parties are both rejected  by the judge giving the reason that:"In my view those who drew up the Rules intended to provide a complete code which is to govern the law of general average for anybody who adopts it..." 17  At first, the dispute was referred to arbitration upon agreement made between the two  parties. The arbitrator's award held that none of these expenses were the subject of general average contribution 18 , so that each party should bear half the costs of the award 19 . The award cannot be accepted by the two parties. Then the case came to the King's Bench Division. The issue in this case is whether or not the circumstances that gave rise to the expenditure in these two casualties were general average. When we come to try to understand general average and distinguish whether a certain average is general average or not. We should know that there are four elements to satisfy for a general average act to occur: (1) a danger, or peril, to the common adventure; (2) extraordinary sacrifice or expenditure; (3) voluntarily or intentionally 15  Expenses incurred and had been paid by the claimant in the first casualty are as follow:1.Repairs; 2.Wages and provisions of the master, officers and crew;3. Coal consumed; 4. Towage, boatmen, mooring and unmooring; 5.Handling cargo on board;6.Discharging cargo;7.Survey's fees and incidentals. 16  Expenses incurred and had been paid by the claimant in the second casualty are as follow: 1.Repairs; 2.Wages and provisions of the master, officers and crew;3. Coal consumed; 4.Handling cargo on board; 5.Discharging cargo;6.Towage in;7.Port expenses, mooring charges, etc.; 8.Towage outwards;9.Survey fees, etc. 17   The Makis (n 7) 197 18   The Makis (n 7) 189 19   The Makis (n 7) 194  4 and reasonably made; and (4) preservation of the property involved in the danger. 20  In this case the Judge mainly focused on discussing the first element above. Since this case has gone through an arbitration, a lot of facts had been tested to be true  by the arbitrator. What the Judge need to decide here is whether the arbitrator was right in law in deciding which expenses the subject of general average contribution and which are not. In the judgment, Roche.J hold: 21  "I am going to hold substantially that all of those which arise out of the resort to the port of refuge, Cherbourg, are recoverable in general average, and I am going to hold substantially that none of those other items which arise out of the casualty at the port of loading, Bordeaux, are recoverable in general average." Since the two parties had chose to use the York-Antwerp Rules, 1924 to govern the disputes between them. So the judge regard that intention as conclusive that he did not decide any questions to the law apart from the Rules. With regard to Bordeaux, the judge hold that none of the items 2 to 6 inclusive are within any part of Rules X, or XI, or XX, which were the Rules relied upon in order to justify the contentions that these were general average expenses. 22  When the judge came to understand what were the nature of the expenses incurred in the first casualty, the Rule X(b) 23  of the York-Antwerp Rules was considered. In this  provision the wording:" necessary for the common safety" is easy to understand. Just as we have mentioned at the beginning of this case analysis. According to this rule, the ship can choose to handle or discharge cargo at any ports they've mentioned in the charterparty as long as the action is done out of the common sake of the ship or the cargo or both. What is hard to understand about this rule is the next sentence of this 20  Lloyd's List Intelligence, <http://www.lloydslistintelligence.com/llint/print-article.htm;jsessionid=0D2B5C01A3FE8F987952A152028D9618?documentId=240716&articleType=rats> accessed 5 March 2014 21   The Makis (n 7) 196 22   The Makis (n 7) 201 23  Rule X(b):"The cost of handling on board or discharging cargo, fuel or stores, whether at a port or  place of loading, call or refuge, shall be admitted as general average when the handling or discharge was necessary for the common safety or to enable damage to the ship caused by sacrifice or accident to  be repaired, if the repairs were necessary for the safe prosecution of the voyage."
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