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General Average was called after MSC Napoli ran into difficulties in the English Channel in 2007


If a consignment is uninsured, or the adjuster is uncertain about the


security of the insurance company, a contributory cash deposit will be requested. Such cash deposits are held in a first class, interest earning bank account – no disbursements can be made from the account without the written consent of the average adjuster. This serves as a reminder of the importance from a shippers’ perspective to ensure adequate cargo insurance is in place to cover any given shipment. In the event of delay at the port of refuge, or if the original ship is unable


to continue, a ‘non-separation agreement’ is incorporated within the GA documentation. This provides for cargo owners to have their cargo forwarded to the original port of destination whilst the original ship remains in the port of refuge, in return for payment of their contribution, as if the cargo had remained aboard.


Destination port Upon arrival at the destination port, only cargo and equipment for which GA bonds and guarantees have been received will be released. Bills of lading will contain GA and lien clauses. Where bonds and guarantees have not been submitted, the shipowner will continue to hold a lien and thus can withhold the cargoes’ release. A potential issue for the freight forwarder or NVOC may arise in


connection with LCL shipments, where several cargo interests are required to submit documentation. Until all have been submitted, the container and cargo will not be released. To prevent delays, it is recommended that the freight forwarder follows up with all cargo interests to ensure they have fulfilled their obligations. The adjuster can be contacted to identify outstanding guarantees. Some NVOC insurers may be willing to provide guarantees in these circumstances, on an


June 2018


undertaking by the NVOC that such cargo is similarly held under lien within the terms of the NVOC bill of lading, facilitating the movement of the remaining LCL cargo. If during the GA adjustment, it is identified that a sacrificed cargo has


been undeclared or wrongly declared, its value will not be allowed. Conversely, if saved, such cargo will remain subject to the prescribed contributions. This further highlights the importance of accurate declaration of cargo.


Time bar provisions Time bar provisions can exist in relation to GA and are prescribed in the YAR. It should be highlighted, however, that the actual time bar in any given incident will be determined by which set of YAR apply to the voyage (1994, 2004 or 2016). The adjuster will conclude their calculations issuing the GA Statement to


all interested parties against their respective GA bonds and guarantees. All parties are obliged under the GA bond to pay the GA adjustment accordingly, thus concluding the process. GA is the mechanism by which extraordinary additional expenditure


incurred during a voyage can be recovered from everyone involved on a pro-rata basis against the ‘landed’ value of goods and other property. Nowadays, where cargoships are capable of carrying in excess of 21,000 teu, GA can be an extremely complex and time-consuming process. All freight forwarders should have an understanding of GA in order that they may efficiently manage matters and set realistic expectations for their clients following such an event.


BIFA would like to thank the TT Club for its assistance in preparing this article. 11


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