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The York-Antwerp Rules 2004
For more than one hundred years the York-Antwerp Rules ("the Rules") have governed the adjustment of general average losses and expenditure. However, it has been apparent for some years that many insurers believe that the Rules are in need of radical reform. Indeed, some insurers share the view which was expressed by the Lloyd's delegation at the Antwerp Conference in 1877 that general average ("GA") ought to be abolished. Be that as it may, the pressure to change the Rules has increased since March 1999 when, following its adoption of a report made by one of its working groups, the International Union of Maritime Insurers ("IUMI") made a formal request that the case for a further revision of the Rules should be placed on the agenda of the Comit Maritime International ("the CMI"). Since then, IUMI's proposals have been the subject of detailed consideration by an international working group and discussion at CMI conferences. At the most recent such conference in Vancouver, held in June 2004, it was agreed to adopt a revised set of the Rules, to be known as the York-Antwerp Rules 2004, the intention being that they should apply to the adjustment of GA claims as soon as practicable after 31st December 2004.
That process may take time, however. This is because, if they are to govern the adjustment of GA, the new Rules will need to be incorporated into bills of lading, charterparties and other documents that evidence the terms on which goods are transported by sea. There may be a reluctance on the part of shipowners to alter their standard contractual documents in this respect, because this is the first time that a new set of the Rules has been adopted by the CMI in circumstances where the shipowning interests, represented by the International Chamber of Shipping, BIMCO, Intertanko and Intercargo, were opposed to their introduction. Those interests argued that significant change was not justified at a time when many owners were still coming to terms with the 1994 Rules, and that a number of the problems which had caused concern to IUMI had already been remedied by developments such as the introduction of GA absorption clauses in policies of hull and machinery insurance. These views did not, however, prevail.
The most radical feature of the latest revision of the Rules lies in their acceptance of the principle that the scope of GA should in future be restricted to expenses and losses incurred for the "common safety" of the property involved in the maritime adventure, and that expenditure incurred for the "common benefit" should no longer be allowed in GA. This objective is achieved by a series of amendments to Rule XI to the effect that wages and maintenance of the master, officers and crew incurred while a vessel is detained in a port of refuge will not be allowed in GA if adjusted in accordance with the 2004 Rules. Another illustration of the adoption of the "common safety" principle can be found in amendments to Rule XIV which provide that savings to hull underwriters achieved by effecting temporary repairs to accidental damage at a port of refuge are accounted for first, before any allowance in GA is considered.
Another reform which will have a significant practical impact consists of an amendment to Rule VI which, in the vast majority of cases, will have the effect of excluding payments made in respect of salvage from GA. The practice of re-apportioning in GA the amounts paid by salved interests in settlement of liabilities for salvage remuneration and related costs has often been questioned as unnecessary and wasteful, not only by IUMI but also by most of the maritime law association membership of the CMI. Those who believed that the existing practice had its advantages have lost the argument and, where the new Rules apply, the fact that costly salvage services are being rendered to a vessel should not affect the owner's decision whether or not to declare GA - unless the owner intends to provide all the security required by the salvage contractor and to undertake payment of the salvage remuneration due from all salved interests. In that situation the new Rule VI will provide a mechanism which will enable any shipowner (or other party) to recover in GA amounts he has paid by way of salvage on behalf of the owners of other salved property. Otherwise, salvage payments will lie where they fall and will not be allowed in GA.
The opportunity has also been taken to make the following additional changes to the Rules, which were less controversial.
1. Commission
Under Rule XX a commission of 2% is allowed in GA on disbursements other than crew wages and maintenance and fuel and stores not replaced during the voyage. This allowance is abolished by the 2004 Rules.
2. Interest
By Rule XXI interest at a rate of 7% is allowed in GA on expenditure, sacrifices and allowances. Doubts had been expressed concerning the desirability of providing for a fixed rate in the Rules given the infrequency with which they are updated. Consideration was given to fixing a rate by reference to an agreed formula. However, this was discarded in favour of a proposal that the rate should be determined annually by the CMI Assembly (for whose benefit a set of guidelines has been devised to assist that process).
3. Time Bar
The current Rules contain no provision which imposes any time limit for the commencement of proceedings relating to the payment of GA contributions. Investigation revealed that there was a wide variety of time bars in national laws - many of which, however, were not clear. Whilst recognising the need to provide that national law should take precedence, it was agreed to include a time bar provision in the 2004 Rules to the effect that any rights to GA contribution, including any rights to claim under GA bonds or guarantees, will be extinguished unless an action is brought within one year after the date on which the GA adjustment is issued and within six years of the termination of the maritime adventure in question. (It is, however, possible for the parties to agree extensions of these limitation periods after such termination.)
If you have any queries concerning the above, please do not hesitate to contact Mark Lloyd.
June 2004
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