IUA MARKET BRIEFING

in co-operation with the

Association of Average Adjusters

Charterers Whim
Should this affect an owner's claim on hull insurers?
Event Chaired by Paul Silver, Director, Richards
Hogg Lindley
Keith Sturges, Director, Richards Hogg Lindley
Tristan Miller, Harvey Ashby

Charterers Whim
Should this affect an owners claim on hull insurers?
Presentation by the Association of Average Adjusters on 28
October 2014 to the IUA

AAA Rule of Practice B26

When a vessel is proceeding in ballast under a time charter
alone or a time charter and a voyage charter entered into by the
time charterer, the general average shall attach to the vessel and
such items of stores and equipment as are indicated above.
Failing a prior termination of the adventure, the adventure shall
be deemed to end and the values for contribution to general
average calculated at the first loading port upon the
commencement of loading cargo.

York-Antwerp Rules, 1994 (Rule XI)

(a) Wages and maintenance of master, officers and crew reasonably incurred
and fuel and stores consumed during the prolongation of the voyage
occasioned by a ship entering a port or place of refuge or returning to her
port or place of loading shall be admitted as general average when the
expenses of entering such port or place are allowable in general average in
accordance with Rule X(a)..
When the ship is condemned or does not proceed on her original voyage, the
wages and maintenance of the master, officers and crew and fuel and stores
consumed and port charges shall be admitted as general average only up to
the date of the ships condemnation or of the abandonment of the
voyage

Case Study (Scenario A)

Panamax bulk carrier in ballast passage under time charter from Rotterdam with
orders to load at US Gulf ports.
Vessel develops main engine problems and puts into to Lisbon for the common
safety and to carry out permanent damage repairs.
Delay in voyage is three months by the time she regains position and follows
charterers orders to proceed to Quebec to load. Claim at stake US$300,000.

Scenario A

Rotterdam.

Quebec.

B/down

.Lisbon

Original voyage track

Scenario A
Should the general average claim be based on the full detention
period and up to regaining position or does it terminate
immediately the charterers decide to change their intended
voyage?

Scenario B
Same as scenario A above but time charterers give orders to
proceed to Poland to load after completion of repairs.
Should the general average continue for the whole period up to
the point the ship is ready to sail (it being accepted that Poland is
in the opposite direction to the original voyage)?

Scenario B
Same as scenario A above but time charterers give orders to
proceed to Poland to load after completion of repairs.
Should the general average continue for the whole period up to
the point the ship is ready to sail (it being accepted that Poland is
in the opposite direction to the original voyage)?

Scenario B

Rotterdam

B/down

.Lisbon

Original voyage track

Tristan Miller
Harvey Ashby Limited
Fellow of the Association of Average Adjusters

AAA Rule of Practice B26

When a vessel is proceeding in ballast under a time charter
alone or a time charter and a voyage charter entered into by the
time charterer, the general average shall attach to the vessel and
such items of stores and equipment as are indicated above.
Failing a prior termination of the adventure, the adventure shall
be deemed to end and the values for contribution to general
average calculated at the first loading port upon the
commencement of loading cargo.

York-Antwerp Rules, 1994 (Rule XI)

(a) Wages and maintenance of master, officers and crew reasonably incurred and
fuel and stores consumed during the prolongation of the voyage occasioned by a
ship entering a port or place of refuge or returning to her port or place of loading
shall be admitted as general average when the expenses of entering such port or
place are allowable in general average in accordance with Rule X(a)..
When the ship is condemned or does not proceed on her original voyage, the wages
and maintenance of the master, officers and crew and fuel and stores consumed
and port charged shall be admitted as general average only up to the date of the
ships condemnation or of the abandonment of the voyage

Scenario A

Rotterdam.

Quebec.

B/down

.Lisbon

Original voyage track

What happens in other Scenarios

Laden vessel YAR
Vessel in ballast no charter shipowner owns ship and
bunkers
Vessel in ballast voyage charter shipowner owns ship and
bunkers
Vessel in ballast time charter & voyage charter
Vessel in ballast time charter

York-Antwerp Rules, 1994 (Rule XI)

(a) Wages and maintenance of master, officers and crew reasonably incurred and
fuel and stores consumed during the prolongation of the voyage occasioned by a
ship entering a port or place of refuge or returning to her port or place of loading
shall be admitted as general average when the expenses of entering such port or
place are allowable in general average in accordance with Rule X(a)..
When the ship is condemned or does not proceed on her original voyage, the wages
and maintenance of the master, officers and crew and fuel and stores consumed
and port charged shall be admitted as general average only up to the date of the
ships condemnation or of the abandonment of the voyage

ITC Hulls 1.10.83 Clause 11.3

11.3 When the Vessel sails in ballast, not under charter the
provisions of the York-Antwerp Rules, 1974 (excluding Rules XX and
XXI) shall be applicable, and the voyage for this purpose shall be
deemed to continue from the port or place of departure until the
arrival of the Vessel at the first port or place thereafter other than a
port or place of refuge or a port or place of call for bunkering only.
If at any such intermediate port or place there is an abandonment
of the adventure originally contemplated the voyage shall
thereupon be deemed to be terminated.

MIA 1906 66.7 tells us

(7)Where ship, freight, and cargo, or any two of those interests,
are owned by the same assured, the liability of the insurer in
respect of general average losses or contributions is to be
determined as if those subjects were owned by different
persons.

ROP B26 First Paragraph

When a vessel is proceeding in ballast to load under a voyage charter entered into by the shipowner
before the general average act, the interests contributing to the general average shall be the vessel,
such items of stores and equipment as belong to parties other than the owners of the vessel (e.g.
bunkers, wireless installation and navigational instruments) and the freight earned under the voyage
charter computed in the usual way after deduction of contingent expenses subsequent to the general
average act. Failing a prior termination of the adventure, the place where the adventure shall be
deemed to end and at which the values for contribution to general average shall be calculated is the
final port of discharge of the cargo carried under the charter but in the event of the prior loss of the
vessel and freight, or either of them, the general average shall attach to any surviving interest or
interests including freight advanced at the loading port deducting therefrom contingent expenses
subsequent to the general average act.

AAA Rule of Practice B26

When a vessel is proceeding in ballast under a time charter alone or
a time charter and a voyage charter entered into by the time
charterer, the general average shall attach to the vessel and such
items of stores and equipment as are indicated above. Failing a prior
termination of the adventure, the adventure shall be deemed to end
and the values for contribution to general average calculated at the
first loading port upon the commencement of loading cargo.

York-Antwerp Rules, 1994 (Rule XI)

(a) Wages and maintenance of master, officers and crew reasonably incurred and
fuel and stores consumed during the prolongation of the voyage occasioned by a
ship entering a port or place of refuge or returning to her port or place of loading
shall be admitted as general average when the expenses of entering such port or
place are allowable in general average in accordance with Rule X(a)..
When the ship is condemned or does not proceed on her original voyage, the wages
and maintenance of the master, officers and crew and fuel and stores consumed
and port charged shall be admitted as general average only up to the date of the
ships condemnation or of the abandonment of the voyage

Keith Sturges
Richards Hogg Lindley
Fellow of the Association of Average Adjusters

Decision not to proceed to same destination taken whilst vessel is still

proceeding towards port of refuge
Allowances terminate:

View 1 Date charterers made their decision (2 June)

View 2 Date charterers told owners (17 June)

View 3 On regaining position, regardless of changed

July)

voyage (8

B26 Vessel in ballast and under charter

Contributing Interests
Freight earned under a voyage charter:

If entered into by the shipowner contributes

If entered into by time charterer does not contribute

B26 Vessel in ballast and under charter

Contributing Interests
(Failing a prior termination of the adventure) place where
adventure ends:
If voyage entered into by the shipowner
= Completion of discharge at final port

If entered into by time charterer (or no voyage charter)

= Commencement of loading at first port

Adventure
An exciting or very unusual experience
A commercial or financial speculation; a venture
A financial speculation or business venture

Voyage
A course of travel or passage, especially a long journey by
water to a distant place
A journey or expedition from one place to another

Still proceeding to POR. Charterers decide to send a

substitute vessel to US Gulf. They tell shipowners ..
immediately
Some adjusters:
Voyage/adventure immediately over. Allowances cease on
arrival Lisbon.
Values assessed Lisbon date of arrival.

Still proceeding to POR. Charterers decide to send a

substitute vessel to US Gulf. They tell shipowners 20
days after arrival Lisbon
Some adjusters:
Date of decision (as in previous slide)
Some adjusters:
Voyage/adventure over on this day. Allowances cease on day
20 at Lisbon.
Values assessed on this date

Still proceeding to POR. Charterers decide to send a

substitute vessel to US Gulf. They tell shipowners 1
day after leaving Lisbon
Some adjusters:
Date of decision
Some adjusters:
Voyage/adventure over at this point ( at sea?)
Values assessed ... on arrival Quebec?

Still proceeding to POR. Charterers decide to send a

substitute vessel to US Gulf.
Regardless of date of decision or notification:

Some adjusters:
Adventure has not been terminated
Values assessed on commencement of loading at next port

YAR XI
When the ship is condemned or does not proceed on her
original voyage, the wages etc. .shall be admitted as
general average only up to the date of the ships
condemnation or of the abandonment of the voyage

.. or up to the date of completion of discharge of cargo

if the condemnation or abandonment takes place before
that date

Cargo interests decide to

change the destination
YAR suggests the common adventure would continue
up to delivery at the changed port.
No premature cessation of GA allowances
Why different if is t/chrs who change the destination?

ITC Hulls Ballast GA

(not under charter)
If at any . intermediate port or place there is an
abandonment of the adventure originally
contemplated the voyage shall thereupon be
deemed to be terminated.

My conclusions:
1. Charterers change of intentions does not destroy the
common adventure
2. B26 deals only with contributing interests no
relevance
3. YAR provide no real guidance regarding time charterers
4. We need uniformity new Rule of Practice

Discussion

Voting

Voting
1. Is there a general view that allowances should be limited
when charterers decide to change the specified voyage?
2. Should there be a change to Rule of Practice B26?

Charterers Whim
Should this affect an owners claim on hull
insurers?
Presentation by the Association of Average Adjusters on 28
October 2014 to the IUA