Chapter 12 Averages Viktoria Villo

Rhodian Law 200 AD

If goods are thrown overboard to lighten the ship, all shall make good by
contribution that which has been given for all

Averages in General
Article 806. For the purposes of the Code, the following shall be deemed
averages:
1. All extraordinary or eventual expenses that may arise whilst sailing, to
safeguard the ship, the cargo or both.
2. All damages or harm suffered by the ship from setting sail at the port of
departure until landing and anchoring at that of her destination, and those
suffered by the freight from loading at the port of dispatch until unloading at
that of consignment.

Usual expenses of navigation shall be considered ordinary expenses to be

defrayed by the shipowner, unless there is an express agreement to the
contrary.

(1) General or gross average

: include all the damages and expenses which are deliberately caused in
order to save the vessel, its cargo or both at the same time, from a real and
known risk

Requisites of General Average

1. There must be a common danger
2. That for the common safety part of the vessel or of the cargo or both is
sacrificed deliberately
3. That from the expenses or damages caused follows the successful saving
of the vessel and cargo, and
4. That the expenses or damages should have been incurred or inflicted after
taking proper legal steps and authority

Note:
The interests so saved must be the sole object of the sacrifice, and those
interests can only be required to contribute to the loss. The safety of
property not included in the common adventure can neither be an object of
the sacrifice, nor a ground of contribution.

(2) Simple or particular average

: include all the expenses and damages caused to the vessel or to her cargo
which have not inured to the common benefit and profit of all the persons
interested in the vessel and her cargo
: If the damage is not by general average, the same can be considered
particular average

By whom borne
1. The owner of the goods that suffered the damage bears the loss (res perit
domino)
Article 810. The owner of the item that gave rise to the expense or that was
damaged shall bear the particular or common average.

2. If the vessel/goods are hypothecated by a loan on bottomry or

respondentia, the lender shall also bear the loss in proportion to his interest

IMPORTANT!!!
Examples of simple or particular averages
Article 809. As a general rule, common or particular averages shall be all
expenses and damages caused to the ship or her cargo that have not inured
on the benefit and common utility of all those interested in the ship and her
cargo, and especially the following:
1. Damage arising to the cargo from loading until unloading, either due to
inherent flaw of the items, as well as accident at sea or act of God or force
majeure, and expenditure made to avoid and repair these;
2. Damages and expenses to the ship in her hull, rigging, weaponry and
equipment, for the same causes and reasons, from her setting sail at the
port of departure, until landing and anchoring at her destination;
3. Damage suffered by the freight loaded on deck, except in coastal
navigation, if the maritime regulations allow;
4. The wages and food of the crew, when the ship is detained or embargoed
by legitimate order or act of God or force majeure, if the charter contract is
by a share in the voyage;
5. The necessary expenses of having to put into a port for repairs or stores;
6. The decreased value of goods sold by the Master on forcible putting in, to
pay for food and save the crew, or to cover any other need of the ship, to
which cargo will accrue the corresponding credits;
7. The food and salaries of the crew while the ship is in quarantine;
8. The damage suffered by the ship or cargo due to striking or colliding with
another, when fortuitous and unavoidable;
If the accident occurs due to the fault or negligent behaviour of the Master,
he shall be held liable for all the damages suffered.
9. Any damage caused to the cargo due to offences, negligence or barratry
by the Master or crew, notwithstanding the right the owner has to take
action against the Master, ship and charter for the relevant compensation.

Common danger
Both ship and the cargo, after has been loaded, are subject to the same
danger, whether during the voyage, or in the port of loading or unloading;
that the danger arises from the accidents of the sea, dispositions of the
authority, or faults of men, provided that the circumstances producing the
peril should be ascertained and imminent or may rationally be said to be
certain and imminent.

Thus it contemplates the situation where a ship shall have entered a port
or place of refuge, or shall have returned to her port or place of loading, in
consequence of accident, sacrifice, or other extraordinary circumstances
which render that necessary for common safety

Does not include situation where flight of the vessel was a measure of
precaution adopted solely and exclusively for the preservation of the vessel
from danger of seizure or capture.

IMPORTANT!!!
There can be no general average if:
1. There was no danger at all;
2. No common danger if the measure was undertaken against a distant peril;
3. Even if there is a common peril, the same may not justify a voluntary
sacrifice if the same can easily be avoided by the ship without much
sacrifice.

Note:
Law on averages does not apply in collision cases where the same was
caused by the negligence of the captains of the colliding vessels and the
cargoes were not jettisoned to save some of the cargoes and the vessel.

Deliberate sacrifice
Of a part for the benefit of the whole in order to justify general average
contribution.

Note:
It cannot involve a damage which resulted beyond the control of the captain
and crew or without any intention on their part.

Sacrifice is made:
1. Through the jettison of the cargo or part of the ship is thrown overboard
during the voyage

There can also be general average even if the sacrifice was not made during
the voyage in at least 2 cases:
1. Where the sinking of a vessel is necessary to extinguish a fire in a port,
roadstead, creek or bay.
2. Cargo is transferred to lighten the ship on account of a storm to facilitate
entry into a port.

Article 816. In order for them to claim in the general average and to be
entitled to compensation, it shall be necessary for the owners of the
belongings jettisoned to prove, with regard to the cargo, their presence on
board by means of the bill of lading; and with regard to those belonging to
the ship, by the inventory drawn up before departure, according to
paragraph 1 of Article 612.

Article 817. If, lightening the ship due to storm, to facilitate her entry to
the port or roadsteads, any part of the cargo is transferred to launches or
boats and is lost, the owner of that part shall be entitled to compensation, as
that caused by loss in the general average, distributing their amount
between the whole ship and the appropriate cargo.
If, on the contrary, the freight transferred is saved and the ship founders, no
liability for salvage may be demanded.

Article 818. If, as a necessary measure to stem fire in a port, roadsteads,

creek or bay, it is decided to scupper any ship, that loss shall be considered
a general average, to which the ships saved shall contribute.

Note:
Loss can no longer be considered a general average if the thing was
inevitably lost.

Rule IV of the York-Antwerp Rules provide:

loss or damage sustained by cutting away wreck or parts of the ship which
have been previously carried away or are effectively lost by accident shall
not be made good as general average.

Successful sacrifice
Article 860. If, notwithstanding the jettison of goods, breaking of spars,
ropes and rigging, the ship were to be lost, running the same risk, there
shall be no entitlement to any contribution whatsoever for the general
average.
The owners of the goods salvaged shall not be liable for compensation of
those cast into the sea, lost or deteriorated.

Note:
It must be the same risk. Thus, if there was typhoon and goods were
jettisoned but goods still sank, no general average contribution. But if the
goods were saved from typhoon but was subsequently lost due to some
other reason, there will be liability for general average contribution.

Article 861. If, after having saved the ship from the risk that gave rise to
the jettison, she were to be lost due to another accident on the voyage, the
goods saved and subsisting from the first risk shall continue to be
encumbered for contribution to the general average, according to their value
in the state in which they are, deducting the expenditure on their salvage.

Compliance with legal steps

(Expenses or damages should have been incurred or inflicted after taking
proper legal steps and authority)

Article 813. Expenditure and causing the damage of the general average
shall be preceded by a decision by the Master, following discussion with the
Navigator and other officers on the ship, hearing the parties with an interest
in the cargo who may be present.
Should these object and the Master and officers, or the majority thereof, or
the Master not with the majority, deem certain measures necessary, these
may be carried out under his responsibility, notwithstanding the right of the
consignors to claim against the Master before the competent Judge or Court
of Law, if they can prove that he acted with malice, lack of skill or
negligence.

If those with an interest in the cargo, present on the ship, are not heard,
they shall not contribute to the general average, that part being assigned to
the Master, unless the urgency of the case is such that there is no time
available for prior discussion.

Article 814. The decision made to cause damage constituting a gross

average must necessarily be set forth in the ships log, stating the motives
and reasons upon which it was based, the votes against and the grounds for
objection, if any, and the irresistible, urgent reasons that led the Master to
do so, if he acted on his own accord.

In the first case, the minutes shall be signed by all present who know how
to, if possible, before proceeding to execution thereof; and when it is not, at
the first opportunity. In the second, by the Master and the ships officers.
After the decision, the minutes shall circumstantially state all the objects
jettisoned and mention shall be made of the defects caused to those
remaining on board. The Master shall be obliged to deliver a copy of these
minutes to the maritime judicial authorities at the first port he puts into,
within twenty-four hours of arrival, and to then ratify it under oath.

Article 815. The Master shall oversee the jettisoning and order the items to
be thrown overboard in the following order:
1. Those on deck, beginning with those that hinder handling or damage the
ship, preferring, if possible, those that are heaviest and of less utility and
value;
2. Those under the upper deck, always beginning with those of most weight
and less value, up to the quantity and number that are absolutely
indispensable.

Who bears general average

1. Borne by those who benefited from the sacrifice
2. shipowner and the owners of the cargoes that were saved
3. Insurers of the vessel or cargoes that were saved
4. Lenders on bottomry or respondentia

Article 812. All those with a share in the ship and cargo on her at the time
of the average arising shall contribute to pay the amount of general or gross
average.

Insurers
Both Code of Commerce and Insurance Code provide that insurer is liable for
any general average in proportion to the contribution attaching to his policy
value where the said value is less than the contributing value of the thing
insured.

Based on New Insurance Code RA 10607

SEC. 166. A marine insurer is liable for a loss falling upon the insured,
through a contribution in respect to the thing insured, required to be made
by him towards a general average loss called for by a peril insured against:
Provided, That the liability of the insurer shall be limited to the proportion of
contribution attaching to his policy value where this is less than the
contributing value of the thing insured.

SEC. 167. When a person insured by a contract of marine insurance has a

demand against others for contribution, he may claim the whole loss from
the insurer, subrogating him to his own right to contribution. But no such
claim can be made upon the insurer after the separation of the interests
liable to contribution, nor when the insured, having the right and opportunity
to enforce contribution from others, has neglected or waived the exercise of
that right.

Lenders on Bottomry and Respondentia

Article 732 provides that lenders on bottomry or respondentia shall suffer, in
proportion to their respective interest, the general average which may take
place in the goods on which the loan is made

Who is entitled to indemnity

: the owner of the goods which were sacrificed

IMPORTANT!!!
However, the following goods even if sacrificed are not covered;
1. goods carried on deck unless the rule, special law or customs of the place
allow the same
2. goods that are recorded in the books or records of the vessel
3. fuel for the vessel if there is more than sufficient fuel for the voyage

Effect of negligence
Claims for averages shall not be admitted if they do not exceed 5% of the
interest which the claimant may have in the vessel or in the cargo if it be
gross average, deducting in both cases the expenses of appraisal, unless
there is an agreement to the contrary (Article 848, Code of Commerce)

Note:
: common carriers cannot limit their liability for injury or loss of goods when
such injury or loss was caused by its own negligence.
: the law on average cannot be applied in determining liability when there is
negligence
: the issue of negligence must first be addressed before the proper provision
of the Code of Commerce on the extent of liability may be applied
Apportionment
Gross average shall be distributed pro rata among the goods which are to
cover the same

Mechanics:
The value of each of the contributing interest is multiplied by a fraction
which has as its numerator the sum of the general average expense and has
as its denominator the sum of the contributing values

Note:
Liability for general average loss excludes measures undertaken against a
distant peril. It is the deliverance from an immediate, impending peril, by a
common sacrifice that constitutes the essence of general average

Example: The fact that the refloating is necessary in order to enable the
vessel to proceed to its port of destination, will not make it a general
average expenses because it is the safety of the property, and not of the
voyage, which constitutes the true foundation of the general average.

IMPORTANT!!!
Proof and liquidation of average: code of commerce
These rules should be complied with. There shall be no general average
contribution if the procedure prescribed is not complied with.

Article 846. Those interested in the justification and settlement of averages

may reach agreements and bind themselves mutually at any time
concerning the liability, assessment and payment of these.
Should an agreement not be reached, the following rules shall apply:
1. Justification of the average shall be provided at the port where the repairs
are performed, if necessary, or at that of unloading;
2. The settlement shall be performed at the port of unloading, if Spanish;
3. If the average has taken place outside the jurisdictional waters of Spain,
or if the cargo has been sold at a foreign port due to forcible arrival, the
settlement shall be performed at the port of arrival;
4. If the average has taken place near the port of arrival, so that port may
be reached, the provisions set forth in rules one and two shall then apply.

Article 847. Both in the event of performing a private settlement of

damages due to agreement, as well as in that of intervention by the judicial
authority at the request of any of the parties who object, they shall all be
summoned and heard, unless they have waived this right.
When they are not present, or do not have a legitimate representative, the
settlement shall be performed by the Consul at the foreign port and, where
there is not one, by the competent Judge or Court of Law, according to the
laws of the country, and on account of the relevant party.
When the representative is a person who is known in the place where the
settlement is performed, his intervention shall be admitted and take legal
effect, even if only authorised by way of a letter from the shipping agent,
consignor or insurer.

Article 848. Lawsuits for averages shall not be admissible if they do not
exceed 5 per cent of the interest that the claimant had in the ship or cargo,
being general averages, and 1 per cent of the goods damaged, if simple,
and, in both cases, the appraisal expenses shall be deducted, except when
otherwise agreed.

Article 849. Damages, breakages, bottomry loans and their premiums, and
any other losses, shall not accrue late payment interest except when the
period of three years has elapsed, as of when the liquidation was concluded
and notified to the parties with an interest in the ship, on the cargo, or both.

Article 850. If, due to one or several accidents at sea, simple and general
averages to the ship, cargo or both were to occur on a same voyage, these
averages shall be determined, separating the expenses and damages
belonging to each average, in the port where the repairs are carried out, or
where the freight is unloaded, sold or realised.

To this end, the Masters shall be obliged to demand that the expert
appraisers, and the master tradesmen who perform the repairs, as well as
those who appraise or intervene in the unloading, correction, sale or
realisation of the freight, to ensure absolute exactitude and separation of the
damages and expenses belonging to each average in each of their appraisals
or estimates, and in those of each average, those of the ship and cargo, also
providing a breakdown of whether or not there is damage due to inherent
flaw of the item and not to sea accident; and if there are common expenses
of the different averages and the ship and her cargo, the relevant amount
for each item must be calculated and stated separately.

SECTION 2.a On liquidation of general averages*

Article 851. When requested by the Master, private proceedings shall be
conducted, by agreement between all the parties concerned, to settle,
liquidate and distribute general averages.
To this end, within fortyeight hours of the ship arriving in port, the Master
shall summon all parties concerned to establish whether the settlement or
liquidation of the general averages must be performed by appraisers and
liquidators appointed by themselves, in which case this shall be done so, if
there is agreement between those concerned.
If an agreement is not possible, the Master shall resort to the competent
Judge or Court of Law, which shall be that of the port where those
proceedings are to be carried out, according to the provisions of this Code,
or the Spanish Consul, if any, and if not, the local authority when this is to
be performed in a foreign port.

Article 852. If the Master does not fulfill the terms set forth in the
preceding Article, the shipping agent or the consignors shall demand the
liquidation, notwithstanding any action by which they are entitled to claim
compensation from him.

Article 853. Upon appointment of the appraisers by the parties concerned,

or by the Judge or Court of Law, they shall proceed, following acceptance, to
inspect the ship and the repairs she needs and to appraise their value,
distinguishing these losses and damages from those due to inherent flaw in
the goods.
The appraisers shall also determine whether the repairs may be carried out
right away, or whether it is necessary to unload the ship to inspect and
repair her.
With regard to the freight, if the damage is visible to the naked eye, the
inspection thereof must be performed before delivery. Should it not be
visible at the time of unloading, this may be performed after delivery,
provided this is checked within fortyeight hours of unloading,
notwithstanding any other evidence deemed relevant by the appraisers.

Article 854. The valuation of the objects that are to contribute to the
general average, and of those constituting the damage, shall be subject to
the following rules:
1. Freight salvaged that is to contribute to payment of the general average
shall be valued at the current price at the port of unloading, after charter
fees, customs dues and unloading expenses are deducted, as recorded in
their material inspection, ignoring what is recorded in the bills of lading,
except when otherwise agreed;
2. If it is necessary to perform the liquidation at the port of departure, the
value of the freight loaded shall be set at its purchase price plus all relevant
expenses until placed on board, excluding the insurance premium;
3. If the freight is damaged, it shall be appraised at its real value,
4. If the voyage has been interrupted, freight has been sold abroad and the
average cannot be calculated, it shall be ascertained by capital contribution
to the value of the freight at the port of arrival, or the liquid product
obtained from its sale;
5. Lost freight constituting the general average shall be appraised pursuant
to the value that those of their class have at the port of unloading, provided
their types and qualities are recorded on the bills of lading; and if they are
not recorded, the content of the purchase invoices issued at the port of
loading shall apply, increased by the sum of the expenses and carriage fees
that have subsequently arisen;
6. Cut spars, sails, cables and other rigging of the ship disabled in order to
save her shall be appraised at their current value, minus one third for the
difference from new to old;
This reduction shall not apply to anchors and chains.
7. The ship shall be appraised at her real value in the state in which she is;
8. The carriage fees shall represent fifty per cent as contributing capital.

Article 855. The freight loaded in the waist of the ship shall contribute to
the general average if saved; but they shall not provide entitlement to
compensation if they are lost having been jettisoned in common salvage,
except when in coastal navigation, the maritime regulations allow such
loading.
The same shall apply to those on board that are not included on the bills of
lading or inventories, as appropriate.
In any case, the Shipper and the Master shall be held liable to the
consignors for the damages of jettison, if placement in the waist is
performed without their consent.

Article 856. Cannons and war munitions carried on board shall not
contribute to the general average, nor the clothes and garments used by the
Master, officers and crew.
The clothes and garments used by the consignors, pursers and passengers
on board at the time of the jettison shall not be included either.
Nor shall the goods jettisoned contribute to payment of the general averages
arising to freight salvaged in a different, later risk.

Article 857. Once the appraisers have concluded valuation of the goods
salved and those lost that constitute the general average, and once the
repairs to the ship are performed, if this is appropriate, and in that case,
following approval of their accounts by the parties concerned, or by the
Judge or Court of Law, the full dossier shall be transferred to the liquidator
appointed so he may proceed to distribute the average.

Article 858. To perform the assessment, the liquidator shall examine the
protest by the Master, checking it, if necessary, against the ships log, and
all the contracts formalised between the parties concerned in the average,
the appraisals, expert inspections and bills for repairs performed. If, as the
result of that examination, he were to find any defect that might be
damaging to the rights of the parties concerned or affect the liability of the
Master, he shall call attention to this in order for it to be corrected, if
possible, and if not, shall record this in the preliminaries of the assessment.
He shall then proceed right away to distribute the amount of the average,
for which he shall set:
1. The contributing capital, which he shall determine by the amount of the
value of the cargo, according to the rules established in Article 854;
2. That of the ship, in the state in which she is, according to the report
prepared by the appraisers;
3. Fifty per cent of the amount of the carriage fees, minus the remaining
fifty per cent for salaries and crews food.
Once the sum of the general average is determined according to the
provisions of this Code, the resulting amount shall be distributed
proportionally among those called to bear it.

Article 859. The insurers of the ship, of the charter fees and cargo shall be
obliged to pay the full sum required for each one of these objects,
respectively, in compensation of the general average.
Article 860. If, notwithstanding the jettison of goods, breaking of spars,
ropes and rigging, the ship were to be lost, running the same risk, there
shall be no entitlement to any contribution whatsoever for the general
average.
The owners of the goods salvaged shall not be liable for compensation of
those cast into the sea, lost or deteriorated.

Article 861. If, after having saved the ship from the risk that gave rise to
the jettison, she were to be lost due to another accident on the voyage, the
goods saved and subsisting from the first risk shall continue to be
encumbered for contribution to the general average, according to their value
in the state in which they are, deducting the expenditure on their salvage.

Article 862. If, in spite of having saved the ship and cargo due to cutting
spars or any other deliberate damage to the ship for that purpose, the
freight is subsequently lost or stolen, the Master may not require the
consignors or consignees to contribute to compensation of the average,
except if the loss arises due to an act by the actual owner or consignee.

Article 863. If the owner of the freight jettisoned recovers it before having
received compensation for the general average, he shall be bound to return
the sum received to the Master and other parties with an interest in the
cargo, deducting the amount for the damage caused by the jettison and the
expenses incurred to recover it.
In that case, the sum returned shall be distributed between the ship and the
parties with an interest in the cargo, in the same proportion to their
contribution to payment of the average.

Article 864. If the owner of the goods jettisoned recovers them without
having claimed compensation, he shall not be obliged to contribute to
payment of the general averages to the rest of the cargo after the jettison.

Article 865. Distribution of the general average shall not take executive
effect until granted conformity, or failing that, after approval by the Judge or
Court of Law, following examination of the liquidation and trial hearing of the
parties present or their representatives.

Article 866. Once the liquidation is approved, the Master must settle the
moneys to be distributed and he shall be liable to the owners of the goods
damaged for the losses his delay or negligence might cause them.

Article 867. If the contributors did not settle the amount that they are to
contribute by the third day after having been required to do so, proceedings
shall be taken, at the request of the Master, against the goods salvaged,
until payment is settled from the revenue thereof.

Article 868. If the party applying to receive the goods salvaged does not
provide sufficient surety to respond for the relevant part of the general
average, the Master may defer their delivery until payment is made.

SECTION 3a On liquidation of simple averages

Article 869. The appraisers that the Judge or Court of Law or parties
concerned may appoint, as appropriate, shall proceed to inspect and assess
the damages in the manner specified in Articles 853 and 854, rules 2 to 7,
as applicable.

The York-Antwerp Rules 1974

General Rule: Code of Commerce provisions on averages are still in force.
Exception:
1. Parties may by stipulation in the charter party or any written agreement,
agree that the York-Antwerp Rules shall be applied.
2. York-Antwerp Rules may also be used to solve controversies where no
provision in the Code of Commerce is in point because the said rule embody
the custom of maritime states.

Rule of interpretation.
In the adjustment of general average the following lettered and numbered
Rules shall apply to the exclusion of any Law and Practice inconsistent
therewith. Except as provided by the numbered Rules, general average shall
be adjusted according to the lettered Rules.

Rule A.
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.

Rule B.
General average sacrifices and expenses shall be borne by the different
contributing interests on the basis hereinafter provided.

Rule C.
Only such losses, damages or expenses which are the direct consequence of
the general average act shall be allowed as general average. Loss or damage
sustained by the ship or cargo through delay, whether on the voyage or
subsequently, such as demurrage, and any indirect loss whatsoever, such as
loss of market, shall not be admitted as general average.

Rule D.
Rights to contribution in general average shall not be affected, though the
event which gave rise to the sacrifice or expenditure may have been due to
the fault of one of the parties to the adventure, but this shall not prejudice
any remedies or defences which may be open against or to that party in
respect of such fault.
Rule E.
The onus of proof is upon the party claiming in general average to show that
the loss or expense claimed is properly allowable as general average.

Rule F.
Any extra expense incurred in place of another expense which would have
been allowable as general average shall be deemed to be general average
and so allowed without regard to the saving, if any, to other interests, but
only up to the amount of the general average expense avoided.

Rule G.
General average shall be adjusted as regards both loss and contribution
upon the basis of values at the time and place when and where the
adventure ends. This rule shall not affect the determination of the place at
which the average statement is to be made up.

Rule I. Jettison of cargo.

No jettison of cargo shall be made good as general average unless such
cargo is carried in accordance with the recognised custom of the trade.

Rule II. Damage by jettison and sacrifice for the common safety.
Damage done to a ship and cargo, or either of them, by or in consequence
of a sacrifice made for the common safety, and by water which goes down a
ship's hatches opened or other opening made for the purpose of making a
jettison for the common safety, shall be made good as general average.

Rule III. Extinguishing fire on shipboard.

Damage done to a ship and cargo, or either of them, by water or otherwise,
including damage by beaching or scuttling a burning ship, in extinguishing a
fire on board the ship, shall be made good as general average; except that
no compensation shall be made for damage by smoke or heat however
caused.

Rule IV. Cutting away wreck.

Loss or damage sustained by cutting away wreck or parts of the ship which
have been previously carried away or are effectively lost by accident shall
not be made good as general average.

Rule V. Voluntary stranding.

When a ship is intentionally run on shore for the common safety, whether or
not she might have been driven on shore, the consequent loss or damage
shall be allowed in general average.

Rule VI. Salvage remuneration.

Expenditure incurred by the parties to the adventure on account of salvage,
whether under contract or otherwise, shall be allowed in general average to
the extent that the salvage operations were undertaken for the purpose of
preserving from peril the property involved in the common maritime
adventure.

Rule VII. Damage to machinery and boilers.

Damage caused to any machinery and boilers of a ship which is ashore and
in a position of peril, in endeavouring to refloat, shall be allowed in general
average when shown to have arisen from an actual intention to float the ship
for the common safety at the risk of such damage; but where a ship is afloat
no loss or damage caused by working the propelling machinery and boilers
shall in any circumstances be made good as general average.

Rule VIII. Expenses lightening a ship when ashore, and consequent damage.
When a ship is ashore and cargo and ship's fuel and stores or any of them
are discharged as a general average act, the extra cost of lightening, lighter
hire and reshipping if incurred and the loss or damage sustained thereby,
shall be admitted as general average.

Rule IX. Ship's material and stores burnt for fuel.

Ship's materials and stores, or any of them, necessarily burnt for fuel for the
common safety at a time of peril, shall be admitted as general average,
when and only when an ample supply of fuel had been provided; but the
estimated quantity of fuel that would have been consumed, calculated at the
price current at the ship's last port of departure at the date of her leaving,
shall be credited to the general average.

Rule X. Expenses at port of refuge etc.

(a) When a ship shall have entered a port or place of refuge or shall have
returned to her port or place of loading in consequence of accident, sacrifice
or other extraordinary circumstances, which render that necessary for the
common safety, the expenses of entering such port or place shall be
admitted as general average; and when she shall have sailed thence with
her original cargo, or part of it, the corresponding expenses of leaving such
port or place consequent upon such entry or return shall likewise be
admitted as general average.
When a ship is at any port or place of refuge and is necessarily removed to
another port or place because repairs cannot be carried out in the first port
or place, the provisions of this Rule shall be applied to the second port or
place as if it were a port or place of refuge and the cost of such removal
including temporary repairs and towage shall be admitted as general
average. The provisions of Rule XI shall be applied to the prolongation of the
voyage occasioned by such removal.
(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, except in cases where the damage to the ship is discovered
at a port or place of loading or call without any accident or other
extraordinary circumstances connected with such damage having taken
place during the voyage.
The cost of handling on board or discharging cargo, fuel or stores shall not
be admissible as general average when incurred solely for the purpose of
restowage due to shifting during the voyage unless such restowage is
necessary for the common safety.
(c) Whenever the cost of handling or discharging cargo, fuel or stores is
admissible as general average, the costs of storage, including insurance if
reasonably incurred, reloading and stowing of such cargo, fuel or stores shall
likewise be admitted as general average.
But when the ship is condemned or does not proceed on her original voyage
storage expenses shall be admitted as general average only up to the date
of the ship's 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.

Rule XI. Wages and maintenance of crew and other expenses bearing up for
and in a port of refuge, etc.
(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).
(b) When a ship shall have entered or been detained in any port or place in
consequence of accident, sacrifice or other extraordinary circumstances
which render that 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, the wages and
maintenance of the master, officers, and crew reasonably incurred during
the extra period of detention in such port or place until the ship shall or
should have been made ready to proceed upon her voyage, shall be
admitted in general average.
Provided that when damage to the ship is discovered at a port or place of
loading or call without any accident or other extraordinary circumstance
connected with such damage having taken place during the voyage, then the
wages and maintenance of master, officers and crew and fuel and stores
consumed during the extra detention for repairs to damage so discovered
shall not be admissible as general average, even if the repairs are necessary
for the safe prosecution of the voyage.
When the ship is condemned or does not proceed on her original voyage,
wages and maintenance of the master, officers and crew and fuel and stores
consumed shall be admitted as general average only up to the date of the
ship's 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.
Fuel and stores consumed during the extra period of detention shall be
admitted as general average, except such fuel and stores as are consumed
in effecting repairs not allowable in general average.
Port charges incurred during the extra period of detention shall likewise be
admitted as general average except such charges as are incurred solely by
reason of repairs not allowable in general average.
(c) For the purpose of this and the other Rules wages shall include all
payments made to or for the benefit of the master, officers and crew,
whether such payments be imposed by law upon the shipowners or be made
under the terms or articles of employment.
(d) When overtime is paid to the master, officers or crew for maintenance of
the ship or repairs, the cost of which is not allowable in general average,
such overtime shall be allowed in general average only up to the saving in
expense which would have been incurred and admitted as general average,
had such overtime not been incurred.

Rule XII. Damage to cargo in discharging, etc.

Damage to or loss of cargo, fuel or stores caused in the act of handling,
discharging, storing, reloading and stowing shall be made good as general
average, when and only when the cost of those measures respectively is
admitted as general average.

Rule XIII. Deductions from cost of repairs.

Repairs to be allowed in general average shall not be subject to deductions
in respect of 'new for old' where old material or parts are replaced by new
unless the ship is over fifteen years old in which case there shall be a
deduction of one third. The deductions shall be regulated by the age of the
ship from 31 December of the year of completion of construction to the date
of the general average act, except for insulation, life and similar boats,
communications and navigational apparatus and equipment, machinery and
boilers for which the deductions shall be regulated by the age of the
particular parts to which they apply.
The deductions shall be made only from the cost of the new material or
parts when finished and ready to be installed in the ship.
No deduction shall be made in respect of provisions, stores, anchors and
chain cables.
Drydock and slipway dues and costs of shifting the ship shall be allowed in
full.
The costs of cleaning, painting or coating of bottom shall not be allowed in
general average unless the bottom has been painted or coated within the
twelve months preceding the date of the general average act in which case
one half of such costs shall be allowed.

Rule XIV. Temporary repairs.

Where temporary repairs are effected to a ship at a port of loading, call or
refuge, for the common safety, or of damage caused by general average
sacrifice, the cost of such repairs shall be admitted as general average.
Where temporary repairs of accidental damage are effected in order to
enable the adventure to be completed, the cost of such repairs shall be
admitted as general average without regard to the saving, if any, to other
interest, but only up to the saving in expense which would have been
incurred and allowed in general average if such repairs had not been
effected there.
No deductions 'new for old' shall be made from the cost of temporary repairs
allowable as general average.

Rule XV. Loss of freight.

Loss of freight arising from damage to or loss of cargo shall be made good
as general average, either when caused by a general average act, or when
the damage to or loss of cargo is so made good.
Deduction shall be made from the amount of gross freight lost, of the
charges which the owner thereof would have incurred to earn such freight,
but has, in consequence of the sacrifice, not incurred.

Rule XVI. Amount to be made good for cargo lost or damaged by sacrifice.
The amount to be made good as general average for damage to or loss of
cargo sacrificed shall be the loss which has been sustained thereby based on
the value at the time of discharge, ascertained from the commercial invoice
rendered to the receiver or if there is no such invoice from the shipped value
The value at the time of discharge shall include the cost of insurance and
freight except insofar as such freight is at the risk of interests other than the
cargo.
When cargo so damaged is sold and the amount of the damage has not been
otherwise agreed, the loss to be made good in general average shall be the
difference between the net proceeds of sale and the net sound value as
computed in the first paragraph of this Rule.

Rule XVII. Contributory values.

The contribution to a general average shall be made upon the actual net
value of the property at the termination of the adventure except that the
value of cargo shall be the value at the time of discharge, ascertained from
the commercial invoice rendered to the receiver or if there is no such invoice
from the shipped value. The value of the cargo shall include the cost of
insurance and freight unless and insofar as such freight is at the risk of
interests other than the cargo, deducting therefrom any loss or damage
suffered by the cargo prior to or at the time of discharge. The value of the
ship shall be assessed without taking into account the beneficial or
detrimental effect of any demise or time charter-party to which the ship may
be committed.
To these values shall be added the amount made good as general average
for property sacrificed, if not already included, deduction being made from
the freight and passage money at risk of such charges and crew's wages as
would not have been incurred in earning the freight had the ship and cargo
been totally lost at the date of the general average act and have not been
allowed as general average; deduction being also made from the value of
the property of all extra charges incurred in respect thereof subsequently to
the general average act, except such charges as are allowed in general
average.
Where cargo is sold short of destination, however, it shall contribute upon
the actual net proceeds of sale, with the addition of any amount made good
as general average.
Passenger's luggage and personal effects not shipped under bill of lading
shall not contribute in general average.

Rule XVIII. Damage to ship.

The amount to be allowed as general average for damage or loss to the ship,
her machinery and/or gear caused by a general average act shall be as
follows:
(a) When repaired or replaced, The actual reasonable cost of repairing or
replacing such damage or loss subject to deduction in accordance with Rule
XIII;
(b) When not repaired or replaced, The reasonable depreciation arising from
such damage or loss, but not exceeding the estimated cost of repairs. But
where the ship is an actual total loss or when the cost of repairs of the
damage would exceed the value of the ship when repaired, the amount to be
allowed as general average shall be the difference between the estimated
sound value of the ship after deducting therefrom the estimated cost of
repairing damage which is not general average and the value of the ship in
her damaged state which may be measured by the net proceeds of sale, if
any.

Rule XIX. Undeclared or wrongfully declared cargo.

Damage or loss caused to goods loaded without the knowledge of the
shipowner or his agent or to goods willfully misdescribed at time of shipment
shall not be allowed as general average but such goods shall remain liable to
contribute, if saved.
Damage or loss caused to goods which have been wrongfully declared on
shipment at a value which is lower than their real value shall be contributed
for at the declared value, but such goods shall contribute upon their actual
value.

Rule XX. Provision of funds.

A commission of two per cent. of general average disbursements, other than
the wages and maintenance of master, officers and crew and fuel and stores
not replaced during the voyage, shall be allowed in general average, but
when the funds are not provided by any of the contributing interests, the
necessary cost of obtaining the funds required by means of a bottomry bond
or otherwise, or the loss sustained by owners of goods sold for the purpose,
shall be allowed in general average.
The cost of insuring money advanced to pay for general average
disbursements shall also be allowed in general average.

Rule XXI. Interest on losses made good in general average.

Interest shall be allowed on expenditure, sacrifices and allowances charged
to general average at the rate of seven per cent per annum, until the date of
the general average statement, due allowance being made for any interim
reimbursement from the contributory interests or from the general average
deposit fund.

Rule XXII. Treatment of cash deposits.

Where cash deposits have been collected in respect of cargo's liability for
general average, salvage or special charges, such deposits shall be paid
without any delay into a special account in the joint names of a
representative nominated on behalf of the shipowner and a representative
nominated on behalf of the depositors in a bank to be approved by both. The
sum so deposited together with accrued interest, if any, shall be held as
security for payment to the parties entitled thereto of the general average,
salvage or special charges payable by cargo in respect to which the deposits
have been collected. Payments on account of refund of deposits may be
made if certified to in writing by the average adjuster. Such deposits and
payments or refunds shall be without prejudice to the ultimate liability of the
parties.
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