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Frequently asked questions about general average
What is general average, in one sentence?
It is a mechanism of apportionment, not of liability. Article L. 5133-3 of the French Transport Code defines general average as the extraordinary loss, damage and expenditure incurred for the common and pressing safety of the interests engaged in a maritime adventure, decided by the master. Where he sacrifices part of the cargo or incurs expenditure to save the whole, Article L. 5133-7 makes the ship, the freight and the cargo bear the weight of that sacrifice. Everyone contributes, including the party whose goods arrived intact.
Who decides to declare general average?
The master, and only the master. Article L. 5133-3 attaches the classification to his decision, and Article L. 5133-4 allows only the loss, damage and expenditure that is its direct consequence. Expenditure incurred by the owner ashore, without a decision of the master referable to a common peril, does not meet that condition. A general average declaration issued by an owner is therefore not constitutive: it announces a classification that will have to be established, and that is open to argument.
What must the master do after taking his decision?
Two things, and their absence weakens the whole file. Article R. 5133-1 requires him to enter in the log book, as soon as he is able, the date, time and place of the event, the reasons that determined his decision and the measures he ordered. He must then attest those facts within twenty-four hours of arrival at the first port the vessel reaches. Those papers are the raw material of the classification, and asking for them is the first request to make.
Who has to prove that the classification is justified?
The party claiming it, not the party receiving the demand. Article R. 5133-2 puts it in one sentence: the burden of proving that a loss or expense is to be classified as general average lies on the party claiming it. Rule E of the York-Antwerp Rules adds that the claiming party must give written notice of the loss or expense to the average adjuster and supply supporting evidence. In practice the burden is often reversed, and it needs putting back where it belongs.
Does the freight contribute, and for how much?
Yes, and for a reduced share that accounts sometimes omit. Article L. 5133-8 provides that gross freight and passage money contribute for two thirds of their value, even where they have not yet been earned by the owner. The vessel contributes in proportion to its value at the port where the adventure ends, increased where appropriate by the damage it suffered, and the cargo in proportion to its market value at the port of discharge. Applying the reduction to net freight, or forgetting it, shifts everyone’s share.
What happens if all the interests were totally lost?
There is nothing left to apportion. Article L. 5133-16 states that there is no adjustment at all where the interests engaged in the adventure have been totally lost. The logic of the mechanism requires it: general average redistributes the cost of a sacrifice made to save a whole, and if nothing was saved the sacrifice produced no benefit to share. Contribution demands still issued in that situation have no basis, and the lien over the cargo loses its basis too.
Can a clause in the bill of lading displace French law?
In part only, and the qualification is valuable. Article L. 5133-1 makes the provisions of the chapter applicable in the absence of contrary stipulations of the interested parties, which permits incorporation of the York-Antwerp Rules. But the same article deems unwritten any statement by which the carrier reserves, in a bill of lading, provisions other than those of the chapter. The freedom therefore covers a clear and common choice, not a unilateral reservation slipped into a document of adhesion. The general average clause should be read again before any discussion.
Who appoints the average adjuster if we cannot agree?
The court, on the application of any of the parties. Article R. 5133-3 provides that, absent agreement on the adjustment, one or more average adjusters are appointed, at the request of the most diligent party, by the president of the commercial court or, failing that, of the judicial court of the last port of discharge, and by the president of the court of the vessel’s port of registry where that port lies outside France. Disagreement is therefore not a dead end. It opens a procedure the cargo interest can start itself.
Is the adjustment binding on me if I never accepted it?
No. Article R. 5133-4 provides that an adjustment not accepted amicably by all the interested parties is submitted to the court for approval, on the application of the most diligent party, and that where approval is refused the court appoints new adjusters. An adjustment is therefore a proposed account, not a decision. A reasoned refusal to sign blocks nothing: it triggers a review, and the prospect of a second adjustment drawn up by someone the owner did not choose carries weight in the discussions.
While the guide is on its way, two related analyses are freely available: General average and liability: who contributes and who to pursue and General average: contribution, security and adjustment, what to check before paying.
While the guide is on its way, the related analyses are freely available: General average contribution, security and adjustment, on the account itself and how it is challenged; General average and liability, on who contributes and who to pursue; Average bond and average guarantee, on releasing cargo held against security; What is allowed in general average, and what stays with you, on sorting the items of the account; Time limits and recourse in general average, on the three periods that run in parallel.