MARITIME LAW: AVERAGES

Prepared for: ASG Marissa B. Dela Cruz - Galandines Prepared by: Fernando, Lara Janolo, Celine Maria Lansangan, Charmaine Martinez, Czarina Date: March 7, 2013

TABLE OF CONTENTS:

TOPIC I. Averages in General II. Simple Average III. General Average IV. Requisites of General Average V. Who Bears General Average VI. Who Is Entitled to Indemnity VII. Apportionment VIII. Proof and Liquidation of Average IX. York-Antwerp Rule of 2004

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AVERAGES IN GENERAL
All extraordinary or accidental expenses which may be incurred during the voyage in order to preserve the vessel, the cargo, or both and including damages or deteriorations which the vessel may suffer from the time it puts to sea from the port of departure until it casts anchor in the port of destination, and those suffered by the merchandise from the time they are loaded in the port of shipment until they are unloaded in the port of their consignment are considered AVERAGES. They are classified as General or Gross Average or Simple or Particular Average. GENERAL vs. SIMPLE AVERAGES General or Gross Average includes all damages and expenses which are deliberately caused in order to save the vessel, its cargo or both at the same time, from real and known risk. It applies to Maritime adventures only (The Star of Hope vs. Annan) It requires that there must be a common danger; that it is for the common safety of all if the vessel or part of the cargo or both is sacrificed deliberately; that from the expenses or damages caused follows the successful saving of the vessel or cargo or both; and that expenses or damages should have been incurred or inflicted after taking proper legal steps and authority. On the other hand, Simple or Particular Average includes 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. Any damage caused not considered general average is a particular average. The owner of the goods that suffered the damage bears the loss (Res perit domino.) If the vessel or goods are hypothecated by a loan on bottomry or respondentia the lender shall also bear the loss in proportion to his interest. SIMPLE OR PARTICULAR AVERAGE Article 809 states that as a general rule, simple or particular averages shall 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, and especially the the losses suffered by the cargo from the time of its embarkation until it is unloaded, either on account of inherent defect of the goods or by reason of an accident of the sea or force majeure, and the expenses incurred to avoid and repair the same, the losses and expenses suffered by the vessel in its hull, rigging, arms, and equipment, for the same causes and reasons, from the time it puts to sea from the port of departure until it anchors and lands in the port of destination, the losses suffered by the merchandise loaded on deck, except in coastwise navigation, if the marine ordinances allow it, the wages and victuals of the crew when the vessel is detained or embargoed by legitimate order or force majeure, if the charter has been contracted for a fixed sum for the voyage, the necessary expenses on arrival at a port, in order to make repairs or secure provisions, the lowest value of the goods sold by the captain in arrivals under stress for the payment of provisions and in order to save the crew, or to meet any other need of the vessel, against which the proper amount shall be charged, the victuals and wages of the crew while the vessel is in quarantine, the loss inflicted upon the vessel or cargo by reason of an impact or collision with another, if it is accidental and unavoidable. If the accident should occur through the fault or negligence of the captain, the latter shall be liable for all the losses caused, and any loss suffered by the cargo through the fault, negligence, or barratry of the captain or of the crew, without prejudice to the right of the owner to recover the corresponding indemnity from the captain, the vessel, and the freightage.

REQUISITES OF GENERAL AVERAGE 1. COMMON DANGER Both the ship and the cargo, after has been loaded, are subject to the same danger called Common 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. 2. DELIBERATE SACRIFICE There must be voluntary sacrifice of a part for the benefit of the whole in order to justify general average contribution. There are 2 Cases of general average even if sacrifice was not made during the voyage. One is where the sinking of the vessel is necessary to extinguish a fire in port, roadstead, creek or bay; and the other is where cargo is transferred to lighten the ship on account of a storm to facilitate entry into a port. In order that the goods jettisoned may be included in the gross average and the owners thereof be entitled to indemnity, it shall be necessary insofar as the cargo is concerned that their existence on board be proven by means of the bill of lading; and with regard to those belonging to the vessel, by means of the inventory prepared before the departure in accordance with the first paragraph of Article 812 (ARTICLE 816). If in lightening a vessel on account of a storm, in order to facilitate its entry into a port or roadstead, part of the cargo should be transferred to lighters or barges and be lost, the owner of said part shall be entitled to indemnity, as if the loss had originated from a gross average, the amount thereof being distributed between the vessel and cargo from which it came. If, on the contrary, the merchandise transferred should be saved and the vessel should be lost, no liability may be demanded of the salvage (ARTICLE 817). If, as a necessary measure to extinguish a fire in a port, roadstead, creek, or bay,it should be decided to sink any vessel, this loss shall be considered gross average, to which the vessels saved shall contribute (ARTICLE 818). 3. SUCCESSFUL SACRIFICE As to the third requisite of general average, it is indispensable that the sacrifice done was successful. Article 860 of the Code of Commerce is pertinent in this instance which provides that: If, notwithstanding the jettison of merchandise, breakage of masts, ropes, and equipment, the vessel should be lost running the same risk, no contribution whatsoever by reason of gross average shall be proper. The owners of the goods saved shall not be liable for the indemnification of those jettisoned, lost, or damaged. This is clearly enunciated by Justice Clifford in the case of The Star of Hope v. Annan (76 U.S., 203), to wit: the attempt so made to avoid the common peril which all those interests were exposed must be to some practical extent successful, for if nothing is saved there cannot be any such contribution in any case. In other words, no general contribution can be claimed if the vessel and other cargo that are sought to be saved were in fact not saved. However, this is not without an exception. If the vessel and cargo sought to be saved were in fact saved from the event that gave rise to the jettison, there will be liability for general average contribution even if the vessel, together with its cargo, will be subsequently lost for some other reason during the voyage. Thus, article 861 of the Code of Commerce provides:

ARTICLE 861. If, after the vessel has been saved from the risk which gave rise to the jettison, it should be lost through another accident taking place during the voyage, the goods saved and existing from the first risk shall continue liable to contribution by reason of the gross average according to their value in the condition in which they may be found, deducting the expenses incurred in saving them. 4. COMPLIANCE WITH LEGAL STEPS The fourth and last requisite of a general average is that the expenses or damages should have been incurred or inflicted after taking proper legal steps and authority. Relevant in this instance is Articles 813 to 815 of the Code of Commerce which specify the proper formalities and legal steps for making the sacrifice. These steps are summarized as follows: Proper Formalities and Legal Steps (Articles 813-815 of the Code of Commerce) 1. There must be a resolution of the captain, adopted after deliberation with the sailing mate and other officers of the vessel, and after hearing the persons interested in the cargo who may be present. If the latter shall object, and the captain and officers or a majority of them, or the captain, if opposed to the majority, should consider certain measures necessary, they may be executed under his responsibility, without prejudice to the right of the shippers to proceed against the captain before the competent judge or court, if they can prove that he acted with malice, lack of skill, or negligence. If the persons interested in the cargo, being on board the vessel, have not been heard, they shall not contribute to the gross average, their share being chargeable against the captain, unless the urgency of the case should be such that the time necessary for previous deliberations was wanting. 2. The resolution adopted to cause the damages which constitute general average must necessarily be entered in the log book, stating the motives and reasons for the dissent, should there be any, and the irresistible and urgent causes which impelled the captain if he acted of his own accord. In the first case the minutes shall be signed by all the persons present who could do so before taking action, if possible; and if not, at the first opportunity. In the second case, it shall be signed by the captain and by the officers of the vessel. In the minutes, and after the resolution, shall be stated in detail all the goods jettisoned, and mention shall be made of the injuries caused to those kept on board. The captain shall be obliged to deliver one copy of these minutes to the maritime judicial authority of the first port he may make, within twenty-four hours after his arrival, and to ratify it immediately under oath. 3. The captain shall supervise the jettison, and shall order the goods cast overboard in the following order: 3.1. Those which are on deck, beginning with those which embarrass the handling of the vessel or damage her, preferring, if possible, the heaviest ones and those of least utility and value. 3.2. Those in the hold, always beginning with those of the greatest weight and smallest value, to the amount and number absolutely indispensable.

EXAMPLES OF GENERAL AVERAGE Article 811 of the Code of Commerce is explicit as to the examples of general averages. Thus, to wit: As a general rule, general or gross averages shall 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, and particularly the following: 1. The goods or cash invested in the redemption of the vessel or of the cargo captured by enemies, privateers, or pirates, and the provisions, wages, and expenses of the vessel detained during the time the settlement or redemption is being made; 2. The goods jettisoned to lighten the vessel, whether they belong to the cargo, to the vessel, or to the crew, and the damage suffered through said act by the goods which are kept on board; 3. The cables and masts which are cut or rendered useless, the anchors and the chains which are abandoned, in order to save the cargo, the vessel, or both; 4. The expenses of removing or transferring a portion of the cargo in order to lighten the vessel and place it in condition to enter a port or roadstead, and the damage resulting therefrom to the goods removed or transferred; 5. The damage suffered by the goods of the cargo by the opening made in the vessel in order to drain it and prevent its sinking; 6. The expenses caused in order to float a vessel intentionally stranded for the purpose of saving it; 7. The damage caused to the vessel which had to be opened, scuttled or broken in order to save the cargo; 8. The expenses for the treatment and subsistence of the members of the crew who may have been wounded or crippled in defending or saving the vessel; 9. The wages of any member of the crew held as hostage by enemies, privateers, or pirates, and the necessary expenses which he may incur in his imprisonment, until he is returned to the vessel or to his domicile, should he prefer it; 10. The wages and victuals of the crew of a vessel chartered by the month, during the time that it is embargoed or detained by force majeure or by order of the government, or in order to repair the damage caused for the common benefit; 11. The depreciation resulting in the value of the goods sold at arrival under stress in order to repair the vessel by reason of gross average; 12. The expenses of the liquidation of the average. WHO BEARS GENERAL AVERAGE
1. OWNERS OF THE VESSEL AND THE CARGO

The owners of the vessel and the cargo saved are required to absorb a proportionate share of the loss, in order to compensate the damage or loss caused to save the vessel and/or the cargo therein. In general averages, all participants in the maritime venture contribute to offset the losses incurred. This is supported by Article 812 of the Code of Commerce which reads as follows:

Article 812. In order to satisfy the amount of the gross or general averages, all the persons having an interest in the vessel and cargo therein at the time of the occurrence of the average shall contribute.
2. INSURERS

The insurer may also be held liable for general averages under Article 859 of the Code of Commerce, to wit: the underwriters of the vessel, of the freight, and of the cargo shall be obliged to pay for the indemnity of the gross average in so far as is required of each one of these objects respectively. In connection to this, the Insurance Code of the Philippines provides for the extent of liability of the insurer. Section 164 thereof states that the 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.
3. LENDERS ON BOTTOMRY OR RESPONDENTIA

Article 732 of the Code of Commerce also states 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 was made. WHO IS ENTITLED TO INDEMNITY As a general rule, the owner of the goods which were sacrificed or jettisoned is entitled to receive the general average contribution. However, Rule IX of York-Antwerp Rule provides for goods which are not covered by general average even if they were sacrificed. These are the following: 1. Goods carried on deck. 2. Goods not recorded in the books or records of the vessel. 3. Fuel for the vessel if there is more than sufficient fuel for the voyage. Moreover, there are certain claims for averages which shall not be allowed because of the extent of the claim in relation to the interest of the claimant in the vessel or cargo. This is expressly provided in Article 848 of the Code of Commerce. Thus, Article 848. Claims for averages shall not be admitted if they do not exceed 5 per cent of the interest which the claimant may have in the vessel or cargo if it is gross average, and 1 per cent of the goods damaged if particular average, deducting in both cases the expenses of appraisal, unless there is an agreement to the contrary. An exception to the exception is when the common carriers negligence was the cause of the injury or loss. This was explained in the case of American Home assurance Co. vs. Court of Appeals, et. al. (G.R. No. 94149, May5, 1992) common carriers cannot limit their liability for injury or loss of goods where such injury or loss was caused by its own negligence. Otherwise stated, the law on averages under the Code of Commerce cannot be applied in determining liability where there is negligence.

Under the foregoing principle and in line with the Civil Code's mandatory requirement of extraordinary diligence on common carriers in the car care of goods placed in their stead, it is but reasonable to conclude that the issue of negligence must first be addressed before the proper provisions of the Code of Commerce on the extent of liability may be applied. APPORTIONMENT OF LIABILITY The liability of those who should bear the general averages is stated in Article 858 of the Code of Commerce, i.e. after the amount of the gross average has been determined, it shall be distributed pro rata among the goods which are to cover the same. To determine the share or contribution of each of the parties, the following mechanics is to be used: the value of each contributing interests is multiplied by a fraction which has its numerator the sum of the general average expense and has as its denominator the sum of the contributing values. Thus, the formula is as follows: Interest of party x Total General Average Expense Total Contributing Values

PROOF AND LIQUIDATION OF AVERAGES

RULES 1. Place where proof and liquidation shall be made (Art. 846) General Rule : Those interested in the proof and liquidation of averages may mutually agree and bind themselves at anytime with regard to the liability, liquidation and payment thereof. Rules in Absence of Agreements: 1. Proof of Average shall take place in the port where the repairs are made, should any be necessary, or in the port of loading. 2. Liquidation shall be made in the port of unloading, if it is a Philippine port. 3. If the overage occurred outside of the jurisdictional waters of the Philippines OR the cargo has been sold in a foreign port by reason of an arrival under stress, the liquidation shall be made in the port of arrival. 4. Average occurred near the port of destination so that the port can be made, proceedings in Rules 1 and 2 shall be held here. 2. Liquidation of the averages made privately by virtue of agreement (Art. 847) When Judicial Authority intervened at the request of any of the parties interested who do not agree thereto: All shall be cited and heard should they have not have renounced the right If they are not present or they have no legal representative:

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Liquidation shall be made by the consul in a foreign port or, When there is none, competent judge or court, according to the laws of the country and for the account of the proper party

If representative iswell known in the place where liquidation is made o His Intervention shall be admitted and shall produce legal effects *Applies to both: Even though authorized only by a letter of the ship agent, shipper or the insurer

3. Non-Admission of Claims for Averages (Art. 848) General Rule: If they do not exceed 5% of the interest which the claimant may have in the vessel or in the cargo if it be the gross average and 1% of the goods damaged if particular average, deducting to both expense of appraisal Exception: If there is an agreement to the contrary. 4. Damages, average, loans on bottomry and respondentia and their premiums and any other losses do not earn interest by reason of delay (Art. 849) After the lapse of the period of 3 days - counted from the day on which the liquidation may have been conducted and communicated to the persons interested in the vessel, in the cargo or in both at the same time. 5. A. Requisites for the Application of Art. 850 1. Particular Average 2. Gross Average 3. One and the same voyage 4. Resulting from one or more accidents B. Effects: Expenses and damages of each average shall be separate: 1. In the port where the repairs are made 2. Port where merchandise are discharged, sold or utilized C. Obligation of Captains under Art. 850 Demand expert appraisers, contractors making the repairs, appraising and taking part in the unloading, repair, sale or utilization of the merchandise to set down separately and accurately: a) Expenses and damages pertaining to each average b) Those corresponding to the vessel and to the cargo c) Whether or not there are damages proceeding from inherent defect of the thing and not from accident of the sea d) Amount corresponding to in case there should be expenses common to the different averages and to the vessel and its cargo * Estimated and stated distinctly

LIQUIDATION OF GROSS AVERAGES RULES ON VALUATION OF THE OBJECTS TO CONTRIBUTE TO THE GROSS AVERAGE AND WHICH CONSTITUTE AVERAGE (Art. 854 to 856) 1. The merchandise saved which are to contribute to the payment of the gross average shall be valued at the current price at the port of unloading, deducting the freightage, customs duties, and expenses of unloading, as may appear from a material inspection of the same, without taking the bills of lading into consideration unless there is an agreement to the contrary. 2. If the liquidation is to be made in the port of departure, the value of the merchandise loaded shall be determined by the purchase price, including the expenses until they are placed on board, the insurance premium excluded. 3. If the merchandise should be damaged, they shall be appraised at their true value. 4. If the voyage having been interrupted, the merchandise should have been sold in a foreign port, and the average cannot be estimated, the value of the merchandise in the port of arrival, or the net proceeds obtained at the sale thereof, shall be taken as the contributing capital. 5. Merchandise lost, which constitute the gross average, shall be appraised at the value which merchandise of its kind may have in the port of unloading, provided that its kind and quality appear in the bill of lading; and should they not appear, the value shall be that stated in the invoices of the purchase issued in the port of shipment, adding thereto the expenses and freightage subsequently arising. 6. The masts cut down, the sails, cables, and other equipment of the vessel rendered useless for the purpose of saying it, shall be appraised at the current value, deducting one-third by reason of the difference between new and old. - not made with respect to anchors and chains 7. The vessel shall be appraised at its true value in the condition in which it is found. 8. The freightage shall represent 50% by way of contributing capital 9. The merchandise loaded on the upper deck of the vessel shall contribute to the gross average should they be saved; but there shall be no right to indemnity if they should be lost by reason of having been jettisoned for common safety, except when the marine ordinances allow their shipment in this manner in coastwise navigation. It shall also take place with that which is on board and is not included in the bills of lading or inventories, according to the cases. In any case the shipowner and the captain shall be liable to the shippers for the damages from the jettison, if the storage on the upper deck was made without the consent of the latter. 10. Provisions and munitions of war which the vessel may have on board, and the clothing used by the captain, officers, and crew, shall not contribute to the gross average. 11. The clothing used by the shipper, supercargoes, and passenger who may be on board at the time of the jettison shall also be accepted. 12. Neither shall the goods jettisoned contribute to the payment of the gross averages which may occur to the merchandise saved to a different and subsequent risk. DUTIES OF A LIQUIDATOR (Article 858) 1. Examine the protest of the captain, comparing it if necessary with the logbook, and all the contracts which may have been made among the persons interested in the average, the appraisements, expert examinations, and accounts of repairs made, if as a result of this examination, he should find any defect in the procedure which might injure the rights of the captain, he shall call attention thereof in order that it may be corrected, if possible, and otherwise, he shall include it in the exordial of the liquidation

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2. Thereafter, shall proceed with the distribution of the amount of the average, for which he shall fix: a. He contributing capital, which he shall determine by the value of the cargo, in accordance with the rules established in Article 854 b. That of the vessel in her actual condition according to the statement of experts c. The 50% of the amount of the freightage, deducting the remaining 50% for wages and maintenance of the crew 3. Distribute pro rata among the goods which are to cover the same after the amount of the gross average has been determined ROLE OF THE INSURERS OF THE VESSEL OF THE FREIGHTAGE AND OF THE CARGO (Art. 859) They are obliged to pay for the indemnification of the gross average. RULES ON JETTISON (Art. 860-864) 1. If notwithstanding the jettison of merchandise, breakage of masts, ropes, and equipment, the vessel shall be lost running the same risk, no contribution whatsoever by jettison of gross average shall be proper. The owner of the goods saved shall not be liable for the indemnification of those jettisoned, lost or damaged. 2. If, after the vessel has been saved from the risk which gave rise to the jettison, it should be lost through another accident taking place during the voyage, the goods saved and existing from the first risk shall continue to be liable to contribution by reason of the gross average according to their value in the condition in which they may be found, deducting the expenses incurred in saving them. 3. If, in spite of having saved the vessel and the cargo in consequence of the cutting down of masts or of any other damage deliberately done to the vessel for said purpose, the merchandise should subsequently be lost or stolen, the captain cannot demand of the shippers or consignees that they contribute to the indemnity for the average, unless the loss should occur by reason of an act of the owner or consignee himself. 4. If the owner of the jettisoned goods should recover them after having received the indemnity for gross average, he shall be obliged to return to the captain and to other persons interested in the cargo the amount he may have received, deducting the amount of the damage caused by the jettison and of the expenses incurred in their recovery. The amount returned shall be distributed among the vessel and the persons interested in the cargo in the same proportion in which they contributed to the payment of the average. 5. If the owner of the goods jettisoned should recover them without having demanded any indemnity, he shall not be obliged to contribute to the payment of the gross average which may have been suffered by the rest of the cargo after the jettison. FINALITY OF THE DISTRIBUTION OF GROSS AVERAGE (Art. 865) 1. Until it has been agreed to, or 2. In the absence thereof, until approved by the judge or court after an examination of the liquidation and a hearing of the persons interested who may be present or of their representatives EFFECT IF A PERSON DOES NOT CONTRIBUTE (Art. 867) Goods saved shall be proceeded against, in the request of the captain, until payment has been made from their proceeds

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EFFECT IF PERSON TO RECEIVE GOODS SAVED DOES NOT GIVE SECURITY (Art. 868) Captain may defer the delivery thereof until payment has been made

LIQUIDATION OF ORDINARY AVERAGES The experts whom the court or the person interested may appoint, as the case may be, shall proceed with the examination and appraisement of the averages in the manner prescribed in Article 853 and 854, Rules 2-7, insofar as they are applicable. (Art. 869) LIQUIDATION OF GROSS AVERAGES

Guidelines on Liquidation of Gross Averages: 1. Privately held 2. With consent of all the parties in interest Nota Bene: 1. ARTICLE 851. At the instance of the captain, the adjustment, liquidation, and distribution of gross averages shall be held privately, with the consent of all the parties in interest. For this purpose, within forty-eight hours following the arrival of the vessel at the port, the captain shall convene all the person interested in order that they may decide as to whether the adjustment or liquidation of the gross average is to be made by experts and liquidators appointed by themselves, in which case it shall so done if the interested parties agree. If an agreement is not possible, the captain shall apply to the competent judge or court, who shall be the one in the port where these proceedings are to be held in accordance with the provisions of this code, or to

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the consul of the Republic of the Philippines should there be one, and should there be none, to the local authority when they are to be held in a foreign port. 2. ARTICLE 852. If the captain does not comply with the provisions of the preceding article, the ship agent or the shippers shall demand the liquidation without prejudice to the action they may bring to demand indemnity from him. 3. ARTICLE 853. After the experts have been appointed by the persons interested, or by the court, and after the acceptance, they shall proceed to the examination of the vessel and of the repairs required and to the appraisal of their cost, separating these losses and damages from those arising from the inherent defect of the things. The experts shall also declare whether the repairs may be made immediately, or whether it is necessary to unload the vessel in order to examine and repair it. With regard to the merchandise, if the average should be visible at a mere glance, the examination thereof must be made before they are delivered. Should it not be visible at the time of unloading, said examination may be made after the delivery, provided that it is done within forty-eight hours from the unloading and without prejudice to the other proofs which the experts may deem proper. 4. ARTICLE 857. After the appraisement of the goods saved and of those lost which constitute the gross average, has been concluded by the experts, the repairs, if any, made on the vessel, and in this case, the accounts of the same approved by the persons interested or by the judge or court, the entire record shall be turn over to the liquidator appointed, in order that he may proceed with the distribution of the average. 5. ARTICLE 866. After the liquidation has been approved, it shall be the duty of the captain to collect the amount of the contributions, and he shall be liable to the owners of the goods averaged for the damages they may suffer through his delay or negligence.

YORK-ANTWERP RULES OF 2004

GENERAL AVERAGE ACT 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. GENERAL AVERAGE Only such losses, damages or expenses, which are the direct consequence of the general average act, are considered as general averages. Not General Averages: Losses, damages or expenses incurred 1. In respect of damage to the environment 2. In consequence of the escape 3. In consequence of release of pollutant substances from the property involved in the common maritime adventure 4. Demurrage

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5. Loss of market 6. By reason of delay, whether on the voyage or subsequently 7. Any indirect loss whatsoever COMMON MARITIME ADVENTURE There is a common maritime adventure when one or more vessels are towing or pushing another vessel or vessels, provided that they are all involved in commercial activities and not in a salvage operation. GENERAL AVERAGES vs. NOT GENERAL AVERAGES GENERAL AVERAGE Jettison of cargo NOT GENERAL AVERAGE 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 Smoke or heat of the fire Cutting away wreck or parts of the ship which have been previously carried away or are effectively lost by accident Salvage payments, compensations and remunerations

Extinguishing fire, including beaching and scuttling

Ship is intentionally run on shore for the common safety, whether or not she might have been driven on shore (Voluntary Stranding) Damage caused to any machinery and boilers of a ship which is ashore and in a position of peril, in endeavouring to refloat, when shown to have arisen from an actual intention to float the ship for the common safety at the risk of such 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) Cargo, ship's materials and stores, or any of them, necessarily used for fuel for the common safety (this shall be credited to the estimated cost of the fuel which would otherwise have been consumed in prosecuting the intended voyage) Cost of measures undertaken to prevent or minimize damage to the environment: a. as part of an operation performed for the common safety which, had it been undertaken by a party outside the common maritime adventure, would have entitled such party to a salvage reward b. as a condition of entry into or departure from any port or place c. necessarily in connection with the discharging, storing or reloading of cargo

Damage caused to any machinery and boilers of a ship when afloat

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Gross freight loss (minus) the charges which the owner thereof would have incurred to earn such freight, but has, in consequence of the sacrifice, not incurred Goods loaded without the knowledge of the shipowner or his agent or to goods wilfully misdescribed at time of shipment (but such goods shall remain liable to contribute, if saved); NOTE: 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. Half of the costs of cleaning, painting or coating of bottom (must be done within the twelve months preceding the date of the general average act) ENTERING A PORT OR PLACE OF REFUGE PLACE OF LOADING Expenses in entering if 2 ports for temporary or permanent repairs 2nd port The cost of handling on board or discharging cargo, fuel or stores , 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 (including the cost of storage and the damage to or loss of cargo, fuel or stores in the process) The cost of handling on board or discharging cargo, fuel or stores, when restowage is necessary for common safety. Wages and maintenance of master, officers and crew reasonably incurred and fuel and stores consumed during the prolongation of the voyage Port charges OR RETURNING TO THE SHIPS PORT OR

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, incurred solely for the purpose of restowage due to shifting during the voyage Wages and maintenance of master, officers and crew while the vessel is detained at a port of refuge

EFFECT WHEN ONE OF THE PARTIES IS AT FAULT 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.

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IN THE COMPUTATION OF THE GENERAL AVERAGE A. DEDUCTION FROM COST OF REPAIRS General Rule: 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 Exception: If the ship is over fifteen years old in which case there shall be a deduction of one third. Computation of the age of the Ship: From the 31st 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. B. TEMPORARY REPAIRS Recovery in general average of the cost of temporary repairs of accidental damage at a port of refuge is limited to the amount by which the estimated cost of the permanent repairs at the port of refuge exceeds the sum of the temporary repairs plus the permanent repairs actually carried out. This capping of the amount allowed as temporary repairs has sometimes been referred to as the "Baily" method. C. DAMAGE TO THE SHIP 1. When repaired or replaced: The actual reasonable cost of repairing or replacing such damage or loss, subject to deductions mentioned in the previous number. 2. 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. D. CARGO IS LOST OR DAMAGED BY SACRIFICE The amount to be allowed 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 allowed in general average shall be the difference between the net proceeds of sale and the net sound value CONTRIBUTORY VALUES A. General Rules

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1. The contribution to a general average shall be made upon the actual net values 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. 2. 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. 3. The value of the ship shall be assessed without taking into account the beneficial or detrimental effect of any demise or time charterparty to which the ship may be committed. B. Additions and Deductions To these values shall be added the amount allowed 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 or fall upon the ship by virtue of an award for special compensation under Art. 14 of the International Convention on Salvage, 1989 or under any other provision similar in substance. C. Cargo and Property The cargo and other property shall contribute on the basis of its value upon delivery at original destination unless sold or otherwise disposed of short of that destination, and the ship shall contribute upon its actual net value at the time of completion of discharge of cargo. Where cargo is sold short of destination, however, it shall contribute upon the actual net proceeds of sale, with the addition of any amount allowed as general average. E. No Contributory Values 1. 2. 3. 4. Mails Passengers' luggage Personal effects and Accompanied private motor vehicles

TIME BAR FOR CONTRIBUTIONS TO GENERAL AVERAGE Any rights to general average contribution, including any rights to claim under general average bonds and guarantees, shall be extinguished unless an action is brought by the party claiming such contribution within a period of one year after the date upon which the general average adjustment was issued. However, in no case shall such an action be brought after six years from the date of the termination of the common maritime adventure. These periods may be extended if the parties so agree after the termination of the common maritime adventure.

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