General Average

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GENERAL
AVERAGE
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De Lege Rhodia di Iactu - The Rhodian Law of Jettison
“Lege Rhodia cavetur ut si levandae navis gratia

jactus mercum factus est, omnium contributione
sarciatur guod pro omnibus datum est.”
“ The Rhodian Law decrees that if in order to

lighten a ship merchandise has been thrown
overboard, that which has been given for all should
be replaced by the contribution of all.”
A SIMPLE GENERAL AVERAGE
1. A ship loaded with five shipments of cargo goes

aground.
2. The Master takes soundings round the ship, looks at
the sky, and announces:
• that there is a bad storm brewing
• the only way to refloat is to jettison cargo
3. If the ship isn’t refloated she will almost certainly
break up in the storm.
4. Shipment 4, being at the top of the hold, and
therefore most easily accessible, is jettisoned.
5. The ship floats and completes her voyage and the
remaining shipments are safely delivered.
ADJUSTMENT OF GENERAL AVERAGE
Facts – the ship was aground and a storm was approaching. In

the absence of any action, it is virtually certain both ship and
cargo would have been lost.
Allowance in General Average - Sacrifice of cargo shipment 4.

Estimated market value fixed by reference to market price of
shipment 5, (which happens to be virtually identical cargo)
……………...........................……………..£5,000
Apportionment of General Average
Contributing Interest Contributory Value Will pay
Ship £ 50,000 £2,500
Cargo 1 10,000 500
Cargo 2 17,500 875
Cargo 3 12,500 625
Cargo 4 5,000 250
Cargo 5 5,000 250
£100,000 £5,000
Balance and Settlement
Ship will pay £ 2,500
Cargo 1 will pay 500
Balance to pay £ 4,750
Cargo 4 will receive £ 5,000
Less his contribution 250

ESSENTIALS OF A GENERAL
AVERAGE STATEMENT
1. Documentary evidence to show that a general average situation
has arisen. This will normally include deck logs for the whole
voyage from commencement of first loading to completion of
last discharge.
2. Survey reports and other evidence in support of or explaining
the general average allowances made in the adjustment.
3. A column of general average allowances, showing the sacrifices
and expenditure to the credit of the parties.
4. An apportionment of general average, listing all the
contributing interests with their values and the contributions
due, and apportioning the total of the allowances over the
values.
5. A balance explaining how the money has to move between the
parties.
Lord Denning explained the principle of
general average very clearly in the
introduction of his judgement in Australian
Coastal Shipping v. Green (1971). He said:
“[general average] arises when a ship, laden with
cargo, is in peril on the sea, such peril indeed that the
whole adventure, both ship and cargo, is in danger of
being lost. If the master then, for the sake of all,
throws overboard some of the cargo, so as to lighten
the ship, it is unjust that the owner of the goods so
jettisoned should be left to bear all the loss of it
himself. He is entitled to a contribution from the
shipowner and the other cargo owners in proportion
to their interests.
Likewise, if the master, for the sake of all, at the height
of a storm, cuts away part of the ship’s tackle; or cuts
away a mast, or having sprung a leak, puts into a port
of refuge for repairs and spends money on them, it is
unfair that the loss should fall on the shipowner alone.
He is entitled to contribution from the cargo owners for
the loss or expenditure to which he has been put.
In all such cases the act done by the master is call a

“general average act”: and the loss incurred is called a
“general average loss”.
General Average Act
• The general average act is what sets the general
average principle in motion and all rights and
liabilities in general average spring from this act.
• A general average act might be making a general
average sacrifice, such as we have just considered, or
incurring general average expenditure.
• It is fairly clear in this example that both ship and
cargo are in danger of being lost. The principle of
general average depend on the existence of peril, not
on how the ship and cargo got into their position of
peril.
• General average is about situations not causes.
• The question of how the peril arose may be relevant
to the defences of general average claims.
PERIL
The requirement that the ship and cargo must be

in peril applies to all general average situations.
Some of the numbered rules use slightly
different phrases to describe the peril
requirement, but the meaning and effect is the
same in all the rules and the same test can be
applied.
PERIL
The following are the different phrases used:
“for the common safety for the purpose of preserving
from peril” - Rule A, Rule VI.
“for the common safety”
Rules II, V, VII, IX, X(a) and (b), XI(b), XIV
“in a position of peril” - Rule VII
“for the common safety at a time of peril” - Rule IX.
“necessary for the common safety” - Rules X, XI.
1. Some event must have happened which
endangers the whole adventure - e.g. the
ship has gone aground on rocks and there is a
storm approaching.
2. If nothing is done about it there is a real

possibility (N.B. not a certainty) that all will
be lost - e.g. the ship will break up in a
storm; or the ship will drift ashore.
3. Fire – Rule III.

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 in a common maritime
adventure.
General average sacrifices and expenses shall be

borne by the different contributing interests on the
basis hereinafter provided.
Rule A
1. Common maritime adventure - i.e. a ship
plus something
2. Peril to the whole adventure.
3. Voluntary or intentional loss, as opposed to
accidental loss.
4. Extraordinary loss or expenditure.
5. Reasonable.
6. (Success).
Rule G
General average shall be adjusted as regards both
loss and contribution upon the basis of value 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 G
Adventure ends where the ship and the particular
cargo part company.
1. Discharge at the intended port of delivery.
1. Delivery at another port, say as part of a salvage

operation.
1. Agreed termination of voyage.
1. Abandonment of the voyage by the shipowner.

Marine Insurance Act
Section 66.
(4) Subject to any express provision in the policy, where the
assured has incurred a general average expenditure, he may
recover from the insurer in respect of the proportion of the
loss which falls upon him; and, in the case of a general
average sacrifice, he may recover from the insurer in respect
of the whole loss without having enforced his right of
contribution.
(5) Subject to any express provision in the policy, where the
assured has paid, or is liable to pay, a general average
contribution in respect of the subject insured, he may recover
therefore from the insurer.
(6) In the absence of express stipulation, the insurer is not liable
for any general average loss of contribution where the loss
was not incurred for the purpose of avoiding, or in connection
with the avoidance of, a peril insured against.
Institute Cargo Clauses 1.1.82
2. This insurance covers general average and
salvage charges, adjusted or determined
according to the contract of affreightment
and/or the governing law and practice,
incurred to avoid or in connection with the
avoidance of loss from any cause except those
excluded in Clauses 4,5,6 and 7 or elsewhere
in this insurance.

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__________

“Lege Rhodia cavetur ut si levandae navis gratia

“ The Rhodian Law decrees that if in order to

1. A ship loaded with five shipments of cargo goes

Facts – the ship was aground and a storm was approaching. In

Allowance in General Average - Sacrifice of cargo shipment 4.

Balance to pay £ 4,750

Cargo 4 will receive £ 5,000

Less his contribution 250

In all such cases the act done by the master is call a

The requirement that the ship and cargo must be

2. If nothing is done about it there is a real

3. Fire – Rule III.

General average sacrifices and expenses shall be

This rule shall not affect the determination of the

1. Discharge at the intended port of delivery.

1. Delivery at another port, say as part of a salvage

1. Agreed termination of voyage.

1. Abandonment of the voyage by the shipowner.

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