Which York-Antwerp Rules Apply? By Ben Browne – Partner – Thomas Cooper

31/01/2012, ACI

 

There are about 50,000 merchant ships trading internationally and a fair estimate would be that these generate between 1,000 and 1,500 declarations of general average each year.  These declarations result in adjustments which cost hull and cargo insurers many hundreds of millions of dollars so it is in the interests of marine property underwriters that the adjustments are done on the most restricted basis; this will normally mean using the York‑Antwerp Rules 2004.  Because the 2004 Rules are seldom used hull and cargo underwriters worldwide are paying many millions of dollars more in general average each year than they would under the 2004 Rules.  This Article seeks to show that in some cases adjustments done under the York-Antwerp Rules 1974 and 1994 should have been done under the 2004 Rules which could have saved property underwriters significant sums.

 

According to an estimate based on a study of about 2,000 GA adjustments by Matthew Marshall (last updated in 2002), if the York-Antwerp Rules 2004 were universally adopted the amount moved in General Average each year could be reduced by around 17 to 21% as against the 1994 and 1974 Rules.  The main changes are the removal of salvage in most instances from GA, the reduction in the interest rate and the abolition of 2% commission on most disbursements.  The 2004 Rules also introduced a one year time limit for the collection of GA contributions running from the publication of the adjustment and a backstop time limit for the publication of the adjustment of six years from the termination of the voyage.  It is not therefore surprising that many take the view that the choice of Rules is of some importance.

 

The York-Antwerp Rules have to be incorporated into contracts of carriage if they are to apply (unless they are imposed by national law which is quite rare).  Standard form contracts of carriage contain two basic types of incorporation clause.  Before 2004 clauses saying GA would be adjusted “according to York-Antwerp Rules 1994 and any subsequent modification” (GENCON 1994) or something similar were frequently employed.  Since 2004 the simpler and more unambiguous “according to York-Antwerp Rules 1994” has been employed in most BIMCO standard contracts.  Most adjusters take the view that the words “and any subsequent modification thereof” or “amendment thereof” cannot incorporate the 2004 Rules because those Rules are not a “modification” or “amendment” to the 1994 or 1974 Rules.  However there are a number of reasons why this view may not be correct:

 

  • The words used by the Comite Maritime Internationale (“CMI”) when adopting the 2004 Rules referred to them as “amendments which have been made to the York-Antwerp Rules 1994”;

 

  • In the “Marinor” [1996] the English High Court held that the Canadian Carriage of Goods by Sea Act 1993 enacting the Hague Visby Rules was “an amendment” to the earlier Canadian COGSA enacting the Hague Rules;

 

  • In the “Vechscroon” [1982] it was held that the words “the Brussels Convention and any subsequent amendment thereto” incorporated the Hague Visby Rules after they had been promulgated.

 

  • Many of the papers leading up to the CMI’s decision to adopt the 2004 Rules referred to the need for “reforms” or “amendments” to the York-Antwerp Rules 1994;

 

  • The author of the Third Edition of the Voyage Charters considers that the effect of the incorporating words in GENCON 1976 (“and any subsequent modification thereof…”) “is to incorporate the York-Antwerp Rules 2004 in relation to any casualty which arose after the latter Rules were adopted.”

 

In 2005, BIMCO published a bulletin announcing that their standard documents would only refer to the York-Antwerp Rules 1994 and that the words “or any subsequent modification thereto” would no longer be used in the GA clauses in their standard forms.  But despite this many contracts of carriage still use the old wording to incorporate the York-Antwerp Rules.  In these circumstances it seems likely that there have been a number of GA adjustments under the 1974 and 1994 Rules which should in fact have been adjusted under the 2004 Rules.

 

The 2004 Rules were introduced after sustained pressure from marine property insurers and others and the present confusing situation creates contract uncertainty which is anathema to the shipping industry and its insurers.  Recently discussions between the CMI and BIMCO have taken place with a view to amending the York-Antwerp Rules 2004 and promulgating a new York-Antwerp Rules 2012 at the CMI’s Conference in Beijing in October. The proposed amendments will have the effect of  confining re-adjustments of salvage in GA only to cases where the re-adjustment would have an (as yet undefined) substantial  effect and restoring the old Rule XI allowances for crew wages and maintenance while detained at a port of refuge to General Average by reinstating the York Antwerp Rules 1994 wording for Rule XI.

 

The amendment to Rule VI was by far the most important change introduced by the 2004 Rules; it has been estimated that it would have been worth about 10 – 12 % of all sums shifted in GA if implemented in accordance with the 2004 Rules and could have substantially accelerated the production of many adjustments; the reform now being considered will result in a very much smaller saving and will not produce any acceleration in the production of adjustments which re-adjust salvage payments but at least there will be a partial saving. It is estimated the restoration of crew wages and maintenance while detained at a port of refuge to Rule XI will increase the sums shifted in GA by 1 to 2 %. However the other amendments introduced by the 2004 Rules (most significantly the reduction of interest and the abolition of 2% commission on GA disbursements) remain so that the compromise Rules, if introduced, might save marine property insurers around 6 or 7% (at current interest rates) instead of about 16 to 19%. The proposed new Rules will expressly be described as a modification or amendment of previous Rules and so will be incorporated into contracts of carriage on the old BIMCO forms.

 

The amendments now under consideration effectively emasculate the 2004 Rules but are the price which BIMCO’s members are seeking for their agreement to incorporate the new Rules (once promulgated) into their standard forms with a view to achieving greater uniformity across the world in the treatment of general average wordings.


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For more information, please contact:

Ben Browne
Partner
Thomas Cooper
T +44 (0) 20 7481 8851
M +44 (0) 7884 117 986
D +44 (0) 20 7390 2206
ben.browne@thomascooperlaw.com
http://www.thomascooperlaw.com