ICS Pushes for Greater Balance in Salvage Rules
At the Comité Maritime International (CMI) Conference, in New York this week, the International Chamber of Shipping (ICS) will be pressing to ensure that the proposed revision of the York Antwerp Rules of General Average delivers a clear improvement on the present system and does not touch on fundamental principles.
‘General Average’ is a method of equitably allocating and spreading the costs of dealing with a maritime casualty among the parties that benefit from the ship and cargo being saved. The York Antwerp Rules set out rules for the distribution of losses and expenses, for example in incidents when cargo is jettisoned in order to save the ship and the remaining cargo. The system helps to avoid delay in the transport of cargo to its final destination and ensures that the costs of doing so are evenly distributed. The CMI, which is the international association of maritime lawyers, is the custodian of the York Antwerp Rules.
Speaking from New York, ICS Legal Director, Kiran Khosla explained: “We want to avoid a repeat of the situation when the rules on General Average were last revised twelve years ago by CMI but without the support of ICS, with the result that most contracts of carriage still incorporate the 1994 version because the 2004 revision is considered unsatisfactory by shipowners.”
ICS has a longstanding role in representing shipowners’ views whenever issues related to General Average are discussed and has been coordinating its position with respect to the CMI review through its Maritime Law and Insurance Committees.
ICS says that the previous revision of the Rules was not acceptable because it did not reflect an equitable balance of interests of all the parties concerned.
“It is fair to say that the 2004 version has failed to gain widespread acceptance or use throughout the maritime industry.” Khosla said.
After nearly four years’ work, the CMI project is now in the concluding stages. ICS notes there has so far been little appetite for a comprehensive overhaul of the present, well-functioning system based on the 1994 Rules. Instead work has been focused on making practical improvements, for example on financial issues (commission, interest, currency of adjustment).
But the review also touches on some areas that have been controversial in the past, including the rules concerning salvage. Changes have been proposed to address the concern of commercial cargo interests that use of the Rules can be costly and, in some cases where there has been a salvage award, unnecessary. This is because the General Average assessment is frequently a duplication of the salvage award, usually with only minor changes due to the different methods of calculating the values of the ship’s cargo which is necessary to ascertain the respective contributions to salvage/general average.
Draft guidelines have also been prepared by CMI to assist Average Adjusters in interpreting the proposed new Rules and the enhanced discretion that would be accorded to them.
Khosla added “The proposed ‘YAR 2016’ must continue to ensure an equitable balance between the interests of all parties in order to achieve consensus and the ultimate use of the revised Rules in commercial contracts of carriage. This is what ICS hopes the CMI will achieve in New York. Remembering what happened in 2004, it is vital that the final outcome is acceptable to all interests if the new Rules are to succeed and enjoy widespread use in practice.”
The CMI Conference meets in New York from 3-6 May.
The CMI holds a Conference every three to four years at which the work of International Working Groups and/or International Sub-Committees is debated and, if appropriate, concluded with a resolution at the plenary session at the end of the Conference.