General Average in Maritime Transport: Definition, Conditions, and Calculation

Part One: The Concept, Conditions, and Calculation of General Average

Introduction

Maritime transportation has always been exposed to various risks, including fires, storms, collisions, groundings, machinery failures, and other unforeseen incidents. In some emergencies, decisions must be made to save the vessel, its crew, cargo, and the maritime adventure. Such decisions may involve extraordinary expenditures or deliberate sacrifices.

Under these circumstances, one of the most significant principles of maritime law and marine insurance comes into play: General Average (GA).

The fundamental principle of General Average is straightforward: when an extraordinary sacrifice or expenditure is made to preserve property involved in a common maritime adventure from a shared peril, the resulting financial burden should not fall exclusively on one party. Instead, it should be distributed proportionately among the interests benefiting from the successful preservation of the adventure.

What Is General Average?

General Average is a maritime law mechanism under which extraordinary losses or expenses, reasonably and intentionally incurred for the common safety of a vessel, its cargo, and other maritime interests exposed to danger, are apportioned among the contributing interests.

The formal definition is established in Rule A of the York-Antwerp Rules 2016 [1] and Section 66 of the United Kingdom’s Marine Insurance Act 1906 [3]. Its classical common-law formulation can be traced to Birkley v Presgrave (1801) [4]. Iranian Maritime Law, enacted in 1964, also contains provisions concerning General Average [5].

Consider a vessel carrying several cargo consignments that experiences a serious fire during its voyage. To prevent the fire from spreading, the master may be compelled to jettison part of the cargo or employ extraordinary firefighting measures.

In such circumstances, the loss suffered by the cargo deliberately sacrificed to preserve the maritime adventure is not necessarily borne solely by its owner. Provided the requirements of General Average are satisfied, the other contributing interests must share the admissible loss in proportion to their respective contributory values.

The Rationale Behind General Average

The principle of General Average dates back centuries to the early development of maritime commerce, when sea voyages were exposed to substantially greater dangers and prompt decisions by shipmasters were essential to protecting lives, vessels, and cargo.

The underlying rationale was that when one interest was deliberately sacrificed to preserve the common maritime adventure, the financial consequences of that sacrifice should be shared.

This principle enables a vessel’s master to take necessary emergency measures for the common safety without the financial consequences automatically falling on the owner of the property sacrificed.

Conditions Required for General Average

Not every loss or expense arising during a maritime voyage qualifies as General Average. Several fundamental conditions must be satisfied:

1. Existence of a common peril: The vessel, cargo, and other maritime interests must be exposed to a genuine common danger.

2. An extraordinary act: The measure taken must go beyond the ordinary operations of the voyage.

3. Intentional and voluntary action: The sacrifice or expenditure must be deliberately undertaken to preserve the common interests.

4. Reasonableness: The action must be reasonable in light of the circumstances prevailing at the time.

5. Common safety as the objective: The action must be intended to preserve the interests involved in the maritime adventure rather than benefit one party exclusively.

6. Preservation of contributing interests: There must ultimately be interests preserved through the action that can participate in the General Average contribution.

The first five conditions derive from Rule A of the York-Antwerp Rules. The requirement of reasonableness is also reinforced by the Rule Paramount, which provides that no sacrifice or expenditure shall be allowed in General Average unless reasonably made or incurred [1].

Who Declares General Average?

In practice, General Average is generally declared by the shipowner or vessel operator following an emergency.

Once declared, a process begins to identify admissible losses and expenditures and determine the contribution payable by each participating interest.

An independent specialist known as an Average Adjuster is usually appointed to examine the incident, relevant documentation, losses, and expenses.

The Average Adjuster evaluates which items qualify under the applicable contractual provisions and rules and calculates the respective contributions of the maritime interests.

What Are the York-Antwerp Rules?

The York-Antwerp Rules are among the most important internationally recognized frameworks governing the adjustment of General Average.

They provide a relatively harmonized system for determining which sacrifices and expenditures may be admitted in General Average and how contributions should be calculated.

Importantly, the York-Antwerp Rules do not automatically apply to every maritime voyage. Their application generally depends on the terms of the contract of carriage, charterparty, bill of lading, and other relevant contractual documents.

Consequently, careful examination of the transport documentation is essential in every General Average case.

What Expenses May Qualify as General Average?

Depending on the circumstances and applicable rules, several categories of losses and expenditures may qualify, including:

• Extraordinary expenses incurred to save the vessel.

• Emergency towage expenses.

• Certain emergency port charges.

• Cargo discharge and storage expenses under specified circumstances.

• Losses resulting from the deliberate sacrifice of cargo for the common safety.

• Certain extraordinary firefighting expenses.

• Specific salvage expenses and temporary repair costs.

Relevant provisions of the York-Antwerp Rules include Rule I concerning jettison of cargo, Rule III concerning extinguishing fires on board, Rule VI concerning salvage remuneration, Rules X and XI concerning expenses at a port of refuge, and Rule XIV concerning temporary repairs [1].

However, the mere occurrence of such expenses does not automatically make them admissible in General Average. Each item must be examined against the applicable rules and contractual provisions.

General Average vs. Particular Average

An important distinction in marine insurance and maritime transportation is the difference between General Average and Particular Average.

General Average involves an extraordinary sacrifice or expenditure undertaken for the common safety, with admissible amounts apportioned among the contributing maritime interests.

Particular Average, by contrast, refers to a partial loss affecting a specific insured interest that is not a General Average loss. Such a loss is generally borne by the owner of that interest or its insurer, subject to the applicable contract and legal provisions.

The statutory definition of Particular Average is provided in Section 64 of the Marine Insurance Act 1906 [3].

The fundamental distinction is therefore that General Average involves a shared contribution arising from measures undertaken for the common safety, whereas Particular Average generally concerns an individual loss.

The Role of Insurance in General Average

Insurance plays a crucial role in General Average cases.

Following a General Average declaration, a cargo owner may be required to provide financial security for its potential contribution before the cargo can be released.

Depending on the terms and limits of the insurance policy, the cargo insurer may cover the relevant General Average contribution.

Standard Institute Cargo Clauses (A), (B), and (C), 2009 editions, address General Average and salvage charges under Clause 2 [10].

Cargo owners should therefore examine their insurance coverage carefully before shipment.

General Average Bond and General Average Guarantee

Following a General Average declaration, cargo owners may be required to submit documents and security arrangements to guarantee payment of their eventual contributions.

Two important instruments are the General Average Bond and the General Average Guarantee.

These instruments are intended to secure payment of the contribution ultimately established through the General Average adjustment.

In practice, three principal documents are commonly requested:

1. Average Bond: A document signed by the cargo owner undertaking to pay the contribution properly assessed against the cargo.

2. Average Guarantee: A guarantee generally issued by the cargo insurer to secure the cargo’s General Average contribution.

3. Valuation Form: A declaration of cargo value, usually accompanied by the commercial invoice, used to establish the contributory value.

These documents are also identified in the Comité Maritime International’s Guidelines relating to General Average [2].

Practical Example of General Average Calculation

Assume a container vessel is engaged in a voyage involving total saved interests valued at USD 50 million.

During the voyage, a serious fire breaks out. To prevent its spread and save the vessel and remaining cargo, certain goods are deliberately sacrificed, and the vessel is diverted to another port for emergency operations.

Following an examination by the Average Adjuster, assume that the total admissible General Average sacrifices and expenditures amount to USD 5 million.

This USD 5 million is not necessarily payable solely by the owner of the damaged cargo. Instead, the contributing maritime interests, including the vessel and cargo interests, participate according to their respective contributory values.

For example, if a particular cargo consignment represents 10% of the total contributory value, its contribution would, in a simplified calculation, be approximately 10% of the amount to be apportioned.

Under Rule XVII, however, the amount made good in respect of sacrificed property is also added to the contributory values. Therefore, the owner of sacrificed cargo may both receive an allowance for the sacrifice and contribute proportionately to the General Average [1].

Actual adjustments are substantially more complex and require consideration of the final contributory values, admissible expenditures, nature of the losses, cargo valuations, and applicable contractual provisions.

Notable real-world cases include the Maersk Honam fire in 2018, the grounding of Ever Given in the Suez Canal in 2021, and the Dali collision with the Francis Scott Key Bridge in Baltimore in 2024, following which General Average was declared [13].

These incidents illustrate the practical importance of security arrangements and cargo release procedures following major maritime casualties.

Why General Average Matters to Cargo Owners

Cargo owners should not assume that purchasing cargo insurance automatically eliminates all financial obligations arising from General Average.

The extent of insurance protection depends on the policy wording, applicable clauses, insured value, exclusions, and relevant contractual provisions.

Following an incident, prompt coordination with the carrier, Average Adjuster, and insurer is particularly important.

Cargo owners are therefore advised to review their insurance coverage before shipment, examine General Average clauses in transport contracts, maintain accurate shipping documents, and contact their insurers immediately following a declaration.

They should also avoid taking delivery of or transferring cargo without first examining the applicable General Average security requirements.

Another important consideration is whether the casualty resulted from the vessel’s unseaworthiness. In certain circumstances, this may provide cargo interests with a legal defense against contribution, as discussed below.

The Role of Shipping Companies and Shipping Agents

Shipping companies, shipping agents, freight forwarders, and other transport intermediaries play an essential role in coordinating General Average procedures.

Shipping agents should be able to provide cargo interests with accurate information regarding the vessel’s condition, port arrangements, cargo status, required documentation, and release procedures.

Effective coordination among shipowners, charterers, insurers, Average Adjusters, ports, and cargo owners can reduce delays and prevent further disputes.

Does Every Major Maritime Casualty Result in General Average?

No. The severity of an incident alone does not establish General Average.

A vessel may suffer extensive damage without the incident meeting the legal requirements for General Average.

The relevant questions include whether a common peril existed, whether an extraordinary measure was taken, whether that measure was intended for the common safety, whether it was reasonable, and whether the resulting losses or expenses are admissible under the applicable rules and contracts.

Fault and Cargo Owners’ Defenses Under Rule D

Rule D of the York-Antwerp Rules provides that rights to General Average contribution are not affected merely because the event giving rise to the sacrifice or expenditure was caused by the fault of one of the parties to the maritime adventure.

However, the rule preserves the rights and defenses available against the party at fault [1].

In practical terms, if a casualty results from the vessel’s unseaworthiness and the carrier has failed to exercise due diligence as required under Article III(1) of the Hague Rules, the carrier’s actionable fault may provide cargo interests with a defense against General Average contribution [6][8].

By contrast, where the casualty arises from a navigational or ship-management error falling within the carrier’s exemption under Article IV(2)(a) of the Hague Rules, cargo interests may remain liable to contribute [6].

A significant judicial precedent is The CMA CGM Libra.

In 2011, the vessel grounded near Xiamen following deficiencies in its passage plan. In 2021, the United Kingdom Supreme Court held that the defective passage plan rendered the vessel unseaworthy and upheld the position that cargo interests were not required to contribute to the General Average [7].

As a practical precaution, cargo owners providing a bond or guarantee to obtain cargo release should preserve their rights and defenses, including by acting without prejudice to their legal position, while investigating the cause of the casualty through their insurers or legal advisers.

The Importance of General Average in International Trade

General Average is not merely a technical principle of maritime law. It can directly affect international trade and supply-chain operations.

A maritime casualty may cause cargo to remain detained at a port, require additional documentation, and oblige cargo owners to provide security before obtaining release.

These circumstances can affect delivery schedules, storage costs, production operations, and contractual obligations between buyers and sellers.

Understanding General Average is therefore essential for shipping companies, freight forwarders, cargo owners, traders, and marine insurers.

Part Two: General Average in Wartime: Can War-Related Losses Qualify?

One of the most important questions in maritime transportation concerns whether damage sustained by a vessel during war, armed conflict, or an attack involving missiles, mines, torpedoes, or other weapons of war can qualify as General Average.

Answering this question requires a distinction between two fundamentally different categories: losses directly caused by the hostile event itself and extraordinary sacrifices or expenditures deliberately and reasonably undertaken after that event to preserve the vessel, cargo, and other maritime interests.

This distinction is essential in both maritime law and marine insurance.

1. Direct War Damage Does Not Necessarily Constitute General Average

Consider a merchant vessel transiting a conflict zone that is struck by an enemy missile, causing damage to its hull and the destruction of part of its cargo.

The fact that the vessel and cargo are involved in the same maritime adventure does not automatically make the resulting damage General Average.

Under Rule A of the York-Antwerp Rules, a General Average act requires an extraordinary sacrifice or expenditure intentionally and reasonably made or incurred for the common safety [1].

Furthermore, Rule C generally limits General Average allowances to losses and expenses that are the direct consequence of a General Average act.

Consequently, damage caused directly by a missile strike, without a qualifying extraordinary measure undertaken for the common safety, cannot be treated as General Average merely because the incident endangered multiple maritime interests.

2. Emergency Measures Taken to Save the Vessel May Qualify

The situation changes when, following a hostile attack, the vessel and cargo face a common peril and extraordinary measures are undertaken to preserve them.

For example, a missile strike may cause a fire on board. To prevent the vessel from sinking and protect the remaining cargo, the master may decide to:

• Jettison part of the cargo.

• Intentionally beach or ground the vessel.

• Arrange emergency towage.

• Incur extraordinary firefighting or salvage expenses.

• Divert the vessel to a port of refuge.

Such measures may qualify as General Average if the applicable legal and contractual requirements are satisfied.

The relevant York-Antwerp provisions include Rule A, Rule I concerning jettison, Rule III concerning firefighting, Rule V concerning voluntary stranding, and Rules X and XI concerning expenses associated with a port of refuge [1].

3. Practical Example: A Missile Attack on a Container Vessel

Assume that a container vessel is struck by a missile during an armed conflict.

The attack damages the vessel’s propulsion machinery, ignites part of the cargo, causes flooding in a cargo hold, and places the vessel at risk of sinking.

The damage directly resulting from the missile strike does not, by itself, constitute General Average.

However, if extraordinary measures are subsequently undertaken to preserve the common maritime adventure, such as towing the vessel to a safe port and incurring emergency salvage expenses, qualifying expenditures may be admitted in General Average.

In other words, the initial peril may originate from an act of war, but that circumstance does not necessarily prevent a subsequent qualifying General Average act.

4. The Difference Between War Damage and General Average

Rule C of the York-Antwerp Rules excludes losses arising merely from delay and other indirect losses from General Average [1].

5. The Critical Role of War Risk Insurance

A distinction must be made between whether an expenditure qualifies as General Average under maritime law and whether it is covered by a particular insurance policy.

A General Average allowance does not automatically mean that every insurance policy will respond to the resulting contribution.

War risks are generally excluded from standard marine cargo insurance under Clause 6 of the Institute Cargo Clauses (A), 2009 [10].

Coverage for such risks may require the Institute War Clauses (Cargo) or equivalent war risk insurance.

The Institute War Clauses (Cargo) provide coverage, subject to their terms and exclusions, for specified risks such as war, civil war, hostile acts, certain seizures, and certain abandoned weapons of war.

Clause 2 also addresses General Average and salvage charges incurred to avoid or in connection with the avoidance of losses arising from insured war risks [11].

However, the duration of war risk coverage is generally restricted, particularly in relation to the period during which cargo remains on board the vessel.

Two separate questions must therefore be considered: Does the loss or expenditure qualify as General Average under maritime law? Does the relevant insurance policy cover that General Average contribution or the underlying war-related loss?

The answers are not necessarily identical.

6. The Importance of Contracts of Carriage and Bills of Lading

Every General Average case requires careful examination of the contract of carriage, charterparty, and bill of lading.

Although the York-Antwerp Rules are widely incorporated into maritime transport contracts, the applicable edition depends on the contractual wording.

The 2016 edition was adopted by the Comité Maritime International at its New York conference and is the latest edition identified in the source material [14].

Earlier editions, including those of 1974, 1994, and 2004, remain referenced in various shipping contracts.

In The Polar case, five bills of lading referred to the 1974 York-Antwerp Rules, while another referred to the 1994 edition [9].

Accordingly, a case cannot be assessed solely by reference to the expressions “General Average” or “War Risk.” The governing contractual provisions must be examined.

7. A More Complex Wartime Scenario

Assume that a vessel is attacked in a conflict zone and sustains hull damage.

Although the vessel remains afloat, its condition is dangerous. The master decides to discharge part of the cargo, divert to a safe port, employ emergency tugs, and incur extraordinary firefighting and repair expenses.

In this situation, the direct physical damage caused by the missile may constitute war damage.

By contrast, qualifying losses and expenditures resulting from deliberate and reasonable measures undertaken for the common safety may constitute General Average.

This distinction is particularly important for cargo owners, freight forwarders, shipping companies, and insurers operating in conflict-affected maritime regions.

8. What Happens If a Vessel Sinks Because of War?

If a vessel sinks directly as a result of a hostile attack and no qualifying extraordinary measure has been undertaken for the common safety, the sinking itself does not establish General Average.

However, if qualifying General Average acts occurred before the vessel sank, the resulting sacrifices or expenditures may require examination under the applicable rules.

The existence of contributing interests is particularly important.

If the vessel and all cargo are completely lost, no surviving contributory interests remain against which an ordinary General Average adjustment can practically be apportioned.

9. Judicial Precedent: The Polar Case, UK Supreme Court, 2024

One of the most significant recent judgments concerning the relationship between war risk insurance and General Average is Herculito Maritime Ltd v Gunvor International BV (The Polar) [2024] UKSC 2 [9].

In 2010, the vessel Polar was hijacked by Somali pirates in the Gulf of Aden.

Following payment of a ransom, the shipowner declared General Average.

Cargo interests argued that because the charterer had paid additional war risk and piracy insurance premiums under the charterparty, the shipowner should seek recovery exclusively from its insurers rather than demand General Average contributions from cargo interests.

The United Kingdom Supreme Court rejected that argument and held that the cargo interests remained liable for their General Average contributions relating to the ransom.

The practical implication is significant: payment of additional war risk insurance premiums by a charterer does not automatically exempt cargo owners from General Average liability.

If contracting parties intend war-related risks to be addressed exclusively through a joint insurance arrangement, that intention must be clearly reflected in their contractual provisions.

10. Conclusion of Part Two

War or military attacks do not automatically give rise to General Average.

Nevertheless, where a war-related peril exposes the vessel and cargo to a common danger, an extraordinary sacrifice or expenditure intentionally and reasonably undertaken for their preservation may qualify as General Average under the applicable rules and contracts.

From an insurance perspective, War Risk Coverage and General Average Coverage must be examined separately.

The existence of General Average coverage under an ordinary marine insurance policy does not necessarily establish coverage for war-related losses.

Part Three: What Happens to Uninsured Cargo Owners When General Average Is Declared?

One of the most consequential issues following a General Average declaration concerns cargo that is not covered by marine cargo insurance.

Many cargo owners assume that if their goods are uninsured, they will simply bear any physical damage to their own cargo and will have no further obligations.

This assumption is incorrect.

General Average does not concern only the physical loss of an individual consignment. Where a qualifying General Average act has occurred, the participating maritime interests may be required to contribute to the resulting admissible sacrifices and expenditures.

Under Rule A of the York-Antwerp Rules, General Average arises when an extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety of property involved in a common maritime adventure [1].

1. Lack of Insurance Does Not Exempt Cargo Owners from General Average

Consider a vessel carrying 500 containers that experiences a serious casualty.

To preserve the vessel and its cargo, certain goods are sacrificed, and extraordinary expenses are incurred for emergency towage, port refuge, discharge, and salvage operations.

Following an adjustment, the Average Adjuster determines that certain losses and expenditures are admissible in General Average.

In these circumstances, an uninsured cargo owner may still be required to contribute.

The absence of cargo insurance does not eliminate General Average liability. It means that the cargo owner may have to arrange the necessary security and meet the financial obligation personally.

The basis of General Average contribution is the interest in the maritime adventure and the applicable rules, rather than the mere existence of an insurance policy.

This principle is reflected in Section 66 of the Marine Insurance Act 1906 and Rule A of the York-Antwerp Rules [1][3].

2. The Main Challenge for Uninsured Cargo Owners: Providing Security

One of the most serious practical difficulties for uninsured cargo owners arises when they attempt to obtain release of their goods.

Following a General Average declaration, the shipowner or its representatives may require an Average Bond and suitable financial security.

Where cargo is insured, the insurer may provide an Average Guarantee securing the cargo’s potential contribution.

For uninsured cargo, no such insurer is available.

Consequently, the cargo owner may need to provide security personally, arrange a cash deposit, obtain a bank guarantee, or negotiate another acceptable financial arrangement with the shipowner and Average Adjuster.

The CMI Guidelines relating to General Average identify the Average Bond and Average Guarantee as principal security documents [2].

Cash deposits are commonly held in a joint account in the names of the shipowner and Average Adjuster, and the cargo owner should retain documentary evidence of payment.

3. Cargo May Not Be Released Until Security Is Provided

This issue can have significant commercial consequences.

Assume a cargo consignment valued at USD 2 million is detained at a port of refuge following a General Average declaration.

The cargo owner may be required to satisfy General Average security requirements before obtaining delivery.

If the cargo is insured, the insurer may facilitate the provision of the necessary guarantee.

If the cargo is uninsured, the owner must arrange an acceptable form of financial security independently.

This can create additional costs, administrative difficulties, and substantial delays in cargo release.

Maersk has explained that uninsured cargo owners may need to arrange their own letters of guarantee, potentially involving considerable expense and obligations that may remain in force for several years in complex cases [12].

The legal basis for withholding delivery may include the shipowner’s lien over cargo as security for General Average contributions.

4. Must an Uninsured Cargo Owner Pay the Entire General Average Loss?

No.

An uninsured cargo owner is not automatically responsible for the entire General Average amount.

Where the cargo is a contributing interest, the owner is generally responsible for the contribution attributable to that cargo, calculated according to its contributory value and the applicable adjustment.

Consider the following simplified example:

In this simplified example, the individual consignment represents 2% of the total contributory value.

Its approximate General Average contribution would therefore be:

This is an illustrative calculation only.

In an actual adjustment, contributory values and admissible items must be determined under the applicable York-Antwerp Rules, particularly Rule XVII, the contract of carriage, and the circumstances of the case.

Under Rule XVII, the amount made good for sacrificed property is also included in the contributory values. Consequently, the actual contribution percentage may differ from this simplified illustration.

The important point is that a cargo owner may receive goods in sound condition and nevertheless be required to pay a General Average contribution.

5. The Difference Between Saved Cargo and Sacrificed Cargo

General Average distinguishes between two categories of cargo.

Saved cargo: Goods preserved during the casualty may be required to contribute to the General Average adjustment, even if they have sustained no physical damage.

Sacrificed cargo: Goods deliberately sacrificed for the common safety may qualify for a General Average allowance if the sacrifice satisfies the applicable requirements.

Rule XVI of the York-Antwerp Rules addresses the amount to be allowed for cargo lost or damaged by General Average sacrifice, with valuation generally based on the value at the time of discharge, as determined from the commercial invoice rendered to the receiver [1].

A cargo owner may therefore be entitled to receive an allowance for sacrificed goods while also being required to contribute proportionately to the General Average.

6. What If Uninsured Cargo Is Itself Sacrificed?

This situation can create substantial financial exposure.

Assume an uninsured cargo consignment is valued at USD 1 million.

During an emergency, part of the cargo is deliberately jettisoned to preserve the vessel and remaining goods, including the uninsured consignment.

If the sacrifice is admitted in General Average, the cargo owner may be entitled to an allowance for the qualifying loss.

However, this does not necessarily mean that the owner will automatically recover the full commercial value of the cargo.

The amount recoverable depends on the applicable valuation provisions, particularly Rule XVI, and the relevant circumstances.

The cargo owner must also submit the necessary claim documentation to the Average Adjuster within the applicable time limits under Rule E [1].

Accordingly, even where an uninsured cargo owner may recover an amount through General Average, the absence of insurance can still create substantial financial risk.

7. War-Related Casualties Make the Situation More Complex

Where a casualty arises from war, missile attacks, naval mines, or other hostile activities, the position becomes more complicated.

Two separate issues must be examined.

First, whether the particular loss or expenditure qualifies as General Average under the applicable rules.

Second, whether the relevant insurance policy covers the war-related peril and any associated General Average contribution.

For uninsured cargo owners, the second issue presents a particular challenge because there is no cargo insurer to provide protection against otherwise insurable losses.

The Polar judgment further demonstrates that payment of additional war risk premiums by a charterer does not automatically relieve cargo interests of their General Average obligations [9].

8. Why Marine Cargo Insurance Is Essential

Marine cargo insurance should not be regarded solely as protection against physical loss or damage.

Appropriate insurance may also protect cargo owners against General Average liabilities and facilitate the provision of security following a casualty.

Before shipment, cargo owners should therefore establish whether their policy includes General Average coverage under the Institute Cargo Clauses, whether war risks are covered under the Institute War Clauses or equivalent provisions, whether salvage charges are insured, and what security arrangements the insurer will provide following a General Average declaration.

These questions are especially important for shipments passing through conflict zones or maritime areas exposed to elevated security risks.

9. The Role of the Average Adjuster

The Average Adjuster plays a central role in determining admissible General Average losses and expenditures and calculating contributions.

Under Rule E of the York-Antwerp Rules, the party claiming an allowance bears the burden of proving that the claimed loss or expenditure is properly allowable in General Average.

The parties must also provide relevant documentation concerning the values of their interests and the losses claimed [1].

Important time limits apply.

Under Rule E, parties are generally required to notify the Average Adjuster in writing of their claims within 12 months of the termination of the common maritime adventure, with supporting evidence and contributory values to be supplied within the periods specified by the rule.

Rule XXIII of the 2016 York-Antwerp Rules also establishes time limits for General Average claims, including a one-year period following the issuance of the adjustment and an ultimate six-year period following termination of the common maritime adventure [1].

Uninsured cargo owners must therefore maintain and submit relevant shipping documents, commercial invoices, cargo valuations, and other evidence requested by the Average Adjuster.

10. Practical Scenario

Assume a container vessel is involved in a maritime adventure with interests valued at USD 100 million.

Following a serious casualty, extraordinary measures are undertaken to preserve the vessel and cargo.

The resulting losses and expenditures are as follows:

Assume the Average Adjuster determines that the full USD 10 million is admissible in General Average.

A cargo owner whose goods are valued at USD 2 million cannot avoid contribution merely because the cargo is uninsured.

The owner may still be required to contribute and provide suitable security before obtaining release of the goods.

With appropriate insurance, the insurer may assist in providing security and paying covered contributions.

Without insurance, the cargo owner must personally manage the financial exposure.

An important exception may arise where the casualty resulted from the vessel’s unseaworthiness and the carrier’s failure to exercise due diligence.

In such circumstances, cargo interests, whether insured or uninsured, may have a defense against contribution under Rule D and the principles established in The CMA CGM Libra [7].

Final Conclusion

General Average is one of the oldest and most significant principles of maritime law. Its purpose is to establish an equitable allocation of extraordinary sacrifices and expenditures among the interests involved in a common maritime adventure.

Where a reasonable and extraordinary sacrifice or expenditure is deliberately undertaken for the common safety, the financial consequences should not be borne exclusively by one party. Instead, admissible amounts are apportioned among the contributing interests in accordance with the applicable rules and contractual provisions.

This principle remains relevant in complex maritime emergencies, including fires, groundings, salvage operations, military attacks, and casualties occurring in conflict zones.

However, determining whether a particular loss or expenditure qualifies as General Average requires careful consideration of the circumstances, contractual documentation, applicable rules, and supporting evidence.

An especially important distinction concerns direct war damage.

Physical losses directly caused by a hostile attack are not necessarily General Average. Nevertheless, extraordinary sacrifices or expenditures subsequently undertaken for the common safety may qualify if the relevant legal requirements are satisfied.

Cargo owners must also recognize that the absence of marine cargo insurance does not automatically exempt them from General Average contributions.

Following a declaration, an uninsured cargo owner may be required to provide financial security to obtain delivery and subsequently pay the contribution established by the adjustment.

Appropriate insurance can significantly reduce both financial exposure and the practical difficulties associated with providing security.

At the same time, cargo owners’ obligations are not absolute.

Where a casualty results from unseaworthiness attributable to the carrier’s failure to exercise due diligence, the cargo owner may have a valid defense against General Average contribution under Rule D and the judicial principles illustrated by The CMA CGM Libra.

Providing security to obtain cargo release should therefore not automatically be treated as an unconditional acceptance of liability.

From a broader commercial perspective, marine cargo insurance should be regarded as an integral component of financial and operational risk management rather than merely a mechanism for compensating physical cargo damage.

For trading companies, cargo owners, freight forwarders, shipping operators, and other maritime stakeholders, careful examination of General Average, salvage, marine insurance, and particularly war risk coverage before the commencement of a voyage can help prevent substantial and unexpected financial liabilities.

Ultimately, the central principle of General Average can be summarized as follows:

When an extraordinary sacrifice or expenditure is reasonably undertaken for the common safety of a maritime adventure, the resulting financial burden is shared among the contributing interests under the applicable rules and contracts. Appropriate insurance can make the difference between a manageable financial obligation and a serious financial crisis for a cargo owner.

References

[1] Comité Maritime International (CMI), York-Antwerp Rules 2016, Rule of Interpretation, Rule Paramount, Lettered Rules A–G, and Numbered Rules I, III, V, VI, X, XI, XIV, XVI, XVII, and XXIII.

[2] Comité Maritime International (CMI), Guidelines Relating to General Average (2016).

[3] Marine Insurance Act 1906 (United Kingdom), Sections 64 and 66.

[4] Birkley v Presgrave (1801) 1 East 220.

[5] Iranian Maritime Law, enacted in 1964 (1343 SH), provisions concerning General Average. Specific article numbers require verification against the official statutory text.

[6] Hague Rules 1924 / Hague-Visby Rules 1968, Article III(1) and Article IV(2)(a).

[7] Alize 1954 v Allianz Elementar Versicherungs AG (The CMA CGM Libra) [2021] UKSC 51. Case commentary

[8] Goulandris Brothers Ltd v B Goldman & Sons Ltd [1958] 1 QB 74.

[9] Herculito Maritime Ltd v Gunvor International BV (The Polar) [2024] UKSC 2. UK Supreme Court judgment

[10] Institute Cargo Clauses (A), 1 January 2009, Clause 2 (General Average) and Clause 6 (War Exclusion).

[11] Institute War Clauses (Cargo), 1 January 2009, Clause 2 (General Average).

[12] Maersk, What Is a General Average? Maersk guidance

[13] MSC, Francis Scott Key Bridge Allision — M/V DALI General Average Declaration (April 2024). MSC customer advisory

[14] London P&I Club, General Average: York-Antwerp Rules (YAR) 2016 Adopted by the CMI, 21 July 2016. London P&I Club article