General Average

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Payments guarantees and general average adjustment.

Declaration of general average is not sufficient for the recognition of the accident as general average and distribution of expenses between the parties of maritime venture. As stated in Rule E of the York-Antwerp Rules - the party requesting the compensation of expenses as per general average should prove the fact that certain expenses are subject to recognition as general average.

Such party is the one declaring the general average, most commonly the ship owner.

The timely compensation depends on the means of security of payments. The payments are secured before the issuance of documents confirming the average disbursements.
The party that suffered losses should receive the securities.
The payments may be secured by monetary or capital assets, property that are the guarantee of fulfillment of liability. In case of failure the security becomes property of creditor.

The party of maritime venture should provide required security and average bond as per bill of lading clause.

The securities may be provided as average bond, deposit, bank guarantee, insurance company or P & I Club guarantee.

Thus the party declaring general average may request the appropriate securities to be produced before the recognition of the accident as general average, distribution of losses, adjustment of average. Generally, the carrier (ship owner) does not release the cargo to the consignee prior to the issuance of required documents.
As mentioned the average disbursements are distributed between the vessel, cargo and freight in proportion of costs thereof. The distribution is made by the average adjuster.
The average adjuster states the proportions of amounts of disbursements that are payable by the ship owner, owner of carried cargo and the payer of freight. The fact of general average is also confirmed by the adjuster.

The average statement includes the thorough description of general average and distribution of disbursements, its therefore a document that confirms the fact of general average and the liabilities of all parties of marine venture.

The statement is issued for each party involved and one original is kept in the adjuster's records. The valid average statement undisputed or left valid by the court after dispute with the presence of required legal note shall be voluntary fulfilled by all parties in accordance with average bonds.

In case of failure to effect the payment the party is enforced to fulfill liability or the amount is covered by the produced security.

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