Average

ship cargo loss contribution freight port charges damage subject particular

AVERAGE, a term used in maritime commerce to signify damages or expenses resulting from the accidents of navigation. Average is either general or particular. General average arises when sacrifices have been made, or expenditures incurred, for the preservation of the ship, cargo, and freight, from some peril of the sea, or from its effects. It implies a subsequent contribution, from all the parties concerned, rateably to the values of their respective interests, to make good the loss thus occasioned. Particular average signifies the damage or partial loss happening to the ship, goods, or freight by some fortuitous or unavoidable accident. It is borne by the parties to whose property the misfortune happens, or by their insurers. The term average originally meant u-hat is now distinguished as general average ; and the expression " particular average," although not strictly accurate, came to be afterwards used for the convenience of distinguishing those damages or partial III. - i9 losses for which no general contribution could be claimed.

Although nothing can be more simple than the fundamental principle of general average, that a loss incurred for the advantage of all the coadventurers should be mado good by them all in equitable proportion to their stakes in the adventure, the application of this principle to the varied and complicated cases which occur in the course of maritime commerce has given rise to many diversities of usage at different periods and in different countries. It is soon discovered that the principle cannot be applied in any settled or consistent manner unless by the aid of rules of a technical and sometimes of a seemingly arbitrary character. The distinctions on which these rules turn are often very refined indeed. This is the chief reason why no real progress has yet been made towards an international system of general average, notwithstanding repeated conferences and other efforts by most competent representatives from different countries, seeking to arrive at a common understanding as a preliminary basis for such a system. A brief summary only can be given here of the rules which have been established in Great Britain by usage, or by legal decisions, in connection with the subject.

All general average losses may be divided into two principal classes - (1), sacrifices of part of the cargo and freight, or of part of the ship, for the general safety ; (2), extraordinary expenditures incurred with the same object. We shall notice these in their order.

When a part of a cargo is thrown overboard (or jettisoned, as it is termed) to save the ship from foundering in a storm, or to float her when stranded, or to facilitate her escape from an enemy, the loss of the goods and of the freight attached to them must be made good by average contribution. But if goods jettisoned have been originally stowed on deck, no contribution can be demanded for them, unless they are so carried according to the common usage and course of trade on the voyage for which they are shipped, or with the consent of all the parties concerned in the ship and cargo.

If, instead of being thrown overboard, the goods are put into boats or lighters, and lost or damaged before reaching the shore, such loss is regarded as a virtual jettison, and gives a claim to average contribution. The same rule applies to damage occasioned by the goods being put ashore on muddy ground, or where they cannot be kept in ordinary safety. But when the goods have been conveyed to a place of ordinary safety, they cease to be at the risk of the general interest ; and should they be damaged there by fire or other accidents the loss must he borne by the individual proprietors, or by their insurers.

Damage done to the cargo by discharging it at a port of refuge in the manner and under the circumstances nstomary at that port, is not allowed as general average. This rule covers the case of wastage, breakage, leakage, .4:c., from handling the goods in the ordinary course of discharging, warehousing, and reshipping.

If goods are thrown overboard from having become, -through heating or other cause peculiar to their own condition, a source of special danger to the whole interest, the loss is not recoverable in general average. So, too, if a cargo is discharged at a port of refuge from damage resulting from its own vice propre, the costs are chargeable to its owners.

The loss of corn, salt, guano, or similar goods, arising from their being pumped up or baled out with the water in the vessel, is not recoverable by average contribution. The damage done to the cargo by means of water thrown down the hatches, or admitted into the ship by scuttling her, for the purpose of extinguishing an accidental fire, was excluded from general average by the usage of Lloyds up till 1873. In that year the courts of Queen's Bench and Exchequer Chamber expressed a strong opinion in connection with the case of Stewart v. the West India and Pacific Steamship Company, that such damage ought to be made good by average contribution. The usage has now been altered accordingly.

The amount of compensation to be made for goods sacrificed by general average acts is determined by the net market price they would have produced on arrival at the port of destination had they not been sacrificed ; but under deduction of the freight attaching to them (which is made good to the shipowners), and of the charges for duties and landing expenses which are saved.

The general average acts next to be considered arc those which involve sacrifices of part of the ship or her materials.

The same principles which regulate the case of goods thrown overboard apply also to the jettison of the ship's chains, anchors, hawsers, spars, boats, or other stores. But if water-casks are stowed on deck, or if chains and hawsers are carried on deck when the vessel is not near the land so as to render it necessary that they should be so carried, the loss arising from the jettison of these articles falls on the shipowner ; and if boats are jettisoned in consequence of their having been broken adrift from their fastenings on deck by the force of the sea, they are excluded from general average, and are charged to particular average on the ship. The damage done to the ship by cutting boles to effect a jettison of the cargo, or to pour down water to a fire, or by scuttling her for that purpose, is allowed as a general average charge. The damage arising from cutting or knocking away a portion of the ship's bulwarks in order to prevent the deck from being flooded in a storm, is compensated in the same manner.

When sails or masts are cut away in order to right a ship which has liven thrown on her beam-ends, or to prevent her from driving on a lee-shore, the loss is made good by average contribution ; but if the object in cutting away a sail or spar be merely to save a mast, the loss is not made good in general average.

It frequently happens that masts or yards are sprung and carried away by the force of the wind, and are left entangled in the rigging, or hanging over the ship's side in what is termed " a state of wreck ; " in these circumstances it becomes necessary to cut them away, with the sails and rigging attached, and to throw the whole overboard, otherwise they would impede the navigation, and endanger the ship and cargo. On this ground it is held by some authorities that the loss caused by the act of cutting them away should be made good by average contribution. But this act is the direct consequence of the previous accident, which places these articles in a situation where it is impossible to save them without imperilling the ship, cargo, and lives. It would not be reasonable to imperil these for such a purpose ; whence it follows that the displaced articles are already virtually lost by means of the original accident, before the loss is actually consummated by cutting them away, This loss is accordingly excluded, by the usage of this country, from average contribution. On the same principle, no contribution can he demanded for any articles which are sacrificed as having themselves become, through previous accident, the immediate cause of danger to the whole interest.

The loss of sails or spars, in consequence of carrying a press of canvas to avoid a lee-shore, or to escape from an enemy, is not the subject of general average in this country ; neither is the damage suffered by the ship from straining, under any such extraordinary press of sail.

When anchors and cables are slipped from in order to work a vessel off a lee-shore, or to avoid collision with another ship, the loss is made good by average contribution ; but if the cable is slipped in order that the vessel may join convoy, or because the anchor has become hooked to some object at the bottom and cannot be raised, the loss is borne by the shipowner.

When sails, ropes, or other materials are cut up and used at Sea for the purpose of stopping leaks or to rig jury-masts, or when the common benefit requires that they should be applied to some purpose for which they were not originally intended, the loss is made good in general average. The same rule applies to the case of hawsers, cables, anchors, sails, or boats, lost or damaged in attempting to force off a stranded vessel from the shore.

The damage sustained in defending a ship against a pirate or an enemy is not the subject of general average in this country ; it is treated as particular average on the ship.

It has been much debated by writers on maritime law, whether the voluntary stranding of a ship, in order to prevent her from foundering, should be treated as a general or as a particular average loss. In the United States it has been settled, by judicial decision, that the loss in question constitutes a general average claim ; but the opposite doctrine is acted upon in the usage of Great Britain, and the point has never been decided by the courts of law. It appears to us that the argument greatly preponderates against the rule adopted in the United States, and in favour of the usage established in this country. The only reason for regarding this loss as the subject of general average is, that it originates in the intentional act of running the ship aground, for the preservation, as far as possible, of the whole interest concerned. But it zan seldom be known beforehand how the different interests a,t stake will be specially affected by the act in question ;'whether, for instance, the damage to the cargo may not be more serious than the damage to the ship, or vice versa. Thus no particular part of the interest can be said to be intentionally sacrificed for the benefit of the whole ; • the intention, indeed, is not to sacrifice any one part, but to place the whole interest in a situation of less peril than it would otherwise have been in. What particular damages may thereafter ensue to either ship or cargo will depend, in each case, on a variety of circumstances entirely accidental in their character, and therefore in no proper sense the subject of previous intention. The same rule, therefore, which excludes from general average accidental damages in all other cases, ought to exclude them in this case also. Moreover, when the alternatives are either that the vessel be left to founder, or that she be run ashore with a chance of preservation, there can really be no room for choice, or,. at all events, the elements of will and intention are entirely subordinate in the part they must play under the pressure of the existing circumstances ; and in this view the stranding is as truly inevitable as if it had been caused by the force of the winds and waves alone.

But, even were these reasons less weighty than it appears they are, a serious practical objection might be urged against the doctrine that voluntary stranding should be a general average loss, on the ground that it would in most eases be impossible to distinguish between the damages received by the ship and cargo prior to the stranding, and those sustained after or in consequence of it. It is needless to remark, that before a ship can be in such imminent danger of foundering as to render it necessary to run her ashore, she must be presumed to have sustained a very considerable amount of damage ; and the probability is, that the cargo also will have suffered to a corresponding extent. Up to this paint these damages are confessedly particular average ; and were it held that the damages after the stranding were the subject of general average, it would, of course, be necessary to distinguish the separate damages that belonged to each. But in every case these different damages would exist in varying proportions, yet always so incorporated together that justice could never have a more perplexing task than that of discriminating between them. No general rule could be applied that would meet the widely different circumstances of each particular case ; and the arbitrary method of adjustment that would alone be possible would doubtless give rise to endless dissatisfaction and dispute. On the ground of expediency, therefore, as well as on that of principle, the usage now established in this country ought to be maintained, notwithstanding the high authorities by whom the opposite practice has been countenanced.

The amount of general average losses on the ship is compensated by allowing to the owners the cost of repairs, or of new materials in place of those sacrificed, subject to the deduction of one-third for the difference of value between old and new ; but no deduction is made from the cost of new anchors, and only one-sixth is deducted from the cost of new chain cables. If the ship be on her first voyage (which is held to include the homeward as well as the outward passage), the repairs and new materials are allowed in full.

We now proceed to notice the second principal class of general average losses, consisting of extraordinary expenditures incurred with a view to the common benefit.

When a ship is obliged to put into a port of refuge, in consequence of damage received in the course of the voyage, the usage in this country is to allow as general average all the charges connected with the entrance of the vessel into the port, and with the landing and warehousing of the cargo, when this is necessary to admit of the ship being repaired. Thus the expenses of pilotage or other assistance into the port, the harbour dues, and similar charges, the costs of the protest taken by the master and crew, and of the survey held to ascertain whether the cargo requires to be discharged, together with the charges for landing the cargo and conveying it to a warehouse or other place of safety, are all made good as general average. The costs of repairing the ship are charged to general average only in so far as the repairs may refer to damages which are themselves the proper subject of general contribution. If the damages are of the nature of particular average, as is more usually the case, they are charged accordingly ; or if they proceed from " wear and tear," they are stated against the shipowner.

The warehouse rent for the cargo at a port of refuge, and any expenses connected with its preservation, form special charges against that particular interest, and are borne by the proprietors of the goods, or by their insurers. When goods are insured "free from particular average, unless the ship be stranded," it is necessary, if the ship has not been stranded, to distinguish the charges for warehouse rent and fire insurance from those incurred in connection with the preservation of the goods from the effects of damage, - the underwriters being liable for the former, but not for the latter.

The expenses of reshipping the cargo, and the pilotage, or other charges outwards, are borne by the freight. If the entire cargo cannot be taken on board again, from the want, at the port of refuge, of the usual facilities for stow- ing it, the loss or expenses resulting from the exclusion of part of it are not treated, in this country, as the subject of general contribution.

The wages and provisions of the master and crew during the period of detention at a part of refuge are not admitted as a charge against general average, it being held that the shipowner is bound to keep a competent crew on board the ship from the commencement to the end of the voyage at his own expense.

The charges for agency at a port of refuge are brought against the general average, even though they may have been originally made in the form of separate charges against the ship and cargo respectively. Commissions on money advanced, maritime interest on bottomry and respondentia, and the loss on exchanges, &c., are apportioned relatively to the gross sums expended on behalf of the several interests concerned.

The expenses incurred in getting a stranded ship off the ground, the hire of extra hands to pump a ship which has sprung a leak, and the sums awarded for salvage or for other services rendered to the ship and cargo under any extraordinary emergencies, are compensated by average contribution. But this rule applies only to the extraneous assistance that may have been obtained, the crew being bound to do their utmost in the service of the ship on all occasions, with extra remuneration for what they might consider extraordinary exertions on their part. • The costs of reclaiming the ship and cargo after having been captured are allowed as general average charges ; and although ransom to an enemy is prohibited in this country by legal enactment, it seems that this does not apply to the case of money or goods given up by way of composition to pirates for the liberation of the ship and cargo, and that this would also form a subject of average contribution.

When the ship and cargo arrive at the port of destination it is unnecessary, in ordinary cases, to distinguish, in the adjustment of the general average, between the losses which have arisen from sacrifices and those which have resulted from expenditures for the common benefit. But if the ship and cargo should be lost before reaching their destination, no contribution is due for the goods or ship's materials which may have been sacrificed at a former stage of the voyage, the owners of these being in no worse position than any of their coadventurers. On the other hand, it is evident that when money has been expended for the common benefit, the subsequent loss of the ship and cargo should not affect the right of the party who has made the advance to recover it in full from all the parties for whose advantage it was originally made. Hence, while sacrifices are made good only in the event of the ship and cargo being ultimately saved, expenditures must be reimbursed whether the ship and cargo be eventually saved or lost ; and the contribution for these expenditures must be regulated by the values of the ship, cargo, and freight as they stood at the time when the advances were made.

If, however, the money required for average expenditures has been raised by means of bottomry, and the ship be lost before completing the voyage, there can be no claim for reimbursement, - the risk being assumed by the bottomry lender in consideration of the premium he receives on the sum advanced. When there is no bottomry, it is a usual practice, but not an invariable rule, to insure the average disbursements by a special policy. When this has been done, and when the amount has been recovered on the subsequent loss of the ship, it cannot be again claimed from the individuals who would otherwise have been liable. But if the expenditures are not insured, either by a bottomry contract, or by a special policy, and if the ship and cargo be totally lost in the subsequent course of the voyage, the parties for whose benefit the expenditures were incurred must reimburse them on the principles already explained. These parties, however, have recourse on their original insurers, not only for the total loss of the interests insured, but also for the previous expenditures, although the insurers may thus be Called on to pay a larger sum than the amount of the insurance.

The contribution for general average losses is regulated by the values of the respective interests for the benefit of which they were incurred. The practical rule adopted, in all ordinary cases, is to estimate the ship, cargo, and freight at their net values to their owners, in the state in which they arrive at the port of destination, but including in these values the sums made good for sacrifices, and tc assess the contribution accordingly. The necessity for including the amount of compensation made for sacrifices in the valuations on which the contribution is charged, arises from the principle that all the parties interested in the adventure should bear the ultimate loss in exact proportion to their respective interests, which would not be the case if the owners of the articles sacrificed were to recover their full value without being themselves assessed for the loss thereon in the same manner as their coadventurers.

The contributory value of the ship is accordingly her actual value to her owner in the state in which she arrives, whether damaged or otherwise, including the sum made good in the general average for any sacrifices which may have been made of part of the ship or her materials.

The value of the cargo for contribution is its net market value on arrival, after deducting the charges incurred for freight, duty, and landing expenses, but without deducting the costs of insurance or commission. If goods be damaged, they contribute only according to their deteriorated value ; and if special charges have been incurred on the cargo at a port of refuge (as for warehouse rent, &c.), the amount of these charges is deducted. The sum charged to general average for goods sacrificed is of course added to the valuation. All goods carried in the ship for the purposes of traffic must be included in the valuation of the cargo ; but the wearing apparel, or personal effects, of the passengers and crew are exempted from contribution.

The value of the freight for contribution is the sum received by the shipowner on the completion of the voyage for the carriage of the cargo, after deducting from that sum the wages reckoned as from the date of the casualty, the port charges at the place of destination, and the special charges against the freight which may have been incurred at a port of refuge, consisting of the costs of reshipping the cargo, and of outward pilotage, &c. The provisions for the voyage are not deducted, as these are held to have formed part of the original value of the ship. If the freight has been paid in advance, it forms part of the value of the goods, and, consequently, does not contribute as a separate interest. When a sum has been advanced on account of freight, subject to insurance, it must be distinguished from the portion of the freight which remains at the shipowner's risk, and be charged separately for its rateable contribution ; and the freight so advanced is not subject to deduction for wages, &c., this deduction being made only from the freight at risk. It has been decided that, when a vessel has been originally chartered for a double voyage, the whole freight to be earned under the charter-party must contribute at its net value, after deducting the wages and other charges which must be incurred in earning it. The effect of this rule is to render the freight attaching to the return voyage. as well as that attaching to the voyage outwards, liable to contribute for average losses arising in the course of the outward passage, - a result the equity of which is not always very apparent.

An adjustment of general average made at any foreign port where the voyage may terminate, if proved to be in conformity with the law and usage of the country to which such foreign port belongs, is binding on all the parties interested as coadventurers, although they may be subjects of this country, and although the adjustment may be made on principles different from those sanctioned by the laws or usages of Britain. The reason for this rule is, that the parties engaging in the adventure are held to assent to the known maritime usage according to which general average is adjusted on the arrival of the ship and goods at the port of destination.

The subject of general average is only incidentally connected with that of marine insurance, being itself a distinct branch of maritime law. Bat the subject of particular average arises directly out of the contract of insurance, and will therefore be best considered in connection with it. (See INSURA_NCE.) For further information with respect to the subject of average, the reader is referred to the famous work of M. Valin, Commentaire sur l'Ord-onnance de 1681, t. ii. p. 147-198, ed. 1760 ; to Emerigon, Traite des Assurances, t. i. pp. 598-674; Arnould on Marine Insurance; and the treatises on Average of Stevens, Benecke, Bally, Hopkins, and Lowndes. (s. WA.)

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