General Average in Maritime Trade
General Average
Maritime trade inherently involves many risks. Storms, fires, technical malfunctions, or pirate attacks can cause significant losses to ship and cargo owners. In such extraordinary circumstances, the ship captain may have to make certain sacrifices to save the ship and cargo. This is where of general average comes into play. The Turkish Commercial Code (TTK) and international rules define general average as "the sharing by the parties of the cost of extraordinary sacrifices made to save the ship and cargo."
What is General Average?
General average is based on the principle of making a deliberate sacrifice during a sea voyage to save the ship or cargo from serious danger, and the sharing of the losses resulting from this sacrifice by all stakeholders . For example, throwing some cargo overboard to prevent the ship from sinking in a severe storm is a case of general average. Article 1272 and subsequent provisions of the Turkish Commercial Code regulate the elements of general average and the sharing of losses in detail. Furthermore, the York-Antwerp Rules are a frequently used standard reference in calculating general average in international maritime trade
Elements of General Average
Certain basic conditions must be met for general average to be recognized:
- A Common Hazard Must Exist: The vessel or cargo must be at serious risk of damage.
- Conscious and Voluntary Sacrifice: Sacrifice should be the result of a conscious decision, not an accident.
- Useful Outcome: The sacrifice made should contribute to the salvage of the ship or cargo.
- Common Interest: The protection of the interests of the ship, cargo, and freight should be the objective.
If these conditions are not met, the transaction is not considered general average.
Examples of General Average
- Throwing some of the cargo overboard to lighten the ship during a severe storm.
- Allowing a portion of the cargo to be damaged in order to contain the fire.
- Ransom payment in case of a pirate attack.
- When a ship breaks down, extraordinary expenses are incurred for salvage and towing operations.
What these examples have in common is the sacrifices made to protect the interests of all parties.
What is the difference between General Average and Particular Average?
Unlike general average, particular average covers damages attributable to only one party. For example, damages resulting from the cargo owner's improper packaging are solely the responsibility of the cargo owner. However, since general average an extraordinary measure taken against a common risk, the cost is shared among the shipowner, the cargo owner, and the freight creditors.
General Average Calculation
In a general average accident, an average dispatch report is prepared to fairly divide the damages and expenses between the parties . This report is prepared by maritime experts and determines the contribution rates according to the value of the ship, cargo, and freight
Example:
- If the ship is worth 10 million TL, the cargo is worth 5 million TL, and the freight is worth 1 million TL, then the 1 million TL sacrifice made will be divided according to these percentages.
Liability and Insurance of the Parties
General average losses are generally covered under marine insurance . Ship and cargo owners secure themselves against these risks by adding "general average" clauses to their insurance policies. In this case, the deductibles may be covered by the insurance companies
Cargo Owner: Cannot take delivery of the cargo unless the contribution is paid.
Shipowner: Responsible for documenting the average situation and initiating the dispatch process.
Freight Creditor: Contributes a certain percentage of the freight cost.
Legal Process of General Average
- Assessment: The captain determines the magnitude of the danger and the necessary precautions.
- Recording: The sacrifice made is recorded and reported in the ship's logbook.
- Dispatch: When the voyage is completed, an average calculation is made.
- Collection: Contributions are collected from shipowners and other stakeholders.
In this process, from maritime lawyers important. An incorrect calculation or a lack of procedure can lead to disputes between the parties.
General Average in International Regulations
The York-Antwerp Rules ensure the standard application of general average in international maritime law. These rules are frequently referenced in Turkish practice as well. They detail which damages are considered under general average and which expenses are to be shared.
Conclusion
General average a solidarity-based mechanism developed to protect common interests. All stakeholders share the cost of the sacrifices made to save the ship and cargo in an emergency. This system ensures that maritime transport is fair, safe, and sustainable.
Today, the proper execution of general average processes has become more transparent and secure with professional dispatcher reports, legal advice, and insurance protection . A thorough understanding of this process by the parties is crucial for both preventing commercial losses and complying with international maritime regulations.
Gozdenur Turna
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