Updated: Aug 16
Rules of York-Antwerp
(a) Expenditure incurred by the parties to the adventure in the nature of salvage, whether under contract or otherwise, shall be allowed in general average provided that the salvage operations were carried out for the purpose of preserving from peril the property involved in the common maritime adventure.
Expenditure allowed in general average shall include any salvage remuneration in which the skill and efforts of the salvors in preventing or minimising damage to the environment such as is referred to in Art.13 paragraph 1(b) of the International Convention on Salvage, 1989 have been taken into account.
(b) Special compensation payable to a salvor by the ship-owner under Art.14 of the said Convention to the extent specified in paragraph 4 of that Article or under any other provision similar in substance shall not be allowed in general average.
Rule VI of the York-Antwerp Came into existence in 1974. The aim of this rule was that the parties incurring expenditure whether under contract or not, for the purpose of salvage must be allowed in general averageand must be divided/distributed in accordance to the values obtained during the termination of adventure whenever these salvage operations are undertaken for common safety.
Rule VI was in accordance with the Laws and practices of United States of America as well as in majority of European countries. Though, English Law was different in this respect.
The following was agreed in the Hamburg Conference—
“Expenditure incurred by the parties to the adventure on account of salvage, whether under contract or otherwise, shall be allowed in general average to the extent that the salvage operations were undertaken for the purpose of preserving from peril the property involved in the common maritime adventure.”
In 1990, the rule got amended at a CMI Conference held in Paris which got added in the conference agenda at the request of the Secretary-General of the International Maritime Organisation (IMO). Though no changes had taken place at the Sydney Conference in 1994.
THE INTERNATIONAL CONVENTION ON SALVAGE 1989
Article 8 of the Convention imposes an obligation upon the master of the salved vessel, salvors well as the owners of the property to exercise with due are for the prevention of environment.
Article 13.1 (b) provides that the skill and efforts taken by the salvor for preventing and causing minimum damage to the environment must be taken as one of the essential criteria in fixing a salvage reward. Whereas Article 13.2 provides that the reward will be provided by the salved ship and the property in proportion in respect to their salved values.
As per Article 14, if there is a threat of damage to the environment where the salvage has not been successful to prevent it, the salvor shall be entitled to a special compensation which shall be paid by the ship-owner. Article 14 is an exception to the principle of “No Cure—No Pay”.
The “special compensation”may take place in different positions—
1. If the salvor was unable to avert the threat of damage to the environment then he shall recover the out of pocket expenses incurred during the salvage operation and shall be entitled to the fair rate for equipment.
2. If the salvor has been able to prevent or has been able to avert the damage to the environment, he may recover his expenses and an uplift of up to 30%.
3. Though the extent of the uplift mentioned above may not be increased more than 100% of the expenses incurred by the Salvor if the tribunal considers it just and fair.
Though a salvor of life is not entitled to any remuneration from any of the persons whose lives he had saved; but if the life was saved in an accident thus giving rise to a claim for salvage, the salvor of life will be entitled for remuneration for the prevention of environment or property.
LLYOD’S FORM OF SALVAGE AGREEMENT
The need to attract 15 accessions or ratifications meant many years before the Salvage Convention of 1989. The Salavage Industry was not much prepared to wait for long. The Lloyd’s working party decided in 1990 that the process should be accelerated with a new form of Lloyd’s Salvage Agreement, known as LOF 1990. The same process was adopted in the updating of the French Contract d’ Assistance Maritime etc. The LOF 1990 was further amended and was known as LOF 1995.
As per Article 1—
1. The salvage operations may not only take place in Navigable waters but in other waters as well.
2. The term “Vessel” means any kind of craft or ship or even a structure which is capable of navigation.
3. Property includes the freight at risk.
Article 6.2 provides that the master on behalf of the owner of the vessel has the authority to conclude contracts which are in respect to salvage operations. The master or owner of the vessel on behalf of the owner of the property of the vesselhas the authority to conclude such contracts.
THE INTER- RELATIONSHIP OF SALVAGE AND GENERAL AVERAGE
1. The property must be in peril.
2. The imperiled property must be saved by the exertions of those engaged; otherwise, there is no fund to pay for them. In Salvage Conventions (1910 and 1989) it was stated that services which do not render any useful result shall not earn any reward. Whereas in terms of General Average; Bovill C.J. in the case of Fletcher vs. Alexander said:
“If after the jettison or the matter which is the subject of general average has arisen, the remainder of the goods are totally lost, and so no benefit accrues to the owners of the other goods from the jettison, no contribution can be claimed.”
3. If the exertions made to protect the imperiled property are successful it creates a legal right to charge the property saved to pay an amount of money for saving it.
1. In salvage the exertions are to be rewarded to the persons who are being strangers to the community of interest.
But in General Average the duty lies on those on board the ship for the purpose of exerting themselves in the safety of ship and cargo. No question of reward is involved.
2. In Salvage, the salvor holds the maritime lien on the saved property, which attaches when the termination of salvage services.
Whereas in General Average the ship-owner’s remedy is a possessory lien which is not exercised until the termination of adventure.
3. In Salvage, the assessment of the values which have been saved, is done to give assistance to the tribunal for the purpose of assessment of reward.
Whereas in General Average the assessment of the values on which the interest will be contributed.
THE ADMISSION OF SALVAGE PAYMENTS INTO GENERAL AVERAGE ADJUSTMENT
· United Kingdom
In The Raisby Case it was held that in case of no salvage agreement or even there is a salvage agreement but it fails to fix the remuneration, the ship-owner’s liability does not go beyond the proportion due in regards to his interest in freight and ship. Because of this case the question of liability in respect to salved interest to the salvors is individual has never been arisen.
The volunteers rendering salvage services used to be excluded altogether from the general average adjustment.
· Continental Europe
In various countries including Netherlands, Greece, Spain and France the ship-owner is considered as the debtor for the salvage remuneration. Even if this is not the case in majority of the continental systems the salvage award is shared among the parties to the adventure relating to general average contribution. It was recognized by the General Assembly of the Association Internationale des Dispacheurs Europeens (AIDE) in 1965 at Antwerp in a resolution approved by them; it provided that:
“The assembly considers than when the salvage reward has already been divided by an arbitrator or by a tribunal between ship, freight and cargo, the average adjustor may treat the reward as general average and establish another apportionment on the basis of the actual values which after verification are admitted in the general average adjustment.”
· United States of America
Whenever the master accepts the salvage services, to save the adventure from a common peril, the apportionment of the amounts is done on the basis of general average.
COMMENTS ON THE 1990 AMENDMENT
The rule can be divided into two sections:
(a) Sets out the circumstances where salvage expenditure is permitted in general average.
Looking at the above mentioned section it may be pointed that two amendments have taken place since the introduction of the Rule in 1974:
(i) The words “on account of salvage” have substituted the words “in the nature of salvage”
(ii) The vague provisionin regards to allowance of salvage expenditure which provided the words “to the extent that the salvage operations were undertaken for the purpose of preserving from peril the property involved in the common maritime adventure” got amended by the substitution of the words in the beginning “provided that…..” in place of “to the extent that.....”.
(b) Deals with the exclusion from the general average of special compensation payable to a salvor by the ship-owner under Article 14 of the International Convention or any of the other provisions.
Section (b) clears the exclusion as requested by the Salvage Conference of 1989. Though some quarters doubted whether exclusion was necessary but they failed to take in view the salvor’s expenses on which special compensation was based as under Article 14 which are not limited to the expenses which have been incurred for the purpose of avoiding environmental damage which may not even be incurred for that purpose.
THE PROBLEM OF DIFFERENTIAL SETTLEMENTS
After the introduction of the Rule VI in the year 1974 various problems have arisen including the problem when separate settlements have been made by the salvors at different levels of remuneration for the ship and cargo interest; also when the parties, have put separate lawyer’s bills, who have been i.e. the parties have been represented separately in the salvage proceedings.
As per Anglo-Saxon jurisprudence, legal authority lies in favour of a general apportionment. In The Fason Case, the U.S. Court of Appeals (Fifth Circuit) held that the payments made to the salvors are to be brought under general average contribution.
In the United Kingdom the above-mentioned view is supported by the AAA Advisory Committee. The committee recognized the fact that with the growing tendency in cargo and ships the incidence of differential payments to salvors would be likely to increase.
The Advisory Committee was of the opinion—
“Rule VI is mandatory as between the parties to a contract of affreightment providing for adjustment of general average according to York-Antwerp Rules 1974. The committee accordingly takes the view that subject to the overall requirement of reasonableness in the amounts claimed by the parties to the adventure, differential expenditure, including cost, on account of salvage should be allowed in general average and apportion as such.”
EFFECT OF THE RULE PARAMOUNT
The adoption of the Rule Paramount at Sydney had stimulated a re-think in regards to the philosophy underlying Rule VI. Though, this adoption of Rule Paramount at Sydney was quite unexpected.
Views of Authors
F-X Albertini (France): “When a master whose vessel is in peril signs a salvage contract, he does so in the name of and for the whole community; ship and cargo. If the contract provides for the salvage rewarded to be fixed by arbitration, the whole community must, in consequence, submit itself to this procedure. No single party should disengage himself from this obligation which has been taken on his account by the master. It flows logically from this that if certain parties deal directly and for their individual account with the salvor (prior to the arbitration) the expense which they incur while thus individually engage in the fragmentation of the community will have to be integrated into the general average. (so long as it is not excessive)”
J.J.H. Gerritzen (Netherlands): “in my conception salvage is a school example of general average in that it is directed to the preservation of ship and cargo. The fragmentation arises if the applicable law provides for separate liabilities, vis-à-vis salvors, but that does not alter the nature of the services, nor does it change the quality of salvage as a general average act. I have always allowed all “fragments” of the salvage remuneration and (consequent) costs in general average, provided the amounts were reasonable.”
J.A Macdonald (United Kingdom): “The essence of general average is the community which exists between the participating interests: they sink or swim together. Where one party uses his commercial muscle to obtain an advantageous settlement, this is of course perfectly understandable but should not be sanctioned by the general average: there lurks the suspicion that what the salvor may lose in one differential settlement he may attempt to compensate for in dealing with another, possibly less muscular, interest.”
These views of the authors given before the existence of Rule Paramount shows that they believed the reasonableness of each individual settlement and every individual set out the cost as a necessary element in the application of Rule VI.
Author: Navin Kumar Jaggi