Describe how General Average is settled.
When there is a general average act on a voyage, all parties who havebenefited shall contribute towards the loss. The ship has a possesory lien onthe cargo for its contribution to G.A.At the discharging port, GA SETTLEMENT (calculation of losses,contribution according to value etc.) shall be done. But this process iscomplex and takes months to complete. During this settlement process, thecargo will have to be delivered to cargo owners.To ensure that cargo owners contribute towards the GA loss when theGA settlement process is complete, the ship requires the cargo owner to signan AVERAGE BOND which is a promise to pay their GA contribution whensettlement is complete.The ship thus exercises the “POSSESORY LIEN” on cargo in some formof promise and guarantee that cargo owners will pay. In case of GA, it isimportant that ‘AVERAGE BOND’ be signed by cargo owner before cargo isdelivered to him. ‘LLOYD AVERGE BOND’ is the standard form used.GENERAL AVERAGE DEPOSIT is the amount of money deposited in aspecial GA account in bank (joint account between ship and cargo owners). Itis based on arrived value of the property (usually about 10% of value) anddeposited after ‘Average Bond’ was signed. In case of GA act on a voyage theship shall never release the cargo until ‘Average Bond + Deposit’ completed.Average Adjuster is a person appointed by ship owners for thepurpose of assessment and adjustment of GA Losses and claims following ageneral average act.The ship owner has the duty to appoint average adjuster andcollecting the contributions due from various cargo owners in case of GA.An average adjuster will act as an ARBITRATOR and because of hisknowledge of the law and practice relating to insurance and average, will beable to decide and assess.
What is allowable as GA? What is not allowable? & Amount allowed.2.The contribution from each party towards GA.
The estimate of loss/damage due to GA and the approximate rate of contribution from each cargo owner so that GA deposits can bearrange. This will enable cargo to deliver to cargo owner withoutwaiting for final GA settlement. In some cases, GA guarantee given byunderwriters may be accepted.On completion of GA assessment, the adjuster will issue a GENERALAVERAGE SETTLEMENT consisting of all details of losses, damages allowableas GA on one side and contribution based on value by all parties (ship owner,cargo owners etc.) on the other side.This average adjustment is a complex process which takes time, some timemonth of even years.The usual practice for average adjustment is base on the “YORK-ANTWERPRULE” and “ADJUSTER RULE OF PRACTICE”