MARINE INSURANCE III ,HND I

THE HAGUE RULES

.How Goods are moved by ranking;
-water transport
Slow land transport/high risks
-rail transport
-air transport
 MARITIME ACADEMY OF NIGERIA,SCH. OF
MARITIME STUDIES;HND 1

MARINE INSURANCE 3

B.O NTUKOGHE/Barr. M. ATTING

 DOCUMENTS OF CARRIAGE
• Airway bill
• Railway bill
• Road waybill
• Bill of lading
• Consignment note
• Receipt ,etc
 REASONS FOR HAGUE RULES
• High risk/perils in water shipment
• Shift in liability by carriers
• Agreement on standard contract between
carrier and shipper
• Equitable distribution of responsibility and
laibility in carriage contracts by sea
 HAGUE RULES AND CARRIAGE CONTRACT

• Reduce risks
• Share expenses
• Share responsibility/duty
• Create binding laws/regulations
DOCUMENT FOR CARRIAGE OF GOODS BY
SEA-International
– USA Harter’s Act, 1893
– Australian Sea Carriage of Goods Act, 1904
– Canadian Carriage of Goods by Water Act, 1910
– Etc
– 1st attempt to unify carriage document was at the
end of WW1 by USA
– The above attempts and others influenced the
formulation of the H.R.(Hague Rules,1924)
 REASONS FOR UNIFICATION
• Shipowners exempted themselves too frequent
from loses and hence contrary to public
policy/void
• Shipowners made rules to favour themselves only
• Cargo-owners/shippers were more at risks of loses
• Different nations differed in rules in the same
trade
• U.K needed free market economy
 HAGUE RULE DEFINED
• The Rules governing the contract of Carriage of Goods by Sea
• The contract between the Carrier and the Shipper in ocean
transportation
• An Agreement of carriage of goods that uses a Bill of Lading or
similar document in water transportation
• A contract of carriage of goods by sea between the shipper/cargo-
owner and the ship-owner/carrier with which the terms of carriage
are generally given , accepted and endorsed as evidential
document called BILL OF LADING (B/L)
• HR=International Convention for the Unification of certain Rules of
Law relating to Bill of Lading signed at Brussel on 25/8/1924 (as
amended by Brussel Protocols-23/2/1969,21/12/1979)
 HOW H.R.CAME INTO EXISTENCE
At the International Conference on Maritime
Law (ICM) in Brussel in October 1922,delegates
at the conference agreed unanimously to
recommend their respective govts. To adopt as a
basis of a convention a draft for the unification
of certain rules such as; Responsibilities,
Liabilities, Rights and Immunities attaching to
carriers/shippers under the Bill of Lading
 Cont.
• In 1923,British govt. gave a draft convention
with a statutory effect and named Carriage of
Goods by Sea (COGSA) ,1924
• Brussel accepted this 1923 draft and signed it
on 25/8/1924
• USA adopted it as H.R. subject to some
modifications in the Carriage of Goods by Sea
Act 1936 but replaced by the Harter Act nor
repealed/dropped
 Cont.
• HR is an International Convention to impose
upon commercial carriers of goods by sea
• HR outlines the basic obligations for a
shipper/ocean carrier regarding goods with a B/L
• It tries to prevent dissatisfaction and liability due
to the cargo damage
• 90% of the Maritime Nations used this Rules in
1936 as their guiding principles.
 THE HAGUE-VISBY RULES

• HR defines some responsibility of carrier

• HR had some weaknesses
• HR needed to address those weaknesses
• A meeting of Maritime Nations was then held at
Visby to address these and amend the
weaknesses;
• Hence, at the end of the meeting ,the Convention
was named, Hague-Visby Rules
 Cont.
• Visby rules were due to Brussel Protocol of
1968,which amended Brussel Convention of
1924 out of the outcome of a successful
deliberation of the Comittee Maritime
International Conference that was held at
Stockholm in 1963 that made some changes in
the Brussel Convention of 1924 also.
 Cont.
• The Muncaster Castle amendment was also included
in the Visby Rules as seen in the proposed
amendment of art 3(1) of the HR; as reflecting, to
have allowed carriers be relieved of obligation to
exercise due diligence to make the vessel sea-worthy
if they choose a reputable independent contractor
• In the inclusion , the Muncaster amendment ,sec.
23,24 were put aside at the Diplomatic Conference
and eventually o Feb. 23,1968 a Protocol was signed
at Brussel amending the HR sec.25.
 Cont.
• March 23,1977.ten Nations(sufficient in
number and tonnage according to art. 13 of
Brussel Protocol 1968 gave effect to the Visby
Rules and it was ratified or acceded to
• Three months after (June 23,1977),Visby Rules
came into effect/force as the following nations
accented ; U.K, France, Denmark, Norway,
Sweden, Switzerland, the Ecuador Lebanon,
Singapore, Syria
 IMPLICATION OF THE RULES
• Lord Justice Denming summed the explanation
of the definition of the Hague/Visby Rules
that ship-owners used to insert clauses in B/L
exempting themselves from liabilities no
matter how much they or their servants were
at fault,hence, to prevent such circumstances
and also render the ship-owners liable for
want of due diligence to make ship seaworthy
and other matters.
 IMPLICATIONS OF THE RULES
• They are set as Act and Enforceable by law
• The rules hold to parties involve in trade with
a contracting state
• HR is applied in carriage of goods by sea in
ship
 DOCUMENTS APPLICABLE IN SEA TRADE

• Ship delivery order ; doc. Use for contract of

affreightment , i.e. neigther B/L nor sea waybill
• Sea waybill ; any doc. that is not a waybill but use
at sea transport for carriage contract , eg , other
transport documents
• BILL OF LADING; negotiable and/ non negotiable
but transferable by bearer/ endorsement and
include that which is received for shipment
 Application implicational uses
• Any bill of lading
• Any receipt non negotiable as document showing
contract of carriage by sea
• Applies to deck cargoes-timber containers, cars , animals
etc.
• Does not make room for carriers absolute undertaking
that the ship shall be seaworthy
• The rules could be amended if need be
• The Rule may be cited as Carriage of Goods by Sea Act
(COGSA), 1971
 COMPOSITION OF THE RULES
• Preambles
• Application of Hague Rules as amended
• Contracting states
• Why absolute warranty of seaworthiness not
to be implied in contracts to which rules apply
• Application of Act to British possessions , etc
• Extension of application of Rules to carriage
from ports in British possessions, etc
 Cont.
• Supplemental,then
• SCHEDULE as amended by the Brussel
Protocol 1968.here it is made up of the
Articles ( i-xx plus)
 Article I /definitions
• Carrier
• Contract of carriage
• Goods
• Ship
• Carriage of goods
 Article ii/carrier duty
• The carrier shall; load , custody
• Handle
• Care
• Stow
• Carry
• Discharge such goods
• Have responsibility/liability
• Have right and immunity
 Article iii/carrier duty cont.
• Carrier b4 and at start of voyage take due
diligence to ; make ship seaworthy
• Properly man ship
• Equip and supply the ship
• Make the holds ,a.c fit
• Make all ship parts fit and save to
receive,carry and preserve the goods
• Issue bill of lading
 The Bill of Lading and its content
• Document of carriage by sea/water possessing
as being; (a) Receipt
• (b)Document of title
• (c ) Evidence of contract of
Affreightment
 Content as a receipt in B/L
• Goods description
• Wt. of goods
• Qtity of goods
• Different markings on goods
• Date of shipment
• Loading port
• Discharging port /s
• Nature of freight payment
 B/L as document of title content
• Can the goods be sold on transit or not
• Can the goods be assigned to ;
• (a) Order
• (b) in favour of holder ( if the so holder )
pays; -port dues
• -demurrage
• -frt. Left or
• -all frt. at destination port
B/L as evidence of contract of Affreightment

• Bulk carriage at a point

• Bulk carriage at many times
• Bulk carriage as agreed
 Damage report and attention
• If goods are transferred to 3rd party and short of; the
original shipper is not responsible
• If loss/damage arises b4 hand-over,notice should be
given 3 days before
• If statement is not brought within 1yr.all claims are
void
• If a joint survey was carried out the notice need not be
given about the damage/ loss/shortage
• The carrier is not free from the conditions given than
as contained in this rules
 Article iv; Immunity of carrier
• Unsea-worthiness due to due diligence, manning, care , etc
• Act, default of master, mariner, pilot , servant of carrier in
navigation or ship mgt.
• Fire unless privy to
• Peril , damage, accident of sea not/ other navigation water
• Act of God, war , public enemies and other war issues
• Quarantine restrictions, illegal process , strike and related issues
• Saving of life and attempting or property at sea
• Wastage in bulk / wt. loss ( inherent defect)
• Insufficient packaging,
• Latent defect
 Cont.
• A package value must not be more than 10000 francs or
• A unit of 30 francs per kilo. Of gross wt. of goods loss or whichever is higher
• Loss should be calculated according to; - the value at the discharging port,
• -commodity exchange value or
• -current market value based on normal same kind and quality of goods
• NB; 1franc=65.5milgrm. Of gold of millesimal
• fineness 900
• Carrier shall not be exempt if damage is due to, by act/ omission , intent to
cause the damage or recklessness , privy to
• Where goods are dangerous but the carrier was not told,and it got damaged or
carrier destroys them (to save the adventure) , no liability on the carrier applies
• Should such goods hinder the voyage , the could be landed at any place or
destroyed by the carrier
 Article iv Bis
• Losses arising from the contract of carriage / tort are
liability to the carrier
• Actions against the servant / agent to the carrier are
the duty of the carrier and the agent unless otherwise
• However, the total recovery from the agent / servant
and carrier must not exceed the max. amount as stated
above
• But if the servant / agent deliberately damages on act,
omission , recklessly and being privy ,then he has to
bear the liability ,not the carrier
 Article v
• The carrier could surrender his rights and
immunity if the B/L is issued but no t on
charter-party contract unless a bill of lading is
also use, the such rights and immunity can be
given off, or to increase duty/ obligations in
this rules.
 Article vi
• This allows carrier , agent , servant to enter into
any agreement reasonable regarding the carrier/
goods with the obligation to seaworthiness if not
against public policy/ interest in line with the
carrier original duties and legally, at all times
• The /this agreement does not involve ordinary
commercial shipment as found in course of
ordinary trade, if not the carriage must be
reasonable to be yermed special agreement.
 Article vii
• Here it is stated that ;nothing that stops the
carrier/shipper from entering any
agreement/condition/reservation or
exemption involving duties and liability of the
ship/carrier for loss/damage to , or duty of the
carrier.
 Article viii
• This rules do not affect the rights/obligations
of carrier under any law now relating to the
limit of liability of the ship-owner
 Article ix
• This rules do not affect any International
convention, National laws about liability for
nuclear damage
 Article x
• This rules shall apply to every b/ relating to the COG
b/w ports in two different states if;
• -the b/l is issued in contracting states or
• -the carriage is from a port in a contracting
state or
• -the contract contained in or evidenced by the
b/l provides that these rules or law/legislation of any
state giving effect to them are to govern the
contract ,notwithstanding ship flag, carrier,
shipper ,consignee or any other interested person.
 The Hamburg Rules 1978 as date back from
1968
• UN version of the( CoGSA) Convention on the Carriage of
Goods by Sea
• Meant to replace the Hague/Hague –Visby Rules
• Meant to do away with the demerits in Hague Rules ;- no
single basis of liab. For carrier except seaworthiness
• -overlapping exceptions
• -inapplication to modern through transport
• -weighted too much on the carrier advantage
• Distinguishes carrier from actual carrier
• Made up of preamble, 6parts, 26 articles and annexes
 The Hamburg Rules=UN convention on the
CoG by sea 1978
• COMPOSITION:
• Preamble
• 6 parts
• 26 Articles
• Annex ii
Part 1; general provision-Article 1, definitions

• Carrier
• Actual carrier
• Shipper
• Consignee
• Contract of carriage
• Bill of Lading
• Writing to include;telegra, telex.
 Article 2 ;Scope of application
• A) all contracts of carriage by sea b/w 2 different
states
• -port of loading
• -port of discharge
• -one of the optional port of discharge =actual port
• -use of b/l or other doc. Showing the contract
• -b/l or other doc. As showing same
• B) the rules apply to all nationality of ship, carrier,
shipper, consignee , or any interest person
 Cont.
• C) the rules do not apply to charter –party
contract but holds where b/l is issued
• D) rules apply to contracts involving series
carriage in future but not charter-party
contract
 Article 3;intepretation of convention&
application
• Include International character
• The need to promote uniformity
 PART II; Article 4= liability of carrier on
• A) taking over goods;
• -at port of loading
• -while on transit
• -at port of discharge
• B) when goods are taken from;
• -shipper , agent servant
• -authority , other 3rd party
• C) until the goods are delivered by;
• -hand to consignee
• -if consignee not available , then as directed according to trade at port of
discharge
• -handing over to authority not 3rd party at port of dicharge
• D) hand over at discharge port include consignee, carrier, agent , servant
 Article 5; basis of liability cont.
• A) when carrier is in-charge of goods unless reasonable step taken and
proven ia liable to;
• -loss
• -damage
• -delay in delivery
• B) delay exceeding agreed time or non due diligence
• C) consignee may claim total loss if goods are delivered within 60 days after
expiry of delivery date due to;
• -loss by fire
• -negligence of carrier
• D) carrier not liable for live animals loss , damage delay due to specie risk
inherent defect
• E) carrier not liable due to saving of live resulting in delay
 Article 6 ;amount liable to pay
• Liability of 835 units of account per package
• Based on other shipping units
• 2.5 units of account per kg of gross weight
• Liability ofr delay, loss/damage=2.5 times the frt.
Payable for goods delayed, but not exceeding the
total frt. Payable in that contract of carriage
• For consolidated goods/
pallet,containers ,package , shipping unit as
contained in the b/l are only involved
 Article 7 and application of non contractual
claims
• All liability should be due to the contract of
carriage
• If agent , servant is involve,acting by his
employment then the liability shall fall on the
carrier/principal
 Article 8 and loss of right to limit
duty/responsibility
• If loss due to act , omission done with intent to cause loss
• Recklessness , privy to carrier
• Agent , servant be liable on the same as above

• ARTICLE 9;Deck Cargo

• Cargo can be carried on deck only if on agreement or according
to the trade
• Carrier on agreement musr insert in the b/l
• Thgis agreement does not involve 3rd party
• Carriage on deck without agreement=act , omission of the
carrier
Article 10;Liab. Of Carrier and Actual carrier
• The carrier and actual carrier are liable for the entire carriage
• The carrier is liable to the performance of the actual carrier
• All liabilities of the carrier are equal that of the actual carrier
• All non convention agreements do not affect actual carrier except he is privy and
agreed expressly to in writing
• The carrier and actual carrier liability are joint and several to both of them
• The amount collected from carrier , actual carrier, servant shall not exceed the limit of
liability as contained in the Rules
• Nothing shall stop the rights of the carrier/ actual carrier in the course of the contract.

• ARTICLE 11; THROUGH CARRIAGE

• The Rules apply to through/multiple carriers
• Loss/damage is placed on the carrier involved
• Each carrier has the duty to proof his case
 PART III; Liability of the shipper-Article 12
General Rules
• The shipper shall not be liable to the carrier for damage to the ship unless caused by the
shipper negligence , including the agent

• ARTICLE 13;Dangerous Goods

• Shipper must mark the goods
• Label in suitable waythe dangerous goods as such
• Shipper must inform the carrier the nature of the dangerous character of the goods
• Give precautionary measures to be taken ( if not o.y.o)
• The shipper is liable to carrier if endangered by no notice
• Goods may be at any time be;- unloadrd
• - destroyed
• -rendered innocuous if need be without payment/compensation
• But where the caq rrier is informed, it becomes binding
• Yet , if informed but the goods are threat to life, voyage , such actions could be taken
without compensation/payment
 PART IV ; Transport Document-Article 14 ,
(Bill of Lading)
• Should be issued by carrier to shipper on demand
• Carrier signs/ authorises to sign on behalf of
• Signing could be in;- handwriting , printed ,fax , any other mechanical means ,perforated ,stamped , in symbol , electronic
means

• ARTICLE 15; Content of B/L

• general nature of goods
• Leading marks/ids.
• Express stmt. Of the dangerous characteristics
• No. of pkgs. /pcs. of goods
• Wt./ qtity. Of the goods
• Apparent goods conditions
• Name/principal place of carrier
• Name of shipper consignee ( if named)
• Loading port for the contract
• Date goods were taken over at port of loading
• Port of discharging
• No. of original b/l
• Place of insurance of the b/l
• Signature o carrier/agent
 Cont.
• Frt. To be paid by whom/consignee
• Statement as in article 23
• Whether the goods be deck/ undeck
• Date/period of goods delivery at discharging port
• Any increase limit/liability agreed as in article 6
• Shipped b/l if need be , with named ship , date of loading
• If b/l is issued,then previous document should be colected
from shipper
• Amendment could be made by shipper/carrier in previous
document to meet the shipped b/l
 Article 16; B ill of Lading and Reservation
effect
• Reservation arises where the carrier having identified what the b/l should
have , but reasonably unable to feel that the b/l is complete ,he then insert
reservation specifying the inaccuracy suspected ; why the suspicion or why
the goods were not properly checked b4 issue of the shipped b/l
• If the shipped b/l did not indicate abnormally on cargo,/pkg. then it would
be assumed that the goods were received in a nice form,
• Other than that the shipped b/l stands on its three main functions
• If the reservation is not taken and the b/l is given to a 3 rd party or consignee
in good-faith , without contrary proof it could be admissible from the carrier
on loss/damage to the goods
• The b/l the does not indicate according to para.1(k) 0f Art. 15, that
frt.,demurrage at port of loading is payable by consignee, then the consignee
is not liable to paying. But should that b/l be given to a 3 rd party,the carrier
would be free from the proof and liability
 Article 17;Guarantee by the Shipper
• It is accepted that the shipper guaranteed the carrier that goods are well if
marked, numbered, weighted , qtity. given to be included in the shipped b/l. if not
shipper must indemnify carrier for loss/ damage due to the inaccuracy,so shipper
remains liable eveen if 3rd party transfer was made
• Even with guarantee from the shipper ,if no reservation is entered , no liability on
carrier if loss/damage arises,, hence it becomes void and of no effect against 3 rd
party including consignee to whom the b/l was given
• The letter of guarantee is valid if the carrier intended to defraud 3 rd party by
omitting the reservation in para. 3
• If the letter was given , but reservation omitted,while the shipper gave all the
conditions to be inserted in the b/l, the carrier has no right of indemnity from the
shipper as contained in para. 1 of this article
• In the case of intended fraud as in para 3, the carrier is liable , without benefit of
limitation of liability as contained in this convention for loss to 3 rd party or
consignee
 Article 18; Document other than B/L
• That/such document stands valid in place of b/l , holds aa a carriage of Goods by
sea as taken over by the carrier.

• PART V; Claims and Actions—Article 19:Notice of Loss , Damage,Delay.

• Notice has to be given in writing by consignee to carrier not later than 1 day the
goods were handed over to / delivered
• If the loss/ damage was not apparent, the notice should be given within 15
consecutive days after handing over goods to the consignee
• Where a loss/damage was jointly surveyed/carried out,then notice need not be
given to that effect
• When loss/damage arises, the carrier and shipper must give all reasonable
facilities to each other for inspecting and tallying the goods
• Compensation is not payable for delay in delivery unless the carrier had given
notice within 60 days after the day goods were handed to the carrier
 Cont.
• If goods are delivered by actual carrier ,it is same as carrier
by notice or otherwise be effect and in use vice-versa
• Where loss/damage occurs carrier should notify shipper
within 90 days-consecutive after occurrence or after delivery
of goods according topara 2 of art.4 or which ever is later , if
not ,then,it seems the carrier has sustained no loss/damage
by fault/negligence of the shipper
• If notice required is so given on behalf of the carrier/shipper
or agent, it holds that the carrier/shipper has given same
notice
 Article 20; Limitation of action
• After 2 yrs when action is not taken by the court/ arbitration, the case
becomes void-to no effect
• The period of action stars the day carrier delivers goods /part thereof
or where no goods was delivered , but on the last day goods were
meant to be delivered
• The person given the claim can extent the period within declaration to
the claimant and could be further extended as from the 1 st limitation
• Action for indemnity against the liable person can be brought even
after expiration of limitation time provided if within the accepted
period by law of state where the case was brought forward . but must
not be more than 90 days after the person requested for the
indemnity
 Article 21: Jurisdiction
• Complainant/ plaintiff can institute a case at his option of court according to law of
the state where the court is;-located
• -competent
• -plaintiff principal place of business is
• -habitual residence of defendance
• -where contract was made
• -where branch, agency thru which contract was made
• -port of loading / discharging
• -any addition place designated as agreed in the contract of carriage
• -any port/place, court in contracting state where the ship or other vessel by same
owner may be arrested in line with rules of law of the state / Int”l law. But if the
defendant petitions,the claimant must remove the action at his own choice to follow
para.1 of this article, and security measures be given by defendant that payment
must be made of any judgement that may be awarded to the claim in action
 Article 21 cont.
• The security measure must be determine by the court of the port/ place of
arrest
• If the place is specified in para. 1 or 2 of this article , the the case can hold
there
• If the case has been decided in agreed place, no new case on that would be
instituted again , unless the 1st judgement is not enforceable in that
country that the new proceeding took place
• This new sitting on the same case should not be taken as a new case/action
• Also, changing of venure within the same country or different country
should not make the case to have started as a new one as contained in
para.2(a) of this article
• Notwithstanding, if the two parties have agreed to a place for judgement /
claim , then that is effective
 Article 22: Arbitration
• Parties to the contract may provide agreement that in case of disputes , arbitration should be
use
• If charter-party is used and accepted use of arbitration, the is binding so long as b/l is used in
the charter-party contract
• The arbitration pannel at option of claimant hold in;
• -habitual residence of the defendant
• -place in a state within area of principal place of business of defendant
• -place where contract was made if defendant has place of business, branch, agency where
contract was made
• Port of loading/discharging
• Any place as designated as supposed in the arbitration clause or agreement
• The arbitrator/ tribunal shall apply the rules of the convention
• Provision of para.3 and 4 of this article are deemed part of every arbitration clause
agreement , hence any clause that are inconsistent shall be null and void
• Nothing in this article shall invalidate an agreement relating to arbitration made by the
parties after the claim under the contract
PART VI:Supplemental provision ;ARTICLE 23-
Contractual stipulation
• -
 Article 24: General Average
• The gen. av. Procedure shall hold except as in
art. 20,this convention makes room for carrier
and consignee to contribute to general
average and salvage paid/payable

• ARTICLE 25: OTHER CONVENTIONS

 Article 26 ; Unit of Accounts
• Unit of account is the SDR (special drawing right) by IMF
(international monetary fund)
• Amount to be converted into National currency of state based
on the value at date of judgement / dare agreed upon by
parties
• member to IMF;
• -12,500 monetary unit per package
• -other shipping units or
• -37.5 monetary unit per kg of gross goods weight
• Monetary unit here=65.5 milligrammes of gold millesimal
fineness 900
 SUMMARY HAMBURG RULES
• Rules were devised in Hamburg in 1978
• Rules are meant to replace the hague/Visby rules
• Hamburg rules actually date back to 1968
• These rules have three main advantages over hague/Visby;
• -they give the carrier more liabilities other than seaworthiness
• -they are meant to be applied to modern approach of Through
Transportation
• -in the eyes of many Nations now without merchant fleets, their weight on
the carrier has been reduced
• Hamburg rules differentiate Carrier and Actual carrier
• They are meant for a free mk. economy in UK
• They are meant to reduce sippers liabilities
• Meant to standardize rights conditions by legislations
 Similar Documents for Bill of Lading

• Railway bill, - Inland waterway bill

• Consignment note, - Airmail receipt
• Airway bill, - Counterfoil waybill
• Postal receipt, - Trucking road waybill
• Warehouse receipt, - Certificate of mailing
• Consular invoice, - Delivery order
• Certificate of origin, Etc.
 The York Antwerp Rules/Gen. Av.
• This rules deal with General Average incidents and sharing of
the losses involved
• The rules is divided into two;
• -7 lettered (A to G) rules also called RULE PARAMOUNT
• -22 numbered (i-xxii) rules
• It makes for uniform adjustment in general average sharing
• It is a 1974 rules of interpretation that allows the numbered
rules to be considered after the lettered rules
• Where the contract does not include this rules ,adjustment
can be done on foreign/by English law and practice or as
agreed by insurer decision on the policy
 History of York Antwerp Rules
• Glasgow meeting ,1860
• York meeting, 1864
• Antwerp meeting, 1877
• Liverpool meeting ,1890
• Stockholm meeting, 1924
• Amsterdam meeting, 1950
• Hamburg meeting, 1974 ;(A-G) and (i-xxii)
 Issues in York-Antwerp Rules
• General average occurrence
• General average sharing principles
• Salvage charges/cost
• General average adjustment
• Awards in general average
 Essentials of general average
• Adventure must be imperiled
• There must be real danger
• The act must be voluntary/intentional
• The exposure/sacrifice must be reasonable
• The risk/sacrifice must be extra-ordinary
• The sacrifice must be of a common benefit the
loss must be of a direct result of G.A act
York-Antwerp Rules,1994 and interpretation

• Adjustment of General average shall make use of this rules in

exclusion of any Law and Practice not consistent with it
• The rules shall make use of Rule Paramount here called
Lettered Rules (A-G) and /or
• The Numbered Rules (i-xxii)
• The general average shall be adjusted according to the
Lettered Rules
• The lettered Rules reflect the standard conditions for g.a.
adjustment
• The numbered rules reflect precedence/already decided
cases
 Rule Paramount (A-G);
• In no case shall there be any allowance for
sacrifice/expenditure unless reasonably made or incurred
• Rule A;
• -defines g.a. act:
• when and only when any extra ordinary sacrifice is made
• expenditure is intentionally made
• expenditure is reasonably made/incurred for common safety
to preserve from peril happening to property in a common
adventure
• g.a. sacrifice shall be borne by different contributing interest
in the adventure
 RULE –B; common maritime Adventure
defined
• When one or more vessels are towing
• When one or more vessels are pushing anothr vessel/vessels
• These vessels must be involved in commercial activities and
not in salvage operation
• When measures are taken to preserve the vessels and their
cargoes from a common peril
• If a vessel is disconnected from another and is safe it is not
in common peril
• If the disconnection is itself a g. a.act the common
mar.adventure continues
 Rule –C ;Perils for Gen Av .
• Direct –losses
• -damage
• -expenses
• No allowances for in respect of damage to the environment or
• - escape or
• -release of pollutant substances from the property involved in
the common maritime adventure
• No allowances for demurrage would be allowed
• Loss of market is not allowed
• Delay of any type is not allowed nor any indirect loss whatsoever
Rule-D ;Rights to contribute to g.a.
• G.av. Holds even-though what gave rise to it was a fault of one of the members in the
adventure
• All contributors must share according to their individual values

• RULE-E : Right/Onus to Proof;

• -The person making the claim for g.av. has to proof that the loss is a gen. av. One
• -all parties claiming in a gen. av. Must give notice to the av. Adjuster of the
loss/expense
• -The claim to this loss contribution terminates 12 months from the date of its
happening in the common mar. adventure
• -having given notice within 12 months but the claim value not submitted, the
adjuster has the right award a value of his choice to the claimant based on the
available information
• -however if so adjusted based on available information , claimant has the right to
challenge onl on grounds of clearly incorrect
 RULE-F; Additional Expenses Incurred
• Any such expenses in line with , for the same purpose shall be added as gen. average not-
withstanding the saving , if any to other interest
• This addition must not be above the amount the gen. av. Expense avoided

• RULE –G : FRAME OF ADJUSTMENT

• -It should be on both loss and contribution of value at the time when and where the adventure
ends
• -It should be on both loss and contribution of value at the place when and where the adventure
ends
• -this rule does not affect the determination of place at which the av. Statement is to be made up
• -should a ship call to a port or place for common safety and notice given to the interested
parties , and any of them decides to trans-ship the goods by another means, he is liable to
whatever gen. av. contribution made there after as if the adventure had continued in the original
ship when justifiable under the contract of affrtment. And the applicable law
• -but the amount to be given to this interest of the trans-shipped goods should not exceed that
which would have been borne by the cargo if the cargo had been forwarded at their expenses
 The Numbered Rules of York Antwerp: The
Rules of Precedence/interpretation
• RULE –I : Jettison of Cargo
• Jettison cargo can only be accepted as gen. av. Only when so done in accordance with the trade

• RULE –II : Loss /Damage by sacrifice for the common safety

• -the loss of/damage to the property used or sacrificed to safe the common maritime adventure
• -water which goes down the hatch or other opening made so as to jettison the cargo for the common safety shall be
made good as gen. av.

• RULE –III: Extinguishing Fire on Shipboard;

• -damage done to ship and cargo or either of them
• -damage by beaching/scuttling a burning ship while extinguishing fire on board it
• -but no compensation caused by the smoke and heat of the fire shall be taqken for gen. average

• RULE – IV: Cutting Away Wreck;

• -loss/damage due to cutting away wreck or part of the ship previous carried away
• -but ship/part of it effectively loo shall not be made as gen.average

• RULE- V: Voluntary Stranding;

• -the gen. av. Is allowed when aship is intentionally run on shore reasonably for common safety i.e, whether driven or not
on shore
 RULE- VI ; Salvage Remuneration
• Salvage cost whether on contract or otherwise is allow if for the common safety of the adventure
• Salvage cost include;
• -skills
• - efforts of salvor to prevent/minimize damage to environment article 13 para. 1(b) of Int”l convention on salvage
1989
• Special compensation shall not be allowed to be given by the ship-owner in line with article 14 para.4 of the convention

• RULE-VII ; Damage To Machinery And Boilers

• such damage ashore and imperil to refloat is allow if with the real intention to float the ship for common safety
• but where the ship is afloat , no loss or damage caused by working the propelling machinery/ boiler shall be allowed

• RULE-VIII ;Cost of Lightening a ship when ashore due to DAMAGE

• -the removal of cargo, fuel, stores or any other item discharged and reloaded expenses shall be allowed as gen. av.

• RULE IX ; :CARGO,SHIP MATERIALS ,STORES USED FOR FUEL

• ship materials stores, cargo or any of them used as fuel for the common safety of the adventure shall be accepted as
gen, av. Loss
• Where stores and ship material are calculated as fuel to have been consumed for the safety of the adventure ,the such
cost is credited as a gen. average
Rule –x ; expenses at port of refuge, etc.
• The cost incurred in entering and leaving a safe port on a common adventure shall be a gen.
av.
• A ship taken to port of refuge but removed to another port , whether on tow or
otherwise ,the work carried in the new port shall be seen as if its at the first port of refuge
and taken as gen.av. Including temporary repairs
• The cost of handling on board , discharge of cargo , fuel stores loading at refuge port shall be
gen. av. Including repairs for the safe adventure
• Where the damage is discovered at the port of refuge without any accident related to the
common safety, the n no gen. av. Is allowed
• Cost of handling ,stores , discharging , fueling, shall no fall as gen. av. On restowage due to
shifting during the voyage unless necessary for the common safety
• Whenever the above cost are admissibe as gen. av. Then the insurance is also admissible as a
gen. av. cost
• The above provision also apply to extra period of detention due to reloading/restowage
• Gen. av. Does include when a ship is condenmed or proceed in her original voyage nor
abandoned but includes when up to the moment the cargo are discharged b4 abandonement
 RULE XI; wages maintenance , expenses at
port of refuge
• By Rule x(a) wages , crew , officers maintenance fuel stores used reasonably for common safety to /from refuge port
or back to loading port are admissibly as gen. av. cost
• If a ship is being detained at any port/place due to accident, sacrifice/extraordinary condition for the safety of the
voyage, the wages/maintenance fuel/repairs/stores for that period shall be admissible as gen.. Av. Cost even on
detention
• Where there are port charges during this detention ,they shall be gen. av. cost
• Whenever and wherever the ship is condemned or abandoned ,there and then the gen. av. Ceases or up to the date
of completion of discharge of cargo
• The wages shall include;
• - all payments made to/for the benefit of the master , crew officers
• - any payment made by law and imposed upon the shipo-wner
• -payment made by article in terms of employment
• The cost of measure used to prevent environment or minimize damage is admissible as gen. av. If it occurs in any of
the following conditions
• -as part of operation for the common safety done by a party outside the common mar. adventure to give that
party a salvage reward
• -as a condition to allow a ship to enter or depart from port/place as in Rule x(a)
• -as a condition to remain in a port/place as regards real escape of pollutant and additional measure to minimise
environment pollution
• -cost in connection necessary for discharge/reloading , storing of cargo
Rule XII ; Damage to cargo in discharging ,etc
• Damage, loss to cargo ,,fuel , stores thru. Handling, reloading, stoeing , stowing shall be
admissible if these fall within gen.av. Measures

• RULE XIII; Deductions from cost of Repairs

• -new for old is not allowed where of
• -if a ship is over 15yrs the parts replaced as new- 4-old shall make a deduction of one
third
• The deduction shall be regulated by age of the ship from 31st Dec.of the year of the ship
construction to the date of the gen. av. Act
• -the deduction shall be made only from the value of thev ne4w material/part when
finished and ready to be installed in the ship
• -provisions stores anchore chains shall have no deduction here
• -dry-dock, slipway, ship shifting cost shall be allowed in full
• -cleaning, painting, coating of bottom shall not be gen. av. Allowed unless the coating has
done within the last 12months before now in which case half of that cost shall be allowed
 Rule XIV; Temporary Repairs
• Gen. av. Is admissible for temporary repairs for common safety on ship at port
of loading, call/refuge or other related gen. av. Repairs
• Accidental repair to allow the adventure to be completed is acceptable without
regards to saving but not more than the saving expenses that could have been
incurred
• No new for old deduction shall be made from temporary repairs allowances as
gen. av.

• RULE XV; LOSS OF FREIGHT

• Loss of frt. Arising from damage to or loss of cargo shallbe made good in gen.
av.
• Deductions shall be made from the amount of gross frt. Loss, of the charges
the owner would have incurred to earn such frt. But due to this sacrifice was
unable to earn
 Rule xvi; Amount to be awarded for cargo
loss/damage by sacrifice
• The amount shall be same as the value sacrificed at
the time of discharge as contained in the commercial
invoice given to the receiver or the ship value if no
invoice
• The value at time of discharge include;
• -cost of insurance
• -freight
• Where the damaged cargo is sold b4 the damage is
agreed , the loss to be shall be the difference b/w net
proceed of sale and the net sound value computed
 RULE XVII Contributory values
• The actual net value at the termination of the adventure
• For the value of the cargo shall be that at the time of discharge as seen in the commercial invoice or from
the shipped value
• The value of the cargo shall include insurance and frt.
• But any damage suffered b4 now must be deducted or at the time of discharge
• The value of the ship shall include demise or time charter party
• In calculating all the gen. av ,add both that of cargo and ship to give real value
• But deduct the followings;
• -frt. And passage money at risk ;charges, crew wages that are due to this loss or incurred due to the loss
• -deduct all extra charges that do not fall within gen. av. Or special compensation as contained in article
14 of the convention on Salvage 1989, or provisions similar to in substance
• According to RULE G cargo and other property shall contribute according to their on delivery at their
original destination if not sold or disposed b4 their destination
• The ship also shall contribute by her actual net value at time of completion of discharge of cargo
• Where cargo is sold b4 getting to its destination,it share shall be on the net proceed of sales with /in
addition to any amount given as gen. av.
• Mails,passenger luggage,personal effect accompanied private motor vehicles shall not contribute in
general average
 Rule XVIII; Damage to SHIP
• The gen. av. amount for ship damage /loss , machinery , gear shall include;
• -when repaired or replaced based on the actual reasonable cost of them following
deduction as contained in RULE XIII
• The reasonable depreciation arising from such damage/loss not exceeding the estimated
cost of repairs
• If ship is actual total loss/assumed total loss, it is the difference b/w the estimated sound
value of ship after deducting the estimated repair cost of damage that is not included as
gen. av. And the value of the ship in her damaged form/state measured by her net proceed
of sales, if any

• RULE XIX ;Undeclared/Wrongfully Declared Cargo:

• When cargo are damaged/loss which were not received by the ship-owner/agent or goods
willfully misdescribed at time of shipment, they are unadmissible but such goods shall
contribute to gen. av. loss
• Damage to goods wrong fully declared on shipment with lower value shall be contributed
for at that value but such goods shall contribute on the value actual at the time
 Rule xx ;Provision of Funds
• 2% commission is allowed in gen, av. as disbursement apart from wages , maintenance of master , officers , crew fuel
,stores not replaced during the voyage shall be admissible as gen. av. Loss
• Capital loss sustained by cargo owner for sale of cargo to raise fund to defray gen. av. Disbursement shall be allowed
as gen. av.
• The cost of insuring gen. av. Disbursement shall be admitted as gen. av.

• RULE XXI ; Interest on losses made good in General Average’;

• -Interest shall be allowed on;
• expenditure
• sacrifice
• allowances at the rate of 7% p.a . until 3 months after the date of issue gen. av. adjustment is allow

• RULE XXII :TREATMENT OF CASH DEPOSITS

• If cash deposit has been collected as cargo liability for g.a. / salvage,special charges, such deposit shall be paid
without delay into special account In the joint namesshipowner representative and that for the depopsitor in a bank
agreed by the parties
• The sum so deposited including interest shall be held as security to be used for gen. av. Payments, salvage, special
charges payable by cargo
• This payment may be refund if complained to the adjuster in writing and the shall be made without prejudice to the
parties involved
 CARGO CLAIM AND PROCEDURES
• What is Claim?
• A written request made by claimant/ assured to the
underwriter/insurer when an incident/accident happens to be put back
in the position the assured was at the time of the incident took place
i.e, to be indemnified due to the happening of the peril insured against
• HOW DOES CLAIM ARISE?
• The happening of the peril /incident insured against
• When a loss occures
• When a damage arises
• When some expenditure is made
• making for claim and procedure (stmt. for claim)
• -document for claim
 Types of Claims
• Ex-gratia
• Without prejudice
• Returns
• Refunds
• Deductibles/franchise
 Making For Claims/Documents
• The bearer name
• Property endangered
• Property must be real
• Property must be insured
• The policy
• Letter of Subrogation
• Letter of Notice of incident as report by peril type
• Value of the loss
• Proceed of sales (if any)
• Deductions (if any); calculating deductions
• -deductibles/franchise
• -general average
• -additional costs
 Effect of Incident/Accident -LOSS
• Defined ;
• The missing of a/some valued possession/property
• Expenses incurred on something

• TYPE OF LOSSES;
• -particular loss
• -partial loss
• - total loss:
• Actual total loss
• Constructive/Assumed total loss
• General Average loss
 General Average and Declaration
• Who declares the general average? –Master

• Conditions for Declaration:

• The general av. Concept
• How general av. Arises
• Condition for gen. av. To hold
• General av. And sister vessel
• Gen. av .adjustment

• PARTIES TO GEN. AV.;

• Ship-owner
• Cargo owner
• Gen. av. Calculation /adjuster

• AREAS OF GEN. AV.APPLICATION’

• Salvage
• Jettison
• Pollution
• Fire on Board
• Ship repairs
• Freight
• Etc.

• GENERAL AVERAGE DEFINED; That which has been given for all shall be replaced by the contribution of all
 Conditions for Gen. av. to hold
• There must be a real and common danger but not mere
• There must be need for sacrifice
• The sacrifice must be voluntary
• Something must be saved from the peril due to the sacrifice

• SPECIFIC CLAIM DOCUMENTS;

• - SHIP/HULL
• Hull policy
• Av. Stmt.(logbook extract)
• Survey reports
• Repairs specification and cost- if any
• Detail of any tender -if any
• Other expenditures - if any
• Copies of extended protest -if any
• - CARGO CLAIMS;
• The policy
• B/L with terms of the contract of carriage and goods at time of carriage
• Survey report proceed of sales -if any
• Letter of subrogation (endorsed)
 Major claim presenters
• Subrogator
• Broker for Assured
• Prof.nal. Av. Adjuster
• Insurer employed adjuster
• Arbitration

• ISSUES FOR PROMPT CLAIM ATTENDANCE

• All the documents must be original
• Party claiming must be the policy holder

• INSURER BOOK OF CLAIM

• Claim register
• Secondary register
• Report book

• CLAIM AND ASSIGNMENT OF BLAME

• Single Blame
• Cross blame/Both to blame and single assignment
 Contents of the books
• CLAIM REGISTER
• Claimant reference
• Insurance account
• Vessel/Goods involved
• Surveyor
• Claim follio
• Remark

• SECONDARY REGISTER
• Claimants name
• Brief detail of claim progress and reason for delay-if any
• Acknowledgement of receipt of entry
• Attention so far given to the claim

• REPORT BOOK DETAILS

• DATE OF RECEIPT OF THE CLAIM
• NAME OF THE CLAIMANT
• VESSEL/Goods involved
• Detail of incident
• Documents received
• What work has been attended on the claim
• Nature of the claim ( single or cross blame)
• Date credit note was sent to the client
• Detail of payment instruction given/received
• Detail of disposal of documents
 Claim calculations
• Single liability
• Both to blame
• General average
• Average adjustment additional; this to be
illustrated on board .
 INSTITUTE CARGO CLAUSES
• Cargo clauses A, B, and C
• Risks content in clause A (all risks)
• Covers all risks of loss/damage to the subject matter insured
except the exclusions as contained in ss4-7
• Covers gen. Av.
• Salvage charges
• Adjustments in line with the contract of affreightment
• It extents to losses due to both to blame collision on
notification of the underwriter
• The exclusions makes for special clause policy to be taken; by
that the policy does not cover the following risks,
 Risks exclusions
• Wilful misconduct of assured
• Ordinary leakage, loss in wt. Wear &tear of the s.m.
• Improper packaging, preparation of s.m.
• Inherent vice/ nature of the s.m.
• Delay eventhough the delay is due to the risk insured
• Insolvency/ financial default of the owner , mngr. Chaterer or operator of the vessel
• Any weapon of war employing atomic/nuclear fission/fusion, radioactive force or
matter
• excl 5;
• unseaworthiness of the vessel/craft
• Unfitness of the vessel, craft , liftvan conveyance container for the safe carriage of
the s.m.
• Breach of implied warranty of seaworthiness of ship unless the owner is privy to such
 Exlu.6
• the insurance shall not cover any war peril
• Strike perils

• Exclu. 7
• This shall not cover expense/loss/damage due to;
• Strike or lockout
• Labour disturbance
• Civil commotion
• Terrorist act
• Political motive
• Exclusions as contained in B and C
 Institute cargo clause B
• The risks covered include those reasonably attributable to;
• Fire /explosion
• Vessel stranding ,grounding , sunk capsized
• Overturning, derailment of land conveyance
• Collision with any external object other than water
• Cargo discharge at port of distress
• Earthquake, volcanic eruption, lightning
• Gen. Average sacrifice

• Jettison/ washing overboard

• Entry of sea lake , river water in container, vessel, hold, craft conveyance, liftvan or place of storage
• ##Total loss of any package overboard dropped while loading/discharging from the vessel
• General av. Salvage charges, average adjustment according to the law and practice of the trade
• Both to blame collision, but the underwriter shall have the right to defend ,except as found in the exclusions
• Additional exclusion here has it that ;
• deliberate damage to or deliberate destruction of the s.m. Or any of the part by wilful /wrongful act of
any person or persons
 Cargo clause C risks
• These risks are as contained in clauses B but
stops at jettison ,then continues on;
• general average salvage charges , average
adjustment up to the last peril.
 Other issues in the clauses A, B C;
• Duration
• Claims
• Benefit of insurance
• Minimum losses
• Avoidance of delay
• Law and practice
 War clauses/perils
• War
• Civil war
• Arrest
• Capture
• Torpedoes
• Seizure
• Detainment
• Belligerent power hostile act
• Derelict mines
• Bombs
• Insurrection
• Revolution
• Rebellion
• civil strife
• Other derelict weapons of war
 Strike clauses/perils
• Losses by strikers
• Lock-out workmen
• Labour disturbance
• Riots
• Civil commotion from strike
• Any terrorist act
• People acting from political motive
 Duration of the Policy
• From when goods leave w/h ,store and on transit and terminates on;
• -delivery to consignee
• Final w/h
• Destination store named
• Where the assured so elect
• For allocation or distribution or;
• On expiry of 60 days after disharge completed frm. Oversea vessel at final port of discharge
• Where the goods have arrived but policy not ended and goods to be carried inland, it
terminates at time the goods are loaded into the new vehicle
• The policy shall hold if delay is beyond the control of the assured;
• -deviation
• Forced discharge
• Reshipment/transhipment
• During any variation of the adventure due to liberty grant to ship-owner/charterer of the
contract of affreightment
 Cont.
• Any thing beyond the assured that terminates
the contract b4 final port/destination then
policy also stops there unless prompt notice
be given to Held Covered on addition
premium
• If the policy changes assured ,Held covered
must be made if not ,it terminates on that
change
 Claims in the policy
• To recover from this policy ,Assured must have ins. Interest at time of loss
• Claim can be mad that it came within policy period not minding when the
contract was concluded unless assured was aware b4 then
• If the insurer terminates the contract b4 final destination ,he shall be re-
embursed by insurer for
• -unloading
• -storing
• -forwarding the s.m. to the destination where it was insured but does
not include gen. Av. ,salvage charges
• If the s.m. Is reasonably abandunt ,is recoverable
• Where the policy increases in value the the premium shall increase only if
the insurer is accordingly involved to revalue the goods
 Benefit of insurance
• The insurance shall not inure to the benefit of the carrier or other
bailee.

• Minimising Losses;
• -the assured/servant/agent must reasonably try to avert/minimise
loss
• Assured must make sure all rights against carrier bailee 3rd party are
preserved hence the insurer can recover and indemnify the assured
on any charges reasonably incurred
• Any measures taken by the assured /insurer to protect save, or
recover the s.m. Shall not be waived/abandoned
 Avoidance of delay
• The assured must act with reasonable
despatch in all conditions within their control.

• LAW AND PRACTICE

• This insurance is subject to English Law and
Practice.
 Other Clauses
• Location clause
• Replacement
• Machinery damage addition
• Dual valuation
• Theft, pilferage ,non-delivery
• Additional perils
Assignment -1;attempt the three questions

• 1. what do you understand by term claims and

outline the 5 types of claims you with some
brief explanations ?
• 2. average is synonimus with loss; explain
their types ?
• 3. York Anwep Rules is based on the principles
of general average loss ; how are the two parts
used?
Assignment -2; attempt any 2 questions from
here
• 1. explain the development of the Hague-
Visby Rules in not more than 6 sentences ?
• 2. briefly mention what could constitute
adjustment by Average Adjusters ?
• 3 . 600 packages were insured based on
Deductible consideration in series of 150
packs each at 5% ,8% ,7%, 10%;give the total
required in case of total loss ?
 Institute cargo clauses interpretation
• Time clause –Hull
• Time clause – freight
• Voyage clause –hull
• Voyage clause –freight
• Cargo clause A, B, C.
• War clauses. Malicious damage
• Strike clauses, Additional perils
• Location, Replacement, Machinery damage
• Dual valuation, theft, Pilferage, non-delivery
 Time clause-Hull
• What is hull
• What is time charter (TC)
• Conditions associated with TC and fees
• Duty of the ship owner
• Duty of the charterer/despondent owner
• Crew on board and payment
• Return of the vessel (if any)
 Time clause- freight
• What constitute freight
• Method of receive of freight
• Terms of payments
• Failure of payment
• Redress in default to parties involved
 Risks covered by cargo clause A
• All risks of damage ,loss to the s.m. Except as
contained in the exclusions 4,5,6,7
• Gen. Av; salvage charges
• Av. Adjust according to the trade
• Liabilities under contract of affrt.ment
• Both to blame clause on notification of the
insurer
 Cargo clause –B- risks
• Fire/explosion, standing, grounding sunk/capsized
• Overturning, derailment of land conveyance, collision, contact with
craft, vessel, conveyance with any external object other than water
• Discharge of cargo at port of distress
• earthquake., volcanic erruption , lightening
• Gen. Av. Loss ,jettison /washing overboard
• Entry of lake ,sea , river into vessel, craft hold ,conveyance,
container , liftvan, place of storage
• ##Total loss of any package overboard, dropped while loading on to,
or unloading from vessel/craft##
• Gen. Av.,salvage charges ,both to blame according to the trade
laws/practice
 Cargo clause –C -risks
• The risks here are as contained in clause B in
exclusion of washing overboard and the
double hash-tack in clause B
Risks not covered by cargo clauses A,B,C
• All the exclusions are the same from clauses 4,5,6 and 7
except 4.7 in clauses B and C not found in cargo clause A
• Clause 4 in B & C stops with 4.8 while cargo clause A
stopped at 4.7 but is not the same wordings as seen in
B&C
• Clause 4.7 in cargo clause A coresponds to 4.8 of cargo
clauses B&C
• NOTE; cadets are advised to get copies of these clauses
from the TEXTBOOK on Insurance by ALLAN BRANCH or
Law of International Trade
 Other articles of the clauses
• Claims
• Duration/termination of the policy
• Benefit of insurance
• Minimising losses
• Avoidance of delays
• The law and practice under consideration