Rules of York-Antwerp
Damage done to a ship and cargo, or either of them, by water or otherwise, including damage by beaching or scuttling a burning ship, in extinguishing a fire on board the ship, shall be made good as general averages; except that no compensation shall be made for damage by smoke however caused or by heat of the fire.
The resolution passed by the Glasgow Conference in 1860 read:
“that the damage done to ship, cargo, and freight, in extinguishing the fire, shall be allowed in general average.”
This was approved without any alteration by the 1864 York Conference.
This rule very clearly is different from the current practice of British average adjusters, which excluded the damage caused to the goods by water, used to extinguish fire, on the ground that, unlike jettison, no particular package had been selected for the sacrifice.
The AAA, at their 1873 general meeting changed the rule and passed a Rule of Practice “that damage done by water poured down a ship’s hold to extinguish a fire be treated as general averages.”
At the 1877 Antwerp Conference, Richard Lowndes successfully moved an amendment at the 1864 Rule, by which the following wording was added:
“…..except that no compensation be made for damage done by water to packages which have been on fire.”
Two more amendments were made in the Liverpool Conference in 1890.
Rule III was not altered at the conference of 1924 or 1949. In the years preceding the 1974 Hamburg Conference, it became clear that there was a difference in practice of average adjusters in different countries in deciding:
- What portion of the ship or the bulk cargo was on fire,
- Whether, and to what extent damage by smoke should be considered for general averages.
The practice of allowing in general average the enhancement of damages by smoke in consequence of efforts to extinguish fire had been disapproved in the United States in the case Reliance Marine Insurance Co. Vs New York & Cuba Mail Steamship Co.
In the 1974 Hamburg Conference, the BMLA proposed 2 amendments to solve these problems:
- Deleting the exclusion that no compensation should be made for damage to such portion of the ship and the bulk cargo, or to separate packages of cargo, as have been in fire
- To replace it by a new exclusion for damage by smoke or heat, however, caused
As the main objective of the Hamburg Conference was to simplify the general averages procedure, these amendments were adopted.
As a result of the first of the 1974 amendment, cargo surveyors no longer needed to make a separation of water damaged cargo suffering from water damage only and those that have also been touched by fire. It was no longer necessary to explore the realm of semantic to decide what is a ‘portion’ of a bulk cargo, and whether there is a distinction between a package which is charred and one which is scorched. The second amendment is also beneficial, since the exclusion for damage by smoke, has succeeded where an argument has failed in bringing about the uniformity of practice.
Although through the course of the various amendments the scope of the Rule is significantly widened, but it still does not consider all the circumstances that can arise in practice in case of fire. So, to interpret the rule the following things have to be noted.
- The rule applies to damage and not to “Loss and damage”. Although the word ‘damage”, when applied to cargo, may cover instances where such damages renders the goods a constructive total loss.
- Damage to property which is not cargo would need to be justified under Rule A and loss of freight under Rule XV.
More importantly, Rule III only talks about damage done in extinguishing fire. As Wright J. said in Tempus Shipping Vs. Louis Dreyfus, “Mere heating which has not arrived at the state of incandescence or ignition is not within the specific word ‘fire’. So, if the cargo is heated up to an extend that there could be chances of it catching fire, reasonable steps taken to prevent the outbreak of fire, will fall not under Rule III but under Rule A. On the other hand, if the master under mistake of fact pours water on goods in a hold believing that there is fire, when none existed, nor there was any danger of fire, this will not fall under the general average principle, as the element of peril is absent.
Cutting Away Wreck
Loss or damage sustained by cutting away wreck or parts of the ship which has been previously carried away or are effectively lost by accident shall not be made good as general average.
The origin of the resolution was at the Glasgow Conference, which read:
“That the loss sustained by cutting away a wreck of masts accidentally broken ought not to be allowed in general averages.”
At the York Conference 1864, the terms of this resolution were slightly enlarged and was brought under the ambit of York Rules.
There were no changes made in the subsequent revisions of York-Antwerp Rules until 1974. At the Sydney Conference in 1994, it was proposed by the US Delegation that rule should be rescinded and replaced by the following:
“When the ship or cargo or other property on board the ship sustains a combination of sacrificial damage and damage which is not general average the amount made good in general averages under any these Rules shall not exceed the net increase in repair or replacement costs resulting from the sacrificial damage.”
The delegated clearly thought that this was altogether too much to swallow at one gulp and the proposal was decisively rejected.
Historically, it would not be totally accurate to say that the Rule expressed a principle, rather, it was originally designed to prevent the confusion in determining the value, if any, attached to the remains of a mast or spars which, having been carried away by a sea peril, had to be cut adrift for the common safety.
The present text, however, would not support such a severe practice. Though, the 1974 text brought the Rule closer to principle. The rule in the present form has to do with the reality of the sacrifice and excludes from general averages only those parts of a ship which are as good as lost at the time when the decision is made to cut them away.
One of the amendments effected in 1974 was done to substitute the words “sustained by” for “caused by” in the phrase that previously read “loss or damage caused by cutting away wreck”. Even after the amendment, the wordings of the rule were still criticized on the ground that consequential damage to a part of the ship not previously affected by the accident could be caused by cutting away of the wreck. In the opinion of Lowndes & Rudolf, it is correct in stating that the damage to the propeller should not be excluded, but it is submitted that his conclusion can be justified not only on principle but also in the construction of the Rule in its present wording.