Policy & Compliance
Know your BIFA Standard Trading Conditions 2021 – Clause 22
simple example would be where, to save a ship and its crew, a percentage of the cargo being carried is destroyed by fire-fighting measures following an onboard fire. All owners of cargo aboard will then share the costs incurred to save the venture. So, a General Average has been declared and you have been asked for an indemnity or a deposit. What should you do? As mentioned at the start of this article, any standard marine policy will include General Average losses so, if the goods have been insured, the importer should obtain a General Average guarantee from the insurers. If no insurance has been organised then a cash deposit will be needed. Whatever the position, your first action upon receiving notification that a General Average has been declared for a vessel is to give immediate notice to the importer. The appointed average adjusters will need to be in possession of completed guarantees and bond forms or cash deposit before release of cargo, so it is vital that the importer takes immediate action.
Clause 22 refers to General Average and is fairly straightforward, hence just two paragraphs on its wording and use are needed here, followed by some background information
M arine insurance policies usually include cover for General Average so it is good practice to bring the associated risks of a maritime loss to the attention of customers whilst offering suitable insurance cover if none has already been arranged. Clause 22 Where liability arises in respect of claims of a general average nature in connection with the Goods, the Customer shall promptly provide security to the Company, or to any other party designated by the Company, in a form acceptable to the Company. Comment on Clause 22 This clause should be read in conjunction with the indemnity Clause 20(D). This clause makes it clear that it is the Customer, and
not the BIFA Member, that must provide prompt and proper security for goods subject to general average. What is General Average? Whenever there is a maritime disaster, BIFA receives many calls or e-mails concerning General Average. General Average began as an ‘unwritten law’ in ancient times. Whilst thought to go back to the Phoenician age, the underlying principle remains the basis of General Average resolution today. The legal framework covering General Average is the York- Antwerp rules, last revised in 2016. It is a process whereby the parties whose interests have been sacrificed or who have incurred extra expense, are recompensed by the contribution of those whose interests have been saved. A
“ Your first action upon receiving notification that a General Average has been declared for a vessel is to give immediate notice to the importer
February 2024 | 21
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