Shipping Lawyer Salvage and General Average 2 — Questions and Answers
Question 1: Under what circumstances may a ship's master bind cargo interests to a salvage contract without their prior consent?
- Only when all cargo interests have been individually notified and have failed to respond within 24 hours
- In genuine emergencies where the danger is imminent and there is no opportunity to consult cargo owners (Correct answer)
- Whenever the master determines that the vessel's flag state law permits such action
- Only when the salvage contract is in the standard Lloyd's Open Form
Correct answer: In genuine emergencies where the danger is imminent and there is no opportunity to consult cargo owners
The master has an implied agency authority to bind cargo interests to salvage contracts in emergencies because the law recognizes the necessity of immediate action when life and property are in peril and consultation is impossible.
Question 2: On what basis are general average contributions calculated under the York-Antwerp Rules?
- The insured value of each interest as declared to underwriters at the commencement of the voyage
- The invoice cost of cargo plus freight, as shown in shipping documents
- The contributory value of each interest at the termination of the adventure at the port of destination (Correct answer)
- The market replacement cost of each interest at the port of loading
Correct answer: The contributory value of each interest at the termination of the adventure at the port of destination
Under Rule XVII of the York-Antwerp Rules, the contributory values are based on the actual net values of the property at the end of the adventure (the port of destination), reflecting what each party actually saved from the common peril.
Question 3: Which of the following would NOT be allowable as a general average sacrifice under the York-Antwerp Rules?
- Cargo deliberately jettisoned to lighten a vessel in danger of foundering
- Damage to machinery caused by the extraordinary use of engines to refloat a grounded vessel
- Damage resulting from ordinary wear and tear of the vessel's machinery during the voyage (Correct answer)
- Water damage to cargo caused by firefighting efforts to extinguish a shipboard fire
Correct answer: Damage resulting from ordinary wear and tear of the vessel's machinery during the voyage
Ordinary wear and tear is a foreseeable incident of the voyage, not an extraordinary sacrifice or expenditure made for the common safety, and is therefore excluded from general average allowances under the York-Antwerp Rules.
Question 4: The 'New Jason Clause' was developed specifically to address which legal problem in US maritime law?
- US courts' refusal to allow general average recovery from cargo when the owner's negligence contributed to the casualty requiring the sacrifice (Correct answer)
- Disputes over salvage priority when multiple vessels respond to a distress call in US waters
- Allocation of salvage costs between vessel owners and cargo interests under US federal law
- Environmental liability arising from general average acts in US exclusive economic zones
Correct answer: US courts' refusal to allow general average recovery from cargo when the owner's negligence contributed to the casualty requiring the sacrifice
The New Jason Clause was developed after the US Supreme Court held in The Jason (1912) and subsequent cases that a negligent shipowner could not recover general average from cargo; the clause contractually restores this right and also addresses the US Harter Act's requirements.
Question 5: What is the role of a General Average Adjuster?
- A court-appointed maritime arbitrator who resolves disputes between salvors and vessel owners
- An independent expert who investigates maritime casualties and determines whether criminal negligence occurred
- A specialist who calculates, apportions, and formally adjusts the general average contributions owed by each interest (Correct answer)
- A government official responsible for certifying that a general average declaration complies with applicable regulations
Correct answer: A specialist who calculates, apportions, and formally adjusts the general average contributions owed by each interest
A General Average Adjuster (typically an Average Adjuster or Average Stater) is an independent expert, often appointed by the shipowner, who determines what losses qualify for general average, calculates each party's contributory value, and prepares the formal adjustment document.
Question 6: Under the 1989 Salvage Convention, what compensation may a salvor receive even when the salvage operation fails to save the vessel?
- A fixed award of 10% of the vessel's pre-casualty market value
- Full reimbursement of all out-of-pocket salvage expenses regardless of the outcome
- Special compensation for measures taken to prevent or minimize environmental damage, payable by the vessel's P&I insurer (Correct answer)
- No compensation is payable if the salvage operation is ultimately unsuccessful
Correct answer: Special compensation for measures taken to prevent or minimize environmental damage, payable by the vessel's P&I insurer
Article 14 of the 1989 Salvage Convention entitles a salvor to special compensation from the vessel owner for environmental protection measures, even when the traditional salvage award would be nil, ensuring salvors are not deterred from undertaking high-risk environmental salvage.
Question 7: What documents does a cargo interest typically provide to participate in a general average adjustment and secure release of their cargo?
- A General Average Bond (personal undertaking) and a General Average Guarantee from their cargo insurer (Correct answer)
- A bill of lading endorsed in blank and a notarized customs import declaration
- A marine survey report and a certificate of origin from the exporting country
- An original letter of credit and a certified commercial invoice
Correct answer: A General Average Bond (personal undertaking) and a General Average Guarantee from their cargo insurer
Shipowners typically require cargo interests to sign a General Average Bond (their personal obligation to pay their share) and provide a General Average Guarantee from their cargo underwriter (the insurer's security) before releasing cargo held as security for general average contributions.
Shipping Lawyer Salvage and General Average 2
Under what circumstances may a ship's master bind cargo interests to a salvage contract without their prior consent?