Casualty

General average

Published 28 August 2026 · updated 17 October 2026

General average is the oldest rule in shipping that is still in use, and the one that surprises cargo owners most. If something is sacrificed on purpose, and reasonably, to save the ship and cargo from a danger they share, the loss is not left with whoever suffered it. Everyone whose property was saved pays a share in proportion to the value saved. A shipper whose containers were never touched, on a ship that never ran aground, can receive a demand for money, and that demand is entirely valid.

What the rule is

General average is a set of contractual and legal rules. It is not an insurance product, and it is not an international convention. It applies because the bill of lading and the charterparty say so, and they almost always say that the calculation will follow the York-Antwerp Rules. The Comite Maritime International (CMI) maintains those rules.

The definition is in Rule A of the 2016 text. There is a general average act when, and only when, an extraordinary sacrifice or expense is made on purpose and reasonably, for the common safety, to protect the property involved in a shared sea voyage from danger.

Each word in that definition is a test, and in practice these tests decide most cases:

• Extraordinary. Normal running costs and the normal results of a voyage are not general average, however expensive they are.
• Intentionally. It must be a deliberate act. Damage that the sea causes by itself is "particular average", and the owner of the damaged property bears it alone.
• Reasonably. The Rule Paramount says it directly: in no case shall there be any allowance for sacrifice or expenditure unless reasonably made or incurred.
• Common safety, common peril. An act that benefits only one party is not general average.

The classic examples still explain it best: throwing cargo overboard to lighten a ship that has run aground, damage caused while putting out a fire on board, deliberately beaching a ship to stop it sinking, and the cost of going into a port of refuge. Modern cases usually involve the last of these, where the costs of salvage, removing cargo to lighten the ship, hiring tugs and restowing are the figures that end up in the calculation.

How the Rules are put together

There are seven lettered rules that set out principles, and twenty-three numbered rules that deal with specific items. The Rule of Interpretation sets the order. The Rules apply in place of any conflicting law or practice. Apart from the Rule Paramount and the numbered rules, general average is calculated under the lettered rules. So a specific numbered rule wins over a general principle, and the requirement to act reasonably wins over both.

Some limits are stated directly. Only losses that are the direct result of the general average act are allowed. Environmental damage and the escape of pollutants are excluded. So are demurrage, loss of market and any loss caused by delay, which rules out most of what a cargo owner would actually like to claim.

One rule works the other way. The right to a contribution still exists even if the event was caused by the fault of one of the parties to the voyage, but that does not affect any claim or defence based on that fault. So the shipowner can still declare general average after an accident caused by its own crew. The cargo owners then reply that the ship was unseaworthy and that the owner did not use due diligence. That is a question under the Hague-Visby Rules, not the York-Antwerp Rules, and it is where most disputed cases are really decided.

Versions, and why the year matters

The 1994 Rules were widely used, and you will still find them in older contracts. The 2004 revision reduced what owners could recover. Shipowners did not support it, and it was very rarely used. The CMI conference in New York approved the 2016 Rules in May 2016, with a technical change to the interest provision in 2022, and BIMCO moved its standard contracts onto them. The practical rule is the same as for charterparty forms: name the year, because three different texts are still in use and they do not produce the same figures.

Three changes in 2016 show up in real cases. Salvage can still be claimed, but where the parties each have their own contract with the salvors, it is brought into the calculation only in defined cases. This confirms the adjusters' habit of leaving it out when sharing it again would change little. Low-value cargo can be left out of the contribution when including it would cost more than its share is worth. And the commission that used to be allowed on general average payments was removed.

Security, and why the cargo does not move

The shipowner has a lien on the cargo for its general average contribution, meaning a right to hold the cargo until it is paid. But the contribution can take months or years to calculate. Because of this delay, the owner takes security (a promise of payment) before handing over the cargo:

• A general average bond, signed by the cargo receiver, promising to pay whatever contribution is finally due and to declare the value of the goods.
• A general average guarantee, given by the cargo insurer. This is the document that is actually backed by money.
• A cash deposit, when there is no acceptable insurer. This is what an uninsured cargo owner faces.

Commercially, the last point is the one to remember. A cargo owner with normal cargo insurance passes the whole matter to the insurers and pays nothing itself, because standard cargo cover includes general average contributions. An uninsured cargo owner must pay cash against a cargo it has already paid for, and then wait.

The owner appoints an average adjuster, who collects the security and prepares the calculation, called the adjustment. Each contribution is based on the actual net value of the property at the end of the voyage. Cargo is valued at the time of discharge, using the commercial invoice. The ship is valued without regard to whether any charter it is on is a good or a bad one. The party making a claim must prove it, and values and claims must be reported within twelve months, or the adjuster may estimate them.

The time bar

Rule XXIII in the 2016 text ends all rights to contribution, including rights under general average bonds and guarantees, unless legal action is started within one year after the adjustment is issued, and in any case no more than six years after the voyage ended. The parties can agree to extend these periods after the voyage has ended. The rule does not apply between a party and its own insurers, and any mandatory time limit in the applicable law still applies. Adjustments take a long time, so a claim that has been waiting for one is closer to the deadline than it seems.

What it means on a working desk

A declaration of general average stops the normal end of the voyage. Cargo is not released until security is provided, and receivers who have never heard of the idea must have it explained to them. A voyage that was going to finish in two weeks becomes a file that stays open for years. The effects on chartering come from this delay, not from the calculation itself: the ship is off the market, the next fixture does not happen, and the paperwork from the voyage must be kept long enough to produce when the adjuster asks for it.

References

• Comite Maritime International, York-Antwerp Rules 2016, 2016. comitemaritime.org
• Comite Maritime International, York-Antwerp Rules (YAR). comitemaritime.org
• Comite Maritime International, Brief Guidelines relating to General Average. comitemaritime.org
• The Swedish Club, General Average: York Antwerp Rules 2016 adopted by the Comite Maritime International, 2016. swedishclub.com
• UK Parliament, Carriage of Goods by Sea Act 1971, Schedule (the Hague-Visby Rules), 1971. legislation.gov.uk

Related