State the procedure of GA application.

Answer

1. GA incident occurs → There must be an extraordinary sacrifice or expenditure, intentionally and reasonably made for the common safety, to preserve property involved in a common maritime adventure from peril.

2. Master informs the owner/company → Master reports the casualty and records all relevant facts, actions, expenditures, log entries, photographs, statements, etc.

3. Shipowner declares General Average → Normally, the shipowner declares GA when circumstances justify it. The owner appoints a professional Average Adjuster.

4. Average Adjuster collects documents → Such as:

• Ship and cargo values
• Bills of lading
• Cargo invoices
• Insurance details
• Salvage/towage expenses
• Repair and survey reports
• Port-of-refuge expenses
• Master's reports and log extracts

5. GA security obtained before cargo release → Cargo interests are normally required to provide security:

• GA Bond — undertaking from cargo owner.
• GA Guarantee — normally from cargo insurer.
• If cargo is uninsured, a cash deposit may be required.

6. Average Adjuster determines allowances → The adjuster decides which sacrifices and expenditures qualify under the applicable York-Antwerp Rules and calculates the contributory values of ship, cargo and, where applicable, freight.

7. Contribution is calculated

where

Example: If total GA expenditure/sacrifice = $1 million and total contributory value = $20 million, GA rate = 5%. A cargo having a contributory value of $200,000 would contribute $10,000.

8. GA Adjustment is issued → The Average Adjuster prepares the final General Average Adjustment, showing allowable sacrifices/expenditures and each party's contribution.

9. Settlement → Shipowner, cargo owners, freight interests and their insurers pay/receive the amounts according to the adjustment.