Answer
Principles of General Average
General Average (GA) is based on the principle that when an extraordinary sacrifice or expenditure is intentionally and reasonably made for the common safety of the maritime adventure, the resulting loss is shared proportionately by all interests that were saved.
The main principles are:
- Common danger must exist
Ship, cargo and other property involved in the maritime adventure must face a real and substantial common peril. - Sacrifice or expenditure must be voluntary and intentional
The loss must result from a deliberate action, not from an accidental loss.
Example: intentionally jettisoning cargo to refloat a grounded vessel. - Action must be extraordinary
It must be outside the normal expenses or losses of the voyage. - Action must be reasonable
The Master’s decision must be reasonable considering the circumstances at that time. - For common safety
The act must be intended to preserve the whole maritime adventure, not merely one individual interest. - There must be a successful result
Some property must ultimately be saved. The parties whose property is saved then contribute toward the GA loss.
Simple example
A ship is grounded and in danger. The Master orders cargo to be jettisoned and engages tugs to refloat the ship.
If the ship and remaining cargo are saved:
- value of sacrificed cargo → GA sacrifice;
- reasonable tug/refloating expenses → may be GA expenditure;
- shipowner, cargo owners and other contributing interests share the loss according to their respective contributory values.