General average (müşterek avarya in Turkish law) is the apportionment of extraordinary sacrifices and expenses, intentionally made to save the ship and cargo from a common peril, among the ship, cargo and freight in proportion to their values. Even a shipper whose cargo was not damaged at all pays a contribution and cannot take delivery of the goods without providing security.
When does a general average act arise?
Article 1272 of the Turkish Commercial Code (Türk Ticaret Kanunu, TTK) requires three conditions together: the ship, cargo and freight must face a common peril; the sacrifice or expenditure must be made intentionally and in a reasonable course of action; and what is done must be extraordinary. Losses and expenses that are the direct consequence of this act count as general average.
- Flooding compartments to extinguish a fire in the hold, and the damage this water causes to sound cargo
- Jettisoning containers to lighten a grounded ship
- Hiring a salvage company and tugs to refloat or tow the ship
- Entering a port of refuge after an engine failure, and the port charges incurred there
An accident that affects only a single consignment, for example a container getting wet in heavy weather, is particular average. This loss is not apportioned; it stays with the owner or the owner's insurer.
Which rules apply?
Unless the parties agree otherwise, TTK Article 1273 applies the most recent York-Antwerp Rules prepared by the Comité Maritime International (CMI) that have been translated into Turkish and published in the Official Gazette (Resmî Gazete). In international practice the current text is York-Antwerp 2016; at its Antwerp conference in October 2022, the CMI made only a technical correction to the interest provision in Rule XXI. Most bills of lading and charter parties refer to the 2016 text, but the 1994 or 2004 versions are also found in older contract forms. Which version applies is read from the terms on the back of the bill of lading.
How is the apportionment done, step by step?
- Declaration: The shipowner declares general average and is obliged to have the adjustment carried out without delay (TTK Art. 1278).
- Appointment of the average adjuster: The parties concerned choose an average adjuster unanimously; if they cannot agree, the court at the place of adjustment appoints one (Art. 1280).
- Collection of security: Each cargo interest is asked for an average bond, a valuation form and a commercial invoice. For insured cargo, the insurer provides an average guarantee; for uninsured cargo, a cash deposit is taken.
- Calculation: The adjuster totals the allowed sacrifices and expenses and calculates the sound values at destination as the contributory values.
- Adjustment report: The parties concerned may object in court; the final approval decision acquires the force of a court judgment (Art. 1284).
A simple example: suppose the ship is worth 30 million dollars and the cargo on board 20 million dollars in total. If the allowed average is 2.5 million dollars, the rate is 2.5 / 50 = 5 percent. The owner of a 400,000-dollar machine on board pays a contribution of 20,000 dollars, even if the machine did not get so much as a scratch.
What awaits the owner of uninsured cargo?
TTK Article 1277 prohibits the master from delivering the cargo unless the contributions are paid or security is provided; Article 1201 also gives the carrier a lien over all the goods for the general average claim. A consignee without insurance has to leave the cargo waiting in port until the cash deposit is paid, and storage and demurrage charges accumulate in the meantime. Claims for contributions become time-barred after one year; the period starts from the date the ship arrives at the place of adjustment (Art. 1285).
Does insurance cover general average?
All three options of the Institute Cargo Clauses cover the general average contribution and salvage charges; the differences lie in the cover for damage and are compared in the entry ICC (A), (B), (C) clauses. If the sum insured is lower than the contributory value of the cargo, the insurer pays only a proportional part of the contribution. A CMR policy, which covers the carrier's liability, does not cover the cargo owner's contribution; the distinction is explained in the entry difference between CMR insurance and cargo insurance.
Common mistakes
- Assuming that cargo carried on a truck aboard a RoRo vessel is not part of general average; the vehicle and trailer also contribute.
- Delaying the average bond and valuation form; the delivery date is delayed by the same amount.
- Submitting the valuation without an invoice; the adjuster verifies the declaration against documents.
How does Voltim Global support you?
Since cargo carried on the Tuapse–Taşucu RoRo line passes through a sea leg, Voltim Global checks with the customer before loading whether the policy covers the sea leg and the general average contribution. In the event of a declaration, coordination with the international transport insurance side is provided in preparing the documents the adjuster requires, such as the invoice and valuation form.