In this article, I will explain "General Average".

What is Joint Sea Loss?

The "common maritime practice" has been practiced since ancient times, and is based on the idea that vessels and cargoes are a community of common destiny in maritime transportation, and in order to protect their common safety and interests, the costs that were intentionally and reasonably spent (rescue costs, transshipment costs to a substitute vessel, etc.) or sacrificed (cargo damage caused by firefighting operations, etc.) are shared according to the price (burden price) of each saved. The system is based on the sharing of the price (burden price) of each saved cargo.

For example...

Vessel collision, vessel fire!
→ Vessels and cargoes are at risk
→ ・Willfully run aground to avoid sinking
Dumping cargo to lighten the footprint of the ship.
Damage caused by water from fire extinguishing, etc.
and others are recognized as joint sea damage casualty losses.

→ ・Cost of evacuation port
Crew Wages in Evacuation Ports
Temporary repair costs at evacuation port
and others are identified as joint sea damage costs.

These joint sea casualty losses and joint sea loss expenses are compensated by the vessel and cargo ultimately saved.

The rules and method of settlement for such damages are stipulated in the Uniform International Rules called the "York-Antwerp Rules" and are used worldwide (incorporated into charter agreements and bills of lading as part of the contractual content).

If a joint sea loss is declared...

The shipper must be in possession of the shipment in order to receive it.
(1) General Average Bond
(2) General Average Guarantee Letter (if cargo insurance is in force)
Valuation Form
Shipping documents
The following items are to be prepared, arranged, and submitted to the shipping company.

Since the insurance company will issue (2) above, regardless of whether or not it will be a joint marine casualty, it is necessary to promptly notify the insurance company of information such as [location of the vessel, vessel and cargo movements, and cargo delivery schedule] upon occurrence of a marine casualty.

≪Practical flow.
✓In the event of a joint sea loss ...
Shipping company (shipowner): Declares the loss to be a joint sea damage ⇒ A "General Average Declaration Letter "* is sent to the shippers concerned.
*A summary of the accident and a notice declaring the accident to be a joint marine casualty accident.

What to do to receive a shipment

Shipper: Arrange for the following documents
General Average Bond
(2) The shipowner agrees to the joint settlement of marine loss declared by the shipping company (shipowner).
General Average Guarantee Letter
: A guarantee that the insurance company of the cargo will pay to the shipping company (shipowner) on behalf of the shipper the joint sea loss dues to be borne by the shipper → Ask the insurance company to issue such a guarantee.
Valuation Form
The documents necessary to calculate the amount of joint sea damage contributions for cargoes.
Generally, the invoice price should be stated.
(4) Complete set of shipping documents
B/L, Invoice, Packing List, etc.
*In addition to the above, there are other documents required to be submitted depending on the case of the accident.
⇒Submit the above documents to the shipping company (shipowner) or GA Adjuster.
⇒Pick up cargo

Once we pick up the cargo...

Shipper: Check the condition of the cargo →Request a survey if there is damage →Determine the amount of damage →Reimbursement by insurance

■Thereafter

joint accountant
The amount of each party's share of the loss, including hull and cargo, is calculated, and a joint marine loss settlement is prepared.
⇒Reimbursement and invoice will be sent to the insurance company.
insurance company
The contents of the settlement are examined and if there is no objection to the contents of the settlement, the settlement is paid to the settlor (or shipowner).
It usually takes one to two years from the time of the accident to settle the claim, and a major marine accident
In some cases, it may take more than five years.

≪無保険のときの注意点≫

If a joint sea loss is declared, each shipper incurs costs and procedural hassles beyond the cargo value.
If you have marine insurance, the insurance company will issue a letter of guarantee for joint sea loss sharing as described above in "2) What you must do to accept the cargo" and you can receive the cargo. Please note that the cargo cannot be received unless a deposit is paid to the shipping company as a guarantee that the joint sea loss dues will be paid after the settlement is completed.