In May 2016, Comité Maritime International approved a new version of the York-Antwerp Rules (YAR). These Rules return to many of the provisions of the 1994 Rules and early indications are that they will prove more popular with the shipping community than the contentious 2004 Rules.
What are the YARs?
The YARs provide a standard method of apportioning general average losses. General average arises when an extraordinary, voluntary sacrifice is made in order to save the common maritime adventure. The classic case is that of jettison, when part of the cargo is sacrificed to save the vessel and remaining cargo. Today, it arises most frequently in relation to expenses incurred at a port of refuge.
The 2016 YARs
The 2016 YARs are the first revision since 2004. However, in practice, they will be the first changes since the 1994 editions. The 2004 Rules never gained traction in the market meaning that many contracts still incorporate the 1994 or earlier editions of the Rules.
The pressure to reform came predominantly from the marine insurance industry. General average claims incur significant time and expense, particularly for small claims. As a result, the 2016 YARs focus on improving claim and adjustment procedures. The Rules are accompanied by Guidelines which set out best practice.
Some of the changes include:
- Salvage has been reintroduced as a general average loss. However, separate salvage liability will not be allowed as general average unless excluding it produces an unfair result. If salvage is not included, it must be deducted from the contributory value as an extra charge. This approach strikes a balance between the 1994 and 2004 YARs
- Wages incurred at a port of refuge while the vessel is detained for common safety or to effect repairs necessary to continue the voyage will be allowed. This is a return to the 1994 YARs
- Port charges have been defined, despite a general consensus not to include definitions
- A 24 month time limit has been imposed on claims for the cost of cleaning, painting or coating the bottom. This is an extension from 12 months
- Temporary repairs – the 2016 YARs adopt the 1994 method of considering temporary repairs as a general average loss first, before considering particular average
- The use of commercial invoices to calculate the amount for cargo claims has been expressly approved (this is already common practice)
- Approval for adjusters to exclude very small values where appropriate, given these small values often result in disproportionate contributions
- New procedure for adjusters handling funds, removing the joint account provisions of previous rules, which have fallen foul of US anti-trust legislation
- Removal of the 2% commission and adoption of the LIBOR rate with a 4% uplift
- 12 month timebar, introduced in the 2004 YARs, has been preserved
By returning to elements of the 1994 Rules, the 2016 YARs strike a better balance between time, cost and fairness which should make them more favourable to the shipping community. They have already proved more popular than their 2004 predecessor, with the International Chamber of Shipping, International Union of Marine Insurance and BIMCO all lending their support. BIMCO has announced that it will incorporate the 2016 Rules into its standard contracts. This should make the 2016 YARs the industry standard.
By stepping back, the 2016 YARs have brought practice 22 years forward.