The curious case of the MV “STAR ANTARES”, or How we stopped worrying and learned to love the YAR 2016

All for One and One for All

In the ancient laws of the Island of Rhodes and in those of all seafaring nations today, General Average exists as the most impartial method of sharing the extraordinary costs that are incurred in a time of peril to save a ship and its cargo.

Deciding which extraordinary expenses and sacrifices should be shared, and how, is the role of the Average Adjuster whose work is guided by well-established rules, of which the most widely used are the York-Antwerp Rules (the ‘Rules’).  Every so often, the Rules are updated to make sure they remain aligned with modern developments in shipborne commerce.  Average Adjusters have always treated updated versions of the Rules as entirely ‘new’ rules, and not as mere modifications of older versions.  This, Average Adjusters believed, best reflected the choice of the parties to a contract of carriage who are free to decide which version of the Rules they wished to apply to a particular voyage.

That was then, this is now

In November 2023, in the case of ‘Star Axe I LLC v. Royal and Sun Alliance Luxembourg S.A. – Belgian Branch and others’ (the “STAR ANTARES”), the UK Commercial Court decided that where a contract of carriage requires that a certain version of the Rules “or any subsequent modification or amendment thereof” be used to adjust a General Average that arises during the course of the contract, the latest version of the Rules, currently the York-Antwerp Rules 2016, must apply.

Why this matters

This judgement will have wide-ranging impact since most contracts of carriage contain General Average clauses that refer to the 1994 Rules, being the most commonly used earlier Rules, with the text noted in bold above.  Ship owners should be aware that the 1994 and 2016 Rules differ in their treatment of salvage remuneration, General Average interest and cash deposits, but especially in the following crucial aspects:

• Rule XX: Provision of Funds: The 2% commission accorded to the party incurring General Average disbursements (usually the ship owner) has been abolished, and
• Rule XXIII: Time Bar for Contributing to General Average: Rights to claim general average contribution are extinguished unless the party claiming contribution (usually the Ship Owner) takes legal action within a period of one year from the date of the adjustment. Also, no legal action may be brought more than six years after the voyage has terminated.

Background facts

In October 2021, the MV “Star Antares” departed Richards Bay, South Africa, with a cargo of ferro chrome ore for ports in China.  A month later, during its approach to the port of Luoyuan, the vessel struck an uncharted reef and damaged its bottom shell plating.

Following temporary repairs, the vessel discharged its cargo at Luoyuan and then removed to a nearby shipyard for permanent repairs, after which it returned to load and deliver its remaining cargo.  The extraordinary expenses incurred to enable the safe prosecution of the voyage were General Average in nature, and we, Independent Average Adjusters Ltd., were appointed by the vessel owners to adjust the General Average loss.

The cargo was carried under a Congenbill 1994 bill of lading, which included a General Average clause that provided “General average shall be adjusted, stated and settled according to York-Antwerp Rules 1994, or any subsequent modification thereof…”.  When approached for their contribution to the General Average expenses incurred, the Cargo interests claimed that the current version of the York-Antwerp Rules should apply instead of the 1994 version, and when called upon to consider the issue, the UK Commercial Court agreed.

Going forward

We understand that the decision will not be appealed, and so, although we would have preferred a more gradual transition to the 2016 Rules, whenever the phrase “…or any subsequent modification thereof…” is included in a contract of carriage’s General Average clause, and is subject to the law of England and Wales, the General Average loss governed by such clause will be adjusted according to the latest version of the Rules with immediate effect.

Notwithstanding the decision, the parties to a contract of carriage retain their freedom of contract, and should they wish to apply the 1994 Rules to the contract of carriage, they could expressly do so therein, or simply delete the words “or any modification” from the relevant General Average clause.

As Average Adjusters, we remain impartial but keep ourselves informed on matters of law as they affect the shipping and insurance industries.  Although there is no guarantee that the UK Commercial court’s decision will be followed, we hope that the case of the “STAR ANTARES” will bring clarity to the adjustment of General Averages and allow the shipping industry to move forward with greater certainty.

Let’s get in touch

For over 25 years, ‘Independent Average Adjusters’ has strongly supported Greek ship-owners, and their insurers, in addressing every conceivable type of marine casualty, and if we can assist you too, please don’t hesitate to contact our office.