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Hong Kong – Shipping & International Trade Law: General Average.

3 March, 2015

 

1. Will any general average claim (whether under the contract, generally or GA securities) necessarily follow the contractual provisions in relation to general average, in particular, the chosen version of the York Antwerp Rules (‘YAR’)?

 
The Hong Kong courts will normally follow the contractual provisions on general average, otherwise, the common law position will apply. See Hong Kong Islands Shipping Co Ltd v Castle Insurance Co Ltd (Formerly Pacific & Orient Underwriters (HK) Ltd) and 84 Others [1981] HKLR 510.


Time Bars


1. Will general average claims under the contract of carriage be governed by any contractual time bar – in particular, any which might be set out in the YAR (eg, YAR 2004)?

 
Referring again to Hong Kong Islands Shipping Co Ltd v Castle Insurance Co Ltd (Formerly Pacific & Orient Underwriters (HK) Ltd) and 84 Others (supra), the Hong Kong courts will apply contractual time bars. In this particular case, the contractual general average provisions incorporated into the contract of carriage were the York Antwerp Rules (‘YAR’) 1950. It was held that the second plaintiff’s claim for general average was time-barred as a matter of common law and Hong Kong statute (ie, commenced six years after the casualty), and nothing in the YAR 1950 postponed the second plaintiff’s cause of action. The key point is, however, that the Hong Kong courts are prepared to give effect to contractual provisions relating to limitation periods and accrual of time.

 

By analogy, there is no reason to believe that the Hong Kong courts would not uphold the contractual time bar found in Rule XXIII of YAR 2004 (see also section 8.8.2 infra).

 
2. In the event that claims should be pursued under general average securities in your jurisdiction, what is the applicable time bar for such claims? Will this be affected by the provision of YAR 2004 Rule XXIII if 2004 YAR is specified in the relevant contract?

 

 

There is no Hong Kong case law specifically concerning Rule XXIII of YAR 2004 and its effect on the time bar for general average securities (bond or guarantee).

 
Older cases have referred to English authorities to the effect that for general average securities, time runs from the time of the General Average adjustment (Hong Kong Islands Shipping Co Ltd v Castle Insurance Co Ltd (Formerly Pacific & Orient Underwriters (HK) Ltd) and 84 Others [1981] HKLR 510, at page 516, citing Union of India v EB Aaby’s Rederi A/S [1975] AC 797).

 
3. To what extent is any general average adjustment binding?

 
Unless there is agreement between the parties, general average adjustments are not legally binding on the parties. It is open to the parties to scrutinise and, if necessary, challenge the adjusters’ figures.

 
In Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd [1983] 1 HKC 32, a Privy Council decision on appeal from Hong Kong, Lord Diplock held:

 

‘The York-Antwerp Rules do not make the average adjuster’s assessments of liability to contribute contained in his general average statements binding upon cargo owners nor do the rules impose any legal obligation on cargo owners to settle general average claims by paying the amount so assessed …’.

 

This material was first published by Sweet & Maxwell in 2014 in “Shipping and International Trade Law – International Comparisons” (and is reproduced here by agreement with the Publishers)

 
Related:  

 
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For further information, please contact:

 

Damien Laracy, Partner, Laracy & Co in association with Hill Dickinson Hong Kong LLP

damienlaracy@laracyco.com

 

Mike Mallin, Partner, Hill Dickinson Hong Kong LLP in association with Laracy & Co

michael.mallin@hilldickinson.com

 

Michael Ng, Solicitor, Laracy & Co in association with Hill Dickinson Hong Kong LLP

michaelng@laracyco.com

 

Hill Dickinson Hong Kong LLP In Association With Laracy & Co Shipping Maritime & Aviation Practice Profile in Hong Kong

 

 

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