Modern-Day Averages
Today, there exist two main types of Average.
1 ‘York-Antwerp Rules’. As in Baldesseroni’s treatise, this division is between General Average (GA) and Particular Average (PA). GAs are shared between all participants in a venture whilst PAs are borne by the directly affected party. PAs are effectively defined by exclusion (all damages that are not GA are automatically considered PA). The participants in the case of a GA are today defined as the ship-owners and cargo owners. These parties may then be covered by their insurers, with underwriters usually being held liable for GA contributions.
GA is regulated by the York-Antwerp Rules (YAR), which derive their force from their being inserted into freight contacts. These emerged only in the second half of the nineteenth century after the 1864 ‘York Conference’ and the 1877 follow-up in Antwerp, both held under the auspices of the ‘Congress of the Association for the Reform and Codification of the Law of Nations’.
2 Richard Morrison, ‘General Average’, The Assurance Magazine, and Journal of the Institute of Actuaries 12 (1866), p. 350; Richard Cornah, ‘The road to Vancouver: the development of the York-Antwerp Rules’, Journal of International Maritime Law 10 (2004), 155–66, at p. 161. Instead of being enshrined in legislation, as originally envisaged, the rules would be inserted into freight contracts as an intermediary solution. Like lots of intermediary solutions in the history of international cooperation, it has proved remarkably durable. Somewhat remarkably, the original rules did not even define what GA was. The YAR quickly gained traction nevertheless and were ‘all but universally adopted’ by 1890.
3 Cornah, ‘The road to Vancouver’, p. 162. They continue to be regularly updated, though there are still periodic contentions to resolve. The tensions that the reformers encountered had a long history – nor did they ever really go away even after their supposedly definitive resolution via YAR.
4 For discussion on the limitations of the York-Antwerp Rules see Jolien Kruit, General Average, Legal Basis and Applicable Law: The Overrated Significance of the York-Antwerp Rules (Zutphen: Paris Legal Publishers, 2017). Rule A of the 2016 YAR defines a GA act as follows: ‘there is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure’.
5 ‘York-Antwerp Rules’. On this basis, Richard Cornah, a contemporary Average adjuster, identifies four conditions which an expense or damage must meet for an act to be declared a GA: firstly, it must be extraordinary and not part of the ordinary fulfilling of the freight contract; secondly, it must be intentionally made and not an inevitable loss that would have followed without any human intervention; thirdly, it must be for all participants and not just for the salvation of a part of the property; and finally, it must be made in a situation of peril. Cornah admits that this last criterion involves making some subtle distinctions.
6 Cornah, A Guide, pp. 6–7. He states that while the peril in question might not be ‘immediate’ it must be ‘real and substantial’: precautionary acts are therefore not admitted. To this we should also add the criterion contained within the rule paramount of the YAR: that a sacrifice or expenditure must be ‘reasonably made or incurred’. The YAR thus avoids the more probablematic criterion that a GA act be recognised as ‘necessary’ for the salvation of the ship, a somewhat awkward element, as we will see.
These five criteria or variations upon them – extraordinary, intentional, for all participants, in a situation of peril, and reasonable – have been important normative considerations to various extents across the history of risk sharing. There was, however, for most of the history of trade, a much wider typology of Averages than the binary one that we adopt today, resulting in a heterogenous patchwork of different risk- and cost-sharing practices.