Do the York Antwerp Rules 1994 apply or 2016 apply when adjusting general average claims? The English Commercial Court has now decided.

UPDATE: Although the owners sought permission to appeal the court’s judgment below, which was granted, the owners never actually filed their appeal. As a result, the cargo owners succeeded in their defence and now when a GA clause states "1994 or subsequent modifications thereof" an English court will interpret that as meaning the York Antwerp Rules 2016. Some of the consequences of this judgment are set out below.

Paul Haworth has acted for ship owners, cargo owners as well as P&I Clubs in GA matters.

In a landmark case that will no doubt have repercussions in the London market, the Commercial Court has now provided some much needed clarity as to which YAR Rules apply.

The issue to be decided arose from the wording found in clause (3) of the standard Congenbill 1994 form, which provides that “General average shall be adjusted, stated and settled according to York-Antwerp Rules 1994, or any subsequent modification thereof, in London unless another place is agreed in the Charter Party’.”

The Claimant owners contended that it was the York-Antwerp Rules 1994 (‘the YAR 1994’) that applied and the Defendant insurers contended that it is the York-Antwerp Rules 2016 (‘the YAR 2016’).

The Claimant’s primary arguments relied upon commentary from the Comité Maritime International (‘CMI’) as well as various other publications and articles in which those various authors expressed the view that they considered the YAR 2016 to be new Rules and not modifications of the 1994. The effect of which was, if parties wanted the 2016 YAR to apply, that would have to be written into the bill of lading or charterparty.

The Defendants’ position was one of contractual construction and the incorporating formula, “or any subsequent modification thereof,” had a clear and unambiguous meaning. This incorporating formula was intended to function as an inbuilt updating mechanism and made the most recent version of the YAR applicable.

The Defendants set out the background as to where the problem arose and explained that the 2004 YAR were controversial and not widely accepted by the shipowning community; BIMCO had also distanced themselves from the YAR 2004 and an opinion emerged in the market that the YAR 2004 were to be treated as a new set of rules not referentially incorporated by the formulae above.

This the Defendants said “was unfortunate, both because it represented a failure to give the words used their correct meaning, and because it has tended to lead to parties not accepting that the YAR 2016, which enjoy a consensus between ship and cargo interests, are incorporated.”

The judge considered the principles of contractual construction and what material forms part of the background knowledge which was reasonably available to the parties in the situation they were in at the time of the contract.

The judge was not persuaded by the Claimant’s arguments and their reliance upon the CMI commentary and the various other publications. Following the ordinary principles of contractual construction, the judge agreed with the Defendant insurers that by incorporating the formulae above, the YAR that were incorporated into the bills of lading were the YAR 2016, and accordingly the general average adjustment was to be conducted under YAR 2016.

·      The YAR 2016 have a one-year time bar to commence proceedings from the publication of the adjustment and a long stop date of 6 years from the termination of the common adventure to commence proceedings.

·      The 2% commission on disbursements has been abolished and the 7% fixed interest rate is now subject to a variable rate.

·      Salvage remuneration was curtailed in the YAR 2004 and the YAR 2016 has attempted to find a compromise and is more akin to the wording in the YAR 1994.