[Passed] - Maritime Cargo General Average

[Goobergunchia]

Here's the Wikipedia article on what "General Average" actually means:
https://en.wikipedia.org/wiki/General_average

In a nutshell, to quote Wikipedia:

"The law of general average is a principle of maritime law whereby all stakeholders in a sea venture proportionately share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. For instance, should the crew jettison some cargo overboard to lighten the ship in a storm, the loss would be shared pro rata by both the carrier and the cargo-owners."

This is based on the Code of Hammurabi 238, which dates from 1750BC. So it's 3,800 odd years old law. There were significant refinements during the Roman era, but essentially the concept is broadly the same: if a boat is sinking and goods need to be thrown overboard to keep the boat from sinking, the law of general average dictates that if the captain declares general average (or the boat owner does, if the boat actually makes it back to port), all cargo owners share in the loss, not just the owner of that particular piece of cargo thrown overboard.

This is very distinct from land transit laws where if a FedEx truck (say) hits a UPS truck and some cargo is damaged, or a railroad carrying toxic waste spills into a nearby town, it's clear what's damaged and whose fault it is. Only those whose cargo is damaged is responsible. Whereas if cargo is thrown overboard at sea, and general average, the owners of cargo on the entire ship are responsible.

The most famous recent example is Ever Given in the Suez Canal where of course everyone had to eat the loss via general average for being an overnight Internet meme. So the shipowners, charterer (to some extent) and the owners of each of the 21,000 containers had to pay. (And for the "damage" to the Suez Canal, which ended up reportedly was billed at US$600 million).

It is provided by the Lex Rhodia that if merchandise is thrown overboard for the purpose of lightening a ship, the loss is made good by the assessment of all which is made for the benefit of all.

— Julius Paulus Prudentissimus, Opinions of Paulus (circa 230 AD)

As Imperium Anglorum points out, inter alia noting that the "lex Rhodia" is not a lex qua lex, but rather, a maritime custom, but these quotes are preserved, and an excerpt is included in Justinian's 6th-century Digest of Justinian (part of the Corpus Juris Civilis).

Wording adaptation

The modern one is based on the York Antwerp Rules, first revised in 1890, the last revision is 2016. This is run by the Comité Maritime International which is based in Antwerp.
https://comitemaritime.org/work/york-antwerp-rules-yar/
https://comitemaritime.org/recent-work/ ... average-2/

Some notes:

1. I used the term "voyage" here but the technical legal term is "adventure", a term which (again) dates from the Roman era. It's not a theme park ride - about 10% of triremes sank in the Roman era even in the Mediterranean. No it's not romantic.
   
2. Under current law, a "general average deposit" is permitted if the cargo shipper does not have insurance but is required to contribute to (say) disbursements for salvage operations. I simply changed it to requiring insurance throughout as that is closer to modern practice.
   
3. Salvage laws have been removed as that is complex enough that it justifies another resolution on its own right. (GA#50 does not count).
   
4. Because of the vagueness around GA#168, there's some definitions around "WA waters" and "WA ships".
   
5. Details are left to WANC. I can't write in 5,000 words the detailed laws on general average but a 400 page guide book is available for those interested:
   https://www.routledge.com/General-Avera ... 1138060937

Here's a blog post on how General Average actually works in practice:
https://www.myseatime.com/blog/detail/y ... ed-to-know

Origin

This came from a discussion on the WA discord, where I objected to the proposal "Standards For International Freight" by Ostrovskiy on the grounds that maritime shipping compensation is vastly different from land based. So at the request of Sanctaria, one that sets out how maritime cargo compensation works based on real life laws (again, dating 3,800 years) is set out.

viewtopic.php?f=9&t=534782

Category: free trade/mild

The World Assembly (WA),

Noting that, as many bodies of water of WA states are connected, cargo shipping and its impact on free trade have been matters of concern to the WA;

Further noting the lack of laws to compensate for loss of maritime cargo due to perils at sea, hindering free trade between WA states;

Desiring to codify the said matter;

1. Hereby defines:
   
   1. Cargo (or "maritime cargo") to mean any commercial cargo of value carried by a WA ship for profit;
   2. Owner(s) to mean the owner of a WA ship;
   3. Peril(s) to mean any perils a WA ship is exposed to on a voyage, including of the seas, fires, wars, pirates, captures, jettison of goods, negligence, and any others;
   4. Sacrifice to mean any sacrifice or expenses incurred when a ship is exposed to perils, including:
      
      1. any loss or damage (whether to the WA ship, or to cargo) for the common safety of a voyage; and
      2. disbursements and expenses (hereafter, "disbursements") for:
         
         1. the rescue and salvage operations of the WA ship, and/or
         2. necessary repairs for a voyage to the nearest port; and/or
         3. the preservation of cargo from peril(s);
   5. Ship(s) to mean any maritime vessel capable of carrying cargo, excluding those on voyages for a WA state in any governmental capacity, and a "WA ship" to mean a ship on a voyage under the flag of a WA state;
   6. Shipper to mean the owner of the cargo, as witnessed by the bill(s) of lading;
   7. Voyage(s) to mean any voyage on any waters by a WA ship carrying cargo, from starting to load all relevant cargo at a port of departure to the completion of the unloading of all relevant cargo at a port of arrival;
   8. WANC to mean the WA Nautical Commission;
2. Hereby declares that the concept of "general average" applies to maritime cargo carried on a WA ship, namely that those cargo sacrificed for the benefit of all shall be made good by the contribution of all;
   
3. Hereby declares:
   
   1. if sacrifice (as defined in clause 1(d)) is required, such sacrifice shall be allocated on a pro rata basis to the total value of:
      
      1. the undamaged cargo carried, as reported in the bills of lading; plus
      2. the value of the WA ship;
   2. an exception applies to clause 3(a) in that if a shipper suffers total loss of its cargo, then no disbursement is required from that shipper;
      
   3. general average may be declared by:
      
      1. the owner; or,
      2. if facing imminent perils, by the captain of a WA ship;
   4. if general average is declared, all parties potentially benefiting from the sacrifice (such as owners and shippers) must contribute towards disbursement;
   5. no declaration shall be made for general average shall be allowed, unless:
      
      1. it is intentionally and reasonably declared for the common safety of a WA ship or;
      2. it is declared to save cargo from imminent perils;
4. Requires, for the purpose of general average, that:
   
   1. the burden of proof is on the party claiming general average to show that any disbursement claimed is admitted;
   2. only direct losses, damages and expenses of the peril(s) shall count as sacrifice eligible for general average, and that indirect losses, such as (for example) pollution damage are not eligible and remain the responsibility of the part(ies) at fault;
5. Requires, for the purpose of insurance, that:
   
   1. all insurance policies required in this resolution must be underwritten:
      
      1. by a reputable insurer in a WA state; and
      2. governed by the laws of a WA state;
   2. the owner of a WA ship must purchase insurance, to fully cover:
      
      1. all sacrifices (and disbursements) if general average is declared;
      2. damage to the ship, including hull and marine insurance;
      3. indirect losses (including protection and indemnity insurance) such as third-party losses, pollution and environmental damage;
   3. the owner of a WA ship must issue a written reminder to a shipper to purchase cargo insurance if the shipper deems fit;
6. Clarifies:
   
   1. the rights of a party contributing to general average shall not be affected even if the sacrifice may have been the fault of a party to the voyage, but this shall not affect any legal proceedings against that party for such faults;
   2. jurisdiction for disputes under this resolution shall fall on the WA state to which the WA ship is registered;
   3. WANC shall set (and update as it deems fit) procedures on claims, adjustments and other matters deemed relevant for the purpose of this resolution.

Char count: 4,534

[Simone Republic]

Reserved for future drafts.

[Simone Republic]

Bump.

[States of Glory WA Office]

Neville: 'Do the rules here apply to spaceships as well? More importantly, should they apply to spaceships?'

[Simone Republic]

Neville: 'Do the rules here apply to spaceships as well? More importantly, should they apply to spaceships?'

I changed the definition of vessel to "maritime vessel" so it's strictly speaking on sea (or I guess on any multiverse that's liquid, perhaps a livable alien species in a multiverse version of Uranus since that's apparently somehow a cross between a giant ball of gas and liquids).

I think we should have rules for space exploration but I'd leave that topic to another author, I am not familiar with it sufficiently to really comment.

[Simone Republic]

Bump on the official World Assembly Summer-themed Bumper

[Araraukar]

OOC: On mobile so not reading huge walls of text...

From a quick glance there's only the owner of the ship (wrongly labeled as operator) and the owner of the cargo, so to borrow RL example...

Who is what when "A" owns the ship, "B" leases it from "A" and runs a cargo transporting company, "C" owns the cargo containers that "B" leases from them, "D" is the online store whose products are posted in the containers, and "E" is the consumer who paid half when ordering the product and pays the rest, when they pick it up from their local post office.

Is "B" excempt from everything in the proposal? Is "E" compensated for losses but "C" and "D" aren't? Or is it "E" who gets stiffed when "B" tosses some containers overboard to lighten the load to get to their destination faster (that is, no emergency conditions or any other reason to do so but greed).

[Simone Republic]

OOC: On mobile so not reading huge walls of text...

From a quick glance there's only the owner of the ship (wrongly labeled as operator) and the owner of the cargo, so to borrow RL example...

Who is what when "A" owns the ship, "B" leases it from "A" and runs a cargo transporting company, "C" owns the cargo containers that "B" leases from them, "D" is the online store whose products are posted in the containers, and "E" is the consumer who paid half when ordering the product and pays the rest, when they pick it up from their local post office.

Is "B" excempt from everything in the proposal? Is "E" compensated for losses but "C" and "D" aren't? Or is it "E" who gets stiffed when "B" tosses some containers overboard to lighten the load to get to their destination faster (that is, no emergency conditions or any other reason to do so but greed).

I changed the wording on the definition to "owner"

I am grossly.oversimplifying the actual process here as the process actually is more complex, but doing that within 5,000 words is difficult:

Ever Given

OK, to use Ever Given (the one that got stuck in the Suez Canal and became an Internet meme) as example as that's one of the most recent cases of general average, and to use your terminology:

A. Imabari Shipbuilding (a Japanese conglomerate) built the ship, and gave it to its wholly owned subsidiary Shoei Kisen

B1. Evergreen Marine (the Taiwanese shipping giant) leased the ship from Shoei Kisen

B2. Evergreen Marine did not actually operate the ship - the Germany company Bernhard Schulte Shipmanagement actually operated the ship as technical manager on behalf of Evergreen Marine

C. The containers are not all owned by Evergreen Marine either - it's just painted as Evergreen as usually they lease the containers out to shippers, but not everyone does this. Some companies lease containers out to other parties. Or the shipper might have reused a container from another line such as Maersk. So in your case, B and C can be the same company, or C and D can be the same company.

The important thing is who is "carrying the papers" on the goods, which I define as "cargo owners" above. (IRL defining that - ie bills of lading etc would require a separate resolution, I have a semi written draft somewhere on WALL).

D. The shipper pays for a container forwarder (usually a specialist company) to arrange for the container, and arrange for shipping. The shipper takes responsibility, unless they bought insurance but they still have to claim insurance. In some cases the shipper owns containers, sometimes they do not.

E. The consumer is not involved since they haven't received the cargo yet. So that's a separate commercial contract between the consumer and the shipper, depending on whether the risk of the cargo has been transferred to the consumer already. E is not involved as well unless E bought insurance for shipping delays (which happens more often for say commercial goods or anything requiring timely delivery, say car parts) but that's separate litigation related to insurance contracts, and shipping insurance contracts actually don't usually cover shipping delays as the cost is too expensive.

Shoei Kisen (as owner) declared general average on (I think) 31 March 2021. So Shoei Kisen, and the shipper are responsible. Where the shipper got their containers from (Evergreen, or someone else) did not matter except if they leased the containers, in which case there would be separate claims over the leasing of the container and delays.

Ships typically have protection & indemnity (P&I) insurance, which covers third party liability claims including environmental damage and injury. Separate hull and machinery (H&M) policies cover vessels against physical damage.

UK P&I led the insurance payment process as they were the one who wrote the insurance for P&I.

https://www.ukpandi.com/news-and-resour ... statement/

The H&M insurance was led by Mitsui Sumitomo. They never really disclosed anything, I presume because it's such a large company that the loss is not significant for them.

Ever Forward

This is the one that got stuck in Baltimore in 2022 and also became an Internet meme. This is more straight forward - Evergreen Marine owns this ship outright. They declared general average on 31 March 2022.

https://www.evergreen-marine.com/tuf1/j ... 94&lang=en

So in this case, Evergreen Marine and the cargo owners are the ones stuck as well for general average.

The actual legal process is obviously extremely complex so I am grossly oversimplifying here.

I simplified the process of resolving general average by quite a bit, otherwise I'd be cramming a 400-page book on the exact relationships between ship owners, lessees, lessors, technical management companies, container box owners, cargo owners etc into a single GA resolution. I actually have a link to the textbook above.

[Simone Republic]

Bump and last call.

[Apatosaurus]

This is well-written, and given that the principle is an established maritime law concept, I see no reason to oppose.

[Tinhampton]

Office of the President of Sophia & WA Affairs Ministry of the Empire of Great Britain
WORLD ASSEMBLY VOTING RECOMMENDATION

---

General Assembly: Maritime Cargo General Average (Free Trade; Mild), by Simone Republic

Recommendation: FOR

Rationale: The law of general average applies in the real-world shipping of goods. It requires that - so long as the ship faces a great danger, the goods on it have been wilfully damaged in extenuating circumstances, the damage must have been incurred purely to save the ship rather than for the benefit of any stakeholders, and any costs required to recover the ship are also wilful and in extenuating circumstances - then all of the stakeholders must pay an equal amount to recoup the recovery costs.

This proposal, written by perhaps the General Assembly's foremost expert on maritime law, successfully emulates the principles of general average in the world of the WA where it matters the most. We have concerns about the requirement that a WA committee oversee "procedures on claims" made for general average rather than the member state at issue - but a similar, and much more overbearing, precedent was set in GA#513 "Sovereign Justice Accord," a resolution which has hardly met with any serious challenges since its passage. We are therefore satisfied with this.

~~~~~~~~~~

This recommendation was written by Tinhampton, the President of Sophia. The Empire of Great Britain concurs. If you liked this, please upvote our recommendation dispatch here!

This resolution will be at vote between the major updates of July 15th 2023 and July 19th 2023.

This recommendation was jointly issued between Sophia and Empire of Great Britain. This does not mean that the President's opinion of this resolution was influenced by what Empire of Great Britain believes. Under the Constitution, the President must always cast their vote in line with the interests of Sophia, not some other region; this recommendation reflects the sincere beliefs of all regions involved.

[Kalanikaupea]

Regarding the Maritime Cargo General Average Resolution Up for Voting in the World Assembly

Kalanikaupea recognizes that the resolution was up for discussion earlier, however our nation had not been formed, nor had we been admitted into the World Assembly until after the expiry of said discussion.

WITHOUT PREJUDICE: Kalanikaupea and its citizens are guardedly favorable toward the ideology of Free Trade, but cannot support this specific resolution as written due to the following concerns, listed in no particular order:

1. The requirement for legality of cargo being shipped is not defined, nor can it be, as each nation defines its own laws regarding what can be legally transported. Unless there is a resolution passed that specifies a definition of what is legal, and the definition is as such binding by all World Assembly nations, legality remains ambiguous and unenforceable.
   
2. Further to above, the resolution as written does not define how the resolution is to be executed, dependent on the legality of cargo.
   
3. The resolution states "the concept of "general average" applies to maritime cargo carried on a WA ship, namely that those cargo sacrificed for the benefit of all shall be made good by the contribution of all. This is a flawed application that does not consider the risk and financial burden proportionally to WA nations. Nations who do not trade by sea will be disadvantaged disproportionately for the sake of nations who do, and punitively in that regard due to varying sizes of nations in the WA, and corresponding economies.
   
4. Further, the resolution states "jurisdiction for disputes under this resolution shall fall on the WA state to which the WA ship is registered".
   [nation=long]Kalanikaupea[/nation] is vehemently in opposition to this arbitrary assignment of jurisdiction, without consideration of geographical location pertaining to sovereign waters, as it creates opportunities for unscrupulous nations to extort financial benefit from the WA, merely because the ships suffering sacrifice of cargo are registered to their nation.
   
5. Finally, there is no definition of a requirement for independent bodies or committees to conduct investigation into the conditions present causing the sacrifice of cargo to eliminate premeditation, negligence, or other avoidable and possibly criminal causes.

[Wallenburg]

This has been at vote for over 2 days. A sticky would be nice.