[vc_row][vc_column][vc_column_text]The York-Antwerp Rules (YAR) is a set of rules by which General Average (GA) is adjusted. IUMI has a particular interest in their content as, on average, the GA system increases the cost of maritime casualties by between 10%-30% largely due to interest, commission and adjusters’ fees. The process of collecting GA security from all the cargo interests, assembling information about ship and cargo values and expenses then re-adjusting all GA expenses and sacrifices usually takes several years and prevents claims files being closed quickly.
For these reasons IUMI has, for more than 20 years, been campaigning for a set of YAR which allow more GA expenses to lie where they fall outside GA (but usually still covered as “particular average” under marine insurance policies) and encourage the quicker publication of GA adjustments. Context The Comité Maritime International (CMI) is the custodian of YAR and, following a long campaign by IUMI, adopted a new set of rules in 2004. YAR 2004 contained a number of measures to reduce the cost of GA by as much as 20%. However, for a number of reasons they were not incorporated into BIMCO’s standard forms of contract and so have remained largely redundant with shipowners preferring to use the existing YAR 1994 instead.
YAR 2016 To resolve this, in 2012 a CMI international working group undertook a complete re-appraisal of YAR resulting in a revised set of rules (YAR 2016) which were adopted by CMI and accepted by BIMCO last month. YAR 2016 introduces some helpful measures which may reduce insurers’ GA exposure by a few percentage points. The most important gains include:
1. Interest will be fixed annually at ICE LIBOR on the first banking day of each year in the currency of the adjustment plus 4 percentage points.
For a US$ adjustment that would produce a rate of 5.18% for 2016 as opposed to 7% under YAR 1994 or 2.5% for YAR 2004. However, while this will result in savings in the short term if interest rates rise substantially insurers may be exposed to rates even higher than 7%.
2. Commission at 2% will no longer be recoverable.
3. Several measures designed to speed up the adjusting process have been introduced; these include excluding low value cargo from contributing in GA if the cost of including them is greater than their contribution and clarifying the process by which adjusters can estimate GA allowances in the absence of information from the parties.
4. Approved CMI Guidelines about the nature and operation of the GA process have been introduced which it is hoped will assist those involved in GA in understanding what is required of them. Against these helpful moves a number of changes sought by IUMI have not found their way into the YAR 2016.
These include:
(a) Wages and maintenance of crew while a vessel is detained at a place of refuge are to be allowed (as in YAR 1994 but not in the YAR 2004).
(b) The cost of temporary repairs of accidental damage at a port of refuge will not be capped as it is under the YAR 2004 thus restoring the position under the YAR 1994.
(c) Salvage will be re-adjusted in GA in most cases save where such re-adjustment is going to make no material difference to the parties’ situations, the so-called simple salvage situations. BIMCO’s Documentary Committee has agreed that all new and revised BIMCO charter parties and bills of lading will now refer to general average being adjusted in accordance with the new York-Antwerp (YAR) 2016. Overall IUMI welcomes the YAR 2016 as being an improvement on the YAR 1994.
We are indebted to our Salvage Forum member, Ben Browne of Thomas Cooper LLP for all the expertise and hard work he has committed to presenting IUMI’s position in relation to the York-Antwerp Rules.[/vc_column_text][/vc_column][/vc_row]
