What is general average in international shipping?

General average refers to a situation in which a vessel, its cargo, and other property face common peril during the same sea voyage, which may even result in the vessel's destruction. In response, the crew takes necessary actions to fight the peril or seeks external assistance, which may result in vessel damage and the generation of related expenses. When it is impossible to determine specific cargo liability, all cargo owners onboard are jointly responsible for bearing the losses incurred by the ship's company.

(1) General average can be manifested in general average sacrifice and general average expenditure. The former includes jettison of cargo, damage to cargo and the vessel caused by fire-fighting, losses caused by cutting and casting off damaged goods, damage to machinery and boilers, use of cargo, ship materials, and materials as fuel, and damage caused during cargo discharge.

(2) General average expenditure includes salvage rewards, lightening expenses for grounded vessels and losses incurred thereby, port of refuge expenses, wages and other expenses paid to crew members while en route to and at the port of refuge, repair costs, replacement expenses, disbursements, and insurance premiums, as well as interest on general average losses.

What are the conditions for general average to arise?

(1) The peril giving rise to general average must be real, urgent, and unavoidable.

(2) The actions taken to create general average must be emergency, reasonable measures for the common safety of the vessel and cargo. Damage resulting from normal conditions does not qualify as general average.

(3) The general average must involve special sacrifices and additional expenses incurred as a result of taking reasonable measures.

(4) The actions taken to create general average must be effective in avoiding the total loss of the vessel and cargo. Only then can the general average be established, as the basis for sharing general average losses is nonexistent if general average is ineffective.