Steps to be taken at the ‘Port of Refuge’ after a casualty happens & general average is declared

When a vessel falls into a casualty at Sea during maritime adventure, the Master of the vessel considering gravity of the casualty, declares general average and takes decision to proceed to ‘Port of Refuge’ for safeguarding the vessel and the cargo. That means ‘Port of Refuge’ is the safe port where master takes recourse to encounter the outcome of casualty.

Normally extra-ordinary expenditures allowed under general average, are incurred in the port of refuge. The following steps are required to be undertaken by the master to handle and assess the extra-ordinary expenditures to be incurred at the port of refuge as per rules.

Information required

After the casualty has happened, master has to take immediate decision to move the vessel to a safe port of refuge. On arrival at  port of refuge, it is the utmost duty of the master and others on the spot, to provide detail information about the extent of casualty to the head office of shipowner so that they can have clear cut decisions / guidelines from head  office on all important matters to be addressed with priority. In general, following feedback & factual position from port of refuge need to be provided by the master.

Perils at Sea

Perils at Sea

  • Information regarding operational details that will enable the vessel to continue her voyage with the cargo after doing needful at the port of refuge.
  • The estimated total period of extra detention of the vessel at the port of refuge, on account of the casualty.
  • Relevant information about extent and cause of damage to the vessel which would indicate whether temporary or permanent repairs are necessary, and whether dry-docking of vessel or discharge of cargo will be required.
  • Information regarding approximate quantity, nature and, if possible, value of cargo has to be informed to the head office categorically and also reasons for such discharge. This information is urgently required by head office in order to arrange open insurance cover for such forced discharge of cargo. In this connection the recommendation of ship and cargo surveyors are necessary to justify actions to be taken.
  • If incident of fire occurs ( casualty) during normal discharging or loading operations, particulars of proportion of cargo (i.e. number of shipments, type, tonnage and appropriate value) that was on board at the time of casualty, need to be reported.
  • Particulars regarding damage to cargo have to be mentioned in detail.
  • If there is hardly any possibility to complete the voyage with full volume of cargo originally loaded, then what facilities are available for forwarding the cargo to port of destination or what are the comparative advantages / possibilities for sale of cargo at the port of refuge, has to be informed in detail.
  • An itemized list of estimated expenses incurred or to be incurred at the port of refuge, need to be provided to the head office for enabling them to take right decisions as per rule.

Estimated expenses

It is of paramount importance for the head office of shipowner to know the item wise list of estimated expenses incurred or to be incurred at the port of refuge from master/agent as early as possible before sailing vessel. This information of estimated expenses will help head office to take vital decisions on i) what will be the general average contribution of all the parties involved in the maritime adventure in order to compensate the loss or sacrifice made by affected parties. ii) What are the types and amount of securities to be collected from the cargo interests & other related parties to ensure disbursement of general average contribution and release of cargo? iii) Whether insurance cover will be necessary on general average disbursement to be made. All these information are essential for head to decide on alternative course of action needed in order to handle the issue of general average as per rules.

A typical example / format of a message from a port of refuge is shown below for ready reference.

Estimated expenses at port of refuge

Port charges US$     20,000
Cargo discharge           120,000
Storage             50,000
Reloading             90,000
Repairs (temporary)           150,000
Repairs (permanent)           300,000
Surveys, agency etc.               2,500
Crew costs               1,000

——————–

                                   Total Cost =     US$ 733,500

 

Of course if estimates are requested by head office in a certain specified form, master has to send the desired information duly filled-in the prescribed form. Sometimes the situation at the port of refuge may often require that overtime be worked on some of the operations subject to the fact that such extra cost of overtime is allowed under general average as per rule.

Appointment of general interest surveyor

If there is actual damage to cargo and /or ship in a casualty which will be treated under general average sacrifice, then it is necessary to appoint a general surveyor to protect the interest of the shipowner – usually referred to as the “G.A. Surveyor”. Sometimes the general interest surveyor may be appointed by the average adjuster, on behalf of the shipowner. But the responsibility of G.A. Surveyor is to ensure impartial and lawful treatment of each and every general average expenditure so that it is acceptable to all parties concerned without any dispute. The Surveyor normally performs his advisory role of following areas.

  • To advise all parties on the steps necessary to ensure the common safety of ship and cargo.
  • To monitor the steps actually taken by the parties to safeguard the general interest.
  • To review each and every item of general average expenditure incurred and advises the average adjuster as to whether the costs are fair and reasonable.
  • To identify and quantify any general average sacrifice of ship or cargo.
  • To take necessary steps so that general average damage is minimized as far as possible. That means the surveyor may take initiative for sale of cargo at the port of refuge through consultation with cargo interests / consignees.

The authority and responsibility of fund disbursement to the parties against general average sacrifice lies with shipowner.  The job is done by shipowner via the master or the local agent. The G.A. surveyor has no authority to make any order for fund disbursement to any affected party. He does play the role of an adviser in this connection.

Damage to cargo

It is the duty of the shipowner as bailee to protect cargo if vessel falls into any casualty. If a portion of cargo is damaged due to peril at sea, the master of the vessel has to take quick decision for reconditioning or sale of such cargo at the port of refuge through consultation with cargo owner, if practicable. Sometimes it is not possible to contact receivers if the cargo belongs to good number of consignees. The shipowner under any circumstance has to take prompt action towards handling & disposal of damaged cargo after taking appropriate advice from G.A. surveyor.

Master or local agent must inform shipowner regarding the nature and cause of damage to cargo so that shipowner can assess the possible amount of allowances to be kept under general average. There may be many causes for damage to cargo viz fire, jettison and handling damage during discharging, storing, or reloading at the port of refuge. Therefore damage is classified solely in terms of specific cause where different York-Antwerp Rules are applicable to determine the amount of allowances to be considered under general average. Shipowner should consult the G.A. surveyor in all such cases from the point of view of applicable rules to arrive at a reasonable & fair decision.

Forwarding cargo

There may be a situation when vessel is in need of major repairs at the port of refuge to complete the voyage safely and discharge of some or all of the cargo becomes necessary to carry out the repairs. Under this situation, the cost of discharging, storing and reloading of cargo would be allowable in general average under Rule X(b) but it may benefit the parties if the cargo is forwarded to destination by another vessel, rather than being stored and reloaded. In such a situation the extra cost of forwarding can be allowed in general average, under Rule F, up to the amount of storage and reloading expenses saved.

Insurance on general average disbursements

Once general average disbursements at a port of refuge have been determined, contributions of parties to those disbursements are assessed on the basis of values of ship and cargo at the completion of the voyage. If the ship and cargo encounter an accident during her journey from the port of refuge to the destination, resulting in the reduction of respective values (ship & cargo), then the contribution payable by all interests will be affected. In an extreme case if the ship with all its cargo is sunk and becomes a total loss before it reaches destination, then nothing will be left to contribute to the general average. To safeguard the contributions of general average disbursement from this anticipated uncertainty & risk, an insurance cover is necessary. Insurance on general average disbursement will include only those expenses incurred at the port of refuge which are allowable under general average act. These expenses include –  port of refuge expenses, wages of crew, repairs to ship or cargo, temporary repairs and excess cost of overtime allowable in general average, salvage award and legal fees, costs of administration etc.

Abandonment of the voyage

When the ship is damaged so severely that it becomes impossible to restore her in trade within a reasonable period of time from a business point of view, or the cargo is deteriorating rapidly and there is hardly any possibility to reach destination, the shipowner under such situation may be forced to consider abandoning the voyage. This is a very serious step on the part of shipowner to contemplate. Before taking this step, shipowner must take advice from his solicitors and Protection and Indemnity Association.

 

Related Post:

  1. General Average – an overview
  2. Events of sea peril that give rise to general average & application of York-Antwerp Rule
  3. Role of average adjuster and steps to be taken immediately after a casualty happens
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