Legality and rationality of general average for MV Ever Given
Aafter the MV never given blocked the Suez Canal in 2021, throwing global trade into turmoil, the ship’s owner has said what could be a record general average case in terms of the amount at stake – sparking disagreements in legal circles over the legality of the move.
Under Article 193 of the Chinese Maritime Law, the term “general average” refers to “an extraordinary sacrifice or expense intentionally and reasonably made or incurred as a direct result of measures adopted for the common safety of the vessel, the cargo and other goods which are exposed to common danger on a common voyage”.
Conflict of laws
If we compare article 193 of the maritime law with articles 165 and 171, it is obvious that the definition of “general average”, taken literally, does not include accidents occurring in ” navigable waters connected with the sea”. Some have argued that since Ever Given ran aground in a canal, the special protections offered by general average may not apply. The author would argue that the problem stems from the limited nature of Article 193, and that accidents occurring in “navigable waters connected with the sea” should still constitute general average.
There are theoretical arguments that Article 193 and the York-Antwerp Rules 2004 require the incident to occur on a joint voyage, which in practice includes navigable waters connected with the sea.
Logically, in the event of a general average act, the salvage indemnity is a common extraordinary expense paid directly for the intentional measures taken. Since salvage compensation incurred in navigable waters bound to the sea is determined to be the shipowner’s responsibility, general average must naturally be shared with the shipowner.
Article 193 has its origins in the expression “a common maritime adventure” in the original version of the York-Antwerp Rules of 1974, which did not exclude the idea of “navigable waters connected with the sea”.
To be debated
Based on reports from various media, the author believes that such an accident may not constitute general average under current Chinese laws and regulations. Was there a real and material danger? There were no reported risks of hull rupture, overturning or capsizing, and the vessel was able to be refloated after dredging sand and gravel from the bottom using tugs and tidal power.
Were the ship, cargo and other property exposed to a common danger? No, the canal authorities closed the channel and the ship was in no danger of being hit by other ships.
Were the measures taken by the ship taken for the common safety of the ship, cargo and other property? Only the vessel itself was caught in a sticky situation and the measures, such as sand and gravel dredging and tug rescue, were taken solely for the safety of the vessel.
When a ship, its cargo and other property on board are exposed to general or minor danger, instead of material danger, even in the absence of common danger, could consideration be given to including the “sacrifice extraordinary circumstances of the ship or expenses intentionally and reasonably taken or incurred as a direct result of the measures taken” in general average, if they are not for the common safety but rather for the benefit of other unspecified ships, the cargo on board such ships, or even public interest or international navigation and commercial order? The author recommends that Article 193 be supplemented as follows:
“In the interest of merchant shipping and maritime order, 50% of sacrifices or extraordinary expenses intentionally and reasonably made or incurred as a direct result of the measures adopted may also be recognized as general average, notwithstanding the fact that the ship, cargo and other property have not been exposed to common danger, and measures have not been taken for the common safety.
Explanations from the Ministry of Transport on the revision of the maritime law state that: “The revision and publication of a set of maritime legal systems in accordance with the development of navigation and commerce will not only provide the insurance and services for the development of maritime trade corridors, but also China’s proposals for the development of maritime legislation and regional rules by the riparian countries.
The author believes that policy is the basis of legislation, and maritime law has rarely seen legal innovations over the past 30 years. As China becomes more powerful, it is necessary to consider the impact of this incident on the country in order to protect China and the maritime interests of the world.
The aforementioned modification is based on the principle of good faith and the rules of avoidance of perils in response to an emergency in the Chinese Civil Code, integrated with the existing general average system.
The principle of good faith, specified in article 7 of the Civil Code, is a fundamental principle recognized in the civil law of all countries. The essence of general average is that the cargo owner is also required to share the costs of the danger avoidance measures taken by the shipowner. When the ship and the cargo are both tied up on a major sea lane, if the cargo owner felt it was the sole responsibility of the shipowner and refused to share the load, would that be against the principle of good faith? The author would argue that in the traditional philosophy of shipping, ship and cargo are in common peril, but with ever larger container ships, ship and cargo in this incident have visibly “joined together” to interfere with public interests.
Article 182 of the Civil Code and Article 21 of the Penal Code both provide for the prevention of danger in the event of an emergency. In the opinion of the author, the incident is consistent with the concepts and conditions of danger avoidance as commonly known in academic circles.
Co-opetition of rescues
Sand and gravel dredging, the aid of tugboats and other measures eventually allowed never given to escape peril, and the extraordinary expense incurred gave rise to coopetition between the salvage of the ship itself and the public interest. The revision proposed by the author was intended to address both types of rescue. As for the 50% figure mentioned above, this is only a personal suggestion and varied opinions are welcome.
Xie Ming is a partner at ETR law firm
10 & 29/F, Chow Tai Fook Financial Center
No.6 Zhujiang Dong Road, Tianhe District
Guangzhou 510623, China
Tel: +86 20 3718 1333
Fax: +86 20 3718 1388