Wednesday, 16 November 2011

Rena General Average

When Rena grounded on Astrolabe Reef in the early hours of 5th October, a complex legal process was set into motion which will likely last a decade or more. All around the world, lawyers, insurers, salvors and surveyors will have reached for an A4 lever arch file and written ‘Rena File No.1” on the spine. Many hundreds more A4 files will be filled in the months and years to come.

One of the truly ancient principles which will likely be applied to the Rena’s salvage is General Average. General Average is another maritime peculiarity dating back to early Greek times. Even now, every voyage by a cargo ship is termed a ‘maritime adventure’ to which the ship’s Owner, Cargo owners, Master and Crew are deemed participants.

When heavily laden sailing craft were plying the Mediterranean, storms and running aground were an accepted peril of the maritime adventure. In the teeth of a storm, it was common practice for the Captains to jettison part of the cargo thereby lightening the vessel so as to make it safely to port (less a few amphora of wine). When choosing which cargo to jettison, Captains and crews were often not too picky - self-preservation ruled.

Provided the vessel made it to port, the hapless cargo’s owner would be informed of the loss of their precious goods. One party had borne the loss of their goods in order to ensure the successful delivery of the other cargo and the preservation of the ship. The Greeks put their mind to this inequity of one party suffering loss for the collective benefit of the other participants to the maritime adventure.

The principle debated, and now enshrined in maritime commerce, was that the losses of one should be compensated by the collective beneficiaries of the successful voyage. There are a few rules though to maintain fair play in the unscrupulous, rough-and-tumble of shipping.

A General Average claim must, among other things, be voluntary, timely, reasonable and successful. When the Owners of the Rena were alerted to the vessel’s grounding, one of the first thoughts would have been ‘Can we declare General Average?’

After all, if their actions successfully save the majority of the containers but result in the loss of their ship on Astrolabe Reef, then aren’t they entitled to be compensated under the principles of General Average? A powerful incentive when you consider the combined value of the ship and 1,300 containers at the time of the grounding.

Crane Barge Smit Borneo under tow to the Rena salvage site from Singapore:
Kees Drent, Shipping News Clippings 13/11/11

If General Average is declared, every container successfully unloaded to the barge ST-60 will strengthen the Rena’s Owners case that their actions met the test of being voluntary, timely, reasonable and successful. Just imagine you are passenger in a taxi which T-bones another car and the taxi driver demands you contribute to the repair bill! General Average in a nutshell.

Interesting if the ‘cut and thrust’ of maritime commerce, law and salvage lights your fire. No mention yet of a dolphin, penguin or cormorant in this Blog, which I will leave to my reader from the Ministry of the Environment (you know who you are).

The Antipodean Mariner
15th November 2011


  1. Thanks for taking the time to explain these things. It's very interesting.

    The not mentioned dolphins, penguins and cormorants would all carry parasites, as indeed seem to have been attracted to your blog. Their actions to date may show how much we have in common with a cormorant, often confused with a shag. It may also go to show how "shagged" we are as a nation crippled with this pervasive bureaucracy.

    All these "helper" agencies always seem to go on to be dominating forces when they are allowed to exceed their original goals and assume unstated responsibilities, while never actually accepting responsibility for anything that goes wrong.

    Nice shot of the Singapore on her tow. When will the local nondisclosure clause forbid further photos?

    Keep up the good work, please..

  2. What happens is the "taxi driver" lands in court for his intentional actions, do you still have to pay for any damages caused by the accident??

  3. The taxi driver is judged separately from the taxi's owner. So long as the owners of the Rena complied with crewing rules they are insulated in most cases from the consequences of the actions of the individual on the bridge.


  4. Thanks for your candid reports about the Rena salvage effort.

  5. Hello,

    Thanks for informative updates.

    Just one question regarding GA of Reena.

    The cargo we insured was in a container stowed in a hold which got flooded when the ship broke into two. The container washed away into the sea and has been declared a total loss for which the consignee is claiming payment. Would we, as insurers, be able to make any recovery from GA award on account of our payment of claim to the consignee for total loss? or we simply pay our total loss claim and shall not have to make any contribution to the GA expeditures incurred as well as no recoveries thereof from those whose interests were successfully salvaged?

    Shall appreciate your answer.



  6. Hi Ali, just catching up with the blog and comments. The AM isn't a maritime lawyer, but believes that General Average is mainly for the Ship Owner's benefit and is a claim on the salved property only. If your company has insured a container that was a total loss, AM thinks that you won't have any claim on the Ship unless the Master and Owners breached the carriage terms (or exemptions) of the Bill of Lading.

    Best, AM

  7. To declare GA, RENA needs to establish the 3 requirements that the grounding at the Astrolable Reef was intentional due to imminent danger and so on. If the grounding was due to navigational short coming then RENA won't be able to declare GA in such a case.

    David Lim -GC

  8. Re Ali's case, his insurance company will have to pay his client for the TL of the sum insured for the goods/container.

    Ali's company should then send similar claim to the shipowner regardless of what the shipowner has declared. And normally, a prudent shipwoner will refer such claim to his own P&I Club for a mutual settlement.

    Kind Regards
    David Lim - GC

  9. Good day,

    Thanx AM and David.

    Our containers are still not recovered from the sea plus its not expected to fetch any significant value now after being expposed to sea water for this long. We are evaluating option to declare it a CTL and abandon the cargo to the salvors and stay away from the GA contribution proceedings.