General Average After Engine Room Fire

General average requires an extraordinary sacrifice or expenditure intentionally and reasonably made for the common safety of ship and cargo. The tug's remuneration under Lloyd's Open Form is allowable, because the cost of bringing the vessel and cargo to a place of safety is an extraordinary expenditure incurred for the common benefit. The discharge of 1,800 tonnes of ore at the port of refuge is allowable, because it was necessary to reach the damaged area and was done for the common safety. The storage cost during the three weeks is allowable as a substitute expense, since it was incurred to preserve the cargo that had been discharged for the common benefit and would otherwise have been exposed to loss. The reloading cost is allowable on the same basis, because it was necessary to complete the voyage and was part of the same extraordinary operation. The principle is that costs flowing directly from a general average act, and incurred in consequence of it, are allowable if reasonable. The cargo insurer's seaworthiness argument does not defeat the allowance as such; it goes to whether the shipowner can recover the ship's contribution from cargo, which depends on the cause of the fire and the applicable rules. The adjustment should therefore include all four items, subject to the allowance being reasonable and supported by vouchers.

The general average act remains a general average act regardless of the cause of the casualty; the right to contribution arises from the sacrifice or expenditure, not from the fault that created the peril. What the fault affects is the shipowner's ability to recover the ship's share from cargo. Under the York-Antwerp Rules, a party whose fault caused the casualty cannot recover contribution from the innocent party, and the adjustment will typically preserve the cargo interest's rights against the shipowner. The cargo insurer must prove the fault, and it bears that burden. It will need evidence that the wiring defect was known or should have been known and that the owner failed to remedy it. If the insurer proves the fault, the shipowner's claim for the ship's contribution is defeated, though the cargo's own contribution to the general average fund may still be adjusted. If the insurer fails, the adjustment stands and cargo pays its share. The practical step is to obtain the survey and maintenance records and to preserve the vessel's documents before they are lost.

The tug's remuneration is a salvage award under the open form, and it is also an extraordinary expenditure incurred for the common safety. The two are not cumulative in a way that gives the tug twice. The salvage award is assessed by the arbitrator under the open form, and the amount awarded is then brought into the general average as an allowable expenditure, so that it is shared between ship and cargo according to their contributory values. The tug receives its award once, from the general average fund, and the fund is replenished by the contributions of the parties. The cargo insurer's concern is that the same service be paid for twice, which does not happen if the adjustment properly credits the salvage payment against the general average allowance. The adjustment should show the salvage award as a general average expenditure and should not also allow a separate towage charge for the same service. The arbitrator and the average adjuster should coordinate so that the award figure is the figure used in the adjustment.