York-Antwerp Rules 2016 – What Has Changed?

Introduction

The York-Antwerp Rules 2016 were adopted by the Comité Maritime International at its last conference in New York in May 2016 with no dissenting votes and only one abstention. The revision was mainly initiated by the marine insurance industry. The last revision of the rules dates back to 2004. However, the 2004 rules had not been accepted by ship owners – the Baltic and International Maritime Council (BIMCO) was not prepared to incorporate the 2004 rules into its standard contracts, but kept the reference to the 1994 version. In contrast, shortly after the approval of the rules by the Comité Maritime International, BIMCO announced that its standard contracts will now refer to the 2016 version of the rules. In view of this, it can be expected that the latest version will soon become widespread and it will be only a matter of time until the first adjustments are made based on the new rules.

Rules in German law

Under German law, the York-Antwerp Rules are treated as standard terms and conditions and as such, they are subject to the sections in the Civil Code which deal with unfair contract terms (cf Sections 305 to 310 of the Civil Code). Accordingly, valid incorporation of the rules into a contract is governed by the same rules applying to standard terms and conditions as business-to-consumer and business-to-business transactions – for example, proper notice before or at the conclusion of the contract is required and the rules must comply with German law on general contract terms (ie, they must not be unfair, unreasonable or unclear). In this context, the German rules on general average that can be found in Section 588ff of the Commercial Code are also relevant, although these rules are expressly excluded according to the York-Antwerp Rule of Interpretation. The exclusion of Section 588ff is allowed, as German general average rules are not mandatory standard terms. However, the German general average rules remain important and will be applied to supplement any lacuna in the York-Antwerp Rules or other contractual terms.(1) Further, the York-Antwerp Rules must not be inconsistent with other statutory provision from which they seek to deviate (cf Section 307(2)(1) of the Civil Code) according to the German law on standard terms and conditions. Obviously, this applies only if the adjustment is subject to German law. As to the applicable law, the York-Antwerp Rules 2016, like their predecessors, do not provide for a choice of law rule. The applicable law is therefore either to be agreed by the parties or determined pursuant to the governing conflict of law rules.

Changes

Rule G(4) – non-separation agreement

Substituted expenses are to be added to the costs which would have been borne by the cargo owners if the cargo had been forwarded at the owners' cost when assessing the proportion of the allowances made in general average according to Rule G(4).

Rule VI – salvage remuneration

Rule VI relates to the allowance of salvage expenditures. It has been amended by a new paragraph, Paragraph (b), which contains five scenarios in which all parties have separate contractual or legal liability to salvors but the expenditure incurred by the parties shall nevertheless be allowed in general average. The idea behind this new rule is that in cases where parties have separate contractual or statutory liability to salvors, a general re-apportioning in general average leads to unnecessary additional costs and delay. Therefore, a readjustment should be made only when actually needed. The purpose of the five scenarios is to align differences between salved and contributory values.

All five scenarios require 'significance'. However, the meaning of 'significant' is not defined in the 2016 rules. Accordingly, its interpretation is at the discretion of the adjuster. If the parties involved do not accept the adjuster's decision, they will have to dispute the adjustment by starting proceedings according to Section 405ff of the Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction.

Rule XVII – temporary repairs

The existing practice of many average adjusters to exclude low-value cargoes from contribution when the costs for adjusting this cargo were disproportionate to that cargo's contribution is now included in Rule XVII (cf Rule XVII(a)(ii) final sentence). The adjuster's discretion in this respect may lead to disputes about whether it was properly exercised when disregarding cargo in the adjustment.

Rule XXIII – limitation period for contributing to general average

The 1994 rules contain no limitation period for general average contribution claims, like Rule XXIII in the 2016 rules. The limitation was first introduced in the 2004 rules. The 2016 rules adopted the 2004 provision with minor amendments.

According to Rule XXIII, any rights to general average contribution (including any rights to claim under general average bonds and guarantees) will be extinguished (ie, they cease to exist, as opposed to only the remedy being barred, unless an action is brought by the party claiming such contribution within one year following the date on which the general average adjustment is issued). In no instance can action be brought after a 'long stop' of six years from the date of termination of the common maritime adventure. The 2016 limitation is subject to mandatory rules on a time limitation in the applicable law.

German general average law contains a one-year time limit (cf Section 605(3) of the Commercial Code), but it does not begin to run before the end of the year in which the general average adjustment is issued (cf Section 607(4) of the Commercial Code). It follows that the limitation period is normally longer than the one under Rule XXIII, which begins earlier. The same applies to the six-year 'long stop', which is 10 years under German law (cf Section 199(4) of the Civil Code). However, it is generally accepted that this does not lead to an invalidity of the Rule XXIII limitation period under the provisions governing standard terms and conditions.

Further amendments

Further amendments to the 2016 rules concern the commission rule in Rule XX of the 1994 verision, which was dropped in the 2016 rules. Rule XXI (interest on losses allowed in general average) and Rule XXII (treatment of cash deposits) were amended, as were Rule B (tug and tow), Rule E (provision of information to adjusters), Rule XI(c)(ii) (widening the port charges interpretation in view of the Trade Green Shipping decision,(2) Rule XIII(3) and (4) (deductions from costs of repairs) and Rule XXII (treatment of cash deposits amended in the view of anti-money laundering and anti-terrorism laws).

Comité Maritime International guidelines

The Comité Maritime International New York Conference has, for the first time, introduced guidelines for general average to go along with the revised 2016 rules. These guidelines are non-binding and are supposed to reflect best practice, as well as to provide general background information and outline the procedures. They can be downloaded from Comité Maritime International's website.

Comment

Based on the BIMCO decision to incorporate the 2016 rules into its standard contracts, the amendments appear to have been accepted by the ship-owning community.

From a German law perspective, the amendments comply with the law on standard terms and conditions.

The adjuster's discretion to disregard low-value expenditure and to re-apportion salvage expenditure only in specific cases seems to promise time and cost savings. However, this may have been achieved at the expense of parties now arguing with adjusters over how discretion is exercised and starting proceedings under the Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction, which is costly and time consuming.