General average due to collision of vessels. What should the cargo owner do?

Expansion of geography to the Caspian states was and is one of the goals of our company development. Therefore, we are particularly pleased that more and more clients from this region trust Interlegal experts, on whom the success of their business depends.

In late 2023, our Business Development Manager Denys Stadnychenko visited Kazakhstan again and held there several meetings. The result of one was our next case.

An owner of the cargo, which was on board the vessel that collided with another vessel near the Istanbul Canal, applied to us. A general average was declared and average adjusters were nominated accordingly.

Average adjusters informed about taking measures upon cargo detention and asked the Client to pay General Average Security in the form of a cash deposit amounting to 10% of the cargo value (ca. 350,000 US dollars).

A year after payment of General Average Security and release of the cargo, the dispatch still was not formed. Therefore, the client had doubts concerning legitimacy of the announcement on a general average and further legal measures.

Interlegal experts provided to the Client a legal opinion on the stages of declaring a general average, its criteria, difference from a private average, as well as on its legitimacy and lawfulness of cargo retention in a specific case.

We should immediately note that there are no clear deadlines for drawing up a dispatch in international legislation. Usually, the dispatch process takes several months, but depending on complexity of calculations, the number of participants, delays in providing to average adjusters the documents or other information, this process can take a year or more. In our practice, there have been cases when the dispatch was made for 3+ years.

With regard to the above and other practical nuances, our law team developed optimal recommendations for the Client on further actions.

Since the general average occurred due to collision of vessels belonging to the private law institution of causing damage and involves determination of the guilty party and reimbursement of damages, first of all, we advised the client to request information/documents from the average adjusters regarding:

- surveyor’s report on legal effects of the collision;

- official results of investigation of the sea accident;

- reimbursement for damages by the guilty party;

- presence or absence of legal disputes between shipowners related to the specified accident;

This information will be useful to the Client both when communicating with other case participants (shipowner, charterer, insurers) regarding caused damage, and in case of arbitration proceedings.

Currently, the case is not completed, the Client is still waiting for dispatch. Interlegal team, namely junior lawyer Dmytro Karetnikov and associate attorney Nikita Kocherba, managed by associate partner Karyna Gorovaya , have carefully studied circumstances of the case and are ready, at the first request, to take further actions aimed to defend its interests.

The institute of general average is one of the most complex and confusing in maritime law. Cases of general average are so diverse and heartbreaking that they can drive even experienced maritime arbitrators and average adjusters into a dead end. Consulting on general average issues requires lawyers to have in-depth knowledge of not only international and local legislation, but also practical application of such regulations.

Working with general accident cases for almost 29 years, Interlegal experts have gained vast experience that allows them to analyze each such case and to help clients as quickly and efficiently as possible. If you have questions about a general average, we will be happy to help you solve them in the framework of a separate consultation or complex legal support within a specific case.