General Average in Turkish Maritime Law

GENERAL AVERAGE

General average is a legal institution that has existed since Roman Law. The Turkish Commercial Code contains provisions regarding general average. However, these provisions are not mandatory, and the York Antwerp Rules are applied instead. The reason for adopting the York Antwerp Rules is to prevent disputes and complexities arising from Maritime Trade Law. The York Antwerp Rules consist of the basic rules to be applied for general average in both cabotage and international transportation. These rules include lettered and numbered rules. Additionally, there are interpretive rules. The Comité Maritime International, or International Maritime Law Committee, periodically updates these rules. In this article, we will provide general information about general average.

In terms of terminology, average refers to the extraordinary damages incurred by the cargo and the ship and the extraordinary expenses made during the voyage. Average is also used as damage and loss. General average, on the other hand, is an institution that provides solutions against the dangers that may be encountered at sea. General average is legally regulated between Articles 1272 and 1285 of our Turkish Commercial Code. In this context, general average is the case where an extraordinary sacrifice is made or an extraordinary expense is borne reasonably to protect the ship, cargo, other goods, and freight jointly threatened by a common danger during a joint maritime adventure. This situation is accepted as general average, and the expenses and damages that arise as a result will be considered general average. In the York Antwerp Rules, general average is regulated under Rule A. In its simplest form, general average is an act representing voluntary sacrifices and expenses made to protect the values involved in the maritime adventure from danger. In Turkish law, these extraordinary sacrifices and extraordinary expenses undertaken are shared among the rescued values.

WHAT ARE THE ELEMENTS OF GENERAL AVERAGE?

The general average act, which we have theoretically mentioned above, has great importance in Maritime Trade Law and brings many legal disputes in practical life. To determine the existence of a general average act, certain elements are sought.

The elements of general average are:

1. Common Maritime Adventure

As a rule, for general average to be mentioned, the ship, cargo, and freight must be involved in a common maritime adventure. For this, a freight contract must be made between the carrier and the consignor. Freight is the fee that the consignor undertakes to pay to the carrier, and in addition to a contract that can be qualified as a freight contract for general average, a freight fee is also required.

The common maritime adventure begins with the start of loading and continues until the unloading of the cargo is completed. Damage and loss occurring before loading is completed or before the entire cargo is unloaded are considered general average. The common maritime adventure will also end with the removal of the cargo from the ship.

2. Common Danger

For general average to be mentioned, there must be a common danger threatening the cargo, the ship, and the freight. This danger must be common to the cargo, the ship, and the freight. It is not required for the danger to be present. The presence of a serious and imminent danger is sufficient. For example, a receding water level or signs of a severe storm can indicate a common danger. The point to be considered is that this common danger must be extraordinary and strong enough to cause the loss or severe damage to the ship and the cargo.

3. Extraordinary Sacrifice

There is no general average unless extraordinary sacrifices and expenses are borne to save the ship from a common danger. The sacrifices and expenses made must be extraordinary as a rule. These sacrifices and expenses should be different from the expenses undertaken by the carrier under the freight contract. For example, expenses incurred for pulling a damaged ship to a shelter port, grounding the ship, or jettisoning the cargo are examples. However, these sacrifices and expenses should only be made to save the ship and the cargo from an extraordinary danger. In this context, flooding the holds to extinguish a fire on the ship to prevent it from spreading to other ships is not within the scope of general average.

4. Reasonableness of the Sacrifice

If it is clear that a measure taken according to the mentioned common danger will not work or will not yield any beneficial results, the sacrifices and expenses made despite this will not be accepted as general average. Sharing will not be done if the measure taken is not reasonable.

5. Beneficial Result

To claim fees arising from general average, a beneficial result must be achieved. If there is no beneficial result, there is no general average. If the ship and the cargo are completely lost, there can be no talk of general average as none of the values involved in the common maritime adventure have been saved. In this case, the interested parties will have to bear their own losses. For a beneficial result, the ship or the cargo must be completely or partially saved. Saving either one is sufficient in terms of York Antwerp Rule A.

SHARING OF SACRIFICES AND EXPENSES IN GENERAL AVERAGE

The sacrifices and expenses considered as general average must be shared among the ship, cargo, and freight. This is called “Dispache.” The document containing the calculations related to this sharing is called the dispache report. Dispache, in its most general definition, is the report presented to the parties by calculating how the sacrifice made for general average will be compensated.

WHAT IS DISPACE?

Dispache is not an arbitration decision but has the nature of an expert report. However, if the dispache is prepared through arbitration proceedings, it also has the nature of an arbitration decision. According to the Turkish Commercial Code, the shipowners are obliged to have the dispache prepared without delay, otherwise, they will be liable to each interested party. The parties to the general average can agree to select a dispache. The court can also select a dispache. The main authority of the dispache is to determine whether the event is a general average. The dispache report includes information on whether the event will be considered a general average. If the event is considered a general average, it should also document what type of general average it is. The dispache report includes a report on how the sacrifices and expenses made for general average will be shared. Bills of lading and charter parties, expert reports, and expense receipts can help determine whether the event can be considered a general average. For detailed information on dispache, you can consult the Istanbul Maritime Trade Lawyer.

EXPENSES AND DAMAGES SUBJECT TO GENERAL AVERAGE

Expenses and damages that are the direct result of general average are subject to sharing. The jettisoning of cargo, the breakdown of a floating engine are direct results of general average. The expenses and damages subject to general average will be evaluated according to each concrete case. One of the most common examples is a fire occurring during the voyage. The sacrifices and expenses incurred to extinguish the fire on the ship will be considered general average. However, the burned and perished goods are not considered general average because the element of voluntary sacrifice is not provided.

SUBSTITUTE EXPENSES IN GENERAL AVERAGE

The expenses incurred in place of the general average expense to prevent it are substitute expenses. These substitute expenses are also included in the sharing of general average. As a rule, any additional expense undertaken to avoid an expense that would be considered general average will also be included in the general average share, even if other interested parties benefit from these additional expenses, up to the amount of the avoided expense. However, the legal condition is that the substitute expense should not exceed the general average expense. Otherwise, the exceeding part is not included in the general average. The most obvious example of a substitute expense is making workers work overtime to shorten the time spent at the shelter port during the repair process of the ship.

STATUTE OF LIMITATIONS IN GENERAL AVERAGE

As a rule, claims for general average are subject to a one-year statute of limitations. The statute of limitations starts from the date the ship reaches its destination, or if it has not reached its destination, from the date the journey ends at the port where it ended.

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EXAMPLES OF QUOTATIONS FROM SUPREME COURT DECISIONS

“In the concrete case, it is established that the ship was damaged in such a way that it could not be repaired on the way, and the captain duly declared general average and promptly obtained a dispache report. According to the above-mentioned regulation, while it was possible for the defendant-counter-claimant to apply to the court for the approval of the dispache report and give the dispache report the nature of a verdict, it cannot be said that he has a legal interest in filing this lawsuit to collect the share of the general average contribution. Legal interest, according to Article 114/1-h of Law No. 6100, is a condition of the lawsuit, and the conditions of the lawsuit are taken into account ex officio at every stage of the trial. In this case, while it should be decided to dismiss the case for this request, considering that the defendant-counter-claimant has no legal interest in filing the lawsuit to collect the share of the general average contribution determined by the dispache report, it was not seen as correct that a written decision was made, and it was decided to overturn the decision in this respect.” 11th Civil Chamber         

2016/13815 E.  ,  2018/4816 K.

 

“General average is regulated between Articles 1272-1285 of the Turkish Commercial Code No. 6102, and according to this regulation, general average can be declared if an extraordinary expense is borne voluntarily and in a reasonable manner to protect the ship, cargo, goods, and freight that are thrown into a common maritime adventure together against a danger that threatens them. Following the declaration of general average, the shipowner is obliged to promptly have the dispache prepared. An application is made to the court for the approval of the dispache report or objection to the account. All interested parties are summoned to the hearing by the court. The objection to the dispache report must be raised at the latest at the first hearing. If no objection is made to the dispache report or if the objection is not deemed justified, the approval of the dispache report is decided. The dispache report approved by the court gains the nature of a verdict. The dispache report with the nature of a verdict can be directly enforced.” 11th Civil Chamber          2018/4685 E.  ,  2020/3211 K.

 

“The conditions of the total loss clause of the insurance policy will apply if the entire cargo is lost… It was decided that the ship’s repairs were completed on 18.05.2006, and the ship set sail again, and the plaintiff provided a guarantee of 108,906.80 USD for the delivery of the cargo to the defendant, and it was decided that the defendant could request the payment made as a general average contribution that was not covered by the insurance policy under the scope of unjust enrichment, and it could not be said that the payment made by the insurance company was unlawful, and that the defendant was relieved of his debt as much as the amount paid by the plaintiff, and that he was unjustly enriched, and it was decided to accept the case and to collect 57,240.80 USD, equivalent to 90,875.61 TL at the payment date, from the defendant together with advance interest to be processed from the date of the case and to pay it to the plaintiff.” 11th Civil Chamber          2015/14861 E.  ,  2017/3712 K.

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