What is General Average and what happens when General Average is declared?

What is General Average and what happens when General Average is declared?

According to GCaptain, the Japanese owner of the Ever Given, Shoe Kisen, declared General Average.

So what is General Average and what happens when General Average is declared?

General Average is a principle of maritime law that requires that the shipowner and its customers share a proportionate amount of the costs associated with saving a vessel after a major casualty. When General Average is declared, cargo owners are required to contribute to a GA fund before cargo can be released.

Upon declaration of GA, the cargo interests will be asked to provide an average bond, signed by the owners of the cargo, along with an average guarantee, signed by the cargo insurers. These documents provide an undertaking that the party will pay any GA contribution ultimately due
from them under the final adjustment.

Shipowners have a possessory lien on cargo for reasonable GA security, which they are required to collect on behalf of all parties to the adventure, including those cargo interests who have sustained GA sacrifice. The adjuster will work to collect and process this security. It is important that the demand for security is made as soon as possible, as many cargo interests delay providing security until the cargo is approaching destination. Cargo should not be released until full security is in place, so clear communications and updates are vital to minimise delays at destination.

Where cargo is insured, the process is straightforward. Cargo insurers and representatives are familiar with the requirements. As such, they are generally comfortable with providing the standard security documentation, which provides an undertaking to pay any amount ascertained to be properly payable by their interests in GA in due course.

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