General Average

General Average is an ancient institution in maritime law. It refers to the extraordinary sacrifice or expenditure intentionally and reasonably made or incurred for the common safety of the ship, cargo, and other property when they are exposed to a common danger during sea transport. For example, water damage to cargo caused by flooding to extinguish a fire on board, or jettisoning part of the cargo to refloat the ship. Its core lies in 'common danger' and 'intentional and reasonable', and the loss is shared proportionally by the beneficiaries according to the value of the property saved. It is commonly used in bills of lading, charter parties, and insurance clauses, such as 'General Average shall be adjusted in London according to the York-Antwerp Rules'. Note: General Average is different from particular average, which is borne solely by the affected party; it also differs from sue and labour charges, which are expenses incurred to prevent or minimize loss and do not necessarily constitute General Average. Foreign trade practitioners need to specify General Average clauses in contracts and insure against relevant risks (e.g., FPA covers General Average sacrifice). After a General Average incident, the shipowner usually requires the cargo owner to provide General Average security before delivery, and the company should promptly notify the insurer and participate in the adjustment.