When the York-Antwerp Rules 1994 (YAR 1994) came into force, they were met with increasing criticism by Hull and Cargo Underwriters, mainly because their effect was to increase substantially the cost of handling casualties, invariably at underwriter’s expense.
At a CMI conference in 2001, it was therefore decided that work should be undertaken to consider revising the YAR. A CMI conference was subsequently held in Vancouver from 31 May 2004 to 4 June 2004. Debate in Vancouver focussed on a shopping list of so-called incremental changes to the YAR 1994 and led to the YAR 2004.
Ultimately, however many of the incremental changes set out in the YAR 2004 did not have the support of shipowners. Between 2012 and 2016, a CMI International Working Group undertook to review the YAR 2004 with the purpose of finding a compromise with which all parties could live. The International Working Group first met in Dublin in late September 2013 and several subcommittees were tasked with considering specific proposed amendments to the existing 2004 text.
These discussions ultimately gave rise to the York Antwerp Rules 2016 (YAR 2016), which were considered an equitable balance between the interests of all concerned parties. The International Group P&I Clubs issued a circular heralding the 2016 Rules as the product of an extensive review undertaken by the IWG, with input from the International Group, the international adjusting community, National Law Associations, the International Chamber of Shipping, BIMCO and IUMI amongst others.
One of the major changes between the YAR 1994 and the YAR 2004/YAR 2016 concerns commission and interest (Rules XX and XXI). The 2% commission on General Average disbursements of the YAR 1994 was abolished in favour of an agreed interest rate on expenditure, sacrifices and allowances calculated on USD Prime Rate as published in the Wall Street Journal for the first banking day of that calendar year +2%.
Another major change was to be found in Rule XXIII where the 2016 Rules stipulate that:
“(i) [a]ny rights to general average contribution including any rights to claim under general average bonds and guarantees, shall be extinguished unless an action is brought by the party claiming such contribution within one year after the date upon which the general average adjustment is issued. However, in no case shall such an action be brought after six years from the date of termination of the common maritime adventure.
(ii) These periods may be extended if the parties so agree after the termination of the common maritime adventure.”
These were not the only differences between the YAR 1994 and YAR 2004/YAR 2016, the clear intention being for the YAR 2004 and YAR 2016 to be more balanced as between shipowners and cargo interests.
Despite these two sets of revisions in 2004 and 2016 being agreed upon following extensive discussions amongst the various interested elements and organisations such as CMI and BIMCO having publicly endorsed the 2016 Rules, General Averages are nevertheless often still adjusted today according to the YAR 1994.
The most common dry bulk Bill of Lading form, CONGENBILL 1994, contains the following General Average clause: “General Average shall be adjusted, stated and settled according to the York Antwerp Rules 1994 or any subsequent modification thereof….” (underlining added).
This wording appears automatically to have the effect of applying the latest version of the YAR. However, that view has not been universally accepted, partly because of a reluctance in some quarters to apply a version of the YAR that was less favourable to the ship-owning community than the earlier 1994 version. That reluctance often manifested itself in the argument that the YAR 2004 (and 2016) were new Rules, rather than modifications of the 1994 Rules, despite the YAR 1994, YAR 2004 and YAR 2016 being habitually referred to as “versions” of one another and the text of the later versions being very clearly based on the earlier version.
This uncertainty has now been addressed by the High Court of Justice in London. In an important decision, Butcher J held in a judgment handed down on 10 November 2023 that the YAR 2016 are properly to be considered as a modification of the YAR 1994, with the result that the General Average provisions in the CONGENBILL 1994 form (and other similar provisions) incorporate the YAR 2016 rather than the 1994 version.
This judgment provides welcome clarification and brings the YAR 2016 further into the limelight, with significant ramifications for the shipping industry as a whole given the various differences between the 1994 and 2016 versions of the YAR, not least in terms of time bar and interest.
The successful cargo insurers were represented by Atlantis International and Birketts LLP, who instructed Richard Sarll of 7KBW.
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The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at November 2023.