Ballast General Average

1. We had the opportunity earlier to listen to the talk of Ms Nanami Hara, Fellow of the Association of Average Adjusters (“AAA”), and who spoke on “Ballast General Average – No Cargo? No Problem!”. For those interested in learning more about General Average (“GA”), this is must view video given that claims for Ballast GA’s are generally rare.
2. The talk focussed on three types of Ballast GA Claims
   1. When the vessel is on Ballast and on a Voyage Charter (“VC”) (see AAA ROP B 26 (2)ⁱ).
   2. When the vessel is on Ballast and on a Time Charter (“TC”) (see AAA ROP B 26 (3)ⁱⁱ).
   3. When the vessel is on a Ballast and not on any charter (both VC and TC) (see ITCH 1/10/83 Clause 11.3ⁱⁱⁱ).
      The aim of Ballast GA is to allow Owners recovery for their share of the GA expenses. However, whether Owners are entitled to recover from the other parties will depend on whether there is a common maritime adventure. In this regard, the AAA ROP’s are meant for claims against their Insurers (under English policies) and are not strictly applicable to other parties such Charterers (both VC and TC).

3. The major advantage of Ballast GA is that Owners are entitled to the allowances under both R X and R XI of York Antwerp Rules 1994 (“YAR 1994” or other editions) whilst the vessel is in the Port of Refuge. The wordings of R XI of YAR 1994 provide for the requirement of a voyage. However, it could be argued that under both VC and TC, there is no voyage when the vessel is in Ballast and therefore these allowances should not fall for consideration at all to be paid by other interests^iv.
4. What was perhaps not considered was the potential for a Ballast GA claim under a Time Charter Trip (“TCT”). We do admit that a TCT is generally considered as falling under a TC. However, a TCT combines elements of both voyage and time charter. If the TCT is for a limited period providing for one specific trip, it could be argued that it is more akin to a VC given that Owners are entitled to payment of hire for a certain period and with the vessel trading in defined areas as provided in TCT (such as a voyage charter but without the contingent expenses and which are borne by the time charterers themselves). Perhaps, if this is a lacuna, then this should be considered when the AAA ROP B 26 comes for reconsideration.
5. It appears to us that the English Hull Insurance policies aim to allow for the recoverability of these expenses to ensure that they remain competitive given that other Hull policies (say American or German policies) do allow for such recoverability.
6. In conclusion, Ballast GA’s do have some limited use to the Owners in that they can recover, at least their portion of contribution, from their Insurers for expenses incurred when the vessel is on Ballast and which is better than the alternative (they would not then be entitled to allowances for crew expenditures as provided in R 11 of YAR 1994).

^i. 2. When a vessel is proceeding in ballast to load under a voyage charter entered into by the Shipowners before the general average act:
a) The interests contributing to the general average shall be the vessel, such items of bunkers, stores and equipment as belong to parties other than the Owners of the vessel and the freight earned under the voyage charter computed in the usual way after deduction of contingent expenses subsequent to the general average act.
b) Failing a prior termination of the adventure, the place where the adventure shall be deemed to end and at which the values for contribution to general average shall be calculated is the final port of discharge of the cargo carried under the charter but in the event of the prior loss of the vessel and freight, or either of them, the general average shall attach to any surviving interest or interests including freight advanced at the loading port deducting therefrom contingent expenses subsequent to the general average act.
^ii. 3. When a vessel is proceeding in ballast under a time charter alone or a time charter and a voyage charter entered into by the Time Charterer:
a) The general average shall attach to the vessel and such items of bunkers, stores and equipment as belong to parties other than the Owners of the vessel. Failing a prior termination of the time charter, values for the purposes of contribution shall be those pertaining at the time the ship is, or should have been, made ready to depart from the port of refuge.
b) Failing a prior termination of the time charter, the voyage shall be deemed to end at the first port of discharge of cargo at which the vessel arrives after the general average act.
^iii. 11.3 – When the Vessel sails in ballast, not under charter, the provisions of the York-Antwerp Rules, 1974 (excluding Rules XX and XXI) shall be applicable, and the voyage for this purpose shall be deemed to continue from the port or place of departure until the arrival of the Vessel at the first port or place thereafter other than a port or place of refuge or a port or place of call for bunkering only. If at any such intermediate port or place there is an abandonment of the adventure originally contemplated the voyage shall thereupon be deemed to be terminated.
^iv. See comment made by Richard Sarll of 7 KBW and which can be viewed at https://youtu.be/FOOp7SNsT90?t=2119