The Bigham Clause

1. Following a casualty, a vessel may need to be repaired to continue with the voyage. Invariably, some of the costs incurred during repairs of the vessel would fall for consideration under a General Average (“GA”), if declaredⁱ. Owners may sometimes forward the cargo to final destination using other vessels (under Rule F York Antwerp Rules (“YAR”) – Substituted Expenses) to avoid delays to the cargo interests, which would ensue during the conduct of repairs, on the understanding that they (cargo interests) contribute to the allowances which owners are entitled under R.X & R.XI as if the cargo had not been discharged from the vessel (As soon as cargo is discharged from the vessel, there is no longer a common maritime adventure. This being the case, cargo interests are entitled to deny any further contributions to the GA). This clause, known as the Bigham Clauseⁱⁱ, came about to protect the cargo interests in that it caps the cargo interest’s contribution towards GA incurred up to the amounts which they (cargo interests) would have incurred if they forward the cargo by themselves.
2. The Bigham Clause is now included in Para 3 and 4 of R.G of the YAR 1994ⁱⁱⁱ/2016^iv. This clause was judicially considered by the English Court of Appeal in ABT Rasha^v wherein the hull insurers tried to deny the extra “amounts” arising from the application of this clause. The Court held that the Bigham Clause between the Owners and cargo interests was valid such that the Hull Insurers were bound and had to make reimbursement to their insured (Owners) accordingly.
3. We understand that the practice with respect to recoverability of R.G expenses is to allow up to the expenditure which may have been incurred by the cargo interests if they forward the goods by themselves. The question we would wish to consider is whether this is the correct reading based on the wordings of YAR 1994/2016 and which has incorporated the Rule Paramount (“R.P”)?
   1. The wordings of YAR 1994 and 2016 consists of the Rule of Interpretation (“R.I”)^vi, the R.P^vii, 7 lettered and 22^viii or 23^ix numbered rules.
   2. The R.P states that to seek a contribution for any sacrifice or expenditure, this should have been reasonably made or incurred in the first instance (word underlined by us for emphasis).
   3. The R.I provides for the supremacy of the R.P followed by the numbered and finally the lettered rules. Given that the allowances incurred in Para 3 of R.G deals with R.X and R.XI, the provisions of the Lettered Rules, say R.A, will not apply. Instead, the provisions of R.P and Para 3 and 4 of R.G (which provides for the continuing allowances under R.X & R.XI) will apply to deal with the amounts which can be recovered.
4. R.P:
   1. The R.P applies to both the numbered and lettered rules. Accordingly, any allowances sought by Owners in R.G Para 3 under R.X and R.XI have a requirement of reasonableness.
   2. What is reasonable is a question of fact and would be decided based on the circumstances. The party seeking contribution, in this case, the Owners, would have the burden of proving that the R.X and R.XI expenses incurred were reasonable. We submit that if the Owners were aware that the allowances in R.X and R.XI would exceed the forwarding costs, then it would be unreasonable for Owners to contemplate this course of action.
5. R.G:
   1. Para 3 of R.G of the YAR 1994 and 2016 provide for the requirement of the continuation of the voyage in the original ship being justifiable^x. The online Cambridge.org dictionary defines justifiable as “able to be explained or shown to be reasonable; understandable^xi”.
   2. We therefore submit that Para 3 of R.G also provides for a requirement of reasonableness for any expenditure incurred and for which contribution may be sought. If the Owner were aware that the potential allowances in R.X and R.XI would exceed the forwarding costs for the cargo, we submit that it would again be unreasonable for the Owner to contemplate this course of action. Accordingly, the Owner’s entitlement to the expenditure under R.X and R.XI under R.G would be capped to the forwarding costs.
   3. The question would then be is what is the effect of Para 4 of R.G? We submit that if it is established that the Owner’s actions were unreasonable, then the provisions of Para 4 of R.G would be superfluous. However, in those instances where Owner’s action in incurring expenditure was not determined to be unreasonable at the time incurred, Para 4 of R.G would act as the limit for which contributions can be sought from the cargo interests i.e., up to the amount they (cargo interests) would have incurred should they have forwarded the cargo by themselves.
   4. Delays:
      1. Ships are used to carry cargo both for liner and non-liner/tramp voyages. The basic difference is that liner^xii vessels operate on a set schedule allowing cargo interests to plan their cargo movements with greater certainty. Generally, cargo shipped by liner vessels are finished goods and are time sensitive and their values may be affected by delays. Additionally, the freights paid for liner shipments are much higher than tramp^xiii vessels.
      2. The question to be asked is whether delays following a casualty to repair a vessel is reasonable? While a long delay may not have an effect on tramp voyages, we submit that this may not be the case for liner voyages. A long delay^xiv may indeed be unreasonable such that Owners are duty bound to terminate the voyage. The Owners may then decide to hand over the cargo to the cargo interests or to container operators, if cargo is loaded in containers, so that they can make alternative arrangements. Alternatively, Owners may act as agents of cargo/container interests and forward the cargo to the destination. If the voyage is terminated, then the continuing allowances in R.F^xv would cease such that the costs of forwarding would lie where they fall i.e., to be borne by the cargo interests.
6. With respect to the container industry, Container Operators operate multiple vessels and may load the discharged containers on other vessels without charging any additional freight to the cargo interests. This decision taken by the Container Operators (who may or may not be the Owners of the vessel involved in the casualty) is generally to maintain commercial relationship. We submit that if the GA
   1. is subsisting such that if Owner’s are entitled to recovery of R.X and R.XI expenses under R.G, then the Container Operators should also be entitled to recover the freight costs based on R.F. In this regard, we do not quite agree to what has been suggested in Lowndes and Rudolf^xvi in that even if empty slots were used at the port of refuge to forward the containers, the Container Operators would have lost an opportunity to load additional cargo, and which may, in turn, result in loss of revenues. We believe that it would be far better to simply allow for the slot costs, as if the operator is a third party.
   2. is no longer subsisting given that it is unreasonable, then the common interests cease such that they (cargo and container interests) have no continuing interest with the original carrying vessel for any further contributions. In this case, cargo interests would be liable for the forwarding costs should freight be no longer at risk of the carriers.
7. To conclude,
   1. we submit that if the cargo interests wish to cap their exposure for GA expenditure under R.G Para 3, they must, following the casualty,
      1. ascertain the potential costs of forwarding the cargo and update the Owners so that they (Owners) are aware of the costs which may be incurred.
      2. advise the Owners that if they incur expenses which exceed the forwarding costs, this would in their (cargo interests) view, be unreasonable and therefore they (cargo interests) would be entitled to deny any contribution for the excess amounts.
   2. if cargo is shipped in Liner vessels, cargo interests may wish to caution the Owners for any delay, and which may be unreasonable in the circumstances. The downside of this is that cargo interests would be liable for the forwarding costs if freight is no longer at risk (which is invariably the case).

^i. See R X,  XI, XII & XIV of YAR 1994 or 2016.
^ii. Originated in United States of America.
^iii. When a ship is at any port or place in circumstances which would give rise to an allowance in general average under the provisions of Rules X and XI, and the cargo or part thereof is forwarded to destination by other means, rights and liabilities in general average shall, subject to cargo interests being notified if practicable, remain as nearly as possible the same as they would have been in the absence of such forwarding, as if the adventure had continued in the original ship for so long as justifiable under the contract of affreightment and the applicable law.
The proportion attaching to cargo of the allowances made in general average by reason of applying the third paragraph of this Rule shall not exceed the cost which would have been borne by the owners of cargo if the cargo had been forwarded at their expense.
^iv. 3. When a ship is at any port or place in circumstances which would give rise to an allowance in general average under the provisions of Rules X and XI, and the cargo or part thereof is forwarded to destination by other means, rights and liabilities in general average shall, subject to cargo interests being notified if practicable, remain as nearly as possible the same as they would have been in the absence of such forwarding, as if the common maritime adventure had continued in the original ship for so long as justifiable under the contract of carriage and the applicable law.
4. The proportion attaching to cargo of the allowances made in general average by reason of applying the third paragraph of this Rule shall be limited to the cost which would have been borne by the owners of cargo if the cargo had been forwarded at their expense. This limit shall not apply to any allowances made under Rule F.
^v. ABT Rasha [2000] 2 Lloyd’s Rep. 575
^vi.  Rule of Interpretation:
In the adjustment of general average the following Rules shall apply to the exclusion of any Law and Practice inconsistent therewith.
Except as provided by the Rule Paramount and the numbered Rules, general average shall be adjusted according to the lettered Rules.
^vii. Rule Paramount
In no case shall there be any allowance for sacrifice or expenditure unless reasonably made or incurred (underlined by us for emphasis).
^viii. YAR 1994
^ix. YAR 2016
^x. …. adventure had continued in the original ship for so long as justifiable under the contract of affreightment / carriage and the applicable law.
^xi. JUSTIFIABLE | English meaning – Cambridge Dictionary
^xii. See Cargo liner – Wikipedia
^xiii. What is Tramp vessel? Definition and meaning (globalnegotiator.com)
^xiv. in our view a delay of more than 30 days would generally be unreasonable.
^xv. R.F of YAR 1994 states “Any additional expense incurred in place of another expense which would have been allowable as general average shall be deemed to be general average and so allowed without regard to the saving, if any, to other interests, but only up to the amount of the general average expense avoided”.
^xvi. Both the XIV and XV editions of Lowndes & Rudolf state in F23 second para …Where a container vessel enters a port of refuge that is on an established route, perhaps used by the same owner or members of the same consortium, it may be possible to forward some or all of the cargo using empty “slots”. It may therefore be necessary to investigate whether the forwarding has resulted in any actual extra costs in addition to the handling expenses.