Commercial Court Clarifies Which Version of York-Antwerp Rules Apply Under Congenbill 1994

A debate which has rumbled on for several years - namely, which version of the York-Antwerp Rules (YAR) applies to General Average (GA) contributions under Congen 94 bills of lading - has received clarification following a court case.

The decision in the case of Star Axe I LLC vs Royal and Sun Alliance Luxembourg S.A. - Belgian Branch and others (the “STAR ANTARES”) [2023] EWHC 2784 (Comm) was that YAR 2016 apply, not YAR 1994. 

Having been first established in 1890 (and amended several times since), the York-Antwerp Rules outline the rights and obligations of both ship and cargo owners when there is a general average act and some extraordinary sacrifice or expenditure is made or incurred for the purpose of preserving the property involved. In general, bills of lading, contracts of affreightment, and marine insurance policies contain the York-Antwerp Rules within their terms.

The York-Antwerp Rules set out three clear principles - all of which must be met for the Rules to be successfully applied: 

1. The danger to a ship must be imminent. 
2. There must be sacrifice or expenditure or both in order to save the whole. 
3. The attempt to avoid the danger must be successful. 

There is a great deal of detail around these three core principles and the York-Antwerp Rules have continued to evolve. 

The STAR ANTARES case

The STAR ANTARES case involved a situation in which the claimant shipowner issued seven bills of lading on the standard Congenbill 1994, which provides: 

“General average shall be adjusted, stated and settled according to York-Antwerp Rules 1994, or any subsequent modification thereof, in London unless another place is agreed in the Charter Party”.

However, when the claimant’s vessel was proceeding to its second discharge port on 3rd November 2021, it allegedly struck an unknown submerged object and sustained damage. General Average was declared on 19th November 2021. 

In response, the defendant (the cargo insurer) issued Average Guarantees to the claimant, undertaking to pay any contribution to General Average that might be payable in respect to the goods covered by the bills of lading. 

However, the claimant and defendant disagreed on whether their respective rights and obligations in relation to General Average were governed by YAR 1994 or YAR 2016.

YAR 1994 and YAR 2016 have a number of detailed differences. Arguably the most notable is that the YAR 2016 contain a one-year time limit, running from the date of the General Average adjustment, for claims for General Average contributions. The YAR 1994 do not contain this time limit.

The claimant argued that the words “York-Antwerp Rules 1994, or any subsequent modification thereof” did not encompass the subsequent YAR 2004 or YAR 2016. In other words, they were arguing that YAR 2004 and YAR 2016 represent new sets of Rules, rather than ‘modifications’ of YAR 1994. 

The defendant argued the contrary - that the wording was intended to function as an ‘inbuilt updating mechanism’, making YAR 2016 applicable. 

Whilst General Average adjustments often contain statements that the subject wording in clause (3) of Congenbill 1994 does not have the effect of rendering YAR 2004 or YAR 2016 applicable, this contention had no basis in legislation nor judicial authority - until this case. 

The court agreed with the defendant that under the wording of clause (3) of Congenbill 1994, the relevant General Average adjustment was to be conducted under the York-Antwerp Rules 2016. 

It is expected that this decision will bring further clarity to the marine insurance market, ensuring that the updated YAR are used more frequently, that is unless it is overturned on appeal. 

Involved in a cargo or bills of lading dispute? 

With today’s ships carrying more cargo than ever - disputes over cargoes and bills of lading are prevalent. 

If you find yourself embroiled in one of these disputes, then speak to the Shearwater Law team today. We are able to provide advice on cargo claims, letters of indemnity and mis-delivery claims, freight claims, storage charge and demurrage claims and more. 

Find out more about Shearwater Law’s cargo and bills of lading services now