General Average

AuthorEdgar Gold; Aldo Chircop; Hugh M. Kindred; William Moreira
General average (GA) is a maritime principle about sharing loss amongst
the parties interested in the marine adventure on which the loss is incurred.
It is an ancient regime, adopted by the common law and recognized in the
federal Marine Insurance Act1 and the Marine Liability Act2 however not
statutorily regulated. The concept of GA is generally said to have originat-
ed in the Rhodian law several centuries BC because that source is explicitly
referred to in the Digest of Roman law of the Emperor Justinian in the
sixth century AD. Subsequently general average was recorded in a num-
ber of European laws and codif‌ications, and eventually entered English
common law as well.3 Its antiquity is the cause of initial diff‌iculty over the
maritime usage of the word “average.” The English expression apparently
was derived from the French word “avarie” which signif‌ies damage or loss.
Thus “general average” is, simply, a common loss. It is distinguished from
a “particular loss,” which is the ordinary case of individual loss.
1 SC 1993, c 22 [MIA].
2 SC 2001, c 6, Part 5 [MLA].
3 On the history of general average, see Geoffrey Hudson & Michael Harvey, The
York-Antwerp Rules, 3d ed (London: Informa Law, 2010) at 3–7; David J Wilson &
Julian Cooke, Lowndes and Rudolph: The Law of General Average and the York-An-
twerp Rules, 12th ed (London: Sweet & Maxwell, 1997) at 1–11 [Lowndes and
Rudolph]; Knut Selmer, The Survival of General Average (Oslo: Oslo University
Press, 1958) at 19–57.
General Average 687
The purpose of the legal principle of GA is to compensate a party for
loss deliberately incurred to save the marine adventure. Compensation
is made by levying a proportionate contribution on all the parties to the
marine adventure. A commonly referred to statement of the principle
of GA at common law4 is to be found in the old English case of Birkley
v Presgrave:
All loss which arises in consequence of extraordinary sacrif‌ices made
or expenses incurred for the preservation of the ship and cargo comes
within general average, and must be borne proportionately by all who
are interested.5
This def‌inition has been cited with approval in Canada6 and ref‌lected in
the Marine Insurance Act, at section 65:
(1) A general average loss is a loss caused by or directly consequential
on a general average act, and includes a general average sacrif‌ice and a
general average expenditure.
(2) A general average act is an extraordinary sacrif‌ice or expendi-
ture . . . that is voluntarily and reasonably incurred in time of peril for
the purpose of preserving the property from peril in an adventure.
(3) Subject to the conditions imposed by maritime law, a person
who incurs a general average loss is entitled to receive from the other
interested persons a rateable contribution . . . in respect of the loss.7
However, the Marine Insurance Act does not attempt to regulate the ap-
plication of general average and the Marine Liability Act, by adopting the
Hague-Visby Rules as part of Canadian law,8 merely acknowledges the
inclusion of provisions regarding GA in contracts of carriage.9
4 See Grover v Bullock (1848), 5 UCQB 297 at 300; Gurney v MacKay (1875), 37
UCQB 36 at 339–40; Dancey v Burns (1880), 31 UCCP 313 at 315 [Dancey]; Mon-
treal Trust Co v Canadian Surety Co (1937), 75 CS 278 at 280 [Montreal Trust];
Federal Commerce and Navigation Co v Eisenerz-G.m.b.H. (The Oak Hill), [1974]
SCR 1225 [The Oak Hill].
5 (1801), 102 ER 86 at 89. The classic formulation of the def‌inition of general av-
erage by American courts was provided by the US Supreme Court in Star of Hope
(The), 76 US 203 at 228 (1869).
6 Northland Navigation Co Ltd et al v Patterson Boiler Works Ltd, [1983] 2 FC 59
(TD) [Northland Navigation]; Dancey, above note 4.
7 Above note 1.
8 International Convention for the Unif‌ication of Certain Rules of Law Relating to Bills
of Lading, 25 August 1924, 120 LNTS 155 and Protocol to amend the International
Convention for the Unif‌ication of Certain Rules of Law Relating to Bills of Lading,
1924, 23 February 1968, 1412 UNTS 121, English text at 128, as implemented in
the MLA, above note 2, s 43 and Schedule 3 [Hague-Visby Rules].
9 Hague-Visby Rules, ibid, art V, para 2.
General average applies independently of contract. As stated in Ar-
nould’s Law of Marine Insurance and Average:
The plainest principles of equity require that the sacrif‌ices so submit-
ted to should be made good (sarciantur), and the expenses incurred
repaid, by a general contribution from all those benef‌ited by either
the one or the other, in proportion to the value of the property which
those sacrif‌ices and expenses have been instrumental in saving. Hence,
a general average contribution may be def‌ined to be a contribution by
all parties to a maritime adventure, to make good the loss which has
been sustained by one or more of their co-adventurers from sacrif‌ices
made, or expenses incurred, for the preservation of the whole.10
The application of the principles of general average need not be incor-
porated into the governing contract in order to apply and bind the par-
ties thereto. They are based on equity, not on contract. As stated by
Rouleau J in The Pointe Levy:
General average is based on the equitable principle that whatever ex-
penses were incurred for the benef‌it of all parties to a common mar-
itime adventure must be shared by all in proportion to the interests
which benef‌itted. It exists independently of marine insurance. The
obligation to contribute in general average does not depend on any
contract between the parties, but arises out of the perils encountered
in carrying out the contract.11
A long line of admiralty decisions has consistently found that rights
and obligations in general average arise independently of contract. In
reviewing whether a shipowner was liable to charterers for general aver-
age contribution in a situation where the cargo, jettisoned for the safety
of the vessel and remaining cargo, was being carried “at merchant’s risk,”
Lord Brett, MR, in Burton & Co v English & Co stated:
Does it [the merchant’s risk provision], however, cover this claim for
contribution? How does such a claim arise? In theory it arises from an
act done by the master of the ship, not as the servant of the shipowner,
but as the servant of the cargo owner, a relation which is imposed on
him by the necessity of the case. It arises by reason of a voluntary sac-
rif‌ice by the cargo owner for the benef‌it of the ship and cargo, and not
from any act done by the shipowner at all. By what law does the right
arise to general average contribution? Lord Bramwell in his judgment
10 Jonathan Gilman & Sir Joseph Arnould, eds, Arnould’s Law of Marine Insurance
and Average, 17th ed (London: Sweet & Maxwell, 2008) at para 26.
11 Ultramar Canada v Mutual Marine Off‌ice, [1995] 1 FC 341 (TD) [The Pointe Levy].

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