Recipient's obligation to contribute, security deposits, York-Antwerp Rules and the role of transport insurance
If a ship is rescued from a shared peril, all parties involved must share the resulting costs proportionally, including the recipient of the goods. Attacks in the Red Sea and diversions around the Cape of Good Hope are causing such general average incidents to become more frequent. Rogert & Ulbrich will review your contribution obligations, security deposit, and insurance coverage.
What Great Average means – an old principle with current relevance
General average, or GA for short, is one of the oldest principles of maritime law. The basic idea is this: if, in order to save a vessel from a common peril, part of a ship or cargo is sacrificed, or extraordinary costs are incurred, the person affected should not bear the loss alone. Rather, all parties involved share the burden according to the value of their salvaged goods.
What sounds abstract has concrete implications today. Attacks on merchant ships in the Red Sea, extensive diversions, and incidents such as fires or groundings lead shipping companies to declare general average. For importers, this means that their goods are not easily released, and they face substantial financial obligations. A prominent example was the blockage of the Suez Canal caused by the grounding of a large container ship, which resulted in a general average declaration.
Editorial note: Please check current incidents of general average related to the Red Sea and the Suez Canal for accuracy before publication.
An overview of our consulting services transport and forwarding law You can find it on our service page.
Has your shipping company declared general average? Have your contribution obligations and the required guarantees checked before you sign.
The requirements according to § 588 HGB
According to Section 588 of the German Commercial Code (HGB), general average occurs when, on the captain's orders, a ship, fuel, or cargo is intentionally damaged or sacrificed to save the vessel from a common peril, or when expenses are incurred for this purpose. The resulting damages and expenses are borne jointly by the parties involved.
- Common danger: The ship and its cargo must be in a shared, real danger, such as fire, grounding, or attack.
- Captain's order: The rescue measure must be ordered by the captain and be extraordinary, i.e., exceeding the ordinary operational risk.
- Sacrifice or expenditure: A conscious sacrifice must have been made or an extraordinary expenditure undertaken to avert the danger.
According to Section 588 Paragraph 2 of the German Commercial Code (HGB), a party involved is, among others, anyone who bears the risk of a piece of cargo belonging to the shipment being lost or destroyed, which is regularly the owner of the cargo and thus the consignee. Whether these conditions are actually met must be examined carefully in each individual case and is often disputed.
Are you unsure whether a genuine general business interruption has occurred? Have the conditions checked before making any payments.
The recipient's obligation to contribute
If it is determined that a general average has occurred, the burden is shared. The decisive factor is the value of the salvaged goods at the end of the voyage. Each party involved contributes in proportion to the total contributions due and the compensation payable.
For the recipient, one limit is important: According to Section 591 of the German Commercial Code (HGB), each party liable for contributions is only responsible up to the value of the salvaged item attributable to them. The contribution therefore cannot exceed the value of the salvaged goods. Nevertheless, the amounts can be substantial, especially in the case of valuable cargo. The exact amount of the contribution will only be determined after the dispatch agreement.
Unsure how much your contribution will be? Have the assessment and the basis of the claim reviewed.
Security deposit and non-delivery – why your container isn't being released
In practice, many consignees only become aware of a general average when the goods are not released. The reason lies in Section 594 of the German Commercial Code (HGB): Those entitled to payment have a lien on the cargo, and the carrier can make delivery contingent upon the provision of security. Without security, the container remains blocked.
Several documents are usually required, and their names vary. Commonly, these include a declaration of commitment from the recipient, in which they undertake to pay the subsequent premium, and a guarantee from the cargo insurer. The final amount of the premium is not yet fixed at this stage but is determined later in the general average calculation. This calculation, prepared according to Section 595 of the German Commercial Code (HGB), is carried out by a general average expert and allocates the costs to the ship, cargo, and freight.
Is your container being held against a security deposit? Have the required declarations checked before you submit them.
York-Antwerp Rules and applicable law
The legal provisions of Sections 588 et seq. of the German Commercial Code (HGB) do not always apply unchanged. In practice, they are regularly specified in the sea freight contract by agreeing to the York-Antwerp Rules, an internationally recognized set of rules for the presentation of general average. Which version of these rules applies is determined by the bill of lading.
The question of fault is significant. According to Section 589 of the German Commercial Code (HGB), the allocation of liability can change if the risk was caused by the fault of a party involved. If, for example, the general average is due to the fault of the shipping company, the party liable for contributions can raise objections. The York-Antwerp Rules refer to the applicable national law for such questions, so examining the applicable law is also the first step here. It is often worthwhile to carefully consider whether the shipping company contributed to the risk.
Could the general average be due to negligence on the part of the shipping company? Have it checked whether you can raise objections to your obligation to pay contributions.
Which insurance covers you – and your guide to action
The good news for insured importers: Cargo insurance typically covers the cost of general average. In practice, the insurer provides the required guarantee and later pays the agreed premium. Those who are not insured, however, must provide the security themselves and bear the premium out of their own pocket, leading to a significant liquidity risk.
For practical purposes, a structured approach is recommended when filing a general average declaration:
- Contact your insurer immediately: Report the incident to your goods insurer immediately so that they can honor the warranty.
- Do not submit statements without checking them first: Have the required declaration of commitment reviewed before you make any commitments.
- Question the assumptions: Check whether a genuine general average has occurred and whether the shipping company contributed to the danger.
- Check display: Have the subsequent general average calculation checked for accuracy.
- Securing deadlines and claims: Keep your own requirements and the short deadlines in mind.
A clear approach will limit the damage and ensure the swift release of your goods without making any unjustified payments. We will support you in reviewing the declarations, the dispatch, and any objections. The sooner you act, the better you can manage the situation.
Is a general insolvency declaration imminent? Have your contribution obligations, collateral, and insurance coverage reviewed.
Rogert & Ulbrich – Your lawyers in transport and maritime law
Rogert & Ulbrich advises importers, consignees, and insurers in cases of general average. The lawyers Dr. Marco Rogert and Tobias Ulbrich and their multilingual team are familiar with Sections 588 et seq. of the German Commercial Code (HGB), the York-Antwerp Rules, and the practice of security deposits from their daily work.
We examine the prerequisites for the general average declaration, the required collateral, and the disbursement, determine any potential fault on the part of the shipping company, and coordinate the course of action with your insurer. Through our Dutch Desk and as Transport law attorney in Rotterdam We also accompany traffic through the Dutch ports.
Whether it's a declaration of commitment, a disputed arrangement, or an insurance question: Arrange a initial consultation and secure your position.
