Legal Definitions - general-average contribution

A general-average contribution is a payment made by parties involved in a maritime voyage (typically the ship owner and the owners of the cargo on board) to proportionally share the financial burden of a voluntary sacrifice or extraordinary expense incurred to save the entire venture from an imminent danger.

In simpler terms, if a ship's captain makes a deliberate decision to sacrifice part of the ship or its cargo, or incurs significant costs, to save the rest of the ship and its cargo from a common peril (like a storm, fire, or grounding), then all parties whose property was saved must contribute financially. This contribution is calculated based on the value of the property they had on board that was successfully saved.

Here are some examples illustrating how a general-average contribution works:

• Example 1: Jettisoned Cargo

  A large container ship carrying various goods from multiple owners encounters a severe hurricane at sea. To prevent the ship from capsizing and sinking, the captain makes the difficult decision to jettison (throw overboard) several containers of non-essential cargo. This act saves the ship and the remaining cargo. The owners of the jettisoned cargo suffer a loss, but their sacrifice benefited everyone else. Therefore, the ship owner and all the owners of the cargo that was saved would be required to make a general-average contribution. This contribution would go into a fund to compensate the owners whose cargo was thrown overboard, ensuring that the financial burden of saving the entire venture is shared proportionally among all who benefited.

• Example 2: Salvage Operation Costs

  A bulk carrier carrying grain runs aground in a shallow channel, posing a risk to the vessel and its entire cargo. To refloat the ship and prevent further damage or a total loss, the ship owner hires a specialized salvage company. The salvage operation is successful, freeing the ship and saving all the grain. The substantial costs of the salvage operation are considered an extraordinary expense incurred to save the common venture. Consequently, the ship owner and the owner of the grain would each be required to make a general-average contribution to cover the salvage costs, based on the value of the ship and the grain that were saved.

• Example 3: Firefighting Damage

  A cargo vessel experiences a fire in one of its holds, threatening to spread throughout the ship and destroy all cargo. To extinguish the fire and save the vessel and most of its contents, the crew activates the ship's CO2 suppression system and pumps large quantities of water into the burning hold. While the fire is put out, some cargo in adjacent holds suffers significant water damage, and the ship itself incurs damage from the firefighting efforts. The costs associated with the water damage to the cargo and the repairs to the ship, which were necessary to save the entire voyage, would be subject to general-average contribution. All cargo owners whose goods were saved, along with the ship owner, would contribute proportionally to cover these losses and expenses.