Legal Definitions - general-average statement

A general-average statement is a crucial financial document used in maritime law. It provides a precise, detailed calculation of all losses and expenses incurred during a "general average" event, and then determines the exact proportional share that each party involved in the sea voyage (such as the ship owner and the owners of the cargo) must contribute to cover those costs.

A "general average" event occurs when a voluntary and extraordinary sacrifice or expense is intentionally made to save the entire ship and its cargo from an imminent, common peril. The principle behind it is that what is sacrificed for the benefit of all should be borne by all.

Here are some examples illustrating how a general-average statement would be used:

• Example 1: Jettisoned Cargo During a Storm

  Imagine a large container ship encountering a severe and unexpected storm at sea. To prevent the vessel from capsizing and sinking, which would result in the total loss of the ship and all its cargo, the captain makes the difficult decision to order the jettisoning (throwing overboard) of several heavy containers from the deck. This action successfully stabilizes the ship, saving the remaining cargo and the vessel itself.

  How the general-average statement applies: The loss of the jettisoned cargo is a general average sacrifice. An average adjuster would then prepare a general-average statement. This document would meticulously list the value of the lost containers, the value of the saved ship, and the value of all the remaining cargo. It would then calculate the total loss and determine the precise percentage each party (the ship owner and every cargo owner whose goods were saved) must contribute to compensate the owners of the jettisoned cargo. Each party would then be obligated to pay their calculated share.

• Example 2: Salvage Operation After Grounding

  Consider a bulk carrier carrying a valuable shipment of minerals that accidentally runs aground on a sandbar in a remote area. The ship is stuck, and there's a risk of it breaking apart or being damaged by subsequent tides, endangering both the vessel and its cargo. To save the ship and its contents, the ship owner contracts a specialized salvage company for an expensive operation involving tugboats and specialized equipment to refloat the vessel.

  How the general-average statement applies: The substantial cost of the salvage operation is an extraordinary expense incurred to save both the ship and its cargo from a common peril. A general-average statement would be drawn up to detail all the salvage fees, any associated port charges for temporary repairs, and other related expenses. This statement would then allocate these costs proportionally among the ship owner and all the mineral cargo owners, based on the respective values of their property that was successfully saved. Each party would then be required to contribute their calculated share to cover these expenses.