Merchant Shipping Code of Ukraine (Edition of July 04, 2013)

SECTION IX. Marine Casualties and Emergencies.

Chapter 1. General Average.

Clause 277. Definition of General Average.

"General average" shall be losses incurred as a result of deliberately and reasonably made extraordinary expenditures or sacrifices aimed at saving the vessel, freight and cargo from a common danger threatening them.

A general average shall be distributed among the vessel, freight and cargo in proportion to their respective values.

"Freight" as used in this Chapter, shall mean as well a fare for carrying passengers and their baggage.

Clause 278. Application of Law at General Average.

Relationships connected with general average shall be subject to the Law of the state in which port the vessel has terminated her voyage after the casualty that caused the general average unless otherwise agreed by the Parties.

If all parties whose interests are affected by the general average belong to Ukraine the Law of Ukraine shall apply.

Clause 279. Losses Attributed to General Average.

In the presence of features indicated in Clause 277 of this Code, the general average shall include:

  1. the losses incurred by jettisoning cargo or fittings (accessories) of the vessel or by a damage to the vessel or cargo in general salvage operations and, in particular, as a result of water entering the holds through the hatch covers opened for jettisoning cargo or other openings made for said purpose;
  2. the losses incurred by the vessel or cargo while extinguishing a fire on board, including those resulting from scuttling the vessel on fire;
  3. the losses incurred by deliberate grounding and subsequently refloating the vessel;
  4. the losses caused by a damage to engines, other equipment and boilers of the vessel being aground, at the attempt of refloating her;
  5. emergency expenses connected with reloading cargo, fuel or supplies from the vessel into the lighters, with hire of lighters, and with recurrent loading of the vessel, that have been made if she runs aground;
  6. losses caused by damage to or loss of cargo, fuel or supplies in moving and rearranging them on board the vessel, backloading and stowing as well as during their storage in those cases when the expenses at performing these operations are recognized as general average;
  7. the expenses made in order to get assistance both within a salvage contract or without it to the extent said salvage operations were aimed at preventing the vessel, freight and cargo from danger;
  8. the losses caused by environment pollution that has become the result of general average;
  9. the loss of freight caused by the loss of cargo in those instances when a loss of cargo has to be reimbursed following a procedure of general average distribution; in doing so, the expenses that would have been made by the cargo carrier for obtaining said freight had it not been for sacrifices made, shall be excluded from the amount of freight.

Clause 280. Expenses Equated with General Average.

The general average shall also include or be equated with:

  1. the expenses caused by a compulsory call of the vessel to the place of refuge or a return to the port of departure because of an accident or some other emergency that has caused said call or return with a view of general safety;
  2. the expenses connected with sailing of the vessel carrying the initial cargo or a part of it from the place of refuge or from the port of departure wherein the vessel has been forced to return;
  3. the expenses connected with moving cargo, fuel or supplies in the port of departure, of call or in the place of refuge made with a view of general safety or for ensuring the opportunity to repair a damage to the vessel caused by the casualty or other emergencies if said repairs were necessary for a safe continuation of the voyage;
  4. the expenses connected with storage and preservation of property, including reasonable insurance provision, backloading and stowage of cargo, fuel or supplies that have been discharged or moved under circumstances mentioned in item 3 of this Clause; however, if the vessel has been found unfit for sailing or if she did not continue the initial voyage, the storage and preservation expenses are referred to general average up to the date when the vessel has been found unfit for sailing or when the voyage was cancelled, or when the vessel completed discharging of cargo, if she has been found unfit for sailing or has cancelled the voyage prior to said date;
  5. the expenses connected with wages and maintenance of the crew, expenses for fuel and supplies, and those incurred by continuation of said voyage as a result of the vessel calling at a place of refuge or returning to the port of departure in the circumstances mentioned in items 1 and 3 of this Clause; however, if the vessel has been found unfit for sailing or if she has not continued her initial voyage, said expenses shall be referred to general average up to the date when she has been found unfit for sailing or when the voyage has been cancelled or when she has been found unfit for sailing or has cancelled the voyage prior to said date;
  6. the expenses connected with wages and maintenance of the crew incurred by vessel's delay in the interests of general safety in any place as a result of a casualty or other emergency or for repairing damage caused by said emergency, if said repairs are necessary for safe continuation of the voyage. The expenses on fuel, supplies and port expenses incurred by said delay, shall be reimbursed following a procedure of general average distribution, excluding the expenses on repairs that are not referred to general average;
  7. the expenses mentioned in items 1-6 of this Clause caused by a necessity for the vessel to sail from her place of refuge to the other place because it was impossible to perform repairs at the first place of refuge, as well as the expenses connected with said sailing, including provisional repairs and towage;
  8. the cost of the vessel's provisional repairs performed with a view of general safety at the port of departure, of call or at a place of refuge as well as the cost of provisional repairs of damage referred to general average; however, the cost of provisional elimination of accidental damage necessary for completing said voyage only shall be reimbursed within the limits of the costs that were precluded and that would have been referred to general average were they not precluded;
  9. all extraordinary expenses made instead of other expenses that would have been referred to general average; however, they shall be reimbursed only within the limits of the precluded costs irrespective of the savings obtained by any of the general average participants as a result of said substituting costs.

Clause 281. Distribution of General Average.

A general average shall be distributed following the procedure set in Clause 277 of this Code in that case as well when the danger that caused extraordinary expenses or sacrifices arose due to the fault of the person materially interested in the vessel, freight or cargo. However, said distribution shall not deprive the other participants of the general average of their right to recover losses from said party and, equally, shall not deprive said party of his possible means of protection.

Clause 282. Undetermined or Incorrectly Determined Cargoes (Excluded Cargoes).

The losses resulting from damage or loss of cargoes loaded into the vessel without the knowledge of the Shipowner or his agents as well as damage or loss of cargoes deliberately handed over for carriage under incorrect description, shall not be distributed following the procedure described in clause 277 of this Code. However, if said cargoes have been saved, their owners shall have to participate in general distribution on a common basis.

The owners of the cargoes which values, when passing them over for carriage, has been declared lower than their actual value, shall participate in general average distribution in accordance with the actual value of said cargoes, but shall receive reimbursement for losses incurred in the extent of their declared value only.

Clause 283. Losses Resulting from Damage to Vessel.

The losses subject to reimbursement by way of general average that has resulted from damage to the vessel, her machinery and accessories, shall be determined as follows;

  1. in case of repairs of replacement of parts of the vessel - by actual cost of said repairs or replacement;
  2. in other cases - by a reduction of value resulting from said damage that does not exceed the estimated cost of repairs.
  3. In those cases when old materials or parts are replaced by new ones on board the vessel that is fifteen years old or older, the cost of repairs referred to general average shall be discounted on the basis of "new instead of old" by one third.

    In case of an actual or total construction loss of the vessel, the sum to be indemnified in connection with general average shall be the difference between the estimated cost of the vessel in undamaged condition less the estimated cost of repairing the damage that has not been referred to general average, and the cost of the damaged vessel which may be determined as a net income if the vessel has been sold.

    Clause 284. Determination of Sacrificed Cargo Value.

    The losses resulting from damage or loss of the sacrificed cargo that are subject to reimbursement following a general average distribution procedure shall be determined in accordance with its value at the moment of discharge certified by the invoice to the Consignee and, if the invoice is absent - by the shipping value. The value at the moment of discharge shall include the insurance when the freight belongs to the risk of the interests other than the cargo risk.

    In case the damaged cargo is sold, the losses to be reimbursed shall be determined as a difference between value of cargo when undamaged, obtained in accordance with the first part of this clause and the net income from its sale.

    Clause 285. Reimbursement of Losses.

    The sum of expenses reimbursed at general average (excluding the wages and maintenance of the crew, and cost of fuel and supplies that are not replaced during the voyage) shall be charged at 2% in favor of the party who made said expenses.

    Clause 286. Calculation of Amount of Reimbursement.

    The sum of expenses and other sums reimbursed in accordance with general average distribution shall be charged at 7% per annum from the moment when said expenses were made until a termination of compiling a dispatch. However, if any payments have been made with the purpose of reimbursing expenses connected with general average and losses therefore, before the dispatch has been compiled, the interest for the amount paid shall be charged until the day of payment.

    Clause 287 Determination of Total Value of Property.

    Contribution installments connected with general average shall be calculated from the actual net value of property by the end of the voyage excluding the installments for cargo calculated from the value of cargo at discharge that is determined by the invoice submitted to the Consignee and, in the absence of said invoice - by its shipping value. The value of cargo includes the insurante cost and freight, except those cases when the freight belongs to the other risk than the cargo, less the cost of loss or damage inflicted on the cargo prior to the moment of discharge inclusively.

    The value of the vessel shall be determined not taking into account a positive or negative effect of the bareboat or time charter.

    Said values shall be increased by the sum reimbursed at general average for sacrificing property, if said sum has not been included earlier. Therewith, deducted from the sums of freight or of carriage fare that are on the risk of the Shipowner shall be the wages and crew maintenance expenses which would not have been paid if the vessel and cargo had been completely lost in the circumstances that caused the general average and that had not been referred to general average.

    Besides, excluded from the property value shall be all additional expenses made in respect to said property after the general average, except the costs referred to general average.

    The baggage and personal belongings of passengers that were not covered by the Bill of Lading shall not participate in general average contributions.

    Clause 288. Average Adjusters.

    A presence of general average shall be established and its distribution calculation (average adjustment) shall be made up by the average adjusters on application of the parties concerned.

    Clause 289. Burden of Proof.

    The party demanding a general average distribution shall bear the burden of proving that declared losses or expenses have to be referred to the general average.

    All files and records serving as a basis for compiling the average adjustment shall be accessible for review, and the average adjuster shall undertake, on request of the parties concerned, to issue the certified copies of these materials thereto at the expense thereof.

    Clause 290. Duty for Compiling Average Adjustment Statement.

    A duty shall be charged for compiling the general average statement, said duty to be included in the dispatch and distributed among all parties concerned in proportion to their shares of participation in the general average. The amount and the procedure of levying said duty shall be determined by the central body of executive power, ensuring the development and implementation of state policy in the field of maritime and river transport in agreement with the Ministry of Economics of Ukraine.

    Clause 291. Disputing General Average Statement.

    The parties concerned may dispute the general average statement in court within six months from the receipt of said statement with a due notification of the average adjuster by sending him a copy of the claim (statement).

    Clause 292. Execution of Average Statement.

    If the average statement has not been disputed within the terms stipulated by Clause 291 of this Code or disputed but left valid by the court, the due recovery may be executed by a notary writ.

    In doing so, the general average statement and a reference of the average adjuster to the effect that said statement has not been cancelled or changed by the court shall be submitted to the notary office.

    Clause 293. Application of Customs.

    When determining a kind of average, estimating an extent of general average statement, the average adjuster shall be guided, if the Law is not complete, by the international marine shipping customs.