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General average in maritime law: International experience and considerations for Vietnam






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Abstract

The transportation of goods by sea is conducted based on carriage contracts, which stipulate the rights and obligations of the involved parties, the carrier's responsibilities, as well as provisions for dispute resolution, compensation for damages, and the allocation of losses in case of risks, ... This is a complex process that requires a thorough understanding of maritime law and international principles related to marine transport. During the transportation process, one of the most important aspects is the identification of the general average — a long-standing legal concept in international maritime law. General average involves the difficult decisions that a captain or shipowner must make in emergencies, such as sacrificing cargo or incurring extraordinary expenses to save the ship and goods from common danger. The challenge lies in defining what constitutes “sacrifice” or "extraordinary expenses" that align with the concept of the general average. This is not only a matter of legal interpretation but also relates to the rights and obligations of parties involved in the transportation of goods, particularly the responsibilities of the shipowner and carrier regarding the determining general average in specific cases exactly. Currently, Vietnam regulations, especially the Maritime Code 2015, have yet to provide specific and clear guidelines on handling cases of general average. This creates difficulties in the application of laws, the resolution of disputes, and the compensation of losses when incidents occur during the transport of goods. In the international context, many countries have implemented more specific regulations and standards regarding the general average, based on the common principles outlined in the York-Antwerp Rules — a well-known set of international guidelines in the maritime field. These rules not only provide a clear legal framework for determining reasonable costs and sacrifices but also help relevant parties foresee their responsibilities in emergencies. For Vietnam, learning from international experience to enhance legal regulations in this area is both a necessary and urgent issue.

Introduction

Hundreds of years ago, the transportation of goods by sea had to face many dangers such as fire, pirates, storms, etc. and the parties involved in the voyage had to bear certain risks. Then, the general average (hereinafter referred to as “ GA ”) emerged as an independent mechanism in ancient times to adjust losses incurred to ensure the safety of common maritime adventures. Today, to adapt to the global integration process, the need to exchange goods between countries and territories is increasing. The more vibrant international trade is, the more necessary the existence and development of the GA becomes. Thanks to its effectiveness as a tool for adjusting losses and risks in common maritime adventure, the GA has been recognized and regulated in the laws of many countries around the world, including Vietnam.

However, the authors found that there have not been many research works or databases on GA in contract of carriage of goods by sea in Vietnam. Besides, Vietnamese law in general and the Vietnam Maritime Code 2015 in particular have not had clear regulations on this issue. The process of determining GA is a complex and time-consuming assignment. Therefore, the authors chose the issue “General Average in Contract of Carriage of Goods by Sea: International Experience and Lessons for Vietnam” as a research topic and to offer recommendations to improve our domestic law.

In this article, the authors focus on clarifying two main objectives: (1) Analyzing the conditions under which a loss is considered a general average as well as identifying specific examples of general average losses and (2) proposing solutions to improve the Vietnam Maritime Code concerning the regime of “General Average”.

The purpose of the first objective is to help readers clearly understand the conditions that losses must meet to be considered general average, while also providing practical illustrations to enhance readers’ understanding of basic general average in real-world scenarios. Therefore, the authors first analyze the conditions under which a loss can be considered a general average. Additionally, the authors examine some of the fundamental types of GA to illustrate for the readers which losses are classified as GA in specific situations.

Furthermore, to achieve the second objective of proposing solutions to improve the Vietnam Maritime Code concerning the regime of General Average, the authors analyze domestic and international cases related to GA (particularly those applying the York-Antwerp Rules (hereinafter referred to as “ YAR ”) on GA ). The authors also compare and contrast the regulations of other countries on GA to provide the most objective and comprehensive recommendations.

Research methodology

The authors employ the following research methods to complete this study:

* Analytical and Synthesis Method

In this study, the authors analyze and synthesize regulations and viewpoints on the general average in maritime cargo transport contracts. This method is also used to summarize researched perspectives and compare them with international and foreign laws to draw experiences for improving Vietnamese laws in this area.

* Comparative law method

The authors apply this method throughout the study to compare and contrast relevant regulations in various jurisdictions with foreign laws (the laws of the United Kingdom, Singapore, the People’s Republic of China, South Korea, Japan, the Federal Republic of Germany), international laws (the Hague-Visby Rules), international customs, and model contracts (the York-Antwerp Rules, Gencon, Shellvoy), as well as with Vietnamese law, to derive multidimensional conclusions. Through this approach, the study identifies strengths and weaknesses of Vietnamese law and proposes solutions for enhancing Vietnamese Maritime Law provisions on the general average.

Results and discussion

Overview of the “General Average” theory

GA is applied throughout the world as part of maritime law. In general, GA refers to a doctrine of maritime law that provides for the proportionate sharing by all parties to a maritime adventure of losses incurred where cargo is sacrificed in the event of a peril or expenses incurred for the common benefit of the parties to the adventure. 1

There are four main sources of GA regulations. Firstly, laws and customs of trade are fundamental sources of GA regulations. Before GA principle was embodied in the YAR, the adjustment of GA was governed by the law and custom of the place where the voyage ended. 2 Secondly, case law also contributes to the understanding of GA principles. Court decisions are another source of the GA principle. Thirdly, statutes in some jurisdictions include GA principles. For instance, many Scandinavian countries have periodically enacted various versions of the YAR into their national statutes, which govern GA adjustments within their legal systems. 1 Finally, YAR is considered the most widely accepted international document regulating GA adjustments. YAR is applied by most countries as the primary framework for dealing with GA cases.

Regarding the concept of GA, most reference countries widely apply it to partly minimize the damage caused by unexpected factors to the entire vessels. In Vietnam, the concept of GA is specified in Clause 1, Article 292 of the Vietnam Maritime Code 2015, specifically: “General average is any extraordinary sacrifice and expenditure is intentionally and reasonably made or incurred for the common safety in order to save the ship, goods, luggage, freight services, and passengers from common peril.” This means that an action in GA arises if and only if any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred, with the common safety for the purpose of preserving property on a common maritime voyage from danger.

Where there is a GA act, any extraordinary sacrifice or expenditure reasonably and voluntarily incurred shall be calculated and allocated among the participants. 3 This allocation is intended to preserve the property threatened in the common voyage. Depending on the case, there will be a corresponding provision for the party suffering the loss to receive a contribution from the participants, who may be the shipper, the carrier, the consignee, etc. The cost of such sacrifice or expense must be allocated proportionately among all the interests in the voyage, including the interests resulting from such sacrifice or expense.

In general, GA principle is developed on the principle of fairness to preserve the common interests of all parties involved in a contract for the carriage of goods by sea. 4 The adjustment of GA in a contract of carriage by sea plays an indispensable role because these clauses carry a series of important values and meanings for the parties involved in the contract. The concept of GA extends beyond the basic notion of cost-sharing; it also encompasses the broader goal of protecting the common safety of the entire shipping system. The key functions of GA can be summarized in four main points:

(i) To encourage ship owners and all parties involved to take necessary and prompt relief measures to preserve ships and cargo from unusual dangers.

(ii) To ensure that all parties involved in the transport bear their share of the GA in a fair and reasonable manner. 5

(iii) To facilitate the GA adjustment process.

(iv) To promote cooperation and trust.

In conclusion, GA provisions are indispensable not only for the preservation of maritime safety but also for ensuring the rights of all parties involved in the transport. By fostering fairness and cooperation, GA contributes to a sustainable and effective global shipping industry.

Conditions for determining General Average

Rule A of the YAR establishes that an action in GA arises if and only if any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for common safety for the purpose of preserving property from peril during a common maritime adventure. Thus, there are 5 important conditions to determine the GA: (1) extraordinary sacrifice or expenditure, (2) intentional act, (3) reasonable act, (4) time of peril and (5) for the common safety of the adventure.

Conditions for determining General Average

Rule A of the YAR establishes that an action in GA arises if and only if any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for common safety for the purpose of preserving property from peril during a common maritime adventure. Thus, there are 5 important conditions to determine the GA: (1) extraordinary sacrifice or expenditure, (2) intentional act, (3) reasonable act, (4) time of peril and (5) for the common safety of the adventure.

Conditions for determining General Average

Rule A of the YAR establishes that an action in GA arises if and only if any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for common safety for the purpose of preserving property from peril during a common maritime adventure. Thus, there are 5 important conditions to determine the GA: (1) extraordinary sacrifice or expenditure, (2) intentional act, (3) reasonable act, (4) time of peril and (5) for the common safety of the adventure.

Conditions for determining General Average

Rule A of the YAR establishes that an action in GA arises if and only if any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for common safety for the purpose of preserving property from peril during a common maritime adventure. Thus, there are 5 important conditions to determine the GA: (1) extraordinary sacrifice or expenditure, (2) intentional act, (3) reasonable act, (4) time of peril and (5) for the common safety of the adventure.

Conditions for determining General Average

Rule A of the YAR establishes that an action in GA arises if and only if any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for common safety for the purpose of preserving property from peril during a common maritime adventure. Thus, there are 5 important conditions to determine the GA: (1) extraordinary sacrifice or expenditure, (2) intentional act, (3) reasonable act, (4) time of peril and (5) for the common safety of the adventure.

Conditions for determining General Average

Rule A of the YAR establishes that an action in GA arises if and only if any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for common safety for the purpose of preserving property from peril during a common maritime adventure. Thus, there are 5 important conditions to determine the GA: (1) extraordinary sacrifice or expenditure, (2) intentional act, (3) reasonable act, (4) time of peril and (5) for the common safety of the adventure.

Sacrifices or expenditures qualify as Gerneral Average in specific cases

Sacrifices or expenditures qualify as Gerneral Average in specific cases

Sacrifices or expenditures qualify as Gerneral Average in specific cases

Sacrifices or expenditures qualify as Gerneral Average in specific cases

Sacrifices or expenditures qualify as Gerneral Average in specific cases

Sacrifices or expenditures qualify as Gerneral Average in specific cases

Recommendation

Recommendation

Recommendation

Conclusion

In the context of Vietnam today, the development of clear legal regulations governing the GA is absolutely necessary and has important implications for international trade activities. This is because parties will be more confident when they have a basis for determining their rights and obligations from the outset of a marine carriage contract. Therefore, the authors conducted this study with the aim of proposing solutions to improve Vietnamese legal regulations on the GA. The research study has clarified the following issues:

Firstly , through the analysis and evaluation of the views of scholars around the world as well as commenting on related cases, the authors clarify the practice of GA in maritime operations.

Secondly , proposing a number of solutions to improve the legal regulations on the GA in the Vietnam Maritime Code.

ACKNOWLEDGEMENTS

This research is funded by the University of Economics and Law, Vietnam National University Ho Chi Minh City, Vietnam.

ABBREVIATIONS

GA: General average

YAR: York-Antwerp Rules

Port of refuge: Port of refuge or any other place for ensuring common safety

K&R: Kidnap and Ransom

CONFLICT OF INTEREST

The authors declare that they have no conflicts of interest.

AUTHOR S’ CONTRIBUTION

- Author Vu Kim Hanh Dung is responsible for structuring the paper and providing general comments.

- Author Bui Doan Minh Tri is responsible for the content: Introduction, Overview of the General Average theory, Repair and expenses at the port of refuge, GA loss caused by the fault of a party in the common maritime adventure.

- Author Nguyen Thanh Mai is responsible for the content: Abstract, Keywords, Recommendation, Conclusion.

- Author Tran Thi Nguyet Quy is responsible for the content: Introduction, Abstract, Recommendation.

- Author Vu Thi Ngoc Chi is responsible for the content: Salvage cost, Piracy and Kidnap and Ra son Insurance, Recommendation for Criteria for sacrifices “and” extraordinary expenditure to determine general average.

- Author Pham Tran Thien Huong is responsible for the content: Conditions for determining General Average, Jettisoned cargo.

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Article Details

Issue: Vol 8 No 4 (2024)
Page No.: 5631-5643
Published: Dec 31, 2024
Section: Research article
DOI: https://doi.org/10.32508/stdjelm.v8i4.1411

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Creative Commons License

Copyright: The Authors. This is an open access article distributed under the terms of the Creative Commons Attribution License CC-BY 4.0., which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

 How to Cite
Vũ, H. D., Trí, B., Mai, N., Quý, T., Hương, P., & Chi, V. (2024). General average in maritime law: International experience and considerations for Vietnam. Science & Technology Development Journal: Economics- Law & Management, 8(4), 5631-5643. https://doi.org/https://doi.org/10.32508/stdjelm.v8i4.1411

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