YORK-ANTWERP RULES AND PLACES OF REFUGE FOLLOWING THE CMI CONFERENCE 2004

1. YORK-ANTWERP RULESANDPLACES OF REFUGE FOLLOWING THE CMI CONFERENCE 2004 By Ben Browne Shaw and Croft

2. MARINE INSURANCE ACT 1906 s.66 “1. A G.A. loss is a loss caused by or directly consequential on a G.A. act. It includes a G.A. expenditure as well as a G.A. sacrifice. 2. There is a G.A. act where any extraordinary sacrifice or expenditure is voluntarily and reasonably made or incurred in time of peril for the purpose of preserving the property imperilled in the common adventure.”

3. Matthew Marshall’s Research G.A. is too expensive – US$300 million p.a. G.A. Takes too long to adjust – 66% of adjustments are published in 2 years covering 33% of money shifted G.A. is inequitable – 80% of G.A.s caused by the fault of owners/crews. But 60% of G.A. is charged to innocent cargo.

4. INGREDIENTS OF A G.A. CLAIM Salvage 40% Interest and Commission 11% Adjusters’ fees and expenses 11% Crew wages and maintenance 4% Fuel and stores at a place of refuge 1% Cargo expenses 8% Ship and Cargo Sacrifices 19% Others 6%

5. THE YORK-ANTWERP RULES 2004 • Removal of Salvage from G.A. • Crew wages at a Port of Refuge disallowed • Temporary Repairs curtailed • Interest at market rates • Commission abolished • Time Bar • Housekeeping

6. SALVAGE – YAR Rule VI • Salvage lies where it falls unless one party pays another’s proportion • Second casualty affecting values • Uneven settlements will not be readjusted • Carried in plenary by 21 to 9 • Saving for Underwriters: 8%

7. CREW WAGES AT PORTS OF REFUGE – YAR RULE XI • Crew wages and maintenance while detained at a Port of Refuge will not be allowed in G.A. BUT • Crew wages and maintenance during the prolongation of the voyage will be allowed • Saving to Underwriters could be 3-4%.

8. TEMPORARY REPAIRS YAR RULE XIV • Temporary Repairs caused by damage suffered for common safety or a G.A. sacrifice will be allowed. - Temporary Repairs of accidental damage only allowed to the extent that [Temporary Repairs and Permanent Repairs] > Permanent Repairs at Port of Refuge • Baily method • Saving to Underwriters: 1%

9. INTEREST – YAR RULE XX1 • Interest charged at 7% under YAR ’74 and ’94. • Under YAR 2004 the rate will be fixed annually by CMI. • CMI’s Guidelines: - 1 year US$ loans and £, € and Yen will be “taken into account”. • Saving about 3%

10. COMMISSION – YAR RULE XX • 2% on disbursements except crew wages, maintenance and fuel & stores. • Commission duplicates interest. • Under YAR 2004 commission is not charged.

11. TIME BAR – YAR RULE XXIII • One year after Adjustment is published or 6 years after termination of voyage (whichever is less). • Extensions may be agreed. • Does not apply as between insurers and assureds. • May not be enforceable everywhere.

12. YORK-ANTWERP RULES 2004 - SUMMARY • Enter into force 1st January 2005. • Aim to speed up adjustments and save underwriters money • Savings to underwriters overall about 15% • Both Hull and Cargo underwriters gain • Effect on shipowners is minimal (crew wages being main downside) • Important YAR 2004 are utilised. • Policy wordings require only minor changes.

13. PLACES OF REFUGE • Refusal of access to vessels in distress to Places of refuge. • Historical right of access partly supported by: UNCLOS Article 11 Salvage Convention. OPRC 1990. Intervention Convention 1969. Dumping Conventions. SOLAS.

14. GOVERNMENTAL POWERS TO REFUSE ACCESS • Right to protect coastline (UNCLOS). • Bilateral treaties. • Contingency plans. • Dangerous Vessels Act 1985. • SOSREP. • The “TOLEDO” (1995). • The “LONG LYN” (1995).

15. EUROPEAN TRAFFIC MONITORING DIRECTIVE 2002 • “Ports” must be available for ships in distress. • Contingency plans to be drawn up and published. • Problems of publicising PORs.

16. IMO GUIDELINES • 2 sets of Guidelines – one for Master and one for Coastal State. • Adopted 5th December 2003. • 2 step analysis: Event – specific assessment Expert Analysis • Security as a condition of entering a POR. • Not legally binding.

17. PLACES OF SAFETY - CMI Topics discussed: • Obligation to offer POR • Penal liability • Reception facilities • Coastal States and Casualty ships in International Law • Designation of PORs and the mechanism of decision making • Domestic law, Guidelines or a Convention

18. CMI’S PROPOSALS (1) Convention or amendment to a convention or Guidelines on • Rights and obligations of States. • State immunity when providing access to a POR. • Consequences for States who wrongly refuse access. • Financial security as a condition of entering a POR. • Liability compensation regimes for pollution damage • Objectivity/technical expertise when deciding on access requests.

19. CMI’S PROPOSALS (2) • Written reasons for refusal. • PORs to be designated in advance/publicity? • Criminal penalties. • Compulsory liability insurance. • Direct action against insurer. • Should shipowner waive right to limit liability when requesting access to a POR. • Establishment of a Fund to meet excess liabilities outside current regimes.

20. PLACES OF REFUGE – THE FUTURE • CMI’s proposals to be considered by IMO Legal Committee. • Growth of SOSREP type systems. • Short term – rely on existing Conventions (UNCLOS, Intervention Convention, OPRC etc.). • Long term – A Convention or Guidelines?

21. YORK-ANTWERP RULESANDPLACES OF REFUGE FOLLOWING THE CMI CONFERENCE 2004 By Ben Browne Shaw and Croft.