As is publicly known, on November 10, 2023, the High Court of Justice of England and Wales issued a judgment on Case No. CL-2022-000447, between STAR AX I LLC (hereinafter the “Claimant”), and the Royal and Sun Alliance Luxembourg S.A. and others (hereinafter “Insurers”).
The main discussion in this case revolves around of which version of the York-Antwerp Rules is applicable pursuant to clause (3) of the standard Congenbill 1994, wich provides:
“General average shall be adjusted, stated and settled according to York-Antwerp Rules 1994, or any subsequent modification thereof, in London unless another place is agreed in the Charter Party.” (emphasis added)
I. Background
The Claimant carrier issued 7 bills of lading, on the Congenbill 1994 form, acknowledging shipment on its vessel, the M/V ‘Star Antares’, of cargoes of ferro chrome. As the vessel was proceeding to her second discharge port in China, on November 3rd, 2021, the vessel allegedly struck an unknown submerged object, sustaining damage. General Average was declared on November 19, 2021 by Independent Average Adjusters Ltd.
On November 26, 2021, the Insurers issued Average Guarantees to the Claimant, undertaking to pay the Claimant or the Claimant’s average adjusters any contribution to general average and/or salvage and/or special charges which might be legally and properly due and payable in respect of the goods covered by the Bills of Lading.
However, a dispute arose as to whether the parties’ respective rights and obligations were governed by YAR 1994 or YAR 2016.
On one hand, the Claimant argued that the YAR 1994 applied. It contended that YAR 2004 or 2016 could not apply because they were a set of new rules, not amendments to the YAR 1994. Claimant supported this position by citing eight (08) references that distinguished between the YAR 1994 and the subsequent ones.
On the other hand, the Insurers argued that, historically, the YAR have been periodically revised, with further versions being published in 1890, 1924, 1950, 1974, 1994, 2004 and 2016. The Insurers contended that the periodic updating of the YAR is, in general terms, to be explained by a desire for the adjustment of general average to march in step with developments in shipborne commerce and to suit the changing expectations of ship and cargo interests. Also, the Insurers stated that when the Congenbill 1994 was drafted, the parties would reasonably have anticipated that there would have been a further version of the YAR before the Congenbill was updated or fell out of use. The drafters would have considered it desirable for the wording to incorporate the latest version of the YAR, not one that was outdated, for otherwise developments in shipborne commerce would not be properly reflected.
II. Judgement
The Court agreed with the Insurer’s submission that the word ‘modification’ ordinarily signifies a change which does not alter the essential nature or character of the thing which has been modified. The Court further noted that clause (3) in the Congenbill 1994 contains the words ‘any subsequent modification’ and found that the use of ‘any’ emphasises that it is all ‘modifications’ to the YAR 1994 which are to be incorporated.
The Court considered that there was no difficulty as a matter of the ordinary use of language in describing YAR 2004 or YAR 2016 rules as modifications of YAR 1994 rules. They were produced
by the same body, directed to the same end and contained many of the same provisions, albeit with some changes.
The Court state that the relevant words would have incorporated into a putative contract comparable to the contract(s) at issue here the YAR 2004 after their adoption and before the adoption of the YAR 2016. Therefore, those words are effective to have incorporated the YAR 2016 into the contract(s) with which the present case is concerned.
For the above reasons, the Court stated that while no distinction is drawn between the effect of the relevant words on the incorporation of the YAR 2004 and the YAR 2016, the incorporation of the YAR 2016 is the stronger case, as those Rules command a broader consensus, BIMCO has not made about them statements similar to those which it made about YAR 2004, and the arguments that they are not at least a “modification” of the YAR 1994 are weaker.
Finally, the Court held that the relevant general average adjustment was to be conducted under YAR 2016.
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