“STAR ANTARES” – the stars align for the York-Antwerp Rules 2016?

The “STAR ANTARES” decision involves a dispute over which version of the York-Antwerp Rules (YAR) applies to claims for General Average (GA) contributions under Congen 94 bills of lading. The court ruled that the YAR 2016 apply, which significantly affects the defence of GA claims.

Summary 

Claims for General Average are invariably adjusted by reference to the relevant version of the York-Antwerp Rules (“YAR” or “the Rules”). 

The recent decision in the case of Star Axe I LLC v Royal and Sun Alliance Luxembourg S.A.- Belgian Branch and others (the “STAR ANTARES”) [2023] EWHC 2784 (Comm) involved a dispute relating to claims for General Average (“GA”) contributions for cargo that was carried pursuant to the Congenbill 1994 standard form bill of lading. The Court was asked to clarify which version of the YAR applied.

Clause (3) of Congenbill 1994 states “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.”

The English High Court had to decide whether this wording referred to the YAR 1994 or, given the wording “or any subsequent modification thereof”, the YAR 2016.  The Court held that the YAR 2016 (as the latest version of the YAR) were incorporated.

There are a number of detailed differences between the 1994 and 2016 YAR. One notable practical effect of this decision is that the YAR 2016 contain a one-year time limit, running from the date of the GA Adjustment, for claims for GA contributions, including claims under average bonds issued by cargo owners and under average guarantees issued by insurers. By contrast, the YAR 1994 contain no such time limit and therefore so far as English law is concerned at least, will be subject to the statutory time limit of six years from the date of the GA Adjustment.

Background

In September 2021, cargo owners shipped cargoes of ferrochrome on board the vessel “STAR ANTARES” for carriage from ports in southern Africa to Asia, pursuant to various bills of lading on the Congenbill 1994 form.

During the voyage, on 3 November 2021, the vessel struck an unknown submerged object and sustained damage. GA was declared on 19 November 2021.

The Defendant cargo insurers issued average guarantees to shipowners in the usual way, where they undertook to pay any GA contributions and/or salvage and/or special charges which were properly and legally due and payable in respect of the goods carried under the bills of lading.

A dispute arose as to whether the parties’ respective rights and obligations were governed by the YAR 1994 or the YAR 2016.

The issues before the Court

The shipowners argued that the words “York-Antwerp Rules 1994, or any subsequent modification thereof” did not encompass the subsequent YAR 2004 or YAR 2016, such that they would apply instead of the YAR 1994. The shipowners argued that these later versions of the YAR were new sets of Rules and not ‘modifications’ of the YAR 1994.

Conversely, the Defendant cargo insurers argued that the wording was intended to function as an inbuilt updating mechanism and made the most recent version of the YAR applicable.

Whilst in practice GA adjustments often contain statements that the subject wording in clause (3) of Congenbill 1994 does not have the effect of rendering the YAR 2004 or YAR 2016 applicable, and this suggestion has obtained some approval in textbooks, this contention had no basis in legislation nor judicial authority. The present case provided the Court a welcome opportunity to resolve this long-standing question.

The decision of the Court

The Court agreed with the Defendant cargo insurers and found that under the wording of clause (3) of Congenbill 1994, the relevant GA adjustment was to be conducted under the YAR 2016.

The Court made express reference to this interpretation being consistent with “the most obvious purpose of including a reference [in the Congenbill 1994 wording] to subsequent modifications of the specific YAR, namely to ensure that the adjustment of general average should be in step with major developments in shipborne commerce such as would be expected to be considered and taken into account by the CMI [Comite Maritime International]” when issuing subsequent versions of the YAR over time.

Comment

The cargo interests’ interpretation of the wording, endorsed by the Court, is a sensible one, both on a plain reading of the clause itself and in its function as an inbuilt updating mechanism ensuring that the standard Congenbill form remained suitable as new versions of the YAR were subsequently issued in the light of developments in shipping practice.  

Following the Court’s decision, cargo interests may find that in particular the provision in the 2016 YAR of a one year time bar (running from the date of the GA Adjustment) is more frequently available in defence of claims for GA contributions.

The shipowners are expected to appeal the decision. 

We do expect that this decision will bring welcome clarity to the marine insurance market. It will ensure that the updated YAR are used more frequently. The long-tail nature of GA exposures has historically been a problem. The clarity on the time limit (which, after all, was considered a sufficient period of time under the Hague/ Hague-Visby Rules to bring claims for cargo loss or damage) will also permit insurers to close their books on GA claims sooner which will be welcome from a business perspective. 

If you are involved in cases involving claims for outstanding GA contributions and would like assistance in reviewing these claims in the light of these developments, please do contact us.