Annual Report 2022
3. The Chairman’s Address 2022 “General Average Back To The Future” A daunting task; those were the words of a colleague adjuster many years ago to describe the task of preparing and presenting a Chairman’s address. These were also the words that popped up in my mind, when our former Chairman Richard Cornah phoned me over two years ago to ask if I would consider becoming his successor, which implies preparing an address at the end of the term. As a non British and non practising Fellow, I needed some weeks to think this over and then said “yes” instead of “non”. So here is my address. Choosing a suitable subject for the address is the most difficult part of this task. I could have chosen the Covid 19 pandemic that affected our lives over the past two years. This would have involved a study of how marine insurers introduced new clauses into their policies to limit or exclude cover for pandemic related expenses and delays. Richard has already presented his address on Covid 19 and the impact on Hull claims and General Average in 2020. I did not want to step into his footsteps and I think that we are all fed up with Covid 19 by now. Another subject that came to mind could have been the brutal Russian invasion of the Ukraine and the evolving consequences this has on human suffering and the war risk insurance market. Which person that witnessed the Berlin wall coming down in 1989 would have thought that the Cold War between East and West with threats of the use of nuclear weapons would be back on the agenda again in 2022. As to the war risk insurance, the premiums have rocketed up to 7% of the vessel’s insured value per 7 days for vessels in Ukrainian waters. This implies that Owners could pay the equivalent of the value of the vessel on war risk insurance premium in only 15 weeks. I do hope that owners have the correct War Risks clauses in their charterparties, which entitles them to get reimbursed by charterers for these additional war risk premiums. I thought it is too early to choose this topic for an address. In times of pandemic and war, people usually turn to safe investments like gold and silver. The same logic applies to adjusters, who turn to their safe haven called General Average (GA hereafter). So this will be the subject of my address but unlike usual references to GA presented as an ancient maritime principle going back to Rhodian law, I will focus on the future of GA. We will not go back to the past, but back to the future. The largest part of my address deals with the biggest challenge of mankind in the next 25 years, which is combatting climate change. New legislation is being introduced to put a cap on CO2 emissions in shipping and such emissions will no longer be free of charge. Can the new carbon levies consequent on a GA act be allowed in General Average? Before we hop on the DeLorean car with Michael J. Fox for our Back to the Future GA experience resulting from the proposed legislation, I will briefly discuss two recent Supreme Court cases where GA played a crucial role. It is very rare that GA cases reach the Supreme Court, so it therefore deserves attention in my address. The Longchamp (2017) Surprise, surprise, The Longchamp! This case has already been the subject of the address by Lord Clarke back in 2019. The issue of this case was whether the daily vessel operating expenses of shipowners incurred while they were negotiating to reduce the ransom demand of pirates could be allowed in GA. 14
