Introduction
The Congenbill 1994 standard form is one of the most extensively used standard form bills of lading in international trade. Clause (3) of that form provides for general average ("GA") to be "adjusted, stated and settled according to YorkAntwerp Rules ["YAR"] 1994, or any subsequent modification thereof". Although the YAR 1994 were followed by the YAR 2004 and YAR 2016, the received wisdom within the shipping industry and among legal commentators was that clause (3) incorporated the YAR 1994, and not the later rules; and a vast number of adjustments have been carried out on that basis.
That consensus was shattered by the Commercial Court's decision in Star Axe I LLC v. Royal and Sun Alliance Luxembourg S.A. and others ("The Star Antares") [2024] 1 Lloyd's Rep 342, in which Butcher J held that the received wisdom was wrong and clause (3) in fact incorporates the YAR 2016.
The Background
In his Commentary on the York-Antwerp Rules 2004 published in July 2004, Richard Cornah reported that the CMI had agreed that the new Rules should be given the title of "York-Antwerp Rules 2004" to make it clear that these were new rules, and not simply an amendment to or modification of the YAR 1994. He also expressed the view that the words "or any subsequent modification thereof" did not incorporate those later YAR versions. In 2007, BIMCO agreed that the YAR 2004 were "a new set of Rules and not in anyway a modification or amendment of the 1994 Rules".
Thus, by 2018, the editors of the 15th edition of Lowndes & Rudolf: The Law of General Average and The YorkAntwerp Rules, were able to declare that it is possible to contend that there is a binding practice in London that language such as that in the Congenbill '94 form does not incorporate the York-Antwerp Rules 2004 or later versions.
The Judgment and its Implications
In his judgment, Butcher J rejected the owners' argument that the words of clause (3) should be construed against the background of the publications summarised above.
Instead, he first construed the operative words, "any subsequent modification" without reference to those publications and held that those words were "reasonably to be understood as capable of applying to a new version of the Rules." He then held that some of those publications could not be considered because they were not reasonably available to the parties. Finally, he ruled that, if those publications could be taken into account, a reasonable person "would consider such a statement of opinion as being neither necessarily correct nor a sure guide to how a court would construe the relevant words". He concluded that the YAR 2016 were "at least a 'modification' of the YAR 1994" and therefore the Congenbills in dispute incorporated those 2016 Rules.
Although Butcher J granted permission to appeal to the Court of Appeal, the appeal was not pursued. This decision will therefore govern unless and until another case makes it all the way to the Court of Appeal.
The consequences of this ruling are potentially far reaching and extremely disruptive. GA assessments completed under the YAR 1994 are at risk of being challenged on the basis that the wrong Rules have been applied, leading to uncertainty and potential litigation. More importantly, the 1-year time bar in Rule XXIII of the YAR 2016 – which does not appear in the YAR 1994 – poses a very serious risk of shipowners, other GA contributors and average adjusters being time barred from recovering GA contributions which they had been relying on receiving to make the payments required by the adjustment. Such a result would undermine the fundamental principle underlying the concept of GA, being that, "that which has been given for all should be replaced by the contribution of all."
Chirag Karia KC of Quadrant Chambers acted for the claimant shipowner in The Star Antares.
Originally published 18 December 2024
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