Lochner Law Firm, P.C.

Todd D. Lochner
Chase A. Eshelman
Chris J. McNally*
Eugene E. Samarin
Gregory R. Singer

Lochner Law Firm, P.C.
Donner Building
91 Main St., 4th Floor
Annapolis, MD 21401

P: (443) 716-4400
F: (443) 716-4405

Contact Us

* Barred in RI & MA

INSURANCE - General Average

On March 13, 2022, the 1,095-feet M/V Ever Forward was ran aground with 5,000 containers on board. For weeks, despite several attempts to refloat the vessel, Ever Forward was stuck in the mud outside of the Craighill Channel near Gibson Island, Marylnd. A salvage operation was conducted to remove the cargo to make the ship lighter and in hopes to lift it off the seabed. M/V Ever Forward was successfully freed on April 17.

To cover its losses, M/V Ever Forward declared a General Average, a rarely invoked maritime practice that dates back to Ancient Greece, where, to solve the problem of serious ship grounding, cargo would be jettisoned in order to make the vessel lighter. General Average is the practice of the carrier and shippers proportionately sharing the burden of loss during an emergency when cargo must be sacrificed in order to promptly handle the situation to avoid even more loss. Cia. Atlantica Pacifica, S. A. v. Humble Oil & Ref. Co., 274 F. Supp. 884, 891 (D. Md. 1967). This practice prevents arguments on liability and avoids delays from the carrier having to keep track of whose cargo has been sacrificed. Nowadays, General Average also includes salvage operations, which further limits the losses of the carrier and shippers.

As M/V Ever Forward was being offloaded, its General Average call continued to grow, until it was finally freed. Theoretically, the shipowner has no obligation to release the cargo to the consignees until the lien for the General Average occurs. Practically, the shipowner does not want to hold onto the cargo because there will be charges that they will continue to incur at the destination port.

To avoid paying General Average, the shippers will argue that the ship was unseaworthy for some reason. Seaworthiness is based on whether the ship was reasonably fit to carry the cargo that the ship was contracted to transport on the particular voyage. Martin v. Southwark, 191 U.S. 1, 9 (1903). Fitness is determined whether the ship was structurally sound with proper equipment aboard and well staffed with a competent and reliable crew. Seaworthiness is judged on factual, concrete considerations, which include the type of cargo, the route planned for travel, and expected weather patterns.

Since General Average is limited to the marine industry, only maritime counsel would be aware of all the steps necessary to effectuate a proper defense or to break limitation. There are pros and cons of filling for General Average, as well as possible defenses to a filed General Average. For this reason, if you are a shipowner and you think that there may be a claim made against you, a vessel you own, or a vessel that you chartered, do not wait until you are sued before seeking the advice of counsel and your Club representative. If you have cargo interest, particularly if uninsured, seek council before signing the bond as the bond could be a blank check to the shipowner, likely will require a London presence, and within a few days of signing the bond, you appointing a local representative to accept service of process for you in London, or wherever it is beneficial for the shipowner.

If you have any questions, please contact our office as you and we are in this together.
Back to Maritime Law Articles