Court clarifies which version of the Rules apply under Congenbill 1994
 

By Alexander Freemam, Richard Cooper and Reema Shour
 

The Court has recently decided “an old chestnut”, namely which version of the York-Antwerp Rules (YAR) applies pursuant to clause (3) of the standard Congenbill 1994 form. This has been debated for years. The Court held that the general average (GA) adjustment in this case should be conducted under YAR 2016, not YAR 1994.

In Star Axe I LLC -v- Royal and Sun Alliance Luxembourg S.A. & Others (Star Antares) [2023] EWHC 2784, between September 30, 2021 and October 4, 2021, the Claimant carrier issued seven bills of lading on the standard Congenbill 1994 form, which 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.”

On November 3, 2021, while proceeding to the second discharge port, the claimant’s vessel allegedly struck an unknown submerged object and sustained damage. GA was declared on November 19, 2021.

The defendant cargo insurers issued Average Guarantees to the claimant, undertaking to pay any contribution to GA that might be payable in respect of the goods covered by the bills of lading. However, the parties disagreed on whether their respective rights and obligations in relation to GA were governed by YAR 1994 or YAR 2016.

The key issue was whether subsequent YAR published in 2004 and 2016 would be considered a ‘modification’ to YAR 1994 or treated as a ‘new’ set of rules. 

If the former, then clause (3) of Congenbill 1994 (3) would incorporate the latest edition of YAR, i.e. YAR 2016. Alternatively, if the subsequent YAR published in 2004 and 2016 were ‘new’ sets of rules, YAR 1994 would apply. 


The arguments

The claimant argued that YAR 1994 applied, whereas the defendants submitted that it was YAR 2016.

To support its position, the claimant relied on various industry publications and academic texts and commentaries. In the claimant’s view, these materials broadly concluded that the most likely interpretation was that subsequent YAR should be treated as a ‘new’ set of rules, meaning YAR 1994 should continue apply under a standard Congenbill 1994. The claimant also submitted that given Congenbill 2016 expressly incorporated YAR 2016, the parties’ decision to use Congenbill 1994 must mean that they intended YAR 1994 to apply. Furthermore, given the above, clause (3) of the Congenbill 1994 would have been understood to incorporate YAR 1994 at the time of the parties’ agreement.

On the other hand, the defendants submitted that clause (3) of the Congenbill 1994 was to be treated as an ‘inbuilt updating mechanism’ which made the most recent YAR applicable. They argued that when Congenbill 1994 was drafted, it would reasonably have been anticipated that a further version of YAR would be published before Congenbill 1994 fell out of use, and the drafters would have considered it desirable for the wording to incorporate the latest version of YAR, in order to properly reflect developments in shipborne commerce. Otherwise, such developments would not be properly reflected.

The defendants also highlighted among other things that shipowners and charterers continue to use standard contract terms, even after newer wording has been published. 

Therefore, there could be no assurance when drafting Congenbill 1994 that the market would only use it until such time as an updated Congenbill wording became available. Furthermore, the YAR constituted a code for regulating the adjustment of GA with the aim being to harmonize the treatment of GA. Consequently, the periodic YAR updates issued by the Comite Maritime International (CMI) aimed to adjust GA to suit the changing expectations of ship and cargo interests.


The Commercial Court decision

The Court preferred the defendants’ arguments. In considering the background information available to the parties at the time of contracting, the Court thought that they were more likely to have contracted in the context of the facts and circumstances as put forward by the Defendants rather than on the basis of the materials cited by the Claimant. Those materials, even if the parties had been aware of them, would have been considered as mere opinions, no more than that.

As to the meaning of ‘any subsequent modification’, this wording should be reasonably understood as capable of applying to a new version of the YAR. In the Court’s view, a reasonable person would not have understood these words to have meant only amendments to YAR 1994, rather than a new version of YAR. Had the parties intended the narrower construction, they would not have used the words ‘any subsequent modification thereof’.

The Court further noted that each set of the rules was produced by the same body, was directed to the same end, and contained many of the same provisions, albeit with some changes by way of update. It concluded that YAR 2004 and YAR 2016 could be considered as ‘modifications’ of YAR 1994. Such an interpretation accorded with the most obvious purpose of including a reference to subsequent modifications of the specified YAR, namely to ensure that the adjustment of GA 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.

Accordingly, in this case the GA adjustment was to be conducted under YAR 2016.


Comment

This decision has usefully clarified the meaning of clause (3) of the Congenbill 1994. 

Of particular significance - especially to parties currently seeking to recover GA contributions subject to standard Congenbill 1994 wording - is that the claims will be subject to the one-year Rule XXIII YAR 2016 time bar, commencing from the date upon which the GA adjustment is issued (and the six-year ‘long stop date’ time bar from the date of termination of the common maritime adventure). This is in contrast to the standard six-year contractual time bar commencing from the date of adjustment which applies to GA claims subject to YAR 1994. The distinction may catch parties unawares.

It is understood that the claimants intend to apply for permission to appeal.

Alexander Freeman is a partner, Richard Cooper is marine manager, and Reema Shour is a professional support lawyer at Hill Dickinson, www.hilldickinson.com.