PORT OF REFUGE

       Port of refuge  :   It is a port on place that a vessel diverts to when her master considers it                          unsafe to continue the voyage due to a peril that threatens its safety.

                       

            Where such a deviation is for the preservation from peril of the property involved is a        common             maritime adventure, it will generally constitute a general average act.

           

            Where the ship-owner or carrier is a party to a contract of carriage, discontinuation of the voyage is             deviation from the contract.

            A deviation to a pent of refuge will be regarded as a justifiable deviation if the reasons for the deviation can be shown to be a valid one within the terms of the contract. In such a case all contractual rights will be unaffected.

Valid reasons for deviating to a port of refuge usually include:

            (i)         Weather, collision or grounding damage affecting the seaworthiness of the ship

            (ii)        A serious Fire

            (iii)       Dangerous shift of cargo

            (iv)       Serious machinery breakdown

            (v)        Any other accident causing a serious threat to the vessel on her cargo

            (vi)       Shortage of bunker

Paragraph (a) of Rule X – Expenses at port of refuge etc – of the York- Antwerp Rules 1994 provides that ‘when a ship shall have entered a port of refuge fro any of the above mentioned reasons, the expenses incurred shall be admitted as General Avg.’     

A pent or place where a vessel seeks temporary shelter is not a port of refuge (Eg. Due to adverse weather) since running for shelter is ‘ordinary practice and not extraordinary’ in context of Rule A of the York Antwerp Rules.

Particular Average and general Average

A marine loss may be either:-

1.      A total loss or

2.      A partial loss (termed average)

Partial Loss

A partial loss may be either:

1.   Particular average (PA) i.e., accidental partial loss

or   2.General average(GA) i.e., intentional partial loss   

1.         Particular Average:

            It is a partial loss, proximately caused by a peril insured against and which is not a General average          loss. Thus, structural damage proximately caused by collision, grounding, heavy weather etc. (perils     of the seas) would normally be caused as a ‘PA’ loss .

2.         General Average:

            General average is an ancient form of spreading the risk of sea transport and existed long before marine insurance. General average means ‘general loss’, as opposed to a particular loss under marine insurance.

            It is a system, in which all interests involved in the adventure, viz., Hull and Machinery, cargo and Freight at risk must contribute to the losses voluntarily incurred to save all interests on board.

            The principle is ‘That which has been sacrificed for the benefit of all, shall be made good by the contribution of all, that got the benefit from the General Average Act’ The object of ‘GA’ is to ensure, that the owner of the ship or cargo, who has incurred an expenditure or suffered a sacrifice of his property, in order to extricate the ship (and the cargo) from a perilous position, receives a contribution to his loss, from all those who have benefited from this action A ‘GA’ loss is a partial loss, incurred through a deliberate act performed with the intention of protecting the interests of all involved, in a voyage from a danger, which threatens them all. ‘GA’ losses are shared equally by all parties to the ‘common adventure’ each contributing in proportion to his percentage of Net arrived values.

            The five major component of a general average loss are therefore

a) an extraordinary sacrifice or expenditure

b) which action taken was intentional or voluntary and not inevitable

c) and reasonably made

d) against a peril

e) in order to benefit the common venture

e.g., Damage done when over working a ships engine while afloat to prevent grounding in ‘ordinary’, whereas damage done to engines, when already aground, in attempting to re-float the vessel is a ‘GA’, since this is an extraordinary Act.

Total loss and constructive loss

A total loss may be either:

1) An Actual Total Loss (ATL) or

2) A constructive Total Loss (CTL)

Actual Total Loss:

There is an Actual Total Loss, where the subject matter of insurance is completely destroyed or so damaged as to cease to be a thing of the kind insured, on where the insured is irretrievably deprived of it or where properly is posted ‘missing’

e.g. when a ship is missing, viz., has not repented for several weeks

Constructive Total Loss:

As per the Marine Insurance Act, a Constructive total Loss occurs, when an assured is deprived of possession of his ship on goods by a penil insured against and where the subject matter of insurance is reasonably abandoned by the Insured, on account of its actual loss appearing unavoidable, because it could not be prevented from Actual Total Loss without expenditure that would exceed its value after expenses have been incurred.

After ‘valid’ abandonment, the Insurer is entitled to take over the interests of the Assured in whatever remains of the insured property including proprietary rights viz.,

The right to any freight, that was in the course of being earned when the casualty occurred

The right to take over the ship or its goods

The right to dispose of the ship or its goods as they think fit and to retain all the proceedings (even if this is more than the claim actually paid)