The slides, written out
AI-drawn illustration. Simplified to explain the idea, not to scale.
Slide 1 · SHARED PERIL
SHARED PERIL. SHARED PROTECTION.
GENERAL AVERAGE
&
FUND CONVENTION
The principles, rules & protection
that keep maritime trade moving.
THE RULES BEHIND FAIR CONTRIBUTION
AND OIL POLLUTION COMPENSATION
Slide 2 · 1/4
THE PRINCIPLE BEHIND GENERAL AVERAGE
CORE PRINCIPLE
When, during a voyage, an extraordinary sacrifice or expenditure is intentionally and reasonably made for the common safety to preserve property involved in a common maritime adventure, the different contributing interests bear the loss proportionally.
3 PILLARS
01 | COMMON PERIL
The danger must threaten the common maritime adventure.
02 | VOLUNTARY & REASONABLE ACT
The sacrifice or expenditure must be intentionally and reasonably made.
03 | DIRECT CONSEQUENCE
Only losses, damages or expenses that are the direct consequence of the general average act are allowable.
WHO CONTRIBUTES?
SHIP + CARGO + FREIGHT → Contribution based on the applicable contributory values
EXAM EXAMPLE
A vessel runs aground. To refloat her and preserve the common maritime adventure, the Master deliberately uses the main engines, causing qualifying machinery damage.
Such damage may be allowable as General Average, subject to the applicable York Antwerp Rules.
Key reference: York Antwerp Rules 1994, Rules A, C and applicable numbered Rules.
Slide 3 · 2/4
WHAT HAPPENS IN A
MULTIMODAL SHIPMENT?
YAR = THE CONTRACTUAL FRAMEWORK
The York Antwerp Rules commonly provide the
framework for determining what is allowable as
General Average and how the adjustment is
calculated when incorporated into the
applicable contract.
The DGS syllabus specifically references
York Antwerp Rules 1994.
MULTIMODAL TRANSPORT
GA is not automatically restricted to the sea leg.
Where a ship is at a port or place in circumstances
giving rise to GA and cargo is subsequently
forwarded to destination by other means, YAR 1994
Rule G provides that GA rights and liabilities can
remain substantially the same as if the adventure
had continued in the original ship, subject to
the Rule's conditions.
CONTAINER CARGO
The cargo interests participate in General Average
according to the applicable contractual arrangements
and contributory values.
EXAMINER'S TAKEAWAY
Do not say "GA applies only to the sea leg."
The contract and applicable York Antwerp Rules
must be examined, and Rule G specifically
addresses forwarding cargo by other means.
YAR 1994: Rules C, G and I are
particularly important for this topic.
Slide 4 · 3/4
FUND CONVENTION
THE SECOND TIER OF OIL POLLUTION COMPENSATION
PURPOSE
The 1992 Fund Convention provides a second tier
of compensation for oil pollution damage when
compensation under the applicable CLC regime
is unavailable or insufficient.
WHO FINANCES THE FUND?
OIL RECEIVERS
Contributions are levied on persons
who receive more than
150,000
TONNES
of contributing oil in a calendar
year in a State Party.
WHAT IS CONTRIBUTING OIL?
CRUDE OIL + HEAVY FUEL OIL
For the 1992 Fund Convention, "contributing oil"
means crude oil and heavy fuel oil as defined
by the Convention.
Do not equate "contributing oil" with all
persistent oils.
WHO ARE THE CONTRIBUTORS?
Usually the first physical receiver of the oil
in the Member State, subject to the Convention
and applicable national arrangements.
WHO ADMINISTERS THE SYSTEM?
The 1992 Fund is administered by its
governing bodies, supported by the
IOPC Funds Secretariat in London.
IOPC
FUNDS
Financed by oil receivers – not by shipowners.
The Fund operates as a second tier of compensation.
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Slide 5 · 4/4
GENERAL AVERAGE & FUND CONVENTION
EXAM QUICK RECALL
TOPIC
REMEMBER THIS
GENERAL AVERAGE
Extraordinary sacrifice or expenditure intentionally and reasonably made for common safety.
RULE C (YAR 1994)
Only losses, damages or expenses that are the direct consequence of the GA act are allowable.
RULE G (YAR 1994)
GA rights can continue where cargo is forwarded by other means, subject to the Rule's conditions.
YAR 1994
Common contractual framework for GA adjustment when incorporated in the applicable contract.
FUND CONVENTION (1992)
Provides a second tier of compensation for oil pollution damage.
CONTRIBUTOR
Person receiving more than 150,000 tonnes of contributing oil in a calendar year in a State Party.
CONTRIBUTING OIL
Crude oil and heavy fuel oil as defined by the 1992 Fund Convention. Do not confuse with all persistent oils.
FUND FINANCING
Contributions from qualifying oil receivers, not shipowners.
WHO SETTLES CLAIMS?
Claims are administered through the IOPC Funds Secretariat. Settlement authority is exercised by the Director within delegated authority; the Executive Committee deals with settlements requiring its approval.
INDIA – LEGAL FRAMEWORK
Merchant Shipping Act 2025, Sections 213–221 cover the principal Fund provisions.
ONE LINE TO REMEMBER
General Average protects the common maritime adventure. The FUND Convention provides additional compensation for qualifying oil pollution damage.
Drafted by SailR from our daily lessons. AI-drawn illustration. Simplified to explain the idea, not to scale. Last updated 19 Oct 2026.
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