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Piracy ransom & GA contribution by B/L holders

General average is a well known [ancient] concept and cargo owners are always looking at [novel] ways to avoid paying their contribution. In the case of The Polar [2020] cargo owners were arguing that bill of lading terms excluded any GA liability. Liability being $4.8m for $7.7m ransom payment made by shipowners to secure release of the vessel from Somali pirates.

Ship owners had taken out K&R and war risk insurance but premiums were paid for by charterers. Cargo owners contended that the war risk and GoA clause were incorporated in the C/P and by implication ship owners agreed to look solely to their insurers in case of a claim and not seek contribution from B/L holders.

Arbitration tribunal had decided for cargo owners saying there was an exclusive insurance fund precluding owners from recovering GA. Owners were now appealing. The main question before the court was - does an agreement by the charterers to pay for ship owners’ insurance and not to contribute in GA later on, exclude B/L holder’s liability for GA contribution?

The court said - a sort of insurance fund was set up as between ship owners and charterers but that did not preclude ship owners from seeking GA contribution cargo owners. Clear words would be needed in B/L to exclude any such liability.

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