The Association of Average Adjusters

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Average Adjusters are expert in the law and practice of marine insurance and general average; they provide a professional and independent view on the claims arising from marine casualties. The Association of Average Adjusters was founded in 1869 with its prime objects the promotion of correct principles in the adjustment of marine insurance claims and general average, uniformity of practice amongst Average Adjusters and the maintenance of good professional conduct. Fellows of the Association have demonstrated their expertise by rigorous examination.

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The purpose of this site is not only to provide information regarding the Associaiton and its Fellows, but also to act as a resource of information which wiil be of interest and assistance to its members and to the shipping and marine insurance industries, in particular. All categories of membership have access to additional resources.

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annual meetings 2010

We are pleased to announce that at the Annual Meeting of Fellows on 12th May, John Ahern was elected as Chairman of the Association for the ensuing year and Mr Paul Silver was elected as Vice-Chairman.

The Annual General Meeting of the Association took place on 13th May in the Old Library at Lloyd’s; the meeting was addressed by the Chairman, Mr Justice Tomlinson - his address, entitled "Underwriters decline notice of abandonment - some new questions raised by an old phrase", can be downloaded HERE.

The following Press Release was issued by the Association on 13th May:

Association of Average Adjusters
Press release
13 May 2010
Who gets the residual value?
Who is entitled to the residual value of a marine hull, so badly damaged that it is declared a constructive total loss (CTL), was the challenging question put to the Association of Average Adjusters (AAA) at their annual meeting held yesterday (Thurs) in the Lloyd’s Old Library, London. It is a particularly relevant issue at a time of volatile hull values.
AAA Chairman for 2009-10, High Court judge Mr Justice Tomlinson, spoke to the meeting on the subject under the title “Underwriters decline notice of abandonment – some new questions raised by an old phrase.” He was the presiding judge in the important 2009 case of the WD Fairway, a mega-size trailer hopper dredger which became a CTL as a result of a collision off the coast of China.
Mr Justice Tomlinson described how once a ship or rig has been so badly damaged that it is declared beyond repair, it may still have material commercial value. As such, there can be a tussle between the owners and underwriters about who is entitled to what. Underwriters will not accept a notice of abandonment, because it would also mean accepting the associated liabilities, such as wreck removal and pollution. At the same time, having paid the claim, they want to protect their interest in the residual value, which would be much clearer in law if they did accept notice of abandonment.
A further complication is that the law governing the marine insurance contract, more specifically English law in this analysis, is rarely the law which applies to the location of the damaged ship or rig.
What Mr Justice Tomlinson called “the ritual steps of the dance which invariably follow the occurrence of a CTL” usually resolve the issues between owner and underwriter by co-operation, but it is not inevitable thanks to what he described as the “idiosyncrasies of the marine insurance contract.” 
New chairman and members
John Ahern of Rogers Wilkin Ahern, who was the Vice-Chairman of the association in 2009-2010 has been elected Chairman for the 2010-2011 year. The new Vice-Chairman is Paul Silver of Richards Hogg Lindley Group.

Following its autumn and spring examinations, the AAA has accepted 18 new associate members. John Ahern welcomed the resurgence of interest in the profession and its qualifications. He said: “A total of 18 new associates for the year augurs well for the future.  Our warmest congratulations to all of them and to the other successful examination candidates. 
“The fact that a number of examinees failed to satisfy the examiners shows that the exams, even under the modular system now in place, are not an easy passage and  require the necessary input of time and effort, especially on the Fellowship level papers, and this is as it should be to ensure that the Association’s qualifications maintain the required professional standards of excellence to enable us to serve our clients with the necessary level of expertise in maritime law and marine insurance.”
The new associate members are:
Danny Bell (Liverpool)
Richard Brooks (London)
Liliana Quito Castillo (London)
Rachel Fox (Liverpool)
Vanessa Heng (Singapore)
Ben Johnson (London)
Angeliki Kallini (Piraeus)
Adriaan Levendal (Christchurch NZ)
Maria-Irini Mavroudi  (Piraeus)
Tristan Miller (Colchester)
Tak Vyankatesh Murlidhar (Doha)
Nicholas Rowe (London)
Debbie Symonds (London)
Robert Tomlinson (London)
Charlotte Warr (London)
Adam Whittle (London)
Graham Wilkie (Sunderland)
Efstathia Zachopoulou (Piraeus)

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Fellowship Examinations

Guidance Notes for candidates and a synopsis of Modules3/5 has been added to the Examinations page.

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Autumn Seminar 2009

The Association's autumn lunchtime seminar was on the topic of the Rotterdam Rules or the "United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea" to give the full title.

Before the presentations, the Association's Vice-Chairman, John Ahern, was pleased to read out the names of the successful candidates at the October sittings of Modules 1 and 2 of the Association exams.

MODULE 1: MARINE INSURANCE ACT 1906 AND RELATED INSURANCE PRINCIPLES

Robert Tomlinson (London) - Distinction
Ben Johnson (London) - Pass
Nicholas Rowe (London) - Distinction
Djan Venturim (London) - Pass
Rachel Fox (Liverpool) - Distinction
Maria-Irini Mavroudi (Piraeus) - Pass
Heng Sok Koon Vanessa (Singapore) - Pass

MODULE 2: HULL AND CARGO CLAIMS

Liliana Quito Castillo (London) - Pass
Charlotte Warr (London) - Distinction
Danny Bell (Liverpool) - Pass
Angeliki Kallini (Piraeus) - Pass
Adriaan Levandal (Christchurch) - Distinction
Tak Vyankatesh Murlidhar (Doha) - Pass
Graham Wilkie (Sunderland) - Pass

Three candidates failed to satisfy the examiners.

As a result of completing both Modules 1 and 2, the following were now Associate Members:

Liliana Quito Castillo (London)                       
Charlotte Warr (London)                                
Danny Bell (Liverpool)                                   
Angeliki Kallini (Piraeus)                                
Adriaan Levandal (Christchurch)                   
Tak Vyankatesh Murlidhar (Doha)                
Graham Wilkie (Sunderland)                         

The first speaker was Fionna Gavin of Ince & Co.  With a Master's degree in international trade and specialising in charterparty disputes, she has been watching closely as the Rotterdam Rules have been evolving into their final form, and has also been acting as adviser to the Department for Trade.

She summarised the present position with regard to the 21 signatories to date and emphasised that this was only the first stage with each signatory needing to enact legislation.  The most significant changes included the extension beyond the actual “tackle to tackle" carrier to the concept of Maritime Performing Parties - one of many ways the Rules have attempted to embrace multi-model transport.

There had been a significant and broadly accepted shift of liability in favour of cargo interests, with the exercise of due diligence to keep the ship seaworthy now an obligation throughout the voyage, (rather than just up to its inception) and the abolition of the "nautical fault" defense.  The carrier is presumed to be at fault if loss or damage arises while the cargo is in his care and the burden of proof lies with the carrier to prove absence of fault or an excepted peril.  However, the Rules leave the door upon to the carrier proving that he is liable for only part of the loss, as distinct from the more "all or nothing" approach of the Hague Visby Rules, and this may create a degree of uncertainty.

Fionna concluded by reviewing the controversy that had arisen over the Volume Contracts provisions of the Rules, explaining that this had in fact been instigated by major USA Shippers and contained significant safe-guards for cargo interests.

Richard Cornah, recent past Chairman of the Association, followed on to give his initial impression of how the Rotterdam Rules may affect General Average.  Having attended, with several other AAA Fellows, the recent General Assembly of the Association Mondiale de Dispacheurs in Marakesh, he had benefitted from a distinguished panel of speakers who had been invited to attend to present papers on the new convention.  He reminded the audience that the principles of General Average remained important to quantify and allocate costs even if there was no contribution from ship to cargo.  Distinctions still had to be made between extraordinary expenses and ordinary voyage costs, and a line had to be drawn on pollution expenses between property and liability insurers.

While hull insurers would not be greatly affected (except in the relatively rare cases of ship sacrifice) the P&I Clubs would clearly be paying cargo's proportion of general average much more frequently, as cargo declined to pay on the grounds of a breach of the contract of affreightment.

An immediate practical implication would be that the greatly increased likelihood of cargo sustaining a defence to contribution would make it unwise to automatically incur the costs of an expensive security collection from a multi-interest cargo.  However, deciding not to collect security is not a call the shipowner should make without consulting their P&I Club, whose cover is likely to be conditional on proper security having been collected and a demonstrable breach of contract having occurred.

In LOF salvage cases, cargo will still have a direct liability to provide security to salvors and pay their proportion of the award before seeking recovery from the carrier, albeit with a much greater chance of success under the Rotterdam Rules.  Counter-security may become a much bigger issue and this may result in delays.  It is possible that Owners and their P&I Clubs may agree to provide security and pay 100% of the salvage in order to reduce costs and achieve a quick negotiated settlement, but the bigger the exposure the greater the temptation to let matters run their normal course.

That temptation can only be increased by the Rotterdam Rules repeated reference in Article 17 to "all or part" of liability for a loss and the concept of a loss being apportioned somehow if the carrier can partly disprove his fault.  In a collision where it seems likely that both ships are equally to blame, the owner knows that he is no longer protected by the "nautical fault" exception, but equally he is not at fault in respect of the blame attaching to the other vessel.  On that basis could he not recover 50% of any general average contribution due from his cargo?

Many of the most serious casualties have involved containership fires originating in cargo.  These have given rise to complex legal disputes, particularly on factual issues with one party alleging poor stowage (perhaps over a heated bunker tank) and the other pointing to the (undeclared) dangerous nature of the cargo.  Whilst under the Rotterdam Rules it is highly likely the carrier will have to accept some degree of fault there will remain considerable incentive to allege partial fault of others.  Some difficult decisions will need to be made very quickly about whether to collect general average security in such cases.

In conclusion, Richard Cornah noted that there were a number of areas, such as burden of proof and apportionment of loss, where the legal experts could not agree on the correct construction of the Rules, and saying that in time the "Courts will decide".  However, this could involve a very long wait since the Rules (unless signatory states opt-out of the relevant Articles) may make exclusive jurisdiction clauses unenforceable so that decisions will be given by a wide range of Courts that may not produce a consistent view.  As Fionna Gavin pointed out in discussion after the presentations, cases involving bulk cargoes are likely to be decided by Arbitrators whose rationale may never be published.  Perhaps it should be the future commercial users of the Convention, and their insurers, who should take the lead in reaching a consensus.

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