Introduction

The Congenbill 1994 form is a standard bill of lading commonly used with charter-parties in the shipping industry. Clause 3 of the Congenbill 1994 provides for the application of the York-Antwerp Rules (“YAR”) in relation to general average.

Clause 3 of the Congenbill 1994 form provides that “[g]eneral average shall be adjusted, stated and settled according to York-Antwerp Rules 1994 (“YAR 1994”), or any subsequent modification thereof, in London unless another place is agreed in the Charter Party.” The words “or any subsequent modification thereof” has given rise to debates for years over which version of YAR applies under the Congenbill 1994.

Background

The claimant was the carrier under bills of lading on the Congenbill 1994 form. While the claimant’s vessel was proceeding to a port, it struck an unknown object and was damaged. The defendants are the cargo insurers and they issued average guarantees to the claimant, undertaking to pay the claimant or the claimant’s average adjusters any contribution to general average or salvage or special charges that might be legally and properly due and payable in respect of the goods covered in the bills of lading.

A dispute arose as to whether the parties’ rights and obligations are governed by YAR 1994, as the claimant contended, or by the York-Antwerp Rules 2016 (“YAR 2016”), as the defendants contended.

The issue

The issue before the Court was whether YAR 2016 would be considered a “modification” to YAR 1994, or treated as a “new” set of rules.

If YAR 2016 is considered a “modification” to YAR 1994, then clause 3 of Congenbill 1994 would incorporate the latest edition of YAR, i.e. YAR 2016. Alternatively, if YAR 2016 is considered “new” sets of rules, YAR 1994 would apply.

The claimant’s submission

The claimant argued that, when considered against the relevant background matrix of fact, the reference to “YAR 1994 or any subsequent modification” did not embrace YAR 2016, which were a new set of rules rather than a modification.

The claimant relied on a number of materials, which, as the claimant submitted, formed part of the relevant background matrix of fact. These materials include a commentary published by the Association of Average Adjusters, a circular issued by the Baltic and International Maritime Council (BIMCO), the paragraphs in the YAR published in 2004 (“YAR 2004”) and YAR 2016, all of which suggest that YAR 2004 and YAR 2016 are new versions of YAR and were not simply an amendment to or modification of YAR 1994.

In light of the above materials, the claimant submitted that if the parties had intended to incorporate YAR 2016 rather than YAR 1994, they would either have used the Congenbill 2016 form (clause 3 of which specifies the application of YAR 2016), or have amended clause 3 of the Congenbill 1994 form to incorporate YAR 2016 instead. As neither was done, the parties’ agreement was that YAR 1994 were applicable.

The defendants’ submission

On the other hand, the defendants submitted that Clause 3 of the Congenbill 1994 was intended to function as an inbuilt updating mechanism to make the most recent version of the YAR applicable. It is because when the Congenbill 1994 was drafted, it would reasonably have been anticipated that there would have been a further version of the YAR before the Congenbill was updated or fell out of use. The drafters would have considered it desirable for the wording to incorporate the latest version of the YAR, not one that was outdated, for otherwise developments in shipborne commerce would not be properly reflected.

Decision

The Court held that YAR 2016 is considered a “modification” to YAR 1994, and hence YAR 2016 applies in this case.

The wordings in Clause 3 of the Congenbill 1994 are reasonably to be understood as capable of applying to a new version of YAR. The Court does not consider that a reasonable person possessed of the background knowledge, and without regard to the materials relied upon by the claimant, would understand the parties to have meant only amendments to YAR 1994 were to be applied, rather than a new version of the rules which included some changed provisions. A reasonable person would not have understood the parties to have been drawing that somewhat technical distinction, without it being expressly articulated. On the contrary, had the narrower effect been intended, the parties would not have used the words “any … modification”. YAR 1994 and YAR 2016 were produced by the same body, were directed to the same end, and contained many of the same provisions with some changes. Hence, the Court is of the view that, as a matter of the ordinary use of language, there is no difficulty in describing YAR 2016 as “modifications” of YAR 1994.

Key takeaways

As a result of this case, if the parties use the Congenbill 1994 form, YAR 2016, or any subsequent versions of YAR, would apply in relation to general average. If parties would like to adopt YAR 1994 rather than YAR 2016 or the latest version of YAR, they should delete the words “or any subsequent modification thereof” from the Congenbill 1994 and make other necessary amendments to avoid potential disputes.