MARINE · 5 MIN READ

General Average, Salvage, and Sue and Labor

Marine loss adjustment distinguishes two kinds of partial loss. Particular average is an accidental partial loss that falls on one interest alone - the damaged cargo owner simply bears (or insures) it. General average is fundamentally different: when a deliberate, voluntary sacrifice or extraordinary expenditure is reasonably made for the common safety of ship, cargo, and freight - jettisoning containers to refloat a stranded vessel, or port-of-refuge expenses - every interest that benefited contributes proportionally to make good the loss. The governing framework is the York-Antwerp Rules (most recently the 2016 revision), which define allowable sacrifices and expenditures, and a professional average adjuster computes each interest's contribution. Before releasing cargo, the shipowner typically requires a General Average Bond from cargo interests, backed by a cash deposit or an insurer's General Average Guarantee - cargo underwriters routinely post this security for insured shippers. Salvage is the reward maritime law gives a volunteer who rescues property in peril at sea. The engagement must be voluntary - not owed under a pre-existing duty - and the classic contract is Lloyd's Open Form (LOF), famous for its no cure, no pay principle: the salvor earns an award only by achieving a useful result, with the award proportioned to the value saved and the factors in Article 13 of the 1989 Salvage Convention. Because pure no-cure-no-pay discouraged salvors from attempting environmentally risky jobs, Article 14 created special compensation for salvors who prevent or minimize environmental damage even without saving property, and the SCOPIC clause is the market mechanism that funds that environmental effort. Keep the reimbursement categories separate. Salvage charges (MIA 1906 section 65) are payable to a third-party salvor acting independently of contract. Sue and labor charges (section 78) are the assured's own reasonable expenses to avert or minimize an insured loss - a duty the policy imposes on the assured and its agents - and they can be recoverable in addition to the policy limit. General average contributions, salvage charges, and sue and labor all flow through the cargo or hull policy, but each has its own legal source and trigger.