The vessel SS Eagle Courier set sail from Port Arthur, Texas, destined for Leningrad, the USSR [now St Petersburg, Russia]. Divers examined the vessel at Rotterdam. As the ship was manoeuvring off the English coast to pick up a pilot, one of the crew had felt a bump. The divers' report disclosed extensive damage to the propeller, which was serious enough to require repairs before the voyage could be resumed. A portion of the cargo was unloaded, and the vessel was placed in dry dock. The propeller shaft was replaced, and a spare propeller was installed. The cargo was then reloaded, and the vessel completed its voyage.

The shipowner declared a general average, seeking contributions from the vessel's underwriter and the defendant, as insurer of the cargo, for expenses arising from the repairs. The expenses covered by the statement of general average included the costs of unloading and reloading the cargo in connection with the dry docking, as well as the costs of maintaining the vessel's crew and officers during the repair period.

The District Court for the Southern District of New York found that no general average situation existed in the circumstances of this case; the vessel had not been threatened by any 'peril', as required under traditional principles of the law of general average and under the York-Antwerp Rules 1950, which applied to this case in accordance with the terms of the voyage charterparty; the damage was discovered only after the vessel was safely moored; the vessel could have remained moored indefinitely at Rotterdam without incurring the slightest peril to itself or its cargo; and that the voyage could not have been completed without the repairs was irrelevant.

The shipowner appealed. The shipowner's central contention was that the District Court erred by applying r A and ignoring rr 10.b and 11.b of the York-Antwerp Rules.

Held: The judgment is reversed and the case remanded for further proceedings.

Resolution of the issues posed by this appeal required an understanding of the history and content of both the law of general average and the York-Antwerp Rules. Although the principles of the law of general average were relevant to this case, more immediately significant was their codification in the York-Antwerp Rules.

The 'Rule of Interpretation' at the beginning of the York-Antwerp Rules 1950 gave priority to the numbered rules, making it clear that if the facts support a claim in general average under the numbered rules, it mattered not that there had been no general average act within the meaning of r A.

The York-Antwerp Rules 1950 achieved the widespread acceptance that was sought and were approved by the Maritime Law Association in the US. There was no reason not to give these Rules full effect in this case, in accordance with the agreement between the parties. Although they had not been formally sanctioned on an intergovernmental basis, and thus lacked the force of law, the rules reflected an important consensus of the international shipping industry and merit 'full judicial cognisance', at least insofar as they did not conflict with statutory or other policies of equal or greater importance: Sea-Land Service Inc v Aetna Insurance Co 545 F 2d 1313 (2nd Cir 1976) (CMI2666).

If, as the shipowner contended, rr 10.b and 11.b of the York-Antwerp Rules 1950 governed on the facts of this case, they must be given precedence over the language of r A in conformity with the Rule of Interpretation.

Rules 10.b and 11.b did appear to contemplate contribution in general average toward expenses that might not qualify under r A. This is particularly evident in the alternative basis of recovery set out in the numbered rules: recovery of expenses incurred 'to enable damage to the ship caused by sacrifice or accident to be repaired, if the repair were necessary for the safe prosecution of the voyage' (the safe prosecution clause). Under this clause, repairs necessary for the safe continuation of the voyage can be deemed general average acts, even if they would not be so regarded under r A alone.

In effect, the safe prosecution clause was to be read, not as eliminating the requirement of peril, but as presuming its presence in cases where a voyage could not safely be resumed without repairs because of accident or sacrifice. Such a presumption was entirely consistent with the modern interpretation of the peril requirement, which required only a showing of 'real and substantial' danger even though ultimate catastrophe 'may be distant or indeed unlikely'. The safe prosecution clause is a notable example of the occasions where those who supported completion of the adventure as the basis of general average prevailed over those who supported the common safety. This interpretation of rr 10.b and 11.b gave proper effect to their language and purpose. Under this view of the York-Antwerp Rules 1950, this record established a prima facie general average claim. Although the vessel had not lost its propeller, the record showed that it had been seriously damaged and that its condition was deteriorating. The damage report revealed that the propeller 'had backed down the taper of the tailshaft by about 250 mm and the top of the taper was clearly visible'. The vessel's condition, allegedly as the result of an accident at sea, presented a 'real and substantial' danger of loss or complete incapacitation of the propeller - and consequent peril - if the vessel had still been at sea or if it returned at sea without repairs.

A different view was taken in Orient Mid-East Lines Inc v A Shipment of Rice 496 F 2d 1032 (5th Cir 1974) (CMI2656). The Court of Appeal disagreed with the assumption in that case that rr 10 and 11 are limited to actions taken 'for the common safety'. This assumption overlooked the alternative basis of recovery set forth in the safe prosecution clause.

A claim had been stated, but had not yet been proved. The shipowner still bore the burden of showing that the requirements of the Rules had been satisfied. Rule E of the York-Antwerp Rules 1950 provided that '[t]he onus of proof is upon the party claiming in general average to show that the loss or expense claimed is properly allowable as general average'. Thus, for example, the shipowner must show that the damage requiring repair was the result of an 'accident' rather than a latent defect attributable to the vessel's unseaworthiness.