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On appeal from: [2016] EWCA Civ 708

This case considered, where a ship is hijacked by pirates, and the initial ransom sum demanded is not paid, but a period of negotiation is entered into resulting in a lower ransom sum being agreed and paid, whether the expenses incurred during the negotiation period can be deemed to be general average expenses under the York-Antwerp Rules, Rule F (and therefore borne by all parties rather than by the owners alone), on the basis that they are expenses incurred as an alternative to paying a general average expense (ie a higher ransom sum). Also considering whether payment of the initially demanded ransom sum would have been ‘reasonable’ and therefore a general average expense under the York-Antwerp Rules, Rule A.

The Supreme Court allowed the appeal. The Court held that the negotiation period expenses fell within the expression “expense incurred” by the owners, and that the lower courts had been incorrect to assume that the owners had to establish that it would have been reasonable to accept the pirates’ initial demand in order to justify the contention that the negotiation period expenses were allowable under Rule F. The Court found that the incurring of the negotiation period expenses did represent an alternative course of action from the payment of the $4.15m (the amount by which the ransom was reduced).

For judgment, please download: [2017] UKSC 68
For Court’s press summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing, please visit: Supreme Court Website (17 Jul 2017 morning session) (17 Jul 2017 afternoon session) (18 Jul 2017 morning session) (18 Jul 2017 afternoon session)