Piracy, negotiation period expenses and allowance in general average: The Longchamp

Over the past decade, the impact of piracy off the coast of Somalia upon maritime commerce and, indeed, maritime law has been keenly felt. In Mitsui & Co Ltd v Beteiligungsgesellschaft LPG Tankerfl otte mbH & Co KG (The Longchamp), the UK Supreme Court answered the commercially important question whether operating expenses incurred whilst negotiating a lower ransom for the release of a hijacked vessel are allowable in general average, so that they are shared proportionately amongst all involved in the maritime adventure. In so doing, the Court was presented with a rare opportunity to clarify the rules of general average. By majority, the Supreme Court held that such expenses are allowable in general average under Rule F of the York-Antwerp Rules (“YAR”). Marking the Court’s first exegesis of Rule F, The Longchamp is a clear reminder that, despite the necessary significance of commercial practices in a maritime context, the text of the Rules must be given paramount importance, and cannot be substituted for such “extra-legal” considerations.