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Dali's owner declares 'general average' in Key Bridge disaster. What does that mean?

Hayes Gardner, The Baltimore Sun on

Published in News & Features

BALTIMORE — The latest development in the fallout from the Francis Scott Key Bridge collapse traces its roots back millennia. It also could contribute to litigation about who’s paying for what that’s expected to take years.

The owner of the Dali, the massive cargo ship that lost power and knocked down the Key Bridge on March 26, killing six men, has declared “general average,” according to Darrell Wilson, a spokesperson for the ship’s owner, Grace Ocean Private Ltd.

General average, a maritime principle written into shipping contracts, has roots in ancient Greece and the Byzantine Empire. If a ship was in a storm, for example, and the crew needed to jettison some cargo to avoid sinking, they might throw certain goods overboard. Afterward, the ship owner and everyone who had cargo aboard would be responsible for covering that shipper’s loss — not just the unlucky owner whose possessions were sacrificed.

That’s how general average works on a small scale. On a large scale and in modern times, it can mean that cargo owners have to share in the cost of huge salvage efforts — say, pulling thousands of tons of steel off the 984-foot Dali and repairing its bow — with the ship owner.

General average applies to refloating the vessel, but not other costs, such as rebuilding the bridge. (The federal government already has pledged to clean up the mess that currently lies in the Patapsco River and fund a replacement bridge, but eventually will seek damages from responsible parties.)

The Dali owner’s declaration of general average brings another entity — cargo owners — into the complicated financial fray following the Key Bridge collapse that also has shut down Baltimore’s shipping channel, hindered the city’s economic activity and necessitated a colossal cleanup of 50,000 tons of mangled steel and concrete.

 

It’s unknown precisely how many millions of dollars it will cost to refloat the Dali — just one aspect of the entire salvage process — but Jonathan Spencer, principal and average adjuster with the New York-based Spencer Company, said the figure will be “pretty eye-opening.” It could require some cargo owners to pay nearly the same amount as their cargo is worth in order to retrieve it, he said.

“The values are going to be certainly among the highest that we’ve seen,” he said.

How much each entity — cargo and ship owners — would pay is proportional to their value. It’s common for cargo and the actual containers to be worth more than a ship itself so, if that is the case, cargo owners would be on the hook for more than half of the salvage cost. Similarly, an individual transporting a relatively small amount of belongings in one container would pay less than a company with dozens of containers full of valuables.

Those cargo owners, however, eventually might file lawsuits in an effort to avoid payment — a likely scenario, experts say, that would create more litigation in what already has become a litigious event. Lindsey Brock, a Florida maritime attorney, expects legal action from the cargo owners.

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