When a Shipping Line Requests a General Average Deposit – What Documents Should the Bank Require for the Transfer?

Intro

In maritime transport, when a General Average (GA) situation occurs, the shipowner often requires cargo owners to contribute or advance a sum of money as security for their share of the loss.

So, if a customer wishes to remit such a deposit through the bank, what documents must be collected to comply with foreign exchange regulations?

The following question from Ms. Hương Giang (XX Bank) is a very typical example.

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QUESTION

Dear Mr. Old Man,

I’m Hương Giang, Corporate Banking Officer at XX Bank.

My client is an importer of MAN trucks from Germany to Vietnam. One of their containers is being shipped to Hải Phòng Port. However, while the vessel was passing through Malaysian waters, a fire broke out on another deck (not where my client’s cargo was stored), forcing the vessel to stop.

The shipping line has declared this a General Average and requested that my client share the loss. However, it will take about three months for the average adjuster to calculate the precise contribution amount.

Since waiting that long would delay delivery to their buyer, the shipping line has asked my client to make a deposit equivalent to 14% of the cargo value and freight cost as a guarantee. The final adjustment will be settled once the official GA contribution is determined.

In this case, if my client requests our bank to transfer this GA deposit to the shipping line, what supporting documents should be collected to ensure compliance with foreign exchange control regulations?

Best regards,

Hương Giang – XX Bank

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ANSWER

Dear Hương Giang,

Thank you for your very practical question.

**1. What is “General Average”?

General Average is the principle of loss sharing in maritime transport. It applies when the ship’s master intentionally sacrifices or reasonably incurs expenditure on part of the property (ship, cargo, fuel, etc.) to save the entire voyage from a common peril.

In simple terms: “Sacrificing a part to save the whole.”

When that sacrifice benefits all interests on board, every party whose property was saved must contribute proportionally to the loss.

According to the Vietnam Maritime Code or the York–Antwerp Rules, the determination and apportionment of General Average are made by a third party known as an average adjuster. This process can take months, depending on the complexity of the case.

2. Who shares the General Average loss?

All parties whose interests were saved by the sacrifice — including the shipowner and cargo owners (whether exporters or importers), depending on the insurance coverage and carriage contract terms.

When GA is declared, the shipping line normally retains the cargo until the cargo owner provides a GA Bond (General Average Bond) and a GA Guarantee issued by the cargo insurer, as security for their contribution.

3. About your client’s case

It is a standard maritime practice for the shipowner to request an advance deposit (for example, 14%) as security for the cargo owner’s GA contribution.

Once the average adjuster finalizes the apportionment, any difference is settled between the parties.

Your client may negotiate for a lower deposit if justified — for instance, if the cargo has a lower value or is already covered by marine insurance that includes GA contributions.

4. Required documents for the GA deposit transfer (in compliance with FX regulations)

This payment is not a normal trade settlement but a non-trade remittance (security deposit for General Average).

The bank may require the following documents:

• Letter or request for GA contribution/deposit from the shipowner or average adjuster (to evidence payment purpose)
• Bill of Lading showing the remitter as the legitimate cargo owner
• Outward remittance application form (bank’s standard form)
• Debit Note or Invoice (if available)
• Other documents as requested by the bank to clarify the non-trade nature of the payment

When creating the SWIFT message, it is advisable to state clearly in the payment purpose:

“General Average Deposit – M/V [vessel name], Voyage [number], under adjustment by [average adjuster’s name]. Non-trade remittance.”

Conclusion

The shipping line’s request for a General Average deposit is legitimate under maritime practice.

The bank only needs a proper set of supporting documents evidencing the remittance purpose to process the payment in compliance with foreign exchange control requirements.

I hope this explanation gives you a clearer view of General Average and how to handle such special remittance cases properly.

Best regards,

Mr. Old Man