General Average and Risk Management in Medieval and Early Modern Maritime Business

This open-access book explores the history of risk management in medieval and early modern European maritime business, focusing on General Average, a mechanism that shares extraordinary expenses to protect equity. Contributions range from the Islamic Mediterranean to the Low Countries, providing a wide-ranging analysis of social, cultural, and political aspects of pre-modern maritime commerce in Europe.

Format: Paperback / softback
Length: 499 pages
Publication date: 24 December 2022
Publisher: Springer International Publishing AG

This open-access book delves into the rich history of risk management in medieval and early modern European maritime businesses, with a special emphasis on General Average, a crucial mechanism that ensures fairness and equity in the face of extraordinary expenses incurred during voyages. Spanning from the pre-Roman Mediterranean era to the present-day shipping industry, this volume explores the evolution of General Average from its early origins to its widespread application. Contributions from various regions, including the Islamic Mediterranean and the Low Countries, offer a comprehensive analysis of the social, cultural, and political dimensions of pre-modern European maritime commerce.

The concept of General Average emerged in the pre-Roman Mediterranean, where merchants and traders faced numerous risks and uncertainties on their voyages. To mitigate these risks, they formed alliances and agreements, known as "Articles of Agreement," which outlined the responsibilities and obligations of each party in the event of losses or damages. One of the key provisions of these agreements was the establishment of General Average, a mechanism by which extraordinary expenses incurred during a voyage to save the venture would be shared between all participants.

This shared responsibility not only protected the interests of individual merchants but also fostered a sense of community and cooperation among them. By pooling their resources, they were able to mitigate the financial impact of unforeseen events and ensure the continued viability of their businesses. General Average played a pivotal role in the development of maritime commerce in the pre-Roman Mediterranean. It facilitated trade and commerce by reducing the risks associated with voyages and promoting stability and security in the region.

Over time, General Average evolved and became more sophisticated as maritime trade expanded and became more complex. Different regions and countries adopted their own variations and adaptations of the mechanism, reflecting their unique social, cultural, and political contexts. For example, in the Islamic Mediterranean, General Average was influenced by Islamic legal principles and customs, which emphasized the importance of fairness and justice. In the Low Countries, General Average was closely linked to the political and economic power of cities and guilds, which played a significant role in the regulation and governance of maritime trade.

As maritime trade continued to grow and evolve, General Average also faced challenges and controversies. One of the most significant challenges was the issue of "free riders," who benefited from the shared responsibility without contributing their fair share of expenses. To address this issue, various regulations and protocols were developed to ensure that all participants contributed their share of General Average. These regulations often required the establishment of a fund or reserve to cover the expenses of extraordinary events, and they established mechanisms for calculating and distributing the costs among all participants.

Despite these challenges, General Average remained an important mechanism for risk management in medieval and early modern European maritime businesses. It played a crucial role in promoting stability, security, and fairness in the maritime trade, and it helped to establish the foundations of the modern shipping industry. Today, General Average continues to be a relevant concept in the shipping industry, particularly in the context of international trade and the globalization of commerce.

In conclusion, this open-access book offers a comprehensive and insightful exploration of the history of risk management in medieval and early modern European maritime businesses, with a special emphasis on General Average. By tracing the evolution of this risk management tool from its origins in the pre-Roman Mediterranean to its widespread application in the shipping sector today, the volume provides valuable insights into the social, cultural, and political aspects of pre-modern European maritime commerce. The contributions from various regions and periods offer a rich and diverse perspective on the development of this important mechanism, and they highlight the enduring significance of risk management in the maritime industry.

Weight: 688g
Dimension: 152 x 254 x 39 (mm)
ISBN-13: 9783031041204
Edition number: 1st ed. 2023