AG is the abbreviation for general average. In case of general average, the common interest – retaining vessel and cargo – takes precedence. Any sacrifices made by the captain are made in the name of common interest. In this case it is obvious that every interested party bears a proportional share of the damage, which otherwise would have been at the expense of one of the interested parties.
According to the York-Antwerp rules of 1950, the official definition of general average is: “A general average act is when – and only when – an intentional and reasonably exceptional sacrifice or expenditure is made in the name of general protection, with the objective of safeguarding the goods involved in a common business against danger at sea”.