I’ve been reading these two items (and a few others) on the situation of the Ever Given, the giant boat what got itself wedged sideways in the Suez Canal a few weeks ago.
Ever Given in a Nutshell
Ever Given – What Happens Now?
The position seems to be a Byzantine minefield of convoluted international law, contract law and insurance. At least that’s how I read the two articles, viz:
The cause of the problem is still under investigation. Was the ship exceeding the speed limit? Was there mechanical failure? Was there human error? How much of a factor was the weather? Someone will likely be able to work this out as the ship carries an equivalent of an aircraft’s “black box”.
The ship, having been re-floated, was safety checked at anchor in the Great Bitter Lake. It was found to be sound and passed to continue up the Canal to Port Said at the northern end for further checks, before being cleared (or not) to continue to it’s destination in Rotterdam.
However the Ever Given is still at anchor in the great Bitter Lake and cannot move as it has been arrested by the Suez Canal Authority (SCA, an Egyptian government agency) pending settlement of the SCA’s claim for $916million in compensation (including $300million as salvage bonus, and $300million for loss of reputation).
But who pays what is, to say the least, complex as:
- The hull is owned by Japan based Shoei Kisen Kaisha, and insured in Japan.
- The ship is registered in Panama.
- It is leased and operated by Taiwan based Evergreen Marine Corp, who will own much of the ship’s “fixtures and fittings”.
- It is managed by German based Bernard Schulte.
- Protection & Indemnity (P&I) insurance is by UK based UK P&I Club.
- The Ever Given is crewed by 25 Indian seafarers.
- It is apparently 85% loaded with around 18,000 containers of multifarious goods, owned by we know not who, on route from the Far East to half the western world.
- At the time of the accident the ship was being piloted by SCA pilots, who are ipso facto defined as part of the ship’s crew.
The P&I insurers have failed to agree a compensation payment with the SCA and the ship’s owners have reputedly filed an appeal in the Egyptian courts against the ship’s arrest on the grounds that the SCA’s claim is excessive. This is scheduled to be heard tomorrow, 4 May 2021.
Meanwhile the crew (who are apparently being fully paid) are apparently free to leave the ship, and to be replaced, providing there are always sufficient crew to maintain the ship’s safety. Only the ship’s Master cannot leave as he is the ship’s legal guardian.
The estimated value of the vessel and the property on board is:
- Vessel: Approx. $125million
- Cargo: Approx. $500-$600million (and maybe more)
- Containers: Approx. $30million
A total of $655-£755million and perhaps more; but likely less than the SCA’s compensation claim.
However it is reported that while the SCA can arrest the ship, it cannot legally arrest the cargo. But without the ship the cargo is going nowhere. Consequently it has been suggested that the cargo owners could launch a class action (but in which court?) to get the cargo released. But even if they did that, and the legal challenge succeeded, the ship cannot be unloaded: neither in situ nor at any port along the Suez Canal as none have the infrastructure to handle such a massive ship.
Even if it could be unloaded, and the containers transferred to other vessels for onward movement, this would be time consuming and very expensive – for which presumably the cargo owners would have to pay (unless they managed to claim the cost as compensation or against their insurance).
All that is without even thinking about the consequential losses and delays to other ships, some of which will have opted to go the long way round via the Cape of Good Hope, and others who sat it out in the traffic jam. Either way they’re incurring extra expense and delay to their cargoes.
That, my friends is the very simplified version of the simplified version. While it makes for interesting reading (I’m sad like that!) it makes me very glad I’m neither a lawyer nor an insurer!