An Egyptian court ordered the arrest of the EVER GIVEN, loaded with 20,000 TEU, on 13 April 2021 due to claims by the Suez Canal Authority (SCA). This leads to great uncertainty among the parties interested in the cargo. What happens next? What are the risks? Which precautions should be taken?
Following the grounding of the EVER GIVEN in the Suez Canal from 23 March 2021 to 29 March 2021, the owners of the EVER GIVEN, Shoei-Kisen Kaisha, declared general average to the shipping companies Bernhard Schulte Shipmanagement (BSM, technical management) and Evergreen Marine (operator) on 1 April 2021. Richards Hogg Lindley was appointed as General Average Adjuster (https://rhlclientarea.ctplc.com).
The vessel is currently anchored in Great Bitter Lake. Technical inspections (also underwater) have been completed by BSM and the Classification Society American Bureau of Shipping. The seaworthiness of the ship was apparently confirmed (BSM Media Statement; bs-shipmanagement.com).
In connection with the salvage costs and the anticipated repair costs on the canal, the Suez Canal Authority (SCA) on 7 April 2021 claimed damages in the amount of USD 916 million from the vessel respectively the shipowner. On 13 April 2021, the EVER GIVEN was put under arrest by the competent Egyptian court on the basis of this claim. The claim seems to be massively exaggerated as SCA claims USD 300 million as ""salvage bonus"" and USD 300 million for ""loss of reputation"" (cf. media statement by evergreen Marine, www.evergreen-line.com and by the UK P&I Club, www,ukpandi.com).
When the EVER GIVEN will be able to resume her voyage is therefore open. The lifting of the arrest warrant might be a possibility if the liability insurer of the EVER GIVEN, the UK P&I Club, possibly together with the General Average Adjuster, were to issue appropriate guarantees to SCA. However, in view of the exorbitant claims, this is unlikely to happen without further ado.
General Average means in principle that in the event of danger to the entire cargo, the shipowner or the captain may take measures to ""save"" the ship and the cargo. The costs of these measures or the resulting damage, e.g. to a part of the cargo, should then be borne proportionally by all interest holders (contributors). In the present case, such damage could include the salvage costs as well as any damage to the Suez Canal.
The General Average Adjuster has the task of identifying all contributors (owners, shipping companies, managers, cargo interests), the damage and the apportionment of the damage. This process will take some time considering that EVER GIVEN had 20,000 TEU loaded.
The process is governed by the York Antwerp Rules (York Antwerp Rules (YAR) www.comitemaritime.org).
The General Average Adjuster has already stated that any release notices already issued by Evergreen have been cancelled. When and as soon as the EVER GIVEN will be able to dock at its destination ports (especially Hamburg), only the General Average Adjuster will decide on the release of the containers. The General Average Adjuster will claim a lien on the containers at the expense of the shipper or consignee until the shipper or consignee will have provided sufficient security for his possible general average contribution.
In the case of goods insured under a maritime insurance policy, a confirmation by the insurer that it will contribute to any general average contribution is sufficient as security. This confirmation must be given in the form prescribed by the General Average Adjuster (Average Guarantee). For uninsured goods, the owner of the goods must issue an average bond and submit it to the General Average Adjuster together with the commercial invoice. In addition, the General Average Adjuster will require a cash deposit from such shipper or consignee. The amount of this advance payment has not yet been determined by the General Average Adjuster.
At the present time, it is too early to decide whether and, if so, who is liable to whom for damages resulting from this average.
The liability of the operating carrier (Evergreen Marine) or a contractual carrier (NVOCC or multimodal carrier) is governed by the terms and conditions of the respective Bill of Lading (BL). These are often based on the Hague-Visby Rules or the Hamburg Rules, of which the mandatory provisions apply anyway, depending on the applicable law.
Based on most BL terms, the following is most likely to be the outcome in terms of liability:
In order to secure their claims and to ensure the smoothest possible further processing, consignees for cargo which is currently on the EVER GIVEN may provide for the following:
MME Legal | Tax | Compliance is happy to assist you in all matters relating to the EVER GIVEN average in the Suez Canal and its consequences.