EVER GIVEN under arrest in Egypt after blockade of Suez Canal

EVER GIVEN under arrest in Egypt after blockade of Suez Canal

The Facts

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:

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.

 

Liability

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:

  • The carrier can be exempted from the liability if the damage is due to the perils of the sea and other navigable waters. Whether this ground for exemption could apply here cannot be assessed at present.
  • The carrier can be exempted from liability if the damage is due to an event which the carrier could not have prevented by exercising reasonable diligence. Whether this ground for exemption could apply here cannot yet be assessed.
  • If there is no ground for exemption from liability, and all other preconditions are met, the Carrier shall be liable for a maximum of 666.67 SDRs (Special Drawing Rights) per item or unit respectively for a maximum of 2 SDRs per kilo, whichever is the larger amount.
  • Generally, the BL terms provide that the Carrier is not liable for general average contributions of the Shipper/Consignees.
  • In the case of a maritime transport, the carrier is usually not liable for delays, unless a specific arrival date has been expressly guaranteed in the contract. An estimated date of arrival on the BL (ETA) regularly does not fulfil this requirement.

 

Instructions for consignees

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:

  • The contract chains in relation to cargo that are in containers on the EVER GIVEN are to be analysed in order to be able to determine who is responsible for which actions and where action by whoG against whom is already required today.
  • The maritime insurer of the cargo is to be informed (precautionary notification of damage) and is to be requested to issue an Average Guarantee in favour of the General Average Adjuster.
  • Contractual carriers must inform their liability insurers (precautionary notification of damage).
  • The contractual carrier (cf. BL) must be informed as a precaution that he will be held liable for any damages and is obliged to uphold his claims against possible subcontractors.
  • The consignee (or the contractual carrier) has to declare his cargo to the General Average Adjuster and has to deliver the Average Guarantee of the maritime insurer as soon as possible.
  • End customers are to be informed that it is currently not foreseeable when the arrival of the goods can beexpected.
  • As soon as the cargo and containers will be released, the cargo must be checked immediately for possible damages (e.g. spoilage) and damages must be reported immediately to the carrier and the maritime insurer.

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.

April 2021 | Authors: Raphael Brunner

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