News / More delay for shippers as Ever Given legal wrangle is sent to a higher court

24/05/2021

Frustrated shippers with cargo on board the arrested Ever Given are likely to have to wait another week to find out when their goods might be released.

Over the weekend, an Egyptian court heard from the shipowner’s legal team, which argued that the Suez Canal Authority was at fault for the grounding of the vessel in the waterway on 23 March, as, given its size and the weather conditions, it should have been accompanied by two tugs.

Japan’s Shoei Kisen also filed a $100,000 compensation claim against the SCA for “losses related to its detention”.

However, the court in Ismailia yesterday rejected the appeal and upheld the SCA’s continued detention of the vessel, referring the case to a higher court, which is expected to hear claims on Sunday.

The SCA originally demanded $916m in compensation from the shipowner, a claim described by its insurer, the UKP&I Club, as “largely unsupportable”.

The SCA subsequently reduced its claim to $600m and, during an interview with a local TV station over the weekend, SCA chairman Osama Rabie said the claim could be reduced to $550m and that the ship would be freed if Shoei Kisen paid an initial $200m.

However, even this reduced offer goes against established insurance practices, according to marine claims consultant Jose Guerrero. he said: “It is unfortunate that the Suez Canal Authority is not following the long tradition in the maritime industry of having the letter of undertaking (LoU) act as a security for the settlement demand.

“In my 30-year-plus career, I never had a situation in which the claimant rejected the LOU. But then, I never had an Ever Given situation,” he told The Loadstar.

Shoei Kisen declared General Average on 1 April and appointed Richard Hogg Lindley as adjuster.

The problem for cargo interests, according to insurance sources, is that the cost of the casualty to its owners is likely to take some time to determine, if it involves claims from other parties – especially if the demand from the SCA continues to change, which means the adjustors will remain unable to fix the level of the general average and salvage securities.

The last time General Average was declared was following the 2018 fire on board the Maersk Honam. The adjustor fixed the salvage security at 42.5% of cargo value and 11.5% as a GA deposit – this meant a shipper with cargo worth $100,000 needed to pay a combined deposit of $54,000 to get its cargo released.

This leaves shippers with uninsured cargo highly vulnerable to losing it, as the owner can hold the goods under lien until the deposit is paid. Shippers with insured goods will have those deposits covered by their insurers.

To hear more about the Ever Given shippers’ woes, try this clip from The Loadstar Podcast.