NEVER GIVEN under arrest in Egypt after the Suez Canal blockade
Following the grounding of the EVER GIVEN in the Suez Canal from March 23, 2021 to March 29, 2021, the owners of the EVER GIVEN, Shoei-Kisen Kaisha, declared general average to the shipping companies Bernhard Schulte Shipmanagement (BSM, technical direction) and Evergreen Marine (operator) on April 1, 2021. Richards Hogg Lindley has been appointed as General Average Adjuster (https://rhlclientarea.ctplc.com).
The vessel is currently anchored in Grand Bitter Lake. Technical inspections (also underwater) were carried out by BSM and the classification society American Bureau of Shipping. The vessel’s seaworthiness has apparently been confirmed (BSM Media Statement; bs-shipmanagement.com).
In connection with the rescue costs and anticipated repair costs on the canal, the Suez Canal Authority (SCA) claimed on April 7, 2021 damages in the amount of USD 916 million against the vessel respectively at the ‘shipowner. On April 13, 2021, EVER GIVEN was arrested by the relevant Egyptian court on the basis of this allegation. The claim seems to be massively exaggerated as the SCA is claiming 300 million USD as a “rescue bonus” and 300 million USD for “loss of reputation” (cf. press release from Evergreen Marine, www.evergreen-line.com and from UK P&I Club, www, ukpandi.com).
When the EVER GIVEN can resume its journey is therefore open. The lifting of the arrest warrant could be possible if the liability insurer of EVER GIVEN, the UK P&I Club, possibly in collaboration with the General Average Adjuster, issues appropriate guarantees to SCA. However, given the outrageous claims, this is unlikely to happen without further delay.
General average means in principle that in the event of danger to the whole cargo, the owner or the master can take measures to “save” the ship and the cargo. The costs of these measures or the resulting damage, for example to part of the cargo, should then be borne proportionately by all interest holders (contributors). In this case, this damage could include the costs of rescue as well as any damage to the Suez Canal.
The General Average Adjuster’s task is to identify all contributors (owners, shipping lines, managers, cargo interests), damages and distribution of damages. This process will take some time as EVER GIVEN had 20,000 TEUs loaded.
The process is governed by the rules of York Antwerp (York Antwerp Rules (YAR) www.comitemaritime.org).
The General Average Adjuster has already said that all post notices already issued by Evergreen have been rescinded. When and as soon as EVER GIVEN can dock at its destination ports (in particular 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 has provided sufficient security for their possible general average contribution.
In the case of goods insured under a marine insurance policy, confirmation by the insurer that it will contribute to any general damage contribution is sufficient as a guarantee. This confirmation must be given in the form prescribed by the General Damage Adjuster (Average Guarantee). For uninsured goods, the owner of the goods should issue an average bond and submit it to the general damage expert along with the commercial invoice. In addition, the sender or recipient will be required to make a cash deposit to the sender or recipient. The amount of this advance has not yet been determined by the general average expert.
At present, 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 contract 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, the mandatory provisions of which apply anyway, depending on the applicable law.
Based on most of the BL terms, the following is most likely to be the outcome in terms of liability:
- The carrier can be exonerated from its responsibility if the damage is due to the dangers of the sea and other navigable waters. Whether this ground for exemption could apply here cannot be assessed at this time.
- The carrier may be exonerated from liability if the damage is due to an event which the carrier could not have prevented by exercising due diligence. Whether this ground for exemption could apply here cannot yet be assessed.
- If there is no reason for exemption from liability and all other preconditions are met, the Carrier will be liable for a maximum of 666.67 SDR (Special Drawing Rights) per item or unit respectively for a maximum of 2 SDR per kilogram, regardless of the higher amount.
- As a general rule, the BL conditions provide that the Carrier is not responsible for the general average contributions of the Shipper (s).
- In the case of sea transport, the carrier is generally not responsible for delays, unless a specific date of arrival has been expressly guaranteed in the contract. An estimated arrival date on the BL (ETA) does not regularly meet this requirement.
Instructions to recipients
In order to guarantee their complaints and ensure the smoothest possible subsequent processing, recipients of goods currently on the EVER GIVEN can provide for the following:
- The contractual chains relating to the goods that are in containers on the EVER GIVEN must be analyzed in order to be able to determine who is responsible for which actions and where a whoG action against who is already required today.
- The marine insurer of the cargo must be informed (preventive notification of damage) and must be invited to issue an Average Guarantee for the benefit of the General Damage Adjuster.
- Contractual carriers must inform their civil liability insurers (preventive notification of damage).
- The contractual carrier (cf. BL) must be informed as a precaution that he will be held responsible for any damage and is required to uphold his claims against any subcontractors.
- The consignee (or the contractual carrier) must declare his cargo to the General Damage Adjuster and must submit the Average Guarantee of the marine insurer as soon as possible.
- End customers should be informed that it is currently not predictable when the arrival of goods can be expected.
- As soon as the cargo and containers are released, the cargo should be checked immediately for possible damage (eg deterioration) and the damage should be reported immediately to the carrier and the marine insurer.