Author Sameer C Mohindru
Editor Norazlina Jumaat
Commodity Shipping
Topic Suez Canal
16 Apr 2021 | 08:48 UTC
HIGHLIGHTS
Cargo, ship insured separately
Indian crew stranded on ship
Ship fully operational
Singapore — Taiwan's Evergreen Marine Corp, operator of the containership arrested by the Suez Canal authorities and whose thousands of containers are stranded on it, is exploring the possibility of transferring the cargo to another ship, while compensation claims are presently disputed and sub judice.
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The Ever Given, an ultra large containership that was stuck in the Suez Canal for around six days last month, was formally arrested by the authorities there on April 13 over non-payment of claims of around $916 million.
"Evergreen is investigating the scope of [the] court order and studying the possibility of the vessel and the cargo on board being treated separately," the company said in a statement late April 15.
The Taoyuan-based container transportation and shipping company's plans are very important because if successful, will enable the release of millions of dollars worth of goods, which are meant to be delivered all over northern Europe.
However, maritime lawyers and insurance executives pointed out that such a segregation between the cargo and its ship, or even its crew is not easy. Typically, the insurer will prefer that the ship, cargo and also its crew be treated as a single entity instead of adopting a piecemeal approach. The ship has a protection and indemnity cover from the UK Protection and Indemnity Club.
"All stakeholders have to be on the same page, or else the entire matter will get more complicated," a maritime lawyer said.
Even if the Suez Canal Authority, or SCA, agrees to release the cargo against a security deposit or bank guarantee, eventually the Ever Given's owner, Shoei Kisen Kaisha, has to acquiesce as well, a maritime insurance executive added.
"The cargo is onboard the ship, and it can only be discharged with the owner's permission," he added.
The owner and the SCA could not be reached for comment.
POTENTIAL AGREEMENT
In order to lift the arrest order as soon as possible, Evergreen is urging all concerned parties to facilitate a settlement agreement, the company's statement said.
Prior to the arrest, such a settlement agreement could not be reached because the owner and its insurer considered the magnitude of the claim as very high and not fully supported -- including $300 million for notional damage on reputation, sources said.
"A carefully considered and generous offer was made to the SCA to settle their claim," the UK P&I Club said in a statement.
Evergreen's delivery of goods is indefinitely delayed and so the operator-cum-charterer wants the containers to be off-loaded and delivered to their intended destinations. The Ever Given's scheduled ports of call are Rotterdam, Antwerp and Hamburg and the containers were destined for locations across northern Europe.
However, according to protection and indemnity experts, such enroute discharge and reloading from a stranded ship usually happens if it is damaged in an accident. In this case, Ever Given's classification society, the American Bureau of Shipping, has issued a fitness certificate for it to move from Great Bitter Lake to Port Said where it is to be inspected again before proceeding with its voyage, sources said.
On the other hand, the charterer wants to meet its delivery commitments and generally the vessel itself and its cargo are insured separately.
Evergreen is doing its utmost to complete the deliveries entrusted by its customers and keep adverse impact at its minimum, its statement said. The UK P&I Club has insured the owner of Ever Given for certain third party liabilities that might arise from such incidents.
The ship is loaded almost to its capacity of just over 20,000 TEU, or Twenty-foot Equivalent Units, though most of the containers onboard are of 40 foot each.
DISPUTED CLAIM
A major concern, the reason why insurers avoid segregation of the cargo and ship, is the fate of the crew.
"Hypothetically, if a large security amount is deposited and the cargo is released and later something similar is done for the ship, it is the crew which will be held back until full and final payment," an insurance executive tracking such disputes said.
There have been instances in the past where a crew has been stuck at port for years due to such disputes as complete processing of such claims take a long time.
The UK P&I Club has stated that its priority is "fair and swift resolution of this claim to ensure the release of the vessel and cargo and, more importantly, her crew of 25 who remain on board".
During the meeting between the shipowner and SCA on April 12, no consensus was reached on the claims that are largely unsupported and lack detailed justification, Evergreen's statement said, citing information from the insurer.
When the grounding occurred, the vessel was fully operational with no defects in her machinery and equipment, and was manned by a competent and professional crew, UK P&I Club's statement added.
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