Ever Given’s insurers ‘disappointed’ as ship is seized

Egypt’s Suez Canal Authority (SCA) has provisionally impounded Ever Given, the ship that had blocked the Suez canal for nearly a week as per an Egyptian court’s order pending payment of US $916m in compensation for the losses incurred by the blockage, according to Ahram Online.

Osama Rabie, chairman of the SCA, says the figure covers the cost of refloating and maintaining the vessel.

A fleet of tugboats and diggers, with the assistance of the tide, managed to refloat the vessel, whose bow had been firmly lodged into the canal’s sandy bank, causing a huge build-up of vessels.

The ship, which ran aground across the canal on 23 March and refloated on 29 March, is now idle in the Bitter Lakes.

But, insurers UK Club for Protection and Indemnity, say the magnitude of the claim is largely unsupported, and it, and the ship’s owners, have been negotiating in good faith with the SCA

‘On 12 April, a carefully considered and generous offer was made to the SCA to settle their claim,’ says a UK Club statement. ‘We are disappointed by the SCA’s subsequent decision to arrest the vessel today [13Apr2021]. We are also disappointed at comments by the SCA that the ship will be held in Egypt until compensation is paid, and that her crew will be unable to leave the vessel during this time.

‘The SCA has not provided a detailed justification for this extraordinarily large claim, which includes a US$300m claim for a “salvage bonus” and a US$300m claim for “loss of reputation”. The grounding resulted in no pollution and no reported injuries. The vessel was re-floated after six days and the Suez Canal promptly resumed their commercial operations. The claim presented by the SCA also does not include the professional salvor’s claim for their salvage services which owners and their hull underwriters expect to receive separately. The P&I aspects of the claim are relatively modest, with the exception of the claim for loss of reputation, which is disputed.’

The SCA had submitted a report on the vessel’s stranding and then filed a request with the economic court to impound the vessel until a compensation of $900m has been paid, according to Rabie.

Rabie says the negotiation process with the shipowner’s insurance providers, involves “many details.”

The shipowner, he says, is contesting 90 percent of the required sum, saying “they do not want to pay anything.”

The rough estimate of $1bn is in compensation for the losses incurred from the blockage and for the cost of dislodging attempts.

‘Owners have cooperated fully with the SCA throughout their investigation into the cause of the grounding, which we understand is now complete,’ the UK Club statement continues. ‘When the grounding occurred, the vessel was fully operational with no defects in her machinery and/or equipment and she was fully manned by a competent and professional Master and crew. Navigation was being conducted under the supervision of two SCA pilots, in accordance with the Suez Canal Rules of Navigation.

‘The vessel’s classification society, the American Bureau of Shipping (ABS), completed their surveys on 4 April 2021 and issued a certificate of fitness to allow the vessel to move from Great Bitter Lake to Port Said where she will then undergo re-inspection before completing her voyage to Rotterdam. The owners will continue to negotiate with the SCA.

‘The UK Club is working with all parties involved. Our priority is the 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.’

The UK Club has insured the owner of Ever Given for certain third-party liabilities that might arise from an incident such as this – including, for example, damage caused to infrastructure or claims for obstruction. The vessel itself and its cargo will have been insured separately. While the UK Club is unable to comment on any confidential insurance or potential claim details, all valid claims will be considered by the vessel owner, the UK Club and its legal advisors in due course.

Abdulgani Serang, the general secretary-cum-treasurer of the National Union of Seafarers in India, told Insider that the crew members are being treated well and continue to be paid.

But despite the recent news, Serang said that the crew members are not worried just yet.

“The crew members are relaxed because they know that they are employed with Bernard Schulte company and they are covered by the union agreements,” says Serang. “Their professionalism has not been questioned and it is just a matter of time, anytime soon, for them to start sailing.”

Main image courtesy of Suez Canal Authority.