September 22, 2021

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The Ever Given is free, but litigation could prevent it from leaving the Suez Canal – The Washington Post

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On Thursday, the Ever Given’s owner filed suit against the ship’s operator in the United Kingdom’s High Court, the Lawyer first reported. An early stab at limiting the owner’s liability, the lawsuit highlights the labyrinthine ownership structure of container ships, and how difficult it can be to determine who should be held responsible when something goes wrong at sea.

Peter Berdowski, CEO of the Dutch firm behind freeing the Ever Given from the Suez Canal on March 29, said dislodging the ship came down to a matter of physics. (Reuters)

Flagged in Panama, the Ever Given is owned by two Japanese firms, Luster Maritime and Higaki Sangyo Kaisha, which are the plaintiffs in the lawsuit and are both subsidiaries of holding company Shoei Kisen Kaisha (itself a subsidiary of Japanese shipbuilder Imabari.) It is being leased by Evergreen Marine Corporation, a Taiwan-based conglomerate listed as the defendant. On top of that, the ship’s technical manager is Bernhard Schulte Shipmanagement, a German entity that isn’t a party to the lawsuit and was responsible for hiring the Indian crew.

Even figuring out which nation’s courts have jurisdiction could be a complex ordeal.

Meanwhile, numerous competing investigations will seek to determine who was at fault for the incident. Egypt has already launched its own probe, which will involve interviewing the ship’s captain and crew and reviewing the data recorder that serves as a “black box” for the vessel. Panama’s maritime authority has also pledged to carry out its own investigation, since the Ever Given is registered there, as has the German ship management company responsible for hiring the crew.

If these investigations come to contradictory conclusions, the legal wrangling could get even more complicated.

In recent days, Egypt’s Suez Canal Authority has argued that it also deserves to be compensated for the incident — to the tune of $1 billion.

“This is the right of the country,” Osama Rabie, the authority’s chief, told Egyptian broadcaster Sada Elbalad on Wednesday night. He added that Egypt had also suffered damage to its reputation and “should get its due.”

The billion-dollar figure represents the lost revenue from tolls that the authority would typically collect from ships passing through the canal in a six-day period, the cost of the equipment and manpower used to free the ship, and the damage done to the waterway in the process, Rabie said.

While Rabie didn’t indicate where he expected the money to come from, Shoei Kisen Kaisha told Bloomberg that the company expects to discuss compensation with the canal authority.

Egypt’s Suez Canal Authority released on April 1 drone footage of the Ever Given ship, days after it was freed from blocking traffic. (Reuters)

That doesn’t mean that the company is willing to shoulder the financial burden alone. On Thursday, Shoei Kisen Kaisha declared “general average,” appealing to a principle of maritime law that states that the owner of cargo on board a ship should contribute to the cost of rescuing the vessel during a major casualty event, according to industry news site gCaptain.

In other words, Ikea, which was shipping furniture on the Ever Given, wouldn’t be able to collect that furniture until it agrees to fork out a percentage of the furniture’s total value. The Swedish retailer will probably have insurance that covers the unexpected additional cost — but smaller companies may not.

Billions of dollars of cargo were held up in transit each day that the Ever Given remained wedged in the canal, and experts anticipate further backup as those ships begin to arrive in port and find they have nowhere to dock or unload their cargo. If goods on board spoil, or shipping companies have to compensate their customers for arriving late, that could lead to a flurry of insurance claims — opening the door for insurers to file claims against the owners of the Ever Given.

Evergreen, which leased the ship, said this week that it doesn’t guarantee arrival times in its contracts with its own clients. “There is almost no chance that we will be sought to pay compensation,” Evergreen Marine President Eric Hsieh said at a briefing in Taipei, according to Bloomberg. But that doesn’t eliminate the possibility that it could be held liable for other vessels’ delays.

A drawn-out legal battle over who is responsible for the accident could be bad news for the crew members of the Ever Given, who are key witnesses for any investigation. The Times of India reported this week that there are fears that the 25 mariners on board, all Indian nationals, will be effectively placed under “house arrest” while the accident is under review. Currently, the crew remains stuck on board the ship, which is anchored in the Great Bitter Lake midway through the canal.

Rabie told Egyptian television on Wednesday that the ship would be allowed to continue on its way to the Netherlands if the investigation went smoothly and the amount of compensation was agreed on, according to the Associated Press. But if the matter goes to court, the boat will not be allowed to leave Egypt.

Sudarsan Raghavan in Cairo contributed to this story.

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