Suez Canal Vessal
FILE - In this March 30, 2021 file photo, the Ever Given, a Panama-flagged cargo ship, is anchored in Egypt's Great Bitter Lake. An Egyptian court Tuesday, May 4, 2021, rejected an appeal by the owner of a massive container ship of the court-ordered seizure of the vessel by Egyptian authorities over a financial dispute. Egyptian authorities have impounded the hulking Ever Given, which blocked the Suez Canal for nearly a week in March, halting billions of dollars in maritime commerce. (AP Photo/Mohamed El-shahed, File)
business

Egypt court upholds seizure of Japanese ship that blocked Suez Canal

25 Comments
By SAMY MAGDY

An Egyptian court Tuesday rejected an appeal by the owner of a massive container ship of the court-ordered seizure of the vessel over a financial dispute.

Egyptian authorities have impounded the hulking Ever Given, which blocked the Suez Canal for nearly a week in March, halting billions of dollars in maritime commerce.

The Suez Canal Authority said the vessel would not be allowed to leave the country until a compensation amount is settled on with the vessel’s Japanese owner, Shoei Kisen Kaisha Ltd.

A court in the Suez Canal city of Ismailia ordered the seizure of the vessel earlier this month. The Ever Given’s owner filed an appeal on April 22 in hopes of overturning the decision.

The Economic Court of Ismailia on Tuesday upheld the seizure decision. There was no immediate comment from the vessel’s owner.

The Suez Canal Authority has demanded $916 million in compensation, according to the UK Club, an insurer of the Ever Given. That amount takes into account the salvage operation, costs of stalled canal traffic and lost transit fees for the week the Ever Given blocked the canal.

Negotiations between the Suez Canal Authority and the shipowner were still ongoing to settle the compensation claim, Shoei Kisen Kaisha Ltd. said last week. The company said it has notified a number of the owners of the approximately 18,000 containers on the ship to assume part of the damages demand. It refused to disclose further details of the negotiations, including the amount covered by insurance and how much it is asking freight owners to share.

The Ever Given was on its way to the Dutch port of Rotterdam on March 23 when it slammed into the bank of a single-lane stretch of the canal about 6 kilometers (3.7 miles) north of the southern entrance, near the city of Suez.

A massive salvage effort by a flotilla of tugboats helped by the tides freed the skyscraper-sized, Panama-flagged Ever Given six days later, ending the crisis, and allowing hundreds of waiting ships to pass through the canal.

The blockage of the canal forced some ships to take the long alternate route around the Cape of Good Hope at Africa’s southern tip, requiring additional fuel and other costs. Hundreds of other ships waited in place for the blockage to end.

The shutdown, which raised worries of supply shortages and rising costs for consumers, added strain on the shipping industry, already under pressure from the coronavirus pandemic.

© Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

©2021 GPlusMedia Inc.

25 Comments
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An expensive situation for Japan.

-2 ( +5 / -7 )

An expensive situation for owner Shoei Kisen Kaisha.

Japan doesn't pay. Shoei Kisen Kaisha would have to pay.

5 ( +9 / -4 )

It would seem that Egypt Authorities has borrowed a page from Japan's legal system's book.

11 ( +13 / -2 )

Japan doesn't pay. Shoei Kisen Kaisha would have to pay.

Shoei Kisen Kaisha, which interestingly is a wholly owned subsidiary of Imabari Shipbuilding, Japan's largest ship builder and the worlds fourth largest in terms of tonnage and sales value, declared what is called "General Average" soon after the ship ran aground. That is what the article hints at with the sentence "The company said it has notified a number of the owners of the approximately 18,000 containers on the ship to assume part of the damages demand." General Average is a centuries old feature of maritime law most nations still adhere to. With it, the owner and the parties who have cargo on the ship must post a bond in proportion to their exposure to pay for the salvage of a ship that suffers an emergency. Their various insurance companies now must come to agreement among themselves and with the Egyptians how much the eventual bond payments will be. Usually a ship owner is able to post a bond to allow the ship to complete its journey and unload while the owner of the ship and the cargo argue the eventual fine in court. Egypt isn't following the traditional path these sorts of legal disputes follow.

7 ( +7 / -0 )

We should send a flotilla of warships to escort it home.

-8 ( +2 / -10 )

Having worked as a " Marine Engineer" on various ships from 1983 to 2006 have transited the Suez Canal numerous times .Amazed at this freak accident that brought the importance of transport of goods through shipping and the Suez Canal into World headlines .The compensation demanded is as long as the length of the " EVER GIVEN " and how will the owners pay the same ? Could definitely put the company into bankruptcy and seems a lengthy court battle is in progress and only hope the ship doesn't become junk in the process.

4 ( +4 / -0 )

An expensive situation for owner Shoei Kisen Kaisha.

Japan doesn't pay. Shoei Kisen Kaisha would have to pay.

and what about the Taiwanese company that was operating the ship at the time?

-1 ( +5 / -6 )

"It would seem that Egypt Authorities has borrowed a page from Japan's legal system's book"

and if the Egypt Authorities has borrowed a page from America's legal system's book, they would have blown up the ship.

-9 ( +3 / -12 )

Funny, no mention of the Taiwanese company in the article.

-3 ( +5 / -8 )

what about the Taiwanese company that was operating the ship at the time?

The company that was operating the ship is German. The owner of the ship, Shoei Kisen Kaisha, hired a company called Bernhard Schulte Shipmanagement to operate the ship for them. Bernhard Schulte Shipmanagement hires the crew, pays them, arranges crew changes, training and manages the day to day hands on operation of the ship. It is up to the people they hire to get the ship from point A to point B safely and on time. Evergreen Marine of Taiwan is just the shipping company. The hire the ship on a long term contract from Shoei Kisen Kaisha to move their customers cargo from point A to point B. The shippers pay Evergreen to accomplish this on a predetermined schedule and Evergreen pays Shoei Kisen Kaisha to provide a ship and a crew to meet the schedule. Shoei Kisen Kaisha then hires Bernhard Schulte Shipmanagement to operate their ship for them. All of these entities have insurance companies. The ship will probably have one company that insures the ship itself from physical damage or loss and another company that insures the ships's owner against liability. Each shipper has their own insurance company as will the operating company. Evergreen has basically no exposure. The declaration of General Average as I understand it does not apply to them. However their good reputation is being harmed by the negligence of the ship owner and operator so who knows, maybe they pile on and sue those two companies? All of these insurance companies must now agree with the courts in Egypt on what the eventual cost of the mishap is and what everybody will pay. That ship is probably not going anywhere soon.

7 ( +8 / -1 )

.The compensation demanded is as long as the length of the " EVER GIVEN " and how will the owners pay the same ?

The insurance companies retained by the ship owner and each company with cargo in the ship will end up paying the eventual bond to release the ship.

1 ( +1 / -0 )

Just a question. Wasn't the ship being piloted through the channel by the local egiptyian pilots? As far as I'm aware in both Panama and Suez channels the local pilots are taking over the staring and safety harboring of all ships that pass through their channels. If that's the case, isn't almost the entire fault of those local pilots?

4 ( +5 / -1 )

Agreed @DesertTortoise 9:39a. Thanks for taking this back to reality.

- “The insurance companies retained by the ship owner and each company with cargo in the ship will end up paying the eventual bond to release the ship.” -

No J gov bail out necessary, Private business loss is private business loss.

Additionally, some will always try ‘throwing a little shade’ on others @9:23am when they’re not involved in an issue.

0 ( +1 / -1 )

Shoei Kisen Kaisha, which interestingly is a wholly owned subsidiary of Imabari Shipbuilding,

The Egyptian fine is larger than 1/3 of the revenues of the whole Imabari group, and this does not account for the measly small profits since shipbuilding is extremely low in profits and expensive. There is no way that Shoei Kisen Kaisha can afford to pay the fine.

5 ( +5 / -0 )

Just a question. Wasn't the ship being piloted through the channel by the local egiptyian pilots? As far as I'm aware in both Panama and Suez channels the local pilots are taking over the staring and safety harboring of all ships that pass through their channels. If that's the case, isn't almost the entire fault of those local pilots?

According to the Suez Canal Authority rules, the pilots are only advisory and the ships owners and captains remain fully responsible for the safe passage of their ships through the canal. The same is true with harbor pilots all around the world. Harbor pilots are advisory only and the captain is responsible for safe navigation. When I was in the US Coast Guard and later the US Navy, we never took pilots aboard our ships. Of all the canals in the world I believe only the pilots in the Panama Canal assume responsibility for safe passage of the ships they pilot.

4 ( +4 / -0 )

There is no way that Shoei Kisen Kaisha can afford to pay the fine.

They won't. I mentioned above they declared General Average. That means the owners and every company with cargo on that ship will have to pay a share of the cost of the "salvage", to use the legal term from maritime law in proportion to their "exposure". More cargo on board? Pay a bigger proportion of the loss. In the end it will be a bunch of insurance companies that pay Egypt their extortion. Those insurance companies will be the ones fighting it out in the Egyptian courts.

1 ( +2 / -1 )

@Alan Harrison

It would seem that Egypt Authorities has borrowed a page from Japan's legal system's book

Give several examples how Japanese authorities seized foreign ships.

Have the Egypt authorities fully investigated the reason Evergiven slammed into the bank? Or they just want anybody to pay for their financial losses?

0 ( +2 / -2 )

Shiver me timbers matey. Why let the hulking thing into the canal if the possibility exists it will lodge itself into an embankment?

0 ( +0 / -0 )

Why let the hulking thing into the canal if the possibility exists it will lodge itself into an embankment?

Since that possibility exists for all ships the canal would be rendered instantly useless.

0 ( +0 / -0 )

Shiver me timbers matey. Why let the hulking thing into the canal if the possibility exists it will lodge itself into an embankment?

Even larger ships have used that canal without incident. I am pretty sure this wasn't Ever Given's first trip through the Suez either.

0 ( +0 / -0 )

No J gov bail out necessary, Private business loss is private business loss.

The likelihood of the Japanese government providing any money to help settle the matter has a vanishingly small probability as that would set an extremely bad precedent, there are probably discussions going on among diplomats to settle this matter quickly.

0 ( +0 / -0 )

We should send a flotilla of warships to escort it home.

Who is "we"?

0 ( +0 / -0 )

Canceling immediately the whole checkbook diplomacy and freeze all development help money will do. They will excuse down on knees and even give a second container ship as a present. lol

0 ( +0 / -0 )

The whole thing is really down to the owners insurance policy

Whatever happens, I think this will be a very long drawn out affair, and the ship will be a rust bucket by the time this is concluded. After that - razor blades.

0 ( +0 / -0 )

Canceling immediately the whole checkbook diplomacy and freeze all development help money will do. They will excuse down on knees and even give a second container ship as a present. lol

Please do some homework. Egypt is not among the top ten recipients of Japanese foreign aid. Of the top ten nations in terms of giving foreign aid, only France shows Egypt among its top ten recipients. Looking at the foreign aid recipients among top 30 donor nations Egypt is only a top ten recipient for France and Greece.

https://www.wristband.com/content/which-countries-provide-receive-most-foreign-aid/

0 ( +0 / -0 )

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