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Suez Canal chief: Vessel impounded amid financial dispute with Japanese owner

33 Comments
By SAMY MAGDY

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If Egyptian Pilot was on the ship and then the Egyptian Pilot has responsibility for the ship. The Egyptian General was seeking compensation before investigation was carrying out. I don't think Japanese Company should pay any compensation to Canal authority.

"The Suez Canal’s own policies suggest it’s not to blame, even if its pilots were at the helm of a ship that ran aground".

As Suez Canal's own policies, the Suez canal Pilot might the ship to run aground purposefully and then they can blackmail the ship owner.

Why the ship owner has to pay Pilot fee to Canal authority if its pilot take no responsibility and was not qualified pilot who made an error?

1 ( +1 / -0 )

Japanese owner honorably issues an apology 

Thank you.

and gets slammed with nearly a trillion dollar bill. 

I believe the amount is $900,00 not trillions of dollars.

The Suez canal will forever be the SEWER canal to me from now on.

No it won't, it will always be known as the SUEZ Canal.

-1 ( +1 / -2 )

Japanese owner honorably issues an apology and gets slammed with nearly a trillion dollar bill. The Suez canal will forever be the SEWER canal to me from now on.

-2 ( +1 / -3 )

And safety inspection of the ship is the responsibility of Panama, the flag it was flying under.

That is not true. The ships "classification authority" sometimes called its "classification society" is responsible for the inspection. Classification authorities set standards under which offshore structures including ships are constructed and operated. When a new ship is built the owner choses a classification authority to which standards the ship will be built. That classification authorities standards may be higher or lower, affecting the cost of the new ship, but also affecting its insurance rates for its life and even whether or not the owner can obtain certain insurance. Higher standards increases price and may increase operating costs over the ships life but it can also reduce insurance rates. The choice of classification authority also affects what nations in which the ship may be registered. Aside from insurance many nations only allow ships built and operated to to certain standards to fly their flag. Each owner has to make choices for their new ship. In the case of Ever Given the classification authority is the American Bureau of Shipping (ABS) and they have already inspected the ship and cleared it for the voyage to Rotterdam.

0 ( +0 / -0 )

Egyptian pilots and crew operate these ships through the canal. The pilots are notorious for demanding bribes of cigarettes (Marlboros) and food. There is an old joke that the pyramids could not have been built by Egyptians because there were no Marlboros then to bribe them to work.

There has been no hint of any mechanical issues. And safety inspection of the ship is the responsibility of Panama, the flag it was flying under.

The people who will get paid the most will be the (bloody) lawyers.

2 ( +2 / -0 )

Egypt doesn't seem to have an extradition treaty with Japan.

0 ( +0 / -0 )

Easy to solve. Say them, they won’t get any further development help or funds from now on. Result, they will please you even with a second ship for free. lol

Nobody actually care for Japanese aid tbh

0 ( +0 / -0 )

Pilothas ultimate control and responsibility and can be held liable for damages.

Link: https://law.jrank.org/pages/9210/Pilot.html

Again, no. The excerpt below is taken verbatum from an insurance company document describing the legal conditions set by the SCA for vessels using the canal. A link to the document is provided below.

"All vessels and the Master and Owners thereof, by the action alone of navigating in the canal bind themselves to the conditions laid down in the Suez Canal Authority Rules of Navigation and to which they acknowledge being familiar with, and conforming with said contents.

*In particular, Members must remain aware that any vessel transiting the canal or at its associated ports or roads is responsible for any damage or consequential loss it may cause either directly or indirectly to herself or to canal property, personnel or any third parties. Such vessels are deemed responsible without the option to release themselves from reponsibility by limited liablity. *Moreover, the vessel and its owners guarantee to indemnify the Canal Authority in respect of any claim arising against them by reason of any damage they may cause either directly or indirectly to a third party. Finally a vessel and her owners waive the right to claim against the Canal Authority for any damages caused to them by a third party whilst in the canal.

As the results of any incident which may occur in the canal the Canal Authority may delay a vessel for the purpose of investigating any claim or dispute that may arise, or due to any formal or informal complaints that may arise, or for an alleged violation of the rules of the canal or due to security reasons. A vessel may also be delayed until any damage to ship, hull, fittings or any other concerns have been made such that the vessel is deemed capable of completing a safe passage through the canal. If a vessel is detained for whatever reason no claims for damages from vessel or owners will be entertained by the Canal Authorities."

https://www.steamshipmutual.com/Risk-Alerts/RA01SuezCanalNavigation.pdf

0 ( +0 / -0 )

This is a statement from a company called "UK Club". They are the insurer of the Ever Given for certain third party liabilities, but not the insurer of the ship itself. Their statement is an interesting window into the discussions going on regarding the cost of the mishap.

"The SCA has not provided a detailed justification for this extraordinarily large claim, which includes a $300 million claim for a 'salvage bonus' and a $300 million 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," 

UK Club also states:

"Despite the magnitude of the claim which was largely unsupported, the owners and their insurers 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,"

0 ( +0 / -0 )

This demand is typical of the corruption in Egypt, and many other places in the Middle East, where hostage-taking is an art, often done by the government or government agents. The crew, the ship and the cargo will be held for ransom. DT is correct - this could take over a year to work out.

When it comes to postage-taking, perhaps Egypt has learn't a few lessons from Japan.

1 ( +3 / -2 )

This demand is typical of the corruption in Egypt, and many other places in the Middle East, where hostage-taking is an art, often done by the government or government agents. The crew, the ship and the cargo will be held for ransom. DT is correct - this could take over a year to work out.

And exactly where will this $900 million (800 million Euros) go? Probably into the pockets of a lot of administrators and Egyptian government officials, and nothing to actually repairing or improving the Canal itself.

3 ( +4 / -1 )

This is certainly an interesting subject. Thank you for the edification, DT. Will be watching to see what happens.

Dad was in the merchant marine, and talked about going through the Red Sea and the Suez Canal. He said the Red Sea was the hottest spot they ever went through, and that Egypt was a very dangerous place to walk around in. They unloaded their cargo in Alexandria, where it went to the British 8th Army. They sat out the Battle of El Alamein in port, worried that the Germans would win. German bombers came over and dropped their bombs, sinking some ships. There were explosives placed in vital spots of the Suez Canal, ready to be blown up, to deny the canal to the Germans in case they took it over.

1 ( +1 / -0 )

Pilothas ultimate control and responsibility and can be held liable for damages.

Link: https://law.jrank.org/pages/9210/Pilot.html

-1 ( +1 / -2 )

Rabei did not say how much money the canal authority was seeking. However, a judicial official said it demanded at least $900 million. The state-run Ahram daily also reported the $900 million figure.

Shoei Kisen Kaisha Ltd would go bankrupt to pay for this hefty fine. However, the seizure of the vessel is not good financially for the company either.

1 ( +1 / -0 )

Easy to solve. Say them, they won’t get any further development help or funds from now on. Result, they will please you even with a second ship for free. lol

0 ( +0 / -0 )

Someone screwed up and I think it’s unlikely the owners down in Shikoku have much to do with navigating the ever given / evergreen through the Suez Canal..

The training of the crew and material condition of the ship have everything to do with the owners liability in this instance. For example what are the qualifications and level of experience of the Captain, navigator, and other watch standers at the time of the mishap? The owner hired a company to manage the ship and crew so both companies conceivably bear responsibility for the training and qualifications of that crew.

Of more interest to me is how long that crew had been out to see. Right now there are over 300,000 merchant sailors and officers who have been stuck on ships since the beginning of the pandemic over a year ago. Ship owners are not being allowed to conduct regular crew changes. Too many ports will not let sailors debark to shore. Many nations have suspended air travel. Crews cannot leave their ships at the ends of their contracts and return home. Likewise their scheduled replacements cannot travel from home to meet the ship and replace worn out crew members. Some shippers are even putting stipulations in their contracts that prohibit the ships operators from diverting to a port that will allow a crew change if it adds even a day to the length of the voyage. Some ship owners are not even paying their crews once they are out past the end of their contract, even as they continue to faithfully and professionally operate those ships from port to port, month after mount after long boring agonizing month. We don't know the condition of the crew of the Ever Given. They might be tired and abused but we cannot draw that conclusion without knowing the facts. Still, there are like I said some 300,000 seafaring men and women out there long past the ends of their contracts unable to go home. They are tired, some are suicidal and they are a ticking time bomb of mishaps waiting to happen.

6 ( +6 / -0 )

Anyone know what the cargo is? I assume the delay will also cost money and has to be balanced against the costs demanded by the canal authority. I hope none of my letters or packages are on there!

Not sure, but I have read that it has a lot of refrigerated containers on board. On most ships they are using ships power but whatever is inside them in some cases will be perishable fruits and vegetables. Frozen foods are probably ok.

1 ( +1 / -0 )

The ship was piloted by Egiptian pilots through the canal, when the ship's accident occurred. The blame and fault is entirely of Suez operators, including bad weather.

That is not true. The only canal I am aware of where the canal pilots assume responsibility for the safe navigation of the ship is the Panama Canal. The pilots in the Suez Canal, much like harbor pilots all over the world are there to advise the Captain of the ship passing along their encyclopedic knowledge of local waters, currents and underwater hazards, but the Captain of each ship remains responsible for the safe navigation of their ship, not the harbor pilot and not the Suez Canal pilot.

4 ( +4 / -0 )

What does the Egyptian pilot has to say?

3 ( +4 / -1 )

Anyone know what the cargo is? I assume the delay will also cost money and has to be balanced against the costs demanded by the canal authority. I hope none of my letters or packages are on there!

3 ( +3 / -0 )

I hope people think twice before using such a big ship in such a narrow strip of water.

2 ( +3 / -1 )

Desert Tortoise - you obviously have a lot of knowlege in the maritime space..thanks for sharing interesting info.

-2 ( +1 / -3 )

The ship was piloted by Egiptian pilots through the canal, when the ship's accident occurred. The blame and fault is entirely of Suez operators, including bad weather.

Extorting that huge amount of money is just another proof of the Mob style management it happens both on Suez and Panama channels.

5 ( +7 / -2 )

Best decide who is to blame for the incident before demanding who shall pay.

Someone screwed up and I think it’s unlikely the owners down in Shikoku have much to do with navigating the ever given / evergreen through the Suez Canal... aren’t there people in charge of passage of ships through the canal? I’m going to guess there are fees to pass through it too! What are those fees for? Or is it just a monopoly style arrangement that must be paid because the alternatives are typically more expensive?

3 ( +4 / -1 )

General Average is a way to pay the cost of damages suffered in a mishap. It is often used when ships suffer catastrophic losses. The huge container fire on the Maerks Honam is an example of a mishap that resulted in a large loss of cargo and damage to the ship sufficient to require the foward third to be removed entirely and reconstructed. By declaring general average the ship owner is basically demanding all the shippers with freight on the ship pay a proportion of the loss.

There is another means for ship owners to limit liability. It is the Convention on Limitation of Liability for Maritime Claims (LLMC) originally negotiated in 1957 and most recently amended in 1996. The ship owner goes to court and invokes this clause of the International Maritime Organization (IMO), a UN sponsored organization and this limits how much money the ship owner will have to pay in damages. The Convention provides for a virtually unbreakable system of limiting liability. Shipowners and salvors may limit their liability, except if "it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such a loss, or recklessly and with knowledge that such loss would probably result". In the case of the Ever Given however the wording about recklessness probably deters the owner of the Ever Given from invoking this law. Doing so might come back to bite them in the event negligence on the part of the Captain or crew is shown by the mishap investigation.

4 ( +6 / -2 )

May I suggest: The vessel crashed

Both terms are inaccurate. In the maritime world, if a moving ship hits something stationary, it is said to "allide" or to "have allided" with whatever it hit. If two ships are underway (moving in the water) and hit, they are said to "collide" or to "have collided". The maritime world has their own language. It also has its own body of law some of it quite ancient.

6 ( +8 / -2 )

"The vessel had crashed..."

May I suggest: The vessel crashed... ?

-5 ( +0 / -5 )

@Desert Tortoise

Interesting post. This case is again shedding some light on Japan's activities in the Indian Ocean after the Wakashio disaster in Mauritius disappeared from the media.

"However, the Wakashio oil spill is now revealing a darker side to Japan’s expansionist foreign policy and how quickly Japan’s corporate interests overtook its foreign policy objectives. It is a tale of shady defense deals, opaque aid, high level corruption and powerful corporate interests who wield a stronger influence than the Japanese state."

https://www.forbes.com/sites/nishandegnarain/2020/12/11/the-rise-and-fall-of-japan-over-the-deadly-mauritius-oil-spill/?sh=2e60f7b51e87

8 ( +11 / -3 )

"He warned last week in an interview with The Associated Press that bringing the case before a court would be more harmful to the vessel's owner than settling with the canal’s management."

Hmmmmm......

3 ( +4 / -1 )

Good post Desert Tortoise, General Average seems like an escape clause in this case though as there was never any danger to the cargo.

6 ( +6 / -0 )

Ships are navigated by Egyptian pilots. The cargo rots on hold.

5 ( +9 / -4 )

Is kinda impossible to just push the bill to the owner considering the ship itself was operated by a taiwanese company. The ship was in good condition so even if there was a problem, you can only blame at the weather or human error. Doesn't the insurance suppose to handle this? Or are they so greedy that they really think they can extort 900million?

First off, Evergreen Marine Corporation of Taiwan has no operational control of the ship. They are just the shipper. They make the arrangements for the freight to go from point A to point B on a ship they hire for the purpose. In this instance Evergreen hired a japanese company Shoei Kisen Kaisha Ltd, the owner of the Ever Given to haul their cargo for them, The ship is actually on a long term contract to them. The same ship many be given a different name when on contract to a different shipper. The owners are ultimately responsible for the safe operation of the ship and training of its crew. To effect that Shoei Kisen Kaisha hired a German firm, Bernhard Schulte Shipmanagement (BSM), to manage the ship and its staffing needs. BSM hired a crew from India for her and handles all their personnel needs, payroll, crew changes, training, etc.

As for who pays, Shoei Kisen Kaisha declared "General Average" a week ago. General Average is an ancient feature of maritime law most nations still adhere to. It means all of the owners of cargo on that ship will have to pay a proportion of the damages incurred by a mishap, that proportion being based on their exposure which is normally their proportion of the total cargo on the ship. The ship owners also pay a proportion. Insurance then pays the shippers in accordance with the terms of their insurance, if they have any. If not they must pay out of money on hand or raise funds to pay. Shoei Kisen Kaisha will now have to negotiate with the Suez Canal Authority and with every shipper who has a box full of freight on that ship to come to an agreement on what to pay the Suez Canal Authority to free the ship and its cargo. What could possibly go wrong? There are two other ships sitting in Great Bitter Lake for over a year working through details of similar holds placed on them. Settling this may take a long long time.

21 ( +21 / -0 )

Is kinda impossible to just push the bill to the owner considering the ship itself was operated by a taiwanese company. The ship was in good condition so even if there was a problem, you can only blame at the weather or human error. Doesn't the insurance suppose to handle this? Or are they so greedy that they really think they can extort 900million?

-2 ( +8 / -10 )

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