Egypt seizes Ever Given ship, claims $900 million in compensation

Egypt is demanding $900 million in compensation following the blockade of the Suez Canal at the end of March. The Suez Canal Authority said in a televised speech that it had begun negotiations with the aim of obtaining compensation for the damage caused by the Ever Given ship, which was stuck for at least a week, paralysing traffic in this important maritime canal.

The Canal Authority says Egypt was not at fault and that the ship bears full responsibility for what happened. "Negotiations are still ongoing, there are still many points on which we are stumbling with the company and the insurer, starting with the amount of compensation," said Admiral Osama Rabie during his speech. He added that the mammoth Ever Given would not be allowed to leave the country until a compensation amount is received with its Japanese owner, Shoei Kisen Kaisha Ltd.

"The vessel is now officially impounded,'' the admiral told Egyptian state television on Monday night. "They do not want to pay anything,'' he added. Rabei did not disclose in his speech how much money the authority was seeking. However, a judicial official said it demanded at least $900 million, while the state-run Ahram newspaper confirmed the figure.

The seizure was carried out pursuant to a judgment issued by the Ismailiya economic court, the Authority insisted. The amount demanded is equivalent to the losses that Ever Given caused, in addition to its refloating and maintenance activities, at least 400 vessels were blocked to the north and south, resulting in huge traffic jams. While the Suez Canal was blocked, the overall losses amounted to between 6 and 10 billion dollars.

The Ever Given was successfully refloated on March 29 and moved to nearby Great Bitter Lake to be inspected for seaworthiness and to allow repairs to be carried out. Shoei Kisen Kaisha said insurance companies and lawyers were working on the compensation claim and declined to comment further.

UK Club, Ever Given's protection and indemnity insurer, said on Tuesday they had responded to a Suez Canal Authority claim for $916 million and questioned its basis and legitimacy. "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 April 12, a carefully considered and generous offer was made to the SCA to settle their claim," read the statement.

UK Club says it is Ever Given's insurer for certain third party liabilities, including claims for obstructions or infrastructure problems, but it is not the insurer of the ship or cargo. Its statement went on to explain why UK Club believes the extent of the claim is invalid.

"The SCA has not provided a detailed justification for this extraordinarily large claim, which includes a US$300 million claim for a 'salvage bonus' and a US$300 million claim for 'loss of reputation,'" it continued, stressing that the grounding resulted in no pollution and no 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," said the UK Club statement.

The Ever Given's cargo management company, Bernhard Schulte Shipmanagement (BSM), confirmed on Wednesday that the container ship was declared "seaworthy" and its crew is in good condition, although it will remain anchored in the Suez Canal. BSM "can confirm" that "on the basis of these thorough inspections, the vessel has been declared fit to continue its course to Port Said, where it will be reassessed before departing for Rotterdam," the company said in a statement.

However, the ship's cargo will be impounded until the dispute is resolved, according to the Suez Canal Authority. Egyptian authorities are still separately investigating the circumstances that led to the situation. Traffic in the canal, on which more than 10 per cent of world trade depends, resumed on March 29 after the vessel was refloated with the help of international experts. The Suez crisis has opened the debate as to whether the size of sea lanes such as this or the Panama Canal could ultimately represent a limit to the size of cargo ships, and whether the necessary additional infrastructure development could undermine the profitability of these or even larger mega-ships.