Ever Given could be most complex General Average claim of all time
12 May 2021
The grounding of the cargo vessel Ever Given, which blocked the Suez Canal for six days, could potentially become the most complex General Average claim of all time.
The vessel’s owners declared in April “General Average” on the ship meaning owners of uninsured cargo could be left waiting for months to recover their goods. Ever Given is registered in Panama and technically managed by the German ship management company Bernhard Schulte Shipmanagement.
General Average is a legal principle of maritime law and requires that all cargo owners on a vessel to contribute to the costs of any loss even if their cargo is not damaged with Lloyd’s List reporting Egypt is looking to claim around $1bn in compensation for the canal closure.
According to Lloyds List, the litigation triggered by the grounding of the Ever Given potentially involves 20,000 teu and up to 20 cargo interests per container.
Once the vessel owner declares General Average, appointed General Average adjusters then assess each shipment's value on board and apply a formula that determines the financial contribution of each cargo owner. Cargo owners will then need to post a General Average guarantee.
The specialist website highlighted that insured customers will receive their cargo first, while uninsured shippers need the full costs to obtain release stating: “that cost is likely to be large and complex to work out. The costs include claims from other parties which will delay claims adjustors assessing the level of costs incurred. Those with insurance in place will simply provide an insurance certificate. Those without insurance need the final figures to pay their deposit. Difficult to provide a time-frame – could be weeks or months.”
With the vessel on hold until compensation is paid, it seems likely that cargo will remain on board. Once the vessel is released then the bond fee can be agreed and those with insurance can claim their cargo. Those without insurance will need to pay the bond fee to free their goods from the vessel.
The adjustment of General Average proceeds under the process set out in the York Antwerp Rules. The Rules sets the guidelines of which all sacrifices and expenditures can be included during “General Average” and which cannot.
The General Average terms are outlined in a shipment’s bill of lading and can cover a long list of expenses, including towing and salvors. When importing and exporting goods, it is essential to ensure that adequate marine cargo insurance cover is in place to cover such general average liabilities.
For more information regarding cargo insurance, please contact Vida Jarasiunaite at firstname.lastname@example.org or on +370 5 205 8234.