M/V “Ever Given”: Do you have any cargo on board? How to protect your interests

On 23 March 2021, one of the largest containerships in the world grounded in the Suez Canal. The vessel was touching the banks on both sides effectively blocking the channel for six days. This caused the stoppage of the “EVER GIVEN” voyage and the delay of about four hundred vessels that were queuing to cross the channel. As a result of this situation, the delivery of the cargoes on board “EVER GIVEN” and the other blocked vessels has been also delayed.

The 2018 container vessel was bound to the Port of Rotterdam from where its cargo was to be distributed to its destination, many of them to Spain.

Although some of the details of the casualty and the causes are still unknown, cargo owners are worried about what will happen to their cargoes now.

Presently, the M/V “EVER GIVEN” has re-floated and is being towed to a place of refuge where to she will be inspected for damage assessment. This could take days, if not weeks. In fact, if the vessel does not pass the inspection, the vessel operator, EVERGREEN, will probably be compelled to tranship the cargo onto one or more alternative ships to conclude the voyage. This will increase the delay on delivery and the costs.

As a summary, therefore, and regardless of how the events will develop, the cargoes on board the “EVER GIVEN” and/or the approximately four hundred blocked vessels will arrive to their destination with important delays and significant costs. The situation with the blockage will take time to be resolved and that it will also cause bottlenecks on the global logistic chain.

Would cargo owners be entitled to claim damages for delayed delivery against the carrier?

Spanish law does give some protection on that respect. To claim damages for delay, cargo interests will need to provide evidence that the delay was unreasonable under the circumstances. Would Spanish Law be sufficient protection? Would Spanish law be applicable to the contract of carriage? After having studied the contracts of carriage generally used by sea carriers, we may conclude that Spanish law will not be applicable as the conditions of these contracts usually remit to English law.

Will the insurance grant cover for delay?

Most marine cargo insurance policies do not cover losses due to delays. This is the case, for example, of “all risks” ICC A clauses in which delay is expressly excluded. Therefore, unless there is an express agreement to remove such exclusion, cargo insurance will not cover the losses for delay.

Lastly, cargo owners might end paying a large part of the invoice for the salvage operation through General Average.

Cargo interests should also bear in mind that salvors that are intervening to rescue the vessel and her cargo have the right to lien the vessel, the cargo, her freight, and bunkers as a guarantee for the payment of their salvage reward. Presumably, a salvage contract (LOF) has been entered into by Owners and Salvors through which the salvage costs and reward will be paid by Owners and the Salvors will not claim against cargo interests directly.

However, it is possible that the shipowner decides to declare General Average. This is a specialty of maritime law based on equity and an interesting option to the shipowner since it requires that interested parties in the marine adventure (vessel, cargo, freight) contribute in proportion to their interests to the payment of the salvage costs.

Cargo interests insured under any of the ICC policies will be covered and their insurer will take care of the General Average contribution. But uninsured cargo interests will need to handle the claim and procure average guarantees/security by themselves before they obtain delivery of the cargo. If guarantee/security for the General Average contribution is not placed, the carrier will be entitled to exercise a lien on the cargo.

Consequently, cargo interests are encouraged to contact their legal advisors to take adequate steps for the handling on this incident.