Japanese-owned, Taiwanese-operated and Panama-flagged ship moved to unobstructive anchorage in Suez Canal, after it was freed on March 29, “due to its failure to pay $900 million” compensation to waterway authorities.

FILE PHOTO: A view shows the ship Ever Given, one of the world's largest container ships, after it was partially refloated, in Suez Canal, Egypt March 29, 2021.
FILE PHOTO: A view shows the ship Ever Given, one of the world's largest container ships, after it was partially refloated, in Suez Canal, Egypt March 29, 2021. (Reuters)

A skyscraper-sized ship that blocked the Suez Canal for almost a week in March is being held by canal authorities who are pursuing a $916 million compensation claim against the ship’s Japanese owner.

The Ever Given container ship, owned by Shoei Kisen, has been in a lake separating two sections of the canal since it was dislodged on March 29, as the Suez Canal Authority (SCA) conducts investigations.

Maritime data company Lloyd's List said the blockage by the vessel, longer than four football fields, held up an estimated $9.6 billion-worth of cargo between Asia and Europe each day it was stuck.

Egypt also lost between $12 and $15 million in revenues for each day the waterway was closed, according to the canal authority.

The MV Ever Given was later seized "due to its failure to pay $900 million" compensation, Suez Canal Authority chief Osama Rabie was quoted as saying by the state-run Al-Ahram newspaper.

Its fate is "now... in the legal arena," a spokeswoman for the ship's owner Shoei Kisen Kaisha told AFP Wednesday.

An unnamed spokesperson was also quoted by Japan's Jiji Press agency as saying the firm was "at odds with the canal authority in talks over the appropriate amount (of compensation)" but that discussions were ongoing.

READ MORE: How the Suez Canal fiasco mirrors the state of Egypt today

Floatation and maintenance costs

UK Club, the protection & indemnity (P&I) insurer for the Ever Given, said the canal's claim included $300 million for a "salvage bonus" and $300 million for "loss of reputation".

"Despite the magnitude of the claim, which was largely unsupported, the owners and their insurers have been negotiating in good faith with the SCA," UK Club said in a statement.

"On 12 April, a carefully considered and generous offer was made to the SCA to settle their claim.

We are disappointed by the SCA's subsequent decision to arrest the vessel today."

The Japanese-owned, Taiwanese-operated and Panama-flagged ship was moved to unobstructive anchorage in the canal after it was freed on March 29, and tailbacks totalling 420 vessels at the northern and southern entrances to the canal were cleared in early April.

The compensation figure was calculated based on "the losses incurred by the grounded vessel as well as the flotation and maintenance costs" Rabie said, citing a ruling handed down by the Ismailia Economic Court in Egypt.

The grounding of the ship and the intensive salvage efforts are also reported to have resulted in significant damage to the canal.

The Suez Canal earned Egypt just over $5.7 billion in the 2019/20 fiscal year, according to official figures, little changed from the $5.3 billion earned back in 2014.

READ MORE: Egypt demands over $1B in damages after Suez Canal blockage

Stranded cargo

The decision to hold the ship could impact its cargo, said Jai Sharma, a lawyer at Clyde & Co. "I anticipate that there will be companies that are going to air freight cargo replacements," he said.

There was no immediate comment from the SCA, but the authority's chairman Osama Rabie said on Egyptian TV last week that the Ever Given would not leave until the investigation was finished and compensation paid.

He said the canal had borne "great moral damage" as well as shipping fee losses and salvage operation costs. He has also said he hoped to settle matters amicably.

Results of the SCA's investigation were expected by the end of the week, according to SCA sources.

International supply chains were thrown into disarray when the 400-metre (430 yard) Ever Given ran aground in the canal on March 23, with 18,300 containers on board.

Specialist rescue teams took six days to free the vessel, delaying the passage of more than 400 ships and causing others to divert around Africa.

Industry sources told Reuters last week that reinsurers were set to foot most of the bill for the ship's grounding.

Asked about the SCA's claim, Sharma said: "It would seem surprising that the claim could be quantified so quickly with any accuracy."

One maritime lawyer said that normally the ship owner would provide an agreed security that would allow the vessel and crew to continue on their way with a court setting a final award later.

"Of course in this case, they are hoping for cash now," he said. 

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Source: TRTWorld and agencies