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How the Suez Canal incident claim relates to what you learn at ICS
Posted on Friday, August 20, 2021
We asked one of our Members Jagan, (Jagannath Muthu
FICS) an Arbitrator, Mediator & Claims Adjuster and Tutor at
the Singapore Branch of the Institute of Chartered Shipbrokers,
what the relation is between the two.
"Many of the ICS exam subjects touch on key topics and will help
a student understand the intricacies involved in international
trade. Of course, the syllabus for Legal Principles of Shipping
Business tackles issues related to the Suez Canal incident but so
do the course books for Shipping Business, Shipping Law and Marine
Students will learn that an incident like this will often
involve a vessel owner declaring General Average. General Average
is a principle of maritime law that essentially establishes that
all stakeholders, be it owners, charterers or cargo interests share
any damage or losses that may occur as a result of voluntary
sacrifice or have incurred extraordinary expenses to save the
adventure (in this case, completion of the voyage).
General Average is invariably adjusted based on the York-Antwerp
Rules and is contractually incorporated either in the Charter
parties or the Bills of Lading issued. Rule A of the York Antwerp
Rules 2016 defines General Average "There is a general
average act when, and only when, any extraordinary sacrifice or
expenditure is intentionally and reasonably made or incurred for
the common safety to preserve from peril the property involved in a
common maritime adventure."
An Average adjuster is invariably appointed by the vessel owner
who will ascertain the applicable costs and expenses incurred and
adjust these to each stakeholder involved in the adventure. As this
process is time-consuming, owners of Ever-Given are entitled to
security from the cargo onboard the ship and, prior to effecting
delivery, will seek an Average Bond from the cargo owner and an
Average Guarantee from the cargo insurer, if insured and if
uninsured, a cash deposit in lieu."
We also asked Jagan, based on his knowledge, what is the
current update on the Suez Canal claim?
"I've written a series of articles on the progress of this claim
which you can read in detail here:
Mela (https://nau.com.sg/the-ever-given-mela/), The EVER-GIVEN
Mela - II (https://nau.com.sg/the-ever-given-mela-ii/), The EVER-GIVEN
Mela - III (https://nau.com.sg/the-ever-given-mela-iii/)
and the last as The EVER-GIVEN
Mela - IV(https://nau.com.sg/the-ever-given-mela-iv/).
In short, the EVER-GIVEN was released from its arrest on 07 July
2021 after a settlement was reached between the Owners and the Suez
Canal Authority (SCA). The details of the settlement are,
unfortunately, being kept confidential at the present moment.
After her release, the EVER-GIVEN continued with her voyage to
Rotterdam, The Netherlands and subsequently to Felixstowe,
United Kingdom. The EVER-GIVEN was to be dry-docked for repairs at
Dunkirk, France. We understand that the EVER-GIVEN appears to have
completed its repairs as reports indicate that she is on her
journey back through the Suez Canal.
Given the number of parties involved in a vessel of EVER-GIVEN's
size, the issues involved would be complex. The amounts demanded by
SCA for Salvage were perhaps never even contemplated before! One of
the ways is for these costs to be shared on the basis of General
While there is a basis for such "ransom" demands to fall for
consideration under General Average, the issue would be whether the
demands by SCA are valid and whether they were undertaken purely
for the benefit of the completion of the voyage. The
adjustment of the General Average, would take a few years which
means that parties will only become aware a few years down the line
of the basis and the costs being shared under General Average.
Additionally, given that information on the settlement with
SCA is being kept confidential, it would hamper the development of
General Average to deal with container casualties which is indeed
complex given the number of parties involved together with their
How has being involved with the Institute helped you or
your colleagues in your understanding of shipping claims like
"The Institute's exams prepare a person for an all-round
knowledge of International Shipping and its practices. While basic
knowledge could be learned by studying for the Institute's
examinations, one may need to study further for specialising on say
claims which could be done through an LLM in Maritime Law. Shipping
claims have unique challenges and it is not one size fits all given
that it is not restricted to one jurisdiction but can arise in any
jurisdiction where the vessel is transitting. While most of the
parties dealing with shipping claims are legally trained, they may
face difficulty in understanding the commercial practices. This is
where the Institute's exams are particularly an advantage given
that textbooks are written by professionals involved in the
industry keeping in mind what would be relevant. Additionally,
before becoming a member, one has to work in the industry and
therefore the knowledge gained while writing the exams is
complemented with hands-on experience in the industry.
The camaraderie shared by members, be it at a local level or
internationally, also assists in developing a member. A Member can
ask another Member for guidance both personally and professionally.
For instance, if I have a claim arising in another jurisdiction
whose practices are alien to me, I will search for a Member and
give him/her a call to discuss to better understand the situation.
By the same token, I do get calls from Members from other branches
and welcome the opportunity to share. This is the advantage of
being part of the Institute where you can lean on the professional
expertise of each other."
Jagannath Muthu FICS
Arbitrator, Mediator & Claims Adjuster and Tutor
at the Singapore Branch of
the Institute of Chartered Shipbrokers
Institute of Chartered Shipbrokers | 30 Park Street | London SE1 9EQ | United Kingdom
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