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Wednesday, April 14, 2021

The Suez Canal Blockage

I don't often get to post about Admiralty issues, but the recent traffic jam in the Suez Canal opens the door. Egypt has seized the vessel that got stuck in the canal and is seeking $900 million in damages from the vessel, the vessel owner, and the firm that chartered the ship. They will, though, get nothing close to that.

Admiralty law typically caps liability for wrongdoing to the value of the vessel and its contents. The Egyptian government was within its rights to seize the vessel and can auction off whatever is there. "Piercing the veil" and going after the corporations that owned or used the vessel is very difficult, especially in a case like this where there was no loss of life. Ordinary vicarious liability rules do not apply. Egypt would have to show that the vessel got stuck due to some instruction or policy by the corporate masters, which is rather unlikely. Potentially there could be a claim that the captain and/or crew were hired with knowledge that they were untrustworthy. The Exxon Valdez oil spill is an analogous example, as Exxon knew there that Captain Hazelwood was an alcoholic. But I also doubt that there is sufficient proof on that score in this case.

A limitation of liability action has been filed in the UK. This is a maritime suit that seeks a declaratory judgment stating that liability for an accident is capped at the ship's value. That action will probably succeed.


Posted by Gerard Magliocca on April 14, 2021 at 11:30 AM | Permalink


Important indeed. Let alone, while so many insurance companies or insurance claims, would be involved here (more than 300 ships got stuck there). Probably, the law or doctrine of "General Average" shall reign here. I quote from Wikipedia:

"The law of general average is a principle of maritime law whereby all stakeholders in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. For instance, should the crew jettison some cargo overboard to lighten the ship in a storm, the loss would be shared pro rata by both the carrier[1] and the cargo-owners."



Worth noting, that, I quote from Wikipedia:

" The government of Egypt requires ships traversing the canal to be boarded by an Egyptian "Suez crew", including one or more official maritime pilots from Egypt's SCA who command the ship, taking over from the regular crew and the captain. There were two Egyptian SCA pilots on board at the time of the accident."

But, at the same time, they claim, that some human errors have been made here probably. They will have to reconcile it in court. More than bit problematic of course it seems right now.




Posted by: El roam | Apr 14, 2021 2:10:37 PM

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