Ancient Law Could Force Companies to Pay Suez Canal Ship's Costs

You should be glad if your products weren't on this vessel.

We may have forgotten about the supply chain debacle inflicted by the famous ship that became trapped in the Suez Canal this past spring, but those manufacturers with goods aboard haven’t. That’s because companies with products that rode aboard the Ever Given in March are still awaiting their goods.

The cargo ship may not be immobilized in the Suez Canal anymore, but companies continue to sit in limbo, as their products and money hang in the balance.

An Egyptian court impounded the Ever Given following the filing of a $916 million compensation claim by the Suez Canal Authority against the ship’s owner. As a result, the ship is stuck once again. But this time, it’s trapped in Great Bitter Lake amid a legal battle.

Unfortunately, the waiting might not be the worst of it. According to a report by CNN Business, companies such as IKEA, Lenovo, Snuggy and many more may also have to pay to settle the financial obligations of the ship due to an ancient maritime law principle called “General Average.”

“General Average” requires all parties involved in a voyage to share the costs in the event of a loss. This maritime law isn’t exactly new. The idea is over a thousand years old. The law was first officially codified in 1890, as stated by Phoenix Risks Services.

The intended cause, however, seems to be for instances when ships are forced to jettison, or get rid of, cargo in order to save the ship and the crew.

Jai Sharma, the head of cargo casualty at Clyde & Co., said, "If somebody [the ship owners in this case] incurs an extraordinary expense for the common good, then everybody is asked to contribute to it.”

For now, the companies are excluded from negotiations regarding the release of the products with a total value of $600 to $700 million.


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