Frying Pan! Indian Port Declares Force Majeure! Ever Given Still Refuses to Pay $600 Million in Compensation, and the Cargo Ship May Be Auctioned!

According to data released by the Indian Ministry of Health on the 12th, India had 329,942 new confirmed cases of COVID-19 in the past 24 hours, and the number of newly confirmed cases per day has remained above 300,000 for 20 consecutive days . As of the 11th, India's 7-day average daily increase in confirmed cases of COVID-19 reached a record high of 390,995 cases.

Recently, in view of the continued deterioration of the epidemic, the state and district governments of India have taken strict blockade measures, and Visakhapatnam, a major domestic coal import port, has declared force majeure.

According to a letter from the Visakhapatnam Chamber of Commerce of India: Due to the government's blockade, the Visakhapatnam Port will close its daily operations from May 5, 2021 to May 19, 2021. It is hereby declared and confirmed that there is force majeure at the Visakhapatnam Port from May 1, 2021 to May 19, 2021.

Earlier, Kandla Port, the container port closest to the Indian capital New Delhi, announced: Due to the sudden surge in COVID-19 cases, in order to stop the chain of virus infection, all terminal operators at Kandla Port have unilaterally decided to close terminal operations on weekends starting from April 24 until further notice!

Kandla was the first port to announce the partial closure of terminal operations, but given the current situation of the epidemic in India that is close to being out of control, many senior industry insiders agree that other Indian ports are likely to be forced to shut down due to the epidemic in the future!

This time, India took the initiative to declare force majeure because the outbreak of the epidemic led to the port being blocked by the government and daily business activities being stopped, which may result in many claims against the port.

For example, the import and export parties have claims against dock workers for work stoppage, claims against customs clearance agents, and claims for demurrage delays at the dock. Many Indian ports are privately owned and do not have the immunity and defense capabilities of state-owned ports to claims, so they declare force majeure to trigger the force majeure clause in the port operation agreement and protect themselves from various claims.

Does the port completely stop working after declaring force majeure? Not necessarily. Even if it is blocked and force majeure is declared, the port will still retain some basic operations, such as the transshipment of cargo. As mentioned above, declaring force majeure mainly serves to exempt legal liability.

The Indian government actually encourages ports that are required to blockade to declare force majeure. There was a precedent last year where the government recommended that ports declare force majeure.

In March last year, Indian ports also declared force majeure due to the epidemic. In its statement at the time, Indian ports emphasized that the blockade measures would lead to unprecedented restrictions on the entry and exit of personnel and materials, and the ports would be unable to fulfill their obligations under the contract to a certain extent. The port is not responsible for any compensation, damages, and expenses related to this incident.

During this period, there will be no restrictions on vessel demurrage, but contractually guaranteed discharge rates and other port services will not apply. Resumption of port operations will be subject to further instructions from the Central and State Governments.

Subsequently, more ports may declare force majeure.

Conversely, traders and carriers who suffered losses due to the blockade of Indian ports will not be able to claim compensation from these Indian ports.

Recently, Osama Rabie, chairman of the Suez Canal Authority, said in a TV interview that Egypt proposed to reduce the claim amount of the Ever Given owner by one third, reducing the compensation demand from US$900 million to US$600 million .

However, in response to the compensation amount of US$600 million, the insurance company of the Ever Given, North England P&I Club, stated that the owner of the Ever Given has not yet obtained evidence to support the claim amount, the reduced claim amount is not reflected in the claim submitted by SCA to the court, and the amount of the claim is still extremely large .

Due to the ongoing dispute over the amount of compensation that the Suez Canal Authority is paying to the Japanese owner of the Ever Given, Shoei Kisen Kaisha, the ship is currently stranded in the Great Bitter Lake between the two sections of the canal.

Reuters quoted an internal source of the Suez Canal Authority as saying that the Egyptian court is scheduled to hold a hearing on May 22 to review the Suez Canal Authority's claim for compensation. The Egyptian investigation showed that neither the Suez Canal Authority nor the pilot made any mistakes in this accident.

If the shipowner refuses to pay compensation, the court may authorize the Suez Canal Authority to auction the Ever Given.