Early Chapters

Michael Sean Quinn, Ph.D., JD, CPCU, Etc.

Austin, Texas Attorney, Mediator, Consultant, & Expert Witness

Interestingly, as of 6:00am, Monday, March 29, 2021, CDST, 400+ ships were floating idly, and a fair number of the stranded ships carried petroleum, spillage of which would be pollution. By late Monday, the ship, the Ever Given, had been loosened from the sand and rocks, and all dredgers had to do was get hundreds of thousands of cubic feet of sand out of the way. The ship, the Ever Given, ran aground on March 23, 2021. 

The NYT has called this the “most consequential shipping accidents in history[.]” “Full Moon and High Tide Free Suez Tanker” A12 (March 20, 2012). According to the trade journal INSURANCE JOURNAL’s March 26, 2021 piece, “[s]hipping rates for oil product tankers…nearly doubled after the 200-meter,  1300-foot, 430-yards long Ever Given ran aground… [at least in part] due to strong wind.” One such set of rate increases appears to be for petroleum products not even those going through the canal: bound from Tuapse (Russia on the Black Sea) to Southern France. Over several weeks after the accident, ports all over the world were backlogged partly because of what happened to the Ever Given.*

[*One odd thing. In the press, the ship has usually called the “Ever Given. Indeed, there has been some sneering at those who called it the “Evergreen.”Today, in an AP release found in the press on June 23, 2021, in a picture on the story-site of AP-NEWS, there is a huge sign on the side of the ship that says “EVERGREEN.” For now, I will follow the popular and received though odd usage, “Ever Given.” It is now being reported that “Evergreen” is the name of the operating company and “Ever Given” is the name of the ship itself. So, I guess, the huge name of the side of the ship is a form of advertising.]


There is already considerable discussion about the role of cannabis in the global just-in-time disaster caused by “diagonalization” of the ship, the Ever Given, that ran aground in the Suez Canal on March 23, 2021. (That, however, is for a different story.) Groundings are the most common sort of major accident in the canal, and in this case, there was both considerable dust and wind. There were also very high tides, which have helped get the ship loose now, but high tides are intermittent with low tides, often the former are followed by the latter.  (Even the fullness of the moon was relevant to get-it-loose decision-making.)

Whether the “pilot” of the vessel and/or its captain or other officers were stoned, drunk, sleep, playing cards, or something else, may be less interesting than the number of ships, 360 or so, which have been “stalled” as a result of the canal’s having been rendered impassable.  Then again, maybe not, depending on how much liability insurance the operating company has. The operator, as well as the owner, may face enormous liability.

The ship is a quarter of a mile long and probably the largest – or nearly the largest – container ship ever. It has no doubt suffered damages.  The ship carried 18,300 containers, according to INSURANCE CLAIMS JOURNAL (April 14, 2021). Given its size, it is no wonder that it damaged the canal itself, some of which can be repaired quickly, other of which cannot.  Although the vertical size of the ship when loaded is 6 stories, at least, that size boggles many a mind.

As to damage to the ship itself, the dredging process caused the center of the ship to sag, while the bow and stern were lifted. Obviously, some of the giant dredging equipment will suffer some physical damages, and it would be amazing if there were no bodily injuries suffered, for example, by persons trying to get the Ever Given loose. All sorts of insurance professionals, among many others, were involved in this process.  In the more remote aftermath, many insurance professionals will be involved in investigating losses amongst dredgers and tugboats. According to an April 5, 2021 piece in INSURANCE JOURNAL five new tugboats have been ordered from a Chinese company.

The number of idle ships, of course, has financial consequences for world trade: goods don’t arrive on time; Just-in-Time systems are undermined; revenues are cut, profits diminished, customers lost, new customers not sign up, and so forth. Syria is having to ration oil on a national basis, and shipping companies are taking seriously the idea of utilizing arctic shipping. European ports will be “welcoming” many more ships per day than usual, and there may be some petroleum shortages. Keep in mind that the Canal gives route to 13% of global maritime trade and 10% of ocean-bound petroleum shipments.  Interestingly, some of the ships were carrying livestock, and food, water, and vets have had to be rushed to them.

Ultimately, the insured losses will be quite large, especially when the losses of the huge number of trapped vessels are included.

Insurance claims have begun; adjusters have already arrived in Egypt and wherever the ship owners and operators have relevant offices. (The ship appears to have been owned by a Japanese shipping firm, Shoel Kisen KK, and operated by a Taiwanese company, Evergreen Marine Corporation.) Lawfirms have been hired; their research has begun; associates have begun looking into who will be parties to lawsuits and demands for arbitrations. Coverage lawyers are opening their “Maritime Subrogation” files. Divisions of “High Tech” companies are adapting whole banks of algorithms. 

Teams of investigators–some private, some public–have also shown up at various places to try and determine what containers contain goods being smuggled and the identity of those goods. Even drugs are being smuggled these days, the principal once being cocaine. Insurance companies also care about this sort of thing, given relevant exclusions.

There will probably be some pollution claims. The first one that occurs to me is “What besides water flowed out of the ballast of the Ever Given when it was drained, probably only in part?” Interestingly, the Ever Given will be dragged to Great Bitter Lake north on the 120-mile canal. I suspect that there will be pollution there too. (If any of the ships carrying livestock like cattle were already in the canal itself, there is certain to be a certain type of pollution. This is true even if those ships were just outside the canal.)

Obviously, there are huge amounts of insurance and reinsurance for this whole set of events, though probably not enough to cover the whole thing. Billions of dollars–$10-15B, at least–will change hands or be contested, loss negotiations have already begun, experts of marine catastrophes have arrived or on their way; salvage companies have people there; arbitration letters have been issued, and probably lawsuits have been filed in what is thought, by some, to be favorable jurisdictions.  In thinking about the coming insurance controversies, it must be kept in mind that there will be diverse exclusions as well as coverages. The suit is brought against Evergreen Marine Corporation, the charterer and operator of the ship Ever Given, and everyone else that might seek damages. [Which is is: “Ever Given” or “Evergreen”?]

Indeed, lawsuits began not long after traffic resumed. The ship’s owner filed suit on April 1 in London’s High Court seeking limitation of liability. Of course, insurers were involved in this plunge, as they will be for the next several years.

It will turn out that there are dozens and dozens of policies relevant. UK P&I Club has stated to Reuters that it has coverage, so it is likely that its policies are reinsurance by the International P&I Group of P&I Clubs. Interestingly, these companies seem to be non-profit mutual companies owned and utilized by members of the relevant parts of the shipping industry. “Insurers Face Host of Claims On Delays,” WSJ, A6, 3/29/2021. According to this article reports that the damages against the owner will exceed its $3.1B in coverage. (Of course, some shipping companies will file against their own insurers first, and then the owners, as well as the operator, and yet others.)

There are also uninsured losses.  The president of Egypt, for example, has come under considerable pressure to get the canal working again, as have those who run the Suez Canal Authority.  Their mental anguishes are unlikely to be insured. One wonders whether wage and anxiety losses for those waiting aboard ships will be compensable. 

The accomplishment of refloating the Ever Given has been good for almost everybody. If Plan B had been compelled, it would have been necessary to use and perhaps install cranes and lift off all the 18,000  containers, one by one, each weighing 40 tons or more. 

As is not unusual, political figures have stated that their facility and equipment were not at fault. This time it’s the canal is “known” apriori, to be innocent, according to important Egyptian political authorities. No matter that there has been no completed investigation. No matter that the Ever Given faced extraordinary high winds and dust. What about the Egyptian pilots who were supposed to board the vessel and help guide it? What accounts for the “bank effect” in this case?

One interesting question is “Who will be in charge of the investigation?” The ship flew the Panamanian flag. It was in Egyptian territory. The United States is often brought into investigations of this sort. My guess is that all these powers plus the EU, especially the Dutch, will be involved and that the politics will be firm but relatively quiet. 

By April 5, 2021, Egyptian authorities had indicated that it might seek a billion dollars in damages or compensation to it, presumably for “floating” the Ever Given, which is now “resting” in Great Bitter Lake, a bit north of where it ran aground. The ship is still “maned” by the Indian crew of 25 that was with it when it went aground. “Egypt Asks Ship Owner for $1 Billion,” WSJ B3 (Friday, April 9, 2021). The Egyptian authorities will not let it sail away until an agreement as to compensation for the Egyptian government and Suez Canal Authority has been reached. Egypt has started by demanding $1  billion from the ship’s owner. Some of the claims are for physical damage; some is for $95 million in lost transit fees. (Of course, if the ships stranded pass through the canal, some of those transit fees won’t actually be lost to the Canal Authority.)

Reportedly a key insurer made what it described as a “generous offer” on April 12th. It also stated that much of the Suez Canal Authority’s demand was unsupported. Apparently, this includes a $300m “salvage bonus” and another $300m for “loss reputation.” On April 15, 2021, the Ever Given remained “arrested,” in a Lake which is part of the Sue Canal system.  INSURANCE CLAIMS JOURNAL April 14, 2021. According to Jai Shama, a lawyer at Clyde & Co., it is surprising that a claim could be quantified this quickly  

“Accidents involving large container ships can cause property claims of over $1 billion each, according to the credit-ratings firm Fitch Ratings. Insurers covering the Ever Given will act on claims over losses related to perishable goods and supply-chain disruptions,” as well as claims from branches of the Egyptian government. Id.  (This strikes me as a very low estimate if reinsurers are counted as insurers.)

Initially, many amateur observers thought that the main damages that were not physical were (or would be) suffered by shippers immediately blocked from the Suez passage. That is not the case. Ports all over the world are bottlenecked to some degree–some more than others. Ports on the west coast of the United States can’t clear themselves for two months or more reports the CLAIMS JOURNAL in its April 8, 2021. Its article asserts that these are not losses for which there is coverage. (Well, maybe so, maybe not. Maybe some, but maybe others are different.) Not all reports are the same, however. On April 16, 2021, NYT reported something a bit different. regarding the U.S.  “[T]he nation’s ports are handling record cargo volumes s consumers stock up March was the busiest month on record for the Port of Oakland, while the Port of Los Angeles, the main point of entry for good from Asia, said the first three months of the year were the busiest first quarter in its 114-year history.” Sydney Ember et al, “Economic Pace Hints Rebound Is on Horizon,” NYT A-1. (Of course, one needs to keep in mind that shipments from Singapore to L.A. do not use the Suez Canal, through entities up the supply chain might.)

One must concede that there is a “romantic” piece of this story. One reason the ship was effectively floated was that the tide was particularly high on two key days. This was true not just because the moon was full but because it was a “supermoon,” as it will be whenever–but only whenever–the full moon is at the closes point to Earth in its elliptical orbit. It causes tides in the Canal to be as much as 1.5′ higher than when there is just an ordinary full moon.” (The first supermoon of the year is also known as the “worm moon,” though I doubt this will have any influence on the insurance claims process. Probably, the unusual tides in the canal at the time of the accident will matter when it comes to evidence, but the presence of worms will not.)

Too bad there is unlikely to be any jury trials anywhere. The idea of a jury thinking about a full supermoon is intriguing, to say the least.  Then again, we must all wake up to the realities of speedy negotiation. As of April 26 crew members of the Even Given are now free to leave the ship, so long as the captain remains on board. The Chairman of the Suez Canal Authority seems to be saying that “ordinary” crew members were always free to leave. Only two have left, so only 23 such individuals–all Indian nationals–remain on board.* Yusri Mohamed, “Suez Canal Chief Hopes Insurer, Owner of Detained Cargo Ship Reach Deal,” INS. J. (April 26, 2021). Of course, one may wonder if any sane person in the Chairman’s position would say anything else. Consider the following headline “Canal Chief Hopes That Boat Owner, All Insureds, All Insurers, All Reinsurers, and Nearly All Important Iranians, Will Publically Agree Soon That the Earth Is Not Flat.”

*Recently, the Syrian first-mate on a cargo ship impounded-for-debt has retained on board “his” ship for several years, in waters near the Suez Canal. See “Trapped On An Abandoned Ship: A Sailor’s Ordeal,” WSJ A1 (May 1-2, 2021). I wonder if there is not some sort of lawsuit he might have against somebody? In U.S. it might be intentional infliction of emotional distress. And what about insurance?


For a sketch of the short history of containerized ocean shipping–last 40 years or so–see “Why Cargo Ships,” NYT, Biz p.B1 (March 31, 2021). Did you know that using these sorts of ships in New York harbor required the Port Authority of New York and New Jersey to “spearhead a $1.7 billion project to raise the Bayonne Bridge to accommodate mammoth ships laden with cargo from Asia and elsewhere,” (insurance not explicitly mentioned in this piece.) Since the Suez Canal disaster, components of the press like CLAIMS JOURNAL, have reported that the accident rate for container ships has been extraordinarily high recently. Several reasons have been given, e.g., that the enormous number of containers are stacked higher than ever, and voyage scheduling is so hurried that ship captains are virtually required to sail into and through serious storms rather than go around them.  See Ann Koh, “Shipping Containers Fall Overboard at Fastest Rate in Seven Years,” CLAIMS JOURNAL (April 27, 2021).

Here is what one expert claims handler apparently said to Koh: “AIG’s Ranger says companies should be prepared to go around storms and main vessels properly. These vessels are designed to carry the boxes, and to have these losses is–dare I say it–unacceptable.” 

Another Addition. On Sunday, May 24, 2021, the court of appeals for Ismaila Economic Court turned an “Ever Given” case back to a trial level indicating that it lacked jurisdiction. The principal issue appears to be the seizure of the ship and holding it until compensation is decided and paid.  

Interestingly, the claim for compensation has been reduced from $916 million to $550 million. The damages the Authority is seeking include costs of salvage, the cost of stalled canal traffic, and lost transit fees. To get a feel for damages involved, “[a]bout 10% of world trade passes through the canal, a pivotal source of foreign currency to Egypt. Some 19,000 vessels passed through the canal last year, according to official figures.” (See cite below.) These numbers divide up to approximately 52 ships per day, on average. 

One or more of the defendant is seeking $100,000.00, probably in loss of shipping profits. Some ships waited in place, and others turned south and went around the Cape of Good Hope requiring additional fuel and other costs. This number is way too low and will almost certainly rise substantially at least because of how the “Ever Given” is held. 

[Does this sound anything like a type of auto or trucking accident? Does this sound like the inevitable place for insurance and insurance claims-handlers? Why has there been no discussion of them?]

Also interesting is the Suez Canal Authority’s indicating Sunday publically that a salvage boat capsized during the operation, leaving one worker dead. 

Issues in the lower court, as one might expect, include “Who is really at fault? To use American legalese, the Canal Authority has sued owners, the shipping company, the operators, and others. At least some of them have counter-claimed asserting that the Authority was the one really at fault for letting the ship to said in such bad weather and strong winds. Two pilots from the Authority were on board to guide the ship. 

See Samy Magdy, “Suez Canal’s claim Over Once-Stuck Ship Referred by Court” CLAIMS JOURNAL (May 25, 2021)

Negotiations are continuing. The defendants (owner, shipping company, operator, and maybe others) have now offered $150m, and the Authority (SCA) is down to $550. The Lloyds syndicates providing coverage and those providing reinsurance are working feverishly. The lawyers are having a wonderful time.

Maybe the hurry is because there’s to be a hearing next Saturday (June 5). Letting the ship leave will be one of the issues. 

Arguments now being given by SCA include: 

Evergreen was going too fast (25 kpm which is 3 or so times the “speed limit” at the south end of the canal), 

  • The vessel negligently entered the canal when it didn’t have to; 
  • Evergreen’s [Ever Given’s] rudder was the wrong size and in the wrong position, and so on;
  • The ship suffered from the “bank effect,” as the result of pilot error, as one might expect the Suez authority blames the captain since formally speaking he has final authority   

It seems obvious to me that that the speed of Evergreen would be at least partly in the control of the pilot supplied by SCA, and that the pilot should have realized that the rudder had problems and slowed the ship down. 

Still, if SCA’s demand is now $550m, and the offer is $150m, negotiation prospects are promising. Maybe what’s needed here is a mediator. I might be willing to take a whack at it, so long as it’s not virtual. The contemporary virtual is not always virtuous. 

Face to face is what’s needed here. Hawaii might be a good place. Or Iceland, maybe.

Or maybe it could be done in stages. On Wednesday, June 23, 2021, the AP NEWS indicated that some sort of preliminary, partial settlement agreement had been reached between the owner of the ship “Evergreen,” the Suez Canal Authority, and at least some insurers, though other parties and other insurers were not parties to that agreement. A key carrier involved in this agreement was the UK Club. According to AP the Japanese shipowner said “it is working with other insurers and the canal authority to sign a final agreement as soon as possible.” 

AP “Early Agreement Reached in Dispute Over Suez Canal Ship,” June 23, 2012.

See also Aidian Lewis et al, “Suez Canal Blames Ship’s Grounding on Speed, Rudder,” Claims Journal (May 28, 2021).

Something of the same problem arises in the June 24 issue of CLAIMS JOURNAL. In an article entitled “Agreement in Principle Reached” the ship is called “Ever Given.” (As in “The Ever Given containership has been anchored in a lake….” The accepted name of the confinement lake is “Great Bitter Lake.”)

Interestingly–or oddly, perhaps–immediately above that sentence is a good-sized photograph of the ship, with a tug boat nearby. On the side of the ship is a huge, easily visible copy of a name, “Evergreen.”

The ship was released to leave by the Suez Canal Authority on Wednesday, July 6, 2021. The following language is quoted from a release by the Associated Press entitled “Suez Canal Releases Hulking Vessel After Settlement Deal: “Ismailia, Egypt–Suez Canal authorities announced Wednesday the release of the hulking shipping vessel that blocked the crucial east-west waterway for nearly a week earlier this year. The Ever Given [aka “EVERGREEN”] after its Japanese owner, Shoei Kisen Kaisha Ltd., reached a settlement with the canal authorities over a compensation amount after more than three months of negotiations and a court standoff. The settlement deal was signed in a ceremony Wednesday in the Suez Canal city of Ismailia, after which the vessel was seen sailing to the Mediterranean” (Published 7:30 a.m. ET July 7, 2021)

For other information on containerized shipping see my blog entitled “Cargo’s, Containers, Computers and Insurance” and “Insurance and Containerized Shipping–Some History,” Published June 23, 2016. (The preceding title triggers a link. Why one might ask oneself, would a single article have two titles? Non-answer: It’s a digital secret and a cyber mystery.)

An excellent article and good photos were published in NYT Sunday, July 18, 2021. Much more thorough than anything else. Nothing about insurance, however.

Nevertheless, this article states that “Evergreen” is the name of the ship’s operating company and that the ship’s actual name is “Ever Given.”

According to the NYT piece

For other information on containerized shipping see my blog entitled “Cargo’s, Containers, Computers and Insurance” and “Insurance and Containerized Shipping–Some History,” Published June 23, 2016. (The preceding title triggers a link. Why one might ask oneself, would a single article have two titles? Non-answer: It’s a digital secret and a cyber mystery.)

One of the facts mentioned in the NYT article referred to above is the size of the “Ever Given.” It’s one of the largest container ships ever. It is only a few feet shorter than the Empire State Building is tall. This is much larger than large container ships were 15 years ago. Then such ships could routinely carry 10,000 containers. “Ever Given” could carry 20,000. Carrying fully cargo of containers, the ship’s stack by itself stands 14 stories tall.