Chambers and Partners

Trends and Developments in Shipping in the Time of Coronavirus

With 364,191,494 confirmed cases of COVID-19, including 5,631,457 deaths (according to the WHO Coronavirus (COVID-19) Dashboard), the pandemic continues to claim victims. It may be, as mentioned in the Statement made in Copenhagen on 24 January 2022 by Dr Hans Henri P. Kluge, WHO Regional Director for Europe – "The pandemic is far from over, but I am hopeful we can end the emergency phase in 2022", that the relatively less lethal Omicron variant offers hope for stabilisation and normalisation, but it does seem that it will take more time for the pandemic to end.

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Meanwhile, according to the UNCTAD publication, the United Nations Conference on Trade and Development (UNCTAD), Review of Maritime Transport, 2021, the year 2021 began with container shortages and congestion at ports, which led, along with other disruption, to record freight rates. For example, in June 2020, the Shanghai Containerized Freight Index (SCFI) spot rate on the Shanghai – Europe route was less than USD1,000/twenty-foot equivalent unit (TEU) but, by the end of 2020, the rate had reached about USD4,000/TEU and remained firm in the first quarter of 2021. By the end of July 2021, it had reached USD7,395/TEU. Of course, increases in freight rates have also been noticed in other trade routes.

In addition, and as should be expected, the increase in freight rates has been followed by an increase in the demand for crew officers. According to the latest Seafarer Workforce Report from BIMCO and the International Chamber of Shipping (ICS) as reported in the press release of 26 July 2021 at, there is a "current shortfall of 26,240 STCW-certified (Standards of Training Certification and Watchkeeping) officers" and "the industry must significantly increase training and recruitment levels if it is to avoid a serious shortage in the total supply of officers by 2026".

Notable Events in Shipping with Significant Consequences

The strong image of the ports' congestions, which peaked during 2021, of the fleet of around 400 vessels, carrying cargoes worth about USD10 billion, "stuck" at the entrances to the Suez Canal (described in "Opinion: Suez Canal reveals globalisation bottlenecks", in Deutsche Welle (DW)'s newsletter,, on 29 March 2021), waiting to travel through the canal after the grounding of the M/V Ever Given, is an image representative of the aphorisms "time is of the essence" or "time is money" which exemplify the pressures on shipping activities during 2021 and which will probably be relevant in 2022, too.

In fact, the 399.94 metre-long and 219,079 gross-tonnage massive container ship, the M/V Ever Given, had simply accepted the Suez Canal Authority (SCA) invitation in its publication made in the year 2015 after completing the creation of the 35-km new parallel waterway in the Canal (between 60 km to 95 km of the total 172 km of the Canal) and deepening and widening the Great Bitter Lake and the Ballah Bypass (of 27 km and 10 km, respectively) so that the Canal was capable of accommodating vessels with a draught of up to 66 ft and a size of 240,000 tons deadweight tonnage (DWT) and, in fact, was able to accommodate 100% of the fully loaded container-ship fleet, 92.7% of the Bulk Carriers fleet and 61.2% of the Tankers Fleet, as documented in publications on

Loaded with rows of eight containers high from the deck to the top and carrying what could have reached a total weight of 219,079 tons, the M/V Ever Given was one of the 100% type and size of the container ships which could have been accommodated by the Canal.

However, unfortunately, on 23 March 2021, while probably being under compulsory pilotage, as required by the SCA's Rules of Navigation, Article 6 (which states that "(p)ilotage is compulsory for all vessels, whatever their tonnage may be when entering, leaving, moving, changing berth of shifting on Canal water or Port Said and Suez harbours") and, after passing through the "parallel part" across the southern end of the Canal, the M/V Ever Given lost its manoeuvring ability and ran aground in the waterway, and became stuck in the mud and sand, unable to move. As a result, and due to the fact that the grounding took place in the "non-parallel" part of the Canal, the Canal was totally blocked and no movement of vessels could take place, fromneither south to north nor from north to south.

After six days of massive mud-dredging and the removal of sand and silt from underneath the vessels' bows and, together with the power of tug boats, in the early morning of March 29th, the vessel was refloated, and sailed to the Great Bitter Lake area, where it was detained by the SCA, which initiated arrest procedures before the Court of Ismailia City, claiming compensation of USD900 million, which, according to the SCA's statement, was comprised of the loss of revenue during the period of the vessel's grounding, which amounted to USD12 to 15 million a day, USD300 million for a "salvage bonus" and an additional USD300 for "loss of reputation".

The Aftermath

On 7 July 2021, 106 days after its grounding, and after an undisclosed settlement was reached between the SCA and the vessels' owners and insurers, the M/V Ever Given was released from its detention and continued on its voyage to Rotterdam. According to several publications, the agreed settlement amount was a payment of USD550 million, in favour of the SCA (as reported on on 20 August 2021). It might be argued that this compensation payment to the SCA was more in the nature of a "ransom payment", which should be considered as a general-average sacrifice or expenditure, meaning that the cargo interests of the cargo carried on the vessel during its grounding and detention should contribute their relative parts in the compensation amount paid to the SCA (in the matter of Herculito Maritime v Gunvor International, [2021] EWCV Civ 1828-1 December 2021, the MV POLAR was seized by Somali pirates while transiting the Gulf of Aden, and was released following payment of a ransom of USD7.7 million. Pursuant to a general-average adjustment, USD4.8 million was due from the cargo-owners to the ship-owners. It was held that the bills of lading do not contain an agreement by the owners not to seek a contribution in general average from the holders of the bill of ladings from liability in respect of losses covered by additional insurance taken out by the owners. Accordingly, the cargo interest (including their insurers) had to pay their contribution in the ransom paid to the Somali pirates, regardless of the fact that such a risk was covered by the owner's insurances arrangement).

It might, however, be argued that, if and to the extent that the grounding was a result of the vessel's unseaworthiness or of the vessel not being manned properly with a competent crew at the beginning of the voyage (as required under Article 3 (1) of the Hague-Visby Rules), it could mean that the owners might be barred or not entitled to general-average contributions from the cargo interests, if they were held to be the "wrong-doers" and thus under an obligation to use every means possible to remediate the natural consequences of the wrongful act. Whilst the M/V Ever Given was released from its detention at the Canal by the SCA and the Egyptian Court, it may be that the above-mentioned legal questions and matters, if and to what extent they were raised, were left pending and were dealt with in the relevant offices, while the M/V Ever Given continued with its carrying and navigation activities.

One thing that can be learned from this incident is that, even when it comes to a relatively "new-build" container ship navigating in a Canal under the (compulsory) pilotage of local pilots, the rows of containers loaded on board might operate as a huge sail when hit by wind, and this in itself, and/or together with a human, pilotage or operational mistake, can lead to a marine incident, which has had an impact on global trade that can be valued at USD550 million.

In fact, as can be learned from Messrs Allianz Global Corporate & Speciality's report of 31 March 2021 ("The Suez Canal Blockage - lessons to be learned", by Rahul Khanna, on, "groundings, (such as the Ever Given incident) are the most common cause of shipping incidents in the canal – 25 in the past ten years, or one in three of all shipping incidents in the canal".

Unfortunately, the grounding of the M/V Ever Given was not the only grounding which took place during 2021. On April 27th, it was reported that the Norwegian-flagged M/V Tirranna, a 760-foot car carrier, ran aground in the Chesapeake Bay, as reported on, "Car carrier Grounds Near Cape Charles", on 27 April 2021. On Monday April 19th, the M/V Lct-Cebu Great Ocean, which was carrying nickel ore, ran aground in Surigao del Norte Province after its anchor broke while taking shelter from rough sea. Unfortunately, and most sadly, four crew members lost their lives and a search for nine others was still continuing, according to a report issued on April 21st, while seven crew members were rescued, as reported by Karen Lema, on, in "Cargo Ship Grounding in the Philippines: Four Crew Dead, 9 Missing", on 21 April 2021.

According to the "Annual Overview of Marine Casualties and Incidents 2021" published by the European Maritime Safety Agency (EMSA) on, in the year 2020, 219 incidents of grounding/stranding took place, and it was also found that "the navigational casualties, constituted by collision, contact and grounding/stranding, represent 43% of all casualty events".

All of these incidents are another example, and a reminder, that marine carriage still is, as it always has been, a risky adventure, putting at risk the owners, cargo interests, crew members, and also the local and global economy and trade.

Otherwise, and in addition to the increase in the freight and hire rates, 2021 was favourable to owners in aspects of law. In the matter of M/V Lady M, in Glencore Energy UK Ltd v Freeport Holdings Ltd, the "Lady M", [2019] EWCA Civ 318 Case No A4/2018/223, against the background of being under extreme emotional stress due to the illness of his mother or while suffering from an unknown and undiagnosed personality disorder or mental illness, or not suffering from any of these, the chief engineer of the vessel deliberately started a fire inside the engine control room of the vessel during the course of a voyage from Taman in Russia to Houston in the USA. Following a claim filed by the owners of a cargo of fuel oil carried on board the vessel, claiming the sums incurred to the salvors of the vessel and the costs of defending salvage arbitration proceedings, both the Commercial Court and, later, the Court of Appeals, had to decide if owners are exempt from liability under the "fire" and "any other cause arising out of the actual fault or privity of the owners" exceptions which are set in Article IV rule 2 (b) and (q) of the Hague-Visby Rules (the "Rules") and if such exceptions still stand for the owners if barratry occurs. The Courts' decision drew a clear line and statement of the fact that the above-mentioned Article IV 2 (b) exempts owners from liability from damage resulting from fire if the fire was caused deliberately or by barratry and that this exception is subject only to a causative breach of the owner's obligations under Article III rule 1 (of the Rules) or if the fire is caused as a result of the actual fault or privity of the owners.

The above-mentioned decisions in the matter of the Lady M diverted, or even more precisely, rejected, the assumption made by the Supreme Court of New Zealand in the matter of the MV Tasman Pioneer ([11] Tasman Orient Line Cv v New Zealand China Clays Limited and Others, SC 39/2009 [2010] NZSC 37) where, because the vessel was behind schedule, the Master (Captain Hernandez) took a risky shortcut through a narrow canal between Biro Shima Island and the mainland of southern Japan, rather than going round the island. In poor weather, the vessel struck rocks while steaming at about 15 knots. Motivated by a concern for his own position if the truth emerged, the Master did not notify the nearby Japanese coastguard and instead steamed ahead for some few hours towards a point where the vessel would rejoin the course he should have taken and only at that point did he call for assistance. In the meanwhile, the flooding of the vessel by sea water increased and, by the time the salvage assistance was finally sought, the cargo carried on deck (which could have been at least partially saved if the Master had called for assistance immediately) was damaged to the extent of a total loss. The Supreme Court of New Zealand held that the owners were exempt from liability under Article IV rule 2 (a) of the Rules ("Act neglect of default of the Master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship"), reasoning, inter alia, that "unless the respondents [the cargo interests] are able to establish barratry their claims are defeated by Article 4.2 (a)". This means that owners' exemptions from liability, as are set in the rules, do not stand or might not stand for the owners in matters of barratry. The Supreme Court on New Zealand held that the actions of Captain Hernandez, as described by the respondents in their pleadings, were made under the Master's intention to derive personal benefit, which cannot possibly be construed as an intention to cause damage to the cargo or recklessness with knowledge that damage to it will probably result. Therefore, in the matter of the Tasman Pioneer, the Supreme Court of New Zealand held that, where an essential part of barratry has not been pleaded, the respondents cannot argue that the Master's actions constituted barratry and held that the owners were exempt from liability to the damage caused to the cargo.

However, both the Commercial Court and the Court of Appeal, in the matter of the Lady M, found that the conclusion of the Supreme Court of New Zealand in the matter of the Tasman Pioneer, stating that the exception in favour of the carrier under Article IV 2 (a) applies provided that the conduct did not amount to barratry, as not persuasive, and unfounded. The Court of Appeal held that in cases of barratry the carrier's agents are acting contrary to the carrier's interest and in breach of the trust deposed in them and "it is in such a situation that the rationale for the existence of the exclusion of liability might on one view appear more applicable".

Accordingly, it might be concluded that the matter of the Lady M strengthens owners' positions in terms of an exemption from liability, both by, first, adhering to the pure wording of the "fire exempt" ("fire, unless caused by the actual fault or privity of the carrier") and not interpreting the "unless" part of the exemption as if additional wording of "or the fault or neglect of the crew" should be added to the wording of the exemption, and, second, by denying the approach (as presented in the matter of the Tasman Pioneer), where actions of barratry (made by the Master, crew, agent or servant) exclude the owners' exemption, and not only by also deciding that in fact matters of barratry strengthen the rationale of owners' exclusion from liability.

Conversely, the Court of Appeal's turnover of the Commercial court's decision in the matter of the "Eternal Bliss", (K line Pte Ltd v Priminds Shipping (HK) Co Ltd (the Eternal Bliss), Court of Appeal, [2021], EWCA Civ 1712-18 November 2021) relating to the old dispute - can owners be compensated for damages in addition to demurrage? - was not favourable to owners.

A line of authorities relating to the above-mentioned "demurrage/compensation debate" can be drawn between the matter of "Reidar v Arcos" [1927] (Akieselskabet Reiadar v Arcos Ltd, [1927] KB 352), where it was decided that the charterers' failure to load the vessel at the charter rate placed it in breach of the full-load obligation and that the owners' claim for lost freight was not defeated by a demurrage claim or clause, because the lost-freight claim was "essentially distinct from any claim for detention of the vessel", and in the matter of The Bonde [1991] (Richco International Ltd v Alferd C. Toepfer International GMBH (The Bonde) [1991] 1 Lloyd's Rep 136) where, after viewing the authorities, it was held that, for the owners to recover additional damages in additional to demurrage, it was necessary for the owners to prove that an additional breach was made by the charterers, other than the breach of the duty to load the vessel within the agreed lay time. Under the above-mentioned legal background (and other authorities), on 29 July 2015 the dry-bulk carrier Eternal Bliss arrived at Longkou anchorage and tendered for the discharge of the cargo of 70,133 metric tons (m/t) of soybeans that it had carried from Tubarao. The vessel was kept at anchorage for some 31 days, due to port congestion and lack of storage space, and when the cargo was finally discharged, significant mould-growth and caking was exhibited. The owners had to provide USD6 million in favour of cargo interests, and later settled their claim for USD1.1 million. The owners commenced arbitration proceedings against the charterers, arguing that the cargo would not have deteriorated and would have been in sound condition if the charterers had fulfilled their obligation to discharge the vessel within the lay time, and claimed from the Charterers the amount of USD1.1 million, which they have paid to the cargo interests. The charterers argued that their payments of demurrage to the owners constituted the only remedy available to the owners for not discharging the cargo within the agreed lay time. Due to the fact that the charterers' only act of fault was their delay in discharging the vessel, the owners' claim could not have succeeded, following the rule set out in The Bonde. However, the Commercial Court decided that The Bonde was wrongfully decided and should not be followed and held that the charterers are liable to compensate the owners by way of damages for the charterer's breach of contract in not completing the discharge within the permitted lay time. The Court of Appeal overturned the Commercial Court's judgment, reasoning that The Bonde has stood for 30 years and there was no previous case in which its reasoning had been criticised. The Court of Appeal mentioned that allowing the appeal means providing clarity and certainty, while it is open to individual parties or to industrial bodies to take a different path (when conducting their contractual arrangements) if they desire a different result. At the end of the legal proceedings relating to the Eternal Bliss, the charterers were not liable for paying compensation to owners in addition to the demurrage for the breach of their obligation to compete the discharge within the permitted lay time.


Obviously, the year of 2021 provided additional commercial implementations and more significant judgments relating to shipping and maritime law. However, it seems that commercial and legal navigations continue to take place, providing both interest, opportunities and adventures, which make it all so interesting. We are looking forward to whatever additional developments may come in the future.

Adv. Yoav Harris
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