All hopes of recovering some of the nearly 4,000 luxury cars Volkswagen Group had onboard the 6,400 ceu Felicity Ace have been dashed after the Panama-flagged vessel sank yesterday off the coast of Portugal’s Azore Islands.
Volkswagen had VW, Porsche, Audi, Bentley and Lamborghini-branded models destined for the US market when the fire broke out on February 16 and subsequently consumed the Mitsui OSK Lines car carrier. Despite efforts to tow it to safety, the ship sank Tuesday at 09.00 hrs local time in an area where the water is about 3,000 m, the Portuguese Navy said.
Risk solutions company Russell Group suggested the accident would cost the carmaker at least $155m. There were $438m worth of goods on the ship, of which $401m were vehicles. However, it has to be remembered that the voyage had to be saved for the owner to declare the incident as a “general average” event, seeking contribution for the salvage costs from the cargo.
Cargo claims specialist WK Webster reported yesterday: “Recovery claims will arise in respect of the total loss of vehicles stowed on board the vessel. Given some of the car brands involved, these claims will be substantial.”
In terms of who will pay for the damaged cargo, law firm Vandeventer Black said the vessel falls under the Carriage of Goods by Sea Act (COGSA), applicable to all contracts for the carriage of goods by sea to or from ports of the United States in foreign trade. “Among other things, COGSA provides the carrier and ship with 17 defenses for exoneration and limitation of liability for damages. Among those defenses, the ‘fire statute’ will be the best defense for the vessel owners of Felicity Ace, providing that [t]he owner of a vessel is not liable for loss or damage to merchandise on the vessel caused by a fire on the vessel unless the fire resulted from the design or neglect of the owner.”
Vandeventer Black added that in the absence of a finding that the fire resulted from the design or neglect of the owner, this COGSA defense will likely exonerate the vessel interests from liability for the damages caused.
The German automaker had previously stated that it feared the fire on the ship had damaged a large number of its vehicles to the point where they could no longer be delivered to customers, but that the damage is covered by insurance. The company has yet to make any public comment on the loss. Meanwhile, there are fears the vessel’s fuel tanks could be damaged as it lay at the bottom of the Atlantic. “When the vessel sank, there was a small oil slick visible in the water. We will continue to monitor the situation of the area,” MOL Ship Management Singapore said.