MOL and Allianz spearhead lawsuits against Volkswagen over Felicity Ace fire

Japanese shipping company Mitsui OSK Lines (MOL) and global insurance provider Allianz are leading the legal charge against Volkswagen AG, alleging that a lithium-ion battery in a Porsche electric vehicle (EV) owned by the automotive giant triggered the 2022 fire on the Felicity Ace cargo ship.

MOL, the operator and insurer of the ill-fated vessel, and Allianz have reportedly filed two separate lawsuits in Germany, emphasizing that Volkswagen failed to disclose crucial information about the risks associated with transporting electric vehicles and neglected to provide necessary safety precautions, Bloomberg reports.

Volkswagen confirmed to WorldCargo News that the lawsuits were underway.

“Volkswagen AG confirms that it has been served with civil lawsuits in Germany in connection with the sinking of the ‘Felicity Ace’. As these are ongoing proceedings, we cannot comment on further details at this time,” a Volkswagen Group spokesperson said.

The company pointed out that the media reports saying that an electric vehicle was involved in the origin of the fire have not been confirmed by a court.

Volkswagen added that it is not the owner of the sunken ship and therefore cannot make any statements about the ship itself, the accident or the cause.

When approached for a comment about the ongoing legal proceedings, Allianz declined to provide any further details.

“We regret that we can provide any further details on this case. We generally don’t disclose details on client relationships, claims handling or legal proceedings, irrespective if we are involved or not,” an Allianz spokesperson said in a statement to WorldCargo News.

MOL also confirmed the lawsuits were filed to our publication, refraining from further comments.

“We confirm that legal proceedings were enjoined related to ‘Felicity Ace’. We cannot comment on matters which are the subject of legal process,” the company said in an emailed statement.

The Felicity Ace, carrying an estimated USD 155 million worth of luxury vehicles, including 1,110 Porsches, caught fire on February 16, 2022, near the Azores archipelago, eventually sinking with thousands of cars on board. MOL and Allianz jointly claim that a Porsche EV’s lithium-ion battery was the root cause of the fire, prompting legal proceedings against Volkswagen.

As per Russell’s assessment, the overall value of cargo aboard the ship was approximated at USD 438 million, with a substantial portion, around USD 401 million, allocated to cars and goods vehicles. The risk analysis firm estimated at the time of the sinking that the incident would result in at least USD 155 million in expected losses for Volkswagen, Porsche, Audi and Lamborghini vehicles on board the vessel.

Rise in ‘general average’ claims

Fires have become a major loss driver for car carriers, according to Allianz. They can originate in cargo holds due to malfunctions or electrical short circuits in vehicles, with the open decks facilitating rapid spread. As explained by the insurer, the surge in the maritime transport of electric vehicles (EVs) poses additional challenges as existing counter-measures may prove inadequate in addressing EV-related fires effectively. The financial toll of such events is substantial, encompassing the value of the car cargo and expenses associated with wreck removal and pollution control.

When large vessels encounter difficulties, the logistics of emergency response and securing a safe port become intricate. Specialized salvage equipment, tugs, cranes, barges, and port infrastructure become essential, amplifying both time and cost implications for a response.

The escalating salvage costs, coupled with the weight of more extensive losses, are increasingly shouldered by cargo owners and their insurers. The concept of ‘general average,’ a legal procedure distributing losses and saving costs among cargo owners during maritime ventures, has evolved into a more frequent and severe occurrence. This trend is attributed to the growing number of large ships involved in incidents such as fires, groundings, and container losses at sea.