The Suez Canal Authority (SCA) has reached an agreement in principle with insurers over a $550m compensation claim for the grounding of a containership that disrupted world trade in March.

The out-of-court agreement over the grounding of the 20,388-teu Ever Given (built 2018) follows a recently increased offer from the vessel’s Japanese shipowner, Shoei Kisen Kaisha.

Legal proceedings at the Ismailia Economic Court of First Instance in Egypt were put on hold to allow the parties to come to an agreement after the increased offer was made.

Shoei Kisen and its insurers have been represented by marine legal consultancy Stann Marine in negotiations with the SCA.

“Stann is pleased to announce that, following extensive discussions with the SCA’s negotiating committee over the past few weeks, an agreement in principle between the parties has been reached,” Stann Marine director Faz Peermohamed said.

“We are now working with the SCA to finalise a signed settlement agreement as soon as possible. Once the formalities have been dealt with, arrangements for the release of the vessel will be made.”

No details of the terms of the settlement have been disclosed. However, the parities have been moving closer together since the SCA first tabled an initial $916m claim shortly after the vessel was refloated. The SCA’s claim covered the salvage operation, loss of earnings and reputational damage.

Last month, the SCA reduced its claim to $550m while Shoei is reported to have upped its offer from the original $150m.

The claim costs will largely be met through Shoei’s protection and indemnity insurer, the UK P&I Club, and its hull and machinery insurers. The UK P&I Club said it is working with shipowners and other insurers to sign a final agreement “as soon as possible”.

A settlement will likely lead to the release of the vessel and its cargo which has been detained for three months at a Suez Canal anchorage.

However, the agreement may not end litigation over the high-profile incident.

Cargo insurers are seeking to recover losses caused by delay and deterioration of cargo due to the lengthy detention of the vessel. Cargo insurers claim that the SCA’s salvage claim was unreasonable which caused the protracted negotiations.