Wednesday, August 19, 2020

Disaster of Wrecked Oil Tanker Has Ramifications That Will Last for Years

Crisis Will Likely Continue Both on the Ocean Shore and in the Courtroom
Shipping News Feature

MAURITIUS – When the capsize bulk carrier MV Wakashio foundered on a coral reef of the Pointe d'Esny south of the island on the 25th July the incident was described by some as 'the worst environmental disaster the region has ever suffered'. Despite the fact the tanker was not laden with oil, and strenuous efforts were made to pump out leaking fuel, an estimated 1,000 tonnes escaped into the pristine waters.

The Panamanian registered, Mitsui OSK operated vessel, at 300 metres long and with a dead weight of over 200,000 tonnes, presented a huge problem for the authorities, with high winds and waves breaking her back on the 6th August and exacerbating the situation, meaning by last week over 10 square miles of ocean were stained with oil. Finally on 15th August the ship broke in two releasing the residue of oil, estimated at over 160 tonnes.

The area in which the incident occurred is almost entirely dependent on tourism, with the region home to thousands of environmentally sensitive species. Several nations immediately sent help, including France, Japan and India, including specialist equipment and trained personnel. Now the Mauritian authorities have requested compensation from the ship’s owners, Nagashiki Shipping.

The owners have meanwhile supported the arrest of two of the vessel’s officers, including the captain, on grounds of ‘endangering safe navigation’. The company simultaneously offered a full apology for the incident which Greenpeace said in a statement had put ‘thousands of species’ at risk.

As the damage was caused by the vessel’s own fuel supplies the compensation due should be made against the terms of the International Convention on Civil Liability for Bunker Oil Pollution Damage, but this may mean a problem ahead with respect to the extent of liability.

Under the terms of the 1976 Convention on Limitation of Liability for Maritime Claims, which came into force a decade later, the maximum claim would be 2 billion Japanese Yen ($19 million). The original draft of the International maritime Organization (IMO) agreement was signed by Mauritius. Latterly Japan, where the ship was apparently insured with the P&I Club, amended this figure to 7 billion Yen ($66.5 million).

It has been reported that the ship itself was insured for $1 billion, and press reports say the Japanese P&I club has indicated it may pick up some of the clean-up costs. There will however be concerns no doubt over the actual amounts recoverable as Martin Hall, Partner and Head of Marine Casualty at global law firm Clyde & Co., points out:

“[The 2001 Bunker Convention] provides for mandatory third-party insurance cover, and allows claims of third parties for clean-up expenses and other losses caused by pollution from bunkers to be made directly against the insurers. However, owners may be entitled to limit liability in accordance with the Convention for Limitation of Liability for Maritime Claims 1976, or as amended.

”Compensation is based on the gross tonnage of the vessel, which in this case appears to be 101,932 tonnes, and which would entail a cap of around $18 million if Mauritius has only enacted the 1976 Limitation Convention. The only means of breaking the limit in the likely event that claims exceed the limitation fund under the 1976 Limitation Convention would be to prove that the owner is personally responsible for the loss, and that they either acted with the intention to cause the loss or that they acted recklessly and with knowledge that the loss would probably result.

"Although the Bunker Convention 2001 only came into force in 2008, this terrible incident shows that it is already time for Governments of Coastal States to urgently consider the applicable limits and enact the updated limits under the updated 1996 Protocol to the Limitation Convention to ensure compensation claims are properly covered."

Photo: Courtesy of Mobilisation Nationale Wakashio.