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The London P&I Club – Prestige: Pollution Incident Update


Prestige pollution incident

Members may have received press and other reports of a recent judgment in Spain involving the 2002 loss of and pollution from the Prestige.This note aims to provide information on the judgement, the ongoing international legal proceedings and the potentially much wider and far-reaching implications of this development for Shipowners, insurers and other industry stakeholders. 

Note on Prestige Judgement

The Prestige was a conventional pre-MARPOL persistent oil tanker entered by her Owners with the Club continuously from 1988 to her loss in the Bay of Biscay in 2002. The ship was classed from build with ABS and had the approval of one oil major.  

In November 2002 the Prestige was carrying a cargo of 77,000mts of heavy fuel oil from St Petersburg to the Far East. While crossing the Bay of Biscay in adverse conditions the ship developed a sudden list to starboard as water entered the mid-ship starboard ballast tanks following an assumed side shell failure. Pollution was minimal in the initial stages of the incident. Refuge was requested from Spain but denied. Instead the vessel was required to be driven unsympathetically out to sea where, six days (and two storms) later she sank together with the then remaining cargo. Pollution regrettably affected much of the northern coast of Spain and the Southern Atlantic coast of France.

Assessment of pollution claims

Spain and France are parties to the CLC and Fund Conventions. Joint claims handling offices were established with the Fund in Spain and France. The Owners’ CLC limit of US$26.7m was lodged in cash with the Court in Spain in June 2003. The Fund provides supplementary compensation of about US$144m. Claims for pollution damage were presented for about US$2.3bn and assessed by the Fund experts at about EUR350m.

The Spanish Proceedings

The Public Prosecutor commenced criminal proceedings against the senior crewmembers and a representative of the state (in respect of the denial of refuge), on grounds of alleged disobedience and for serious pollution damage. As a consequence of this, the civil claims arising attached to the criminal action. After an exhaustive nine month trial all of the defendants were acquitted of causing the pollution. It was determined that whatever weakness in the ship existed could not be identified and therefore was not known. As a consequence there was no civil liability finding.

A number of parties, including the Public Prosecutor, appealed on points of law. Following a one day hearing the Spanish Supreme Court (Criminal Division) reversed the acquittal of the Master on grounds he must have known it was reckless to perform the intended voyage. The Owners were found vicariously liable for the Master’s negligence. The CLC Convention, under which the Insurer Club benefits from the CLC limit irrespective of the alleged conduct of the Owners, was said to be applied. However, the Court also held that under Spanish criminal law, the Club was directly liable for the Owners recklessness up to the policy limit of US$1bn.

The case was referred back to the trial court to determine the quantum of the recoverable claims. In the meantime the Master is pursuing an appeal to the European Court of Human Rights on the basis that his conviction was unfair.  

Quantum proceedings

The trial court has just issued its judgment on the quantum aspects of the case.  The various claims have been assessed at around EUR1.66bn which is materially greater than the Fund experts’ assessments noted above and is therefore disappointing. This includes about EUR1.63bn assessed in respect of the Spanish and French States and about EUR25m for the non-State claimants.The Club’s liability limit of US$1bn is reiterated; as a Member of the International Group, the Club benefits from the reinsurance purchased collectively which extends to US$1bn for pollution claims.

 Next steps

Judgements obtained and legal proceedings on foot in other jurisdictions will be of relevance. These include: 

  1. A contested judgement already obtained by the Club from the English Court of Appeal against Spain and France. This recognises that the Club has no direct liability to the States claims other than permitted by the CLC Convention.  This judgment is irreconcilable with the Spanish judgments and should provide a basis to resist enforcement;
  2. The Master’s action before the European Court of Human Rights. This is relevant because enforcement of a judgement obtained unfairly would be contrary to public policy. The extremely superficial nature of the Supreme Court hearing being an example of an unfair process.

At the same time, the Club together with its IG partners and other interested parties will continue to give close attention to the wider implications of the judgement. We are concerned at the direction taken by the Spanish Court including its by-passing of an established international Convention. This development underscores the importance of initiatives including but not limited to the adoption of concerted action by ship-owners, insurers, the IMO and IOPC Funds to encourage states not only to sign up to the International Convention regimes, but also to respect and to apply these correctly and consistently; in a way the recent judgments in the Prestige have failed to do.  

17 Nov 2017

South Africa – Port of Cape Town suspends sale and supply of potable water


Members calling at the Port of Cape Town should note that South African law firm Shepstone & Wylie have drawn our attention to water restrictions that are currently in force due to a drought. The Port of Cape Town has suspended the sale and supply of fresh water to vessels calling there, with exceptions being considered on a case by case basis. The notice from Transnet Port Authority courtesy of P&I Associates (Pty) Ltd, the local correspondent, can be accessed here.

Vessels planning to take on water at South African ports should be aware that water restrictions are also in force in Mossel Bay, Port Elizabeth and Ngqura, and should make checks and plan accordingly. 

03 Nov 2017

Madagascar – Plague outbreak


An outbreak of plague is reported in Madagascar. This infectious disease causes fever, chills, head and body aches, vomiting and nausea, and can be fatal. ETIC/Africa P&I Services, a local correspondent, reports that the outbreak is severe and fast spreading, affecting the whole island of Madagascar, including ports. In particular, an outbreak of pneumonic plague has been reported in the port city of Tamatave/Toamasina and the US authorities have issued a Maritime Alert urging vessels calling in Madagascar to exercise caution (click here).

The disease is spread by bites of infected fleas, inhalation of respiratory droplets/small particles from persons with pneumonic plague, and unprotected contact with infectious bodily fluids or contaminated materials. The US Centers for Disease Control and Prevention recommends that travellers to Madagascar take the following steps to help prevent being infected:

  • “Use EPA-registered insect repellent that lists protection against fleas on the label and contains at least 25% DEET.
  • Avoid close contact with sick or dead animals.
  • Avoid close contact with seriously ill people, especially people who are coughing up blood.”

Those calling at Madagascan ports should be alert to the plague risks and take appropriate precautions to avoid infection. This may include considering limiting contact on shore, refraining from travelling in-land, and seeking prompt medical assistance in the event of suspected plague symptoms and/or after close contact with those who are infected.

For further information on the plague situation in Madagascar and advice from the US Centers for Disease Control and Prevention, click here. Additional information on plague symptoms, treatment and prevention can be found in the WHO’s fact sheet which can be accessed by clicking here.

31 Oct 2017

Sudan Sanctions – US revokes certain sanctions and issues a new General Licence


Members will be aware from previous News Alerts (click here) that the US has since January 2017 issued a general licence authorising certain transactions that were previously prohibited under the US Sudanese Sanctions Regulations (SSR) and Executive Orders 13067 and 13412.  It was the intention that in/after July 2017 certain sanctions would be permanently revoked. 

Following an extension of the general licence for a further three months beyond July 2017, on 6 October 2017 the US Government announced the permanent revocation of those sanctions, namely Executive Orders 13067 and 13412. The lifting of the sanctions will become effective as of 12 October 2017. These had previously imposed broad trade and financial sanctions on Sudanese goods, persons and entities including wide prohibitions on the assistance/facilitation that can be given by a US person/entity.

It should be noted that the revocation only applies to certain Sudan sanctions covered by Executive Orders 13067 and 13412 only. Details as to how the lifting of sanctions will work are covered by OFAC’s FAQs, click here to access a copy. A brief overview from New York lawyers, Freehill Hogan & Mahar can be accessed by clicking here.

There are, however, a number of important issues that need to be taken into account before commencing Sudanese trade, including:

  1. As stated in OFAC’s FAQs, some transactions, including the export/re-export of certain agricultural commodities, medicine and medical devices, still require US and non-US persons to obtain an OFAC Licence. However, it appears that OFAC will be publishing a General Licence at the same time as the other sanctions are lifted.
  2. This does not lift the Darfur related sanctions, nor Executive Order 13400 (which lists further SDNs connected to Darfur) nor any other applicable US legislation. OFAC’s web page setting out the overview of the regulations with regard to Sudan, including FAQs, interpretative guidance and information on various licences can be accessed by clicking here.
  3. Certain Sudanese persons remain SDNs.
  4. EU and UN embargos on export of arms and certain strategic goods remain in place, although these are not as broad as the US sanctions were (click here for the current EU sanctions).
  5. Although transactions in US dollars will in theory be permitted, there is no indication from banks as to whether they will clear US dollar payments in relation to Sudan with immediate effect and, if not, the timescale for reimplementation of normal banking procedures. Given that there are still some ongoing sanctions, it is entirely possible that banking restrictions will remain.

In the meantime, given the above outline of ongoing issues and related sanctions, Members should continue to undertake full due diligence and negotiate appropriate sanctions protection in all contracts if considering engaging in Sudan related trade.

10 Oct 2017

Propulsion - Blackout and Engine Failure Guidance


The London P&I Club, in a joint project with leading classification society Bureau Veritas and its casualty and salvage subsidiary TMC Marine, has issued a new booklet providing operational guidance for preventing blackout and main engine failures.

This new publication, the second in a series on loss prevention subjects, focuses on marine engineering issues and procedures related to the prevention of loss of propulsion. Its purpose is to provide general guidance and practical advice to marine engineers and ship owners on blackout and main engine failures, the risks associated with loss of propulsion, and the precautions that can be taken to limit and prevent them.

London P&I Club loss prevention manager Carl Durow says, “The Club has seen an increase in the number of machinery failure-related cases in recent years. In most cases, it is the timing and location of the incident which dictates the severity of the claim. This publication is aimed at raising awareness of the necessary good practices and post-incident investigation activities which in combination can result in significantly reducing the risk of major claims.”

An electronic copy of the guide can be obtained by clicking here.

11 Sep 2017

China - Emission Control Area extended to all ports in Zhejiang


Members will already be aware of the Regulations concerning the low sulphur fuel requirements in specified Emission Control Areas (ECA), including Shanghai, Ningbo – Zhoushan, Suzhou and Nantong, as outlined in previous News  Alerts (click here). 

The Correspondent, Huatai Insurance Agency & Consultant Service Limited, has provided a further update relating to all ports within the Zhejiang ECA.  As from 1 September 2017 onwards, the requirement to use fuel oil with a sulphur content not exceeding 0.5%mm when berthing extends to all ports within the Zhejiang ECA. This includes the ports of Jiaxing, Ningbo-Zhoushan and Taizhou.

Further information on the applicable areas and requirements is set out in the Correspondent’s Circular, which can be accessed by clicking here.

Members should review their bunkering and fuel changeover arrangements to ensure compliance with these Regulations. Members should also ensure that documentary records are in order and fuel samples are kept (as appropriate) to show compliance, which should help to avoid delays and penalties being imposed.

08 Sep 2017

Gulf of Aden & Bab Al Mandeb – Maritime Security Transit Corridor


Recent attacks against merchant shipping in the Gulf of Aden and Bab Al Mandeb have prompted the multinational naval partnership that promotes security and stability across international waters, the Combined Maritime Forces, to extend the existing Internationally Recommended Transit Corridor (IRTC) through to the Red Sea, so creating a continuous recommended route, the Maritime Security Transit Corridor (MSTC). Merchant vessels who use the MSTC will benefit from more targeted military presence and surveillance by the Combined Maritime Forces. To access a copy of the Combined Maritime Forces press release setting out their Guidance on the MSTC, click here.

Maps of the MSTC are available as follows:-

  • Map of the MSTC, including IRTC, click here;
  • Map of the two way route directly connecting the IRTC and the Bab Al Mandeb traffic separation scheme (BAM TSS), click here. Or click here for an enlarged copy;
  • Map of BAMTSS and TSS west of the Hanish Islands, click here, or click here for an enlarged copy.

07 Sep 2017

India - Goods & Service Tax


Members trading to ports in India will be aware of the service tax on freight as outlined in the Club’s previous news alert (click here). Harsh Pratap of HP Law firm, Mumbai, advises that the service tax was repealed on 1 July 2017 and replaced with a more comprehensive Goods & Service Tax (GST) that came into force on the same day. The new GST replaces a number of indirect taxes including excise and customs duties, and other taxes and surcharges relating to the supply of goods and services.

There are 4 different rates of GST and the lowest 5% rate applies to the transport of goods on-board a vessel, which should be paid by the recipient of the goods/importer who can apply for tax credits. The good news is that the new GST does not apply directly to non-Indian domiciled shipping companies.

Further details can be found in HP Law’s note which can be accessed by clicking here.

06 Jul 2017

International Group - Annual Review - 2016/17


The International Group Annual Review 2016/17 is available and can be accessed by clicking here.The Review covers many of the key activities undertaken by the Group during the last P&I policy year and includes summaries of the work carried out by a number of its Sub-Committees and Working Groups on a range of issues,including the Large Casualty Outreach Programme, the Maritime Labour Convention and the next P&I Club Correspondents’ Conference.

08 Jun 2017

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