Home » Compensation limit in MV Wakashio incident shows Bunker Convention is no longer fit for purpose

Compensation limit in MV Wakashio incident shows Bunker Convention is no longer fit for purpose

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Martin Hall

Compensation limit in MV Wakashio incident shows Bunker Convention is no longer fit for purpose

London, 19 August 2020: Following the recent oil spill incident offshore of Pointe d’Esny, south of Mauritius, a number of issues are raised with regard to compensation limits, according to Martin Hall, Partner and Head of Marine Casualty at global law firm Clyde & Co.

The oil spill occurred after the bulk ship carrier MV Wakashio ran aground on a coral reef on 25 July 2020. The ship began to leak fuel oil in the following weeks and broke apart in mid-August. Mauritius declared a state of environmental emergency on Friday after some 1,000 tonnes of fuel had leaked into the surrounding waters.

Commenting on the potential cost of the clean-up efforts and compensation claims, Martin Hall says: “As the ship is not a laden tanker, any compensation claims seem likely to be dealt with under the 2001 Bunker Convention. This 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 $18m” if Mauritius has only enacted the 1976 Limitation Convention.”

Hall explains that any prospects of breaking this limit seems unlikely: “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.”

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