Monday 19th Nov, 2018

Q & A: Legal implications of Y M Efficiency case

Photo: David Sexton
Photo: David Sexton

Are the cargo owners likely to be insured?
It is likely that most, but not all of the cargo in the containers that fell overboard will be insured – but not necessarily in the Australian insurance market. If goods were purchased on CIF (cost, insurance and freight) terms, then insurance will have been arranged by the cargo exporter, commonly at the place of export. However, some Australian importers prefer to control their own insurance arrangements and put goods on a CFR basis (cost and freight) and arrange their own insurance cover locally.

Does the P&I club pay for the salvage operation/salvors?
Salvage of goods is unlikely to be productive. But I imagine the local authorities would be likely to seek compensation from the ship owner for any costs incurred in recovering the containers and cargo washed up on any beaches. The position would be different if the ship suffered debilitating damage and had had to be beached on the coast and oil pollution risks were occasioned, as happened some years ago when the MSC Napoli lost 103 containers overboard and the vessel was beached to prevent it breaking up at sea. It nevertheless polluted the coastline.

Do charges typically arise from such cases?
I am not aware of any instances where compensation has been sought in Australia or prosecutions resulted from such incidents. If there are dangerous polluting products, such as chemicals, in any of the containers the position might be different and a prosecution could be brought. This is a larger and more significant incident of container loss and seems to have occurred closer to the coast than most others in recent times. It is possible that the Australian Maritime Safety Authority may pursue prosecution of the shipowner or operator.

Who would pick up the bill for any environmental damage?
There is unlikely to be any claim for environmental damage as such, but any fine arising from a prosecution would take into account any damage done to the environment and the ship owner would also be liable for any costs and expenses incurred in any clean up. Those liabilities are likely to be covered by the vessel’s P&I club. Most significantly, however, it can be expected that marine cargo insurers who are called upon to pay for loss of cargo will look to pursue recovery from the bill of lading carrier. While the carrier may seek to maintain that the loss of the containers was caused by a peril of the sea constituted by the heavy weather experiences at the time of the incident, it is my expectation that this defence is unlikely to succeed if it can be established that the container loss was at least in part attributable to the failure or inadequacy of the container securing and lashing method at the commencement of the voyage.

Andrew Tulloch is a Melbourne-based specialist in maritime law and a partner with Colin Biggers and Paisley

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