Mayday: India plans legal ringfence from oil spills

Rising accidents involving merchant ships leading to oil spills in Indian waters is a growing concern that needs to be addressed legally and India’s efforts to ratify the Bunker Convention is a step in that direction.

Written by Anil Sasi | Updated: December 9, 2015 1:59:57 am
The big concern, apart from the safety of the crew, was the possibility of oil pollution if efforts were not made to plug the water ingress into the vessel.(Illustration: C R Sasikumar) The big concern, apart from the safety of the crew, was the possibility of oil pollution if efforts were not made to plug the water ingress into the vessel.(Illustration: C R Sasikumar)

On June 22, 2015, merchant ship Jindal Kamakshi with 20 crew members onboard issued Mayday calls near Vasai in the Arabian Sea, just 40 nautical miles North West of the Mumbai harbour. The big concern, apart from the safety of the crew, was the possibility of oil pollution if efforts were not made to plug the water ingress into the vessel.

Earlier, on December 12, 2014, a vessel, Southern Star VII, carrying 350 tonnes of oil crashed and sank after colliding with another vessel while trying to steer through dense fog, spilling the toxic liquid over an 80-sq-km area along the Sela river in Bangladesh and threatened the fragile Sundarbans region. The accident site, near Mongla port, was just 100 km from the Kolkata port and Indian officials were put on high alert over the possibility of the oil slick spreading to the Indian side.

The two accidents are far from isolated events along India’s long coastline, just off the main east-west shipping route. Inclement weather and choppy seas often result in ocean-going vessels finding themselves in distress on account of collisions, vessels drifting ashore and oil spills. One of the worst incidents was the collision between MV Khalijia III and MSC Chitra in August 2010, which resulted in the closure of Mumbai harbour as well as the Jawaharlal Nehru Port Trust and the Mumbai Port Trust. The oil spill damaged the environment that was estimated by the National Environmental Engineering Research Institute to be to the tune of Rs 515 crore.

The Ministry of Shipping’s proposal for India’s accession to the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (Bunker Convention) of the International Maritime Organization (IMO) comes in this backdrop.

The Union Cabinet, on June 10 this year, had ratified the shipping ministry’s proposal and thereby cleared amendments to the Merchant Shipping Act, 1958 to give effect to the Bunker Convention, Nairobi Convention and Salvage Convention of the International Maritime Organisation or IMO — the global standard-setting authority for the safety, security and environmental performance of international shipping that is entrusted with creating the regulatory framework for the shipping industry in the form of Conventions for universal adoption and implementation. While India has already acceded to three International Conventions of the IMO —the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (commonly refered to as the Bunker Convention), the Nairobi International Convention on the Removal of Wrecks, 2007, and the International Convention on Salvage, 1989 — the NDA government’s decision has set the ball rolling on India’s accession to the Bunker Convention. For implementing this, the Merchant Shipping Act, 1958, requires amendments, which has since been initiated.

In a nutshell, the Bunker Convention ensures adequate, prompt, and effective compensation for damage caused by spills of oil, when carried as fuel in ships’ bunkers. This is akin to the liability legislation enacted in the nuclear power sector, where the liability is clearly spelt out and prompt compensation for the victims of a nuclear incident is assured. “It is difficult to obtain compensation to pollution caused by bunker oil spill or leakage from ships other than tankers. Governments and local authorities find it difficult to recover costs on preventive measures and cleanup operation on such type of pollution. This problem can be adequately addressed if India becomes party to this Convention and incorporates its provision into the Merchant Shipping Act, 1958,” an official involved in the exercise said.

The provisions essentially require registered owner of every vessel to maintain compulsory insurance cover that allows claim for compensation for pollution damage to be brought directly against an insurer. As a step in this direction, every ship above one thousand gross tonnage will have to carry a certificate on board to the effect that it maintains insurance or other financial security, such as the guarantee of a bank or similar financial institution. The Directorate General of Shipping has been mandated to issue this certificate and no vessel will be permitted to enter or leave India without this document, the official said.

The Bunker Convention 2001 is already in force internationally since November 21, 2008, and maritime nations accounting for 91 per cent of world shipping tonnage are parties to this Convention, the United States of America and Japan being notable exceptions. At present, irrespective of whether India is a party to the Convention —Indian ships have to carry ‘Blue Card’ issued by insurance companies, if, it is trading in countries that are parties to this Convention. However, the reverse is not true and the same is not applicable for foreign ships trading in India. Even if they are carrying ‘Blue Cards’, pollution in Indian waters will not be under the purview of such insurance as India is not party to this Convention. So, if India were not to become a party to Bunker Convention, Indian flag ships visiting foreign ports will have to continue with the present dispensation of approaching foreign countries for bunker insurance compliance certificates while foreign ships visiting Indian ports will not be subjected to compulsory insurance.

The proposed amendments to the Merchant Shipping Act ,1958, once enacted, shall also give effect to the Nairobi Wreck Removal Convention and the Salvage Convention of IMO, to which India is already a party. It will facilitate more purposeful approach towards removal of wrecks and salvage, protect Indian waters from the wreck hazards and introduce internationally recognised and approved rules for removal of wrecks.

There are some question marks, though. The exemption to smaller ships is one of them. A representative of Indian National Shipowners’ Association or INSA, though, stated that the exemption to the vessels which are 1,000 GT (gross tonnage) and less would be add up to around 500 to 600 vessels, which is not a substantial amount.

There are also some worries that have been expressed about the exemption accorded to ship owners if the pollution damage is due to an ‘Act of God’ (force majure event), something that is likely to leave ample scope for litigation. The Government, though, is of the view that there is no ambiguity on this.

“There are number of case laws which have been well adjudicated and it is now settled by the apex court as to what constitutes an act of God or the force majure. It is very well understood in terms of juristic principles, and there may not be any ambiguity for it during the adjudication proceedings,” an official said.

THOSE OUTSIDE THE CONVENTIONS

Bunker Convention: The United States of America and Japan are the two major maritime nations who are not a party to the Bunker Convention. The United States has enacted the Oil Pollution Act, 1990, which covers all types of oil, from the ship, whether bunkers or Cargo. The compensations and the requirement are more stringent than the Bunker Convention and hence there was no need by US to adopt the Bunker Convention, which came into force at a much later stage in 2008. The Japanese ‘Act on Liability for ship oil pollution 1975’ was amended in 2005 to cover bunker pollution damage before the Bunker Convention came into force internationally in 2008, and also the requirement under the local regulations were more stringent.

In case of India, the provision related to pollution from oil [except bunker oil pollution damage] are existing in the Merchant Shipping Act, 1958, but there is a need to make specific legislation for covering the pollution incidents caused by the bunker oil of the ships, hence the proposed Bill is introduced.

Nairobi Convention: The United States of America, China and Japan, Italy, Norway, Republic of Korea, and Russian Federation are the major maritime nations that are not party to the Convention. As of now the national legislation of the above countries provide adequate mechanism of direct action against the ship owners in their coastal waters, hence there may not be a need for them to be a party to this Convention. However, the Nairobi Wreck Removal Convention has entered into force just this year (on April 14, 2015). Hence, it is still early stages.

With respect to India, the provisions related to the wreck removal already exist in the Act. However, these are proposed to be updated, as an opportunity to make Indian legislation fully compliant with the Convention.

Salvage Convention: Japan, Panama, Republic of Korea, are few major maritime nations which are not party to the Convention. The prime reason being that their national legislation has already made necessary provisions for salvage and the courts have the sole jurisdiction of awarding the salvage compensation. The salvage convention applies to judicial or arbitral proceedings pertaining to salvage. Salvage is generally between private parties and disputes between them are generally decided by arbitration/judicial process. The local legislation of such countries also provides mechanism for Arbitration and compensation for efforts of the salvor irrespective of degree of success, thus such countries have not felt the need for adoption of the convention.

As regards India, the provisions related to salvage are already existing in the Act. However, these are proposed to be updated, as an opportunity to make Indian legislation fully compliant with the Convention.

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