13 Oct 2011

Ship's owners may avoid paying all clean-up costs

1:15 pm on 13 October 2011

A maritime law expert is warning that the owners of a stricken ship off the coast of Tauranga may avoid paying all of the costs of the oil spill clean-up.

The 47,000-tonne ship was heading towards Tauranga from Napier when it ran aground on Astrolabe Reef on 5 October, carrying 1700 tonnes of fuel and more than 1300 containers, including 11 with dangerous goods.

The Rena has protection and indemnity insurance, which includes cover for removal of a wreck and cargo, and loss of or damage of property with respect to pollution.

The current liability limits available are $US4.2 billion for a single event, with a sub-limit of about $US1 billion with respect to a pollution event.

But the director of maritime law firm Dawson and Associates, Peter Dawson, says under New Zealand's Maritime Transport Act, there is a cap on civil liability in relation to pollution.

Mr Dawson says the company could make the case that its liability not extend beyond that cap, which by his calculation is $NZ14 million.

"There is a counter argument, but it's a very difficult barrier to overcome. You have to show that the master of the company itself wilfully and deliberately put the vessel on the reef and caused the damage. I don't believe that threshold will be met in this case."

Prime Minister John Key says insurance cover for the ship is capped and the rest of the salvage and clean-up costs will have to be borne by the Government.

Meanwhile, small operators hoping for compensation over the oil spill may find that the complicated and lengthy process is beyond their means.

A Tauranga fisherman who employs 25 staff says he has been forced out of his normal fishing ground and will be standing in line for any payment available.

But Mr Dawson says maritime law is complicated and it can take a long time to work through the layers of companies involved and decide who may be liable.

"In order to give effect to your claim, you'd have to seize some assets belonging to that company in the jurisdiction of the New Zealand courts and this particular asset is not worth a lot because it's parked on a reef."