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Market responses to catastrophic shipping incident - Clyde & Co International Marine Insurance Confe

  • Press Releases 18 April 2011 18 April 2011

At Clyde & Co's inaugural international marine insurance conference, shipping experts from across the world assessed the global challenges in responding to a hypothetical major marine casualty involving losses and liabilities on a similar scale to the Deepwater Horizon loss.

"Preparation is crucial. You never know what the scenario will be but it's much better to be proactive than reactive," warned speaker Hugh Shaw, the Secretary of State's Representative for Maritime Salvage and Intervention (SOSREP).

A fictional scenario involving a collision between container vessel the Not So Small and passenger ship Great Britain was presented.

The Not So Small was described as an E Class, 190,000 GRT container vessel 18,000 TEU, LOA 400 metres, fully laden – reported to carry highly toxic material, and the Great Britain was described as the largest ever built passenger ferry, 49,000 GRT, LOA 700 feet carrying 1,500 passengers and 1,700 vehicles.

Hugh Shaw detailed the response for a UK incident while partners from Clyde & Co's international offices (Ik Wei Chong, Shanghai; Stirling Leech, Rio de Janeiro; and John Woods, New York) detailed the impact should such an incident occur in their jurisdictions. Martin Hall, Clyde & Co partner in Greece, outlined the salvage and General Average issues the various insurance interests would have to contend with.

Hugh Shaw added: "The first three priorities are for the protection of life, protection of the environment and the protection of property." He said owners and insurers would be involved closely in the recovery process in finding out about any dangerous cargo on board.

Members heard that the Regulation on the Prevention and Control of Marine Pollution from Ships which came into force in March 2010 was a key regulation in China, modelled after CLC 1992 and Bunkers Convention 2001.

"All ships trading in Chinese waters are required to carry liability insurance - hopefully bringing new business opportunities for London underwriters," said Clyde & Co partner Ik Wei Chong. Other provisions under the Regulation include having an emergency response plan, doctrine of strict liability (excluding wars and unavoidable natural calamities), liability limits for oil tankers as provided in CLC 1992 and priority compensation to the MSA for clean-up operations.

The South American civil court system can be "slow" and "unpredictable" according to Stirling Leech, due in part to an undeveloped precedent system. Criminal prosecutions are also likely – especially where pollution is involved. "If you're going to spill oil don't spill in Brazil," he said.

US partner John Woods discussed The Pennsylvania Rule (The Pennsylvania, 86 U.S. (19 Wall.) 125 (1873)) which puts liability for damages upon the ship or ships whose fault caused the injury and the boundaries of proportional fault.

In the US, the owner of the vessel is liable for damages and removal costs for oil spills except where they can prove that the spill was caused by the fault of a third party.

The event also included high-profile speakers from the marine industry, including a keynote address from Maritime London chairman David Moorhouse who highlighted London's role as a shipping centre and its "determination to remain at the forefront of this great industry."

Guests also took part in an open discussion with panel speakers Mark Edmonson, marine hull class underwriter at Chubb; Sarah Sullivan, P&I underwriter for Thomas Miller; Gordon Street, claims manager at Marsh; and Nigel Rogers, average adjuster for Rogers Wilkin Ahern.

As well as the environmental damage caused by shipping casualties, interference from local authorities and the media were also discussed as significant factors with "communication" and a "swift response" key.

Nigel Chapman, Clyde & Co partner in London who chaired the conference, concluded: "If an incident like this were to take place, wherever the casualty may be, it is likely that it will be insured in the London market. We would have claims coming at us from all different directions."

International Marine Insurance Conference material

Brochure

International Marine Insurance Conference - The Challenges Presented by a Major Marine Disaster

Presentation

International Marine Insurance Conference slides

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