The owner and insurer of a bulk carrier which grounded off the coast of Gibraltar are likely to turn to international conventions to limit liability.
The 35,362-dwt OS 35 (built 2009) is hard aground off the peninsula and has broken its back. The wreck has leaked fuel oil which has mostly been contained.
Its protection and indemnity insurance, which would cover pollution-related costs, is understood to be placed with British Marine.
Although not a member of the International Group of P&I Clubs it is the largest of the fixed premium marine insurers and is backed by the giant QBE Group.
Fears of a major oil pollution incident have subsided after salvors managed to remove most of the fuel oil onboard the OS 35.
So far, the pollution prevention operation has included the extensive use of booms around the ship and beaches, the use of vessels to mop up a fuel sheen and some work on clearing up oil which has reached the shore.
Gibraltar is likely to make a claim for this under the International Convention on Civil Liability for Bunker Oil Pollution. It has adopted the convention through its relationship with the UK.
Under the convention, the shipowner, and its insurer, also have the right to limit its financial liability for pollution. A ship the size of the OS 35 can limit liability to around Special Drawing Rights (SDR) 15.7m ($20.3m).
The major cost could come from the wreck removal. The Gibraltar government has said that it has given up on its plan to fit a cofferdam and refloat the vessel after the hull developed a major crack. That option would have been relatively inexpensive.
It has said that the wreck removal could take some time. At this stage, it is unclear if the wreck can be towed away or will have to be dismantled on site which would add considerably to the costs.
The owner also has the right to limit its liability for the wreck removal under the Nairobi International Convention on the Removal of Wrecks. Gibraltar has also adopted this convention through its relationship with the UK.
Unlimited liability
However, in the case of wreck removal the UK is one of eight states which have reserved the right to legislate for unlimited liability.
In both the Bunkers Convention and the Nairobi Wreck Convention the state does not have to prove liability before making a claim.
The OS 35 was operating under a pilot, when the accident happened.
It hit the stationary 162,000-cbm Adam LNG (built 2014), which was at anchor, as it was leaving port.
As an older vessel claim for the loss of the hull is likely to be relatively small. VesselsValue estimates the bulker's market value is around $9.57m.
