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MV Wakshio – compensation to clean up costs
With the only the stern and superstructure of the MV Wakshio remaining on the coral reef on which it grounded on 25 July 2020, all parties involved are looking to the financial settlement whilst clean-up operations proceed.
It is a very difficult picture but one that significantly affects Mauritius and directly the local population affected by the incident.
So far the Mauritius government has pledged its fishermen Rs10,200 (US$250) per month in addition to a bad weather allowance of Rs17,500 (US$ 430). This helps but then there are those in the tourism industry; restaurants, hotels, taxi services etc, who await compensation. Their plight is made worse by COVID restricting tourism.
The Mauritius Times has been reflecting Government concern to ensure fair compensation but urging equity in its distribution . However what is likely to be received?
Compensation for clean-up costs and damages caused by oil spills from tankers is governed by two international conventions – the Civil Liability Convention and the International Convention of the Establishment of an International fund for Compensation for Oil Pollution Damage. However MV Wakashio was not a tanker but a bulk carrier..
Japan’s Mitsui OSK Lines Ltd said on Friday it would spend about 1 billion yen ($9.42 million) on measures to help Mauritius, including the clean-up of the island’s mangrove forests and contribution to an environmental recovery fund.
The bulk carrier owned by Japan’s Nagashiki Shipping but was chartered by Mitsui OSK when it ran aground on a reef in Mauritius on July 25 and later began leaking oil, causing a marine ecological disaster around the Indian Ocean island.
“The owner of the ship takes primary legal responsibility, but we, as the charterer of the ship, have to bear a social responsibility and take proper measures, as this accident has significantly impacted the environment and people’s life in Mauritius,” Mitsui OSK President Junichiro Ikeda told a news conference on Friday.
Mitsui OSK plans to contribute about 800 million yen ($7.55M) over several years to establish a Mauritius natural environment recovery fund and another 100 million yen to several local NGOs and funds established by public agencies such as Mauritius government and United Nations.
Pleasing though these are the cost of the clean-up is likely to be significantly higher and will not be know until it is complete.
Under the 2001 International Convention on Civil Liability for Bunker Oil Pollution damage, which is referred to as the BUNKER convention and has been administered by the International Maritime Organization (IMO) since it came into force in 2008, the owners of vessels are responsible for damage caused by oil leaks. That means Nagashiki rather than Mitsui OSK is liable.
Compensation amounts paid by ship owners are governed by the 1976 Convention on Limitation of Liability for Maritime Claims and a subsequent amended convention agreed in 1996. The agreement also requires owners to ensure they have adequate insurance.
According to Toda Law Office in Tokyo, Mauritius has ratified the 1976 version, which limits payments to 2 billion yen ($18.7 million) while Japan has signed the 1996 document which has an upper limit of 7 billion yen.
It will be up to any court ruling on compensation to decide which one applies in this case.
In addition the Wakashio is insured by Japan P&I Club, the country’s only organization that underwrites protection and indemnity insurance for ocean going and coastal vessels. On Wednesday, a spokesman for Japan P&I said it was “trying to make internal estimates” for how much the clean up would cost.
Jugnauth’s government has said it too has yet to come up with an estimate.
Japan P&I could cover up to as much as $1 billion, because it can count on support from more than a dozen other shipowner insurance unions around the world, according to Koshiro Emura, an analyst at S&P Global Ratings.
Let’s hope this collectively is sufficient. – however who foots the shortfall? If it is the Mauritius Government then this does not seem fair!