Wreck removal is a crucial aspect of maritime law and insurance. When a ship becomes a wreck due to an accident, there are various legal, financial, and environmental implications involved in its removal. The process is governed by different insurance policies, conventions, and international agreements aimed at ensuring that the shipwreck is dealt with responsibly and safely.
Under a standard hull policy, a shipowner is insured for both constructive and actual total loss of the vessel. A constructive total loss occurs when the cost of recovering and repairing the ship exceeds its value, while an actual total loss occurs when the vessel is completely destroyed or irrecoverable.
The standard hull insurance policy, however, specifically excludes liability for the removal or disposal of wrecks, obstructions, cargo, or any related items. In cases where the shipowner declares the vessel a constructive total loss, they must first submit a notice of abandonment to the hull insurer before making a claim. The hull insurer typically declines this notice to avoid taking on the responsibility for subsequent liabilities, such as wreck removal. As a result, while the shipowner can claim the loss of the vessel, they remain liable for the costs of raising, removing, or marking the wreck.
The International Convention on the Removal of Wrecks (WRC), adopted in Nairobi in May 2007, entered into force on April 14, 2015. The WRC provides a legal framework for dealing with shipwrecks that pose risks to safety, property, or the marine environment. It introduces a strict liability regime, making the shipowner responsible for wreck removal costs, except in cases where specific exemptions or limitations apply.
The WRC allows signatory states to remove wrecks or compel shipowners to remove them, particularly when the wrecks could harm maritime safety or the environment. Additionally, the convention requires vessel owners to report any shipwrecks caused by their vessels.
One significant feature of the WRC is its extension beyond a country’s territorial waters. The convention applies not only to the territorial sea but also to a state's exclusive economic zone (EEZ), which can extend up to 200 nautical miles from the shore. In situations where a state has not established an EEZ, the convention area is still recognized as the adjacent area beyond the territorial sea as defined by international law.
Under the WRC, states have the authority to legislate wreck removal within these convention areas. This provision is essential for ensuring that shipowners are held accountable even when a wreck occurs far from the coast.
The shipowner is responsible for covering the costs of locating, marking, and removing a wreck. These responsibilities arise when a wreck presents a danger to maritime safety, blocks important sea routes, or threatens the marine environment. In line with the WRC, shipowners are required to carry compulsory insurance to cover potential wreck removal liabilities. To ensure compliance, vessels must have a certificate of insurance on board, which is provided by the appropriate flag state based on proof of insurance coverage.
Once a shipwreck occurs, the affected state is required to identify and mark the wreck. If the wreck poses any risk to navigation, the environment, or property, the state may impose specific conditions for its removal. States that have ratified the WRC are empowered to demand the removal of wrecks within their jurisdiction or convention area, and shipowners are obligated to comply with such orders. Failure to remove a wreck can result in penalties or legal actions.
Where the shipowner is liable for the removal of a wreck, the costs associated with it can be recovered from the ship’s Protection and Indemnity (P&I) insurance club. P&I insurance provides coverage for various third-party liabilities, including wreck removal.
For the P&I club to cover wreck removal costs, the wreck must be located within a port or state’s jurisdiction. Additionally, the relevant authorities must issue a valid demand compelling the shipowner to remove the wreck. The P&I club also covers the cost of removing bunkers, marking the wreck, or even its destruction if required by the authorities.
With the implementation of the WRC, contracting states can issue wreck removal orders for wrecks within their convention areas, which can extend up to 200 nautical miles from the coastline. The convention applies not only to the wreck itself but also to cargo or any other property that originated from the ship. For example, if debris from the wreck blocks a navigational channel, creating a danger to other vessels, the shipowner remains liable for its removal.
It’s important to note that if a shipowner transfers ownership of the wreck, cargo, or other property before it is raised or removed, they lose their ability to recover costs from the P&I club unless they obtain the club’s prior consent.
In the event that a wreck is raised and subsequently sold for scrap, the proceeds from the sale are typically allocated based on the shipowner's prior agreement with their H&M underwriter. The P&I club, which covers the wreck removal costs, is entitled to recover these costs from the sale proceeds before any remaining funds are distributed to the hull insurer.
In cases where the shipowner has declared a total loss, the wreck's residual value after removal costs would generally go to the H&M insurer. However, this allocation depends on the terms agreed upon in the shipowner’s insurance policy.
To comply with the WRC, shipowners must demonstrate they have sufficient insurance coverage to meet potential liabilities arising from wreck removal. P&I clubs issue the necessary 'blue cards,' which enable shipowners to obtain certificates of insurance from their vessel's flag state. These certificates are essential for ensuring that the ship can legally operate under the WRC framework.
Wreck removal is a complex and critical responsibility for shipowners, particularly in the aftermath of maritime accidents. With the introduction of the WRC, shipowners are now subject to stricter liability regimes, and states have more authority to demand the removal of wrecks in both territorial waters and convention areas. Hull insurance policies provide some coverage for total losses, but shipowners are ultimately liable for wreck removal costs, often relying on P&I insurance for financial protection. As maritime regulations continue to evolve, ensuring compliance with international conventions like the WRC is vital for the safe and responsible management of shipwrecks.
