The Nairobi Convention will come into force in April 2015. It provides a strict liability regime for the removal of hazardous wrecks in Exclusive Economic Zones, with states able to pursue owners for compensation when forced to carry out remedial measures themselves. Direct action against insurers is also permitted but the relevant states’ powers are curbed by the requirement to ensure that measures taken are proportionate to the hazard. The immediate impact of the Convention is likely to be limited but it nonetheless represents a step towards global uniformity in this currently inconsistent area of law and practice.

Origins and early controversy

The Convention comes into force on 14 April 2015, some thirty years after the wrecking of the Mont Louis focused governments’ attention on the lack of a coherent international system for coping with the aftermath of maritime disasters that occur within countries’ Exclusive Economic Zones (“EEZs”) – the area outside a state’s 12 nautical mile territorial waters, usually extending to 200 nautical miles from a baseline that generally follows the coastline. In 1984, the Roll On-Roll Off vessel Mont Louis was carrying an extremely hazardous cargo of uranium hexafluoride when she collided with the ferry Olau Brittania and sank off Ostend. The Belgian authorities were left powerless, as the wreck was just outside territorial waters. The Nairobi Convention is the result of many years of hard work by the IMO Legal Committee.

Although the Convention aims primarily to remove the uncertainty over states’ powers over wrecks within their EEZs, the seemingly common sense suggestion that it might be extended to cover territorial waters caused great controversy. In 2007, Lloyd’s List reported “heated exchanges, which are rare in the legal committee”, with opposition to the “opt-in” clause whereby state parties could choose to extend the Convention’s effect to their territorial waters. Ultimately, the opters-in carried the day, although, as at 20 January 2015, only Antigua & Barbuda, Bulgaria, Denmark, Liberia, the Marshall Islands and the UK (less than half of the current state parties) have decided to apply the Convention to territorial waters, where the majority of wrecks of course occur.

Rising wreck removal expenses

The Convention’s potential importance has grown in recent years because of the significant escalation of wreck removal costs. It is discomforting that the MSC Napoli and the MV Rena were both a fraction of the size of the current generation of giant container ships, yet cost USD135 million and USD244 million to remove respectively. Environmental concerns and intervention by local authorities are probably the key factors: for example, the Italian authorities’ order that the Costa Concordia be refloated and towed, rather than dismantled in place, greatly increased the total wreck removal bill in that case.

How the Convention works

If a ship is involved in a maritime casualty and becomes a wreck within a state’s EEZ, the master or the ship’s operator must report it without delay to the affected state. A “wreck” may include, amongst other things, drifting ships (if measures are not in hand to assist them) and floating debris. An assessment by an affected state that a wreck poses a navigational or major environmental hazard triggers the Convention’s provisions. Once a hazard is declared, states have powers to locate and mark wrecks, warn mariners and “facilitate the removal of wrecks”. Shipowners and their insurers can take some comfort from the fact that the Convention provides that owners may contract with whichever contractor they choose, and that if measures are in hand then states may do no more than set “a reasonable deadline in writing” for removal. Non-compliance permits the state to remove the wreck at the owner’s expense, but only by “the most practical and expeditious means available”.

Other features

The Convention imposes a strict liability on shipowners for the costs of locating, marking and removing wrecks, with only the narrow exceptions of war; natural phenomena of “exceptional, inevitable and irresistible character”; intentional acts and omissions of third parties; and negligence of the authorities responsible for lights and other navigational aids. Although tonnage limitation regimes will still apply, this will often not help owners because most states do not include wreck removal within their limitation regime.

The Convention also provides that all ships over 300 GT must carry insurance up to the limits of the 1996 Protocol to the London Convention on tonnage limitation and provides for direct action against insurers up to this limit. This will allow states to recover at least some costs even when vessels belonging to single ship companies with no other assets are wrecked. Ships must also obtain certificates to prove their insurance cover and the UK, Germany, Denmark, Liberia and the Marshall Islands are taking the lead in issuing certificates to ships flagged in countries that are not parties to the Convention. The International Group of P&I clubs have all agreed to issue “Blue Cards”, which demonstrate that ships have the cover mandated by the Convention and thus allow them to apply for the required certificate. The International Group has also signed memoranda of understanding with the Australian and South African governments, as part of an outreach programme aiming to raise awareness of the role of P&I clubs and improve relations with state authorities. As at 20 January 2015, discussions were also ongoing with the US, Canada, Malaysia, Singapore and EU states grouped together as the European Maritime Safety Agency.

 balance the heavy obligations placed on shipowners, the Convention also provides that measures taken by states shall be proportionate to the hazard, and “shall not unnecessarily interfere with the rights and interests of other States including the State of the ship’s registry, and of any person, physical or corporate, concerned”.

Significance of the Convention

Where it applies, the Convention may lead to owners being able to take a more assertive approach when faced with a wreck removal situation. Although questioning the decisions of state bodies through judicial review or the administrative courts is often an uphill struggle, the Convention gives clear grounds for resisting unreasonable actions taken by states. The strict liability regime may also help to reduce the number of wrecks that occur in the first place by encouraging states to provide ports of refuge rather than turn ships away, because they will be more likely to provide refuge when they are confident that someone will pay if they do become wrecks.

Currently the Convention’s effect is limited by the small number of states – fifteen – that have incorporated it into their law, and by the fact that only six of those have applied it to territorial waters. Its effect in the short term is therefore likely to be limited, but greater adoption and “opting-in” by states to extend its effect to territorial waters, which may prove to be an attractive step since it gives them an agreed right of direct action against insurers, could bring much-needed uniformity and clarity. The delegates at a Salvage and Wreck Conference in London in December 2014 summed the situation up well by voting that although the Convention will not change the situation overnight, it is nonetheless a move forward and deserves the support of the shipping industry and the world’s maritime nations.