The Nairobi International Convention on the Removal Wrecks will enter into force on 14 April 2015 and will be incorporated into the MSA 1995 by the Wreck Removal Convention Act 2011 which also comes into force next month in the UK.
The Convention aims to replace a patchwork of legislation surrounding wreck removal, which is said to have created legal uncertainty and lack of transparency in this area. But will the Convention be a “game changer” for the industry, further increasing risk exposure for owners, underwriters and P&I Clubs but introducing desirable certainty, or will the practical impact of the Convention be minimised by its limited application where wrecks are most likely to occur?
By way of reminder, the key features of the Convention are as follows:
- The Convention applies to contracting states’ Exclusive Economic Zone (EEZ) which usually starts at the seaward edge of the territorial sea and extends 200 nautical miles from the coastal baseline. States may extend the scope of the Convention to their own territorial sea, which normally extends 12 nautical miles from the coastal baseline. If states choose not to do so, incidents in their territorial waters will remain subject to domestic law and the provisions of the Convention (including the compulsory insurance regime) will not apply.
- Compulsory insurance is required for wreck removal liabilities for all ships trading internationally and over 300 GT (up to the 1976 Liability Convention limits (as amended) as implemented in the relevant state). In simple terms, a vessel will not be allowed to the enter ports of a ratifying state unless she is properly insured and has a certificate to prove it. Coupled with this compulsory insurance requirement is the state’s right to bring a direct action against the insurer.
- The Convention gives coastal states the right to demand removal if the wreck creates the potential for substantial damage to the environment (i.e. not just where the wreck is deemed a hazard to navigation).
The UK is one of the few states which has opted to extend the application of the Convention to territorial waters.With wrecks likely to occur closer to the shore (and therefore within territorial waters), quickly establishing whether or not the relevant state has extended the application of the Convention to territorial waters will be crucial.
Another issue will be the link between the Nairobi Convention and the 1976 Limitation Convention in the context of compulsory insurance limits. Many of the countries ratifying the 1976 Limitation Convention (including the UK and, most recently, Malaysia), have excluded the right to limit liability for wreck removal - we would expect these states to ensure that the Nairobi Convention does not change that position, such that apparent limits to wreck removal liability for insurers under the compulsory insurance regime may not, in practice, be available. No doubt insurers are already wary of the requirement to sign up to another line of compulsory insurance, seemingly without limits.
In conclusion, the landscape of management of wreck removal seems be entering a new phase, with the provision of stronger and more overt powers for coastal states in their battle against wreck abandonment by uninsured or impecunious owners. That said, where coastal states do not uniformly extend the application of the Convention to territorial waters, and insofar as there remains a link to national limitation of liability regimes, there will remain a patchwork of legislation which leaves significant scope for confusion and, ultimately, disputes.