Who should be liable for shipwrecks?

The recent flooding across Australia’s east coast also generated work for the maritime and transport law expert. While much of the focus for insurance companies and brokers during these events is around inundated homes and businesses, Taylor was solving marine issues.

“I recently acted for a number of marine insurers on claims related to the 2022 Brisbane floods,” she said. “This included collisions between vessels and marinas and pontoons that had dislodged during the flood event.”

Much of Taylor’s day to day work involves acting for insurers of goods that are damaged during carriage by sea, loading, unloading or during transport.

“Of itself, this may not sound as interesting as maritime incidents, however, these matters almost always involve conflicting jurisdictions, international law and remarkable stories,” she said.

The role of marine insurance in law reform

Taylor said the marine insurance industry plays a “really interesting” role in law reform. One legal area relevant to maritime insurance that is currently in the spotlight is the Nairobi International Convention on the Removal of Wrecks 2007, also known as the Wreck Removal Convention (WRC).

“Australia is currently considering whether it should be a party to the Wreck Removal Convention,” said Taylor. “In its simplest terms, the Wreck Removal Convention attributes liability to shipowners for the removal of wrecks and environmental clean-up, in the exclusive economic zone and if a state so chooses, also its territorial waters.”

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In 2020, the Australian government published a discussion paper seeking stakeholder views on joining the WRC. The paper highlighted how difficult it is to hold the owners of shipwrecked or polluting foreign vessels accountable to recover costs when their accidents are in Australian waters.

“The complexity of this regime has been illustrated by the YM Efficiency incident in June 2018, where 81 shipping containers were lost overboard from a ship southeast of Newcastle,” said the paper’s authors.

The ship’s owner, Taiwanese shipping company Yang Ming, refused to pay the significant clean-up and salvaging costs. The authors said the WRC would be a “a potential improvement to the current process of wreck removal and associated cost recovery.”

Taylor said this is an important issue because shipwrecks can also cause catastrophic pollution to marine and coastal environments.

“As a result, the question of who should pay – the Commonwealth Government or the polluter – usually a foreign shipowner – is critical,” she said.

However, Taylor said the insurance related questions don’t end there.

Insurers can help protect the marine environment

“Once liability is established, it becomes a question of reasonable proportion – how much should be paid? The greater the scale of the pollution damage, the more difficult these questions become,” she said.

Taylor said marine liability insurers argue there needs to be a balance.

“That is, there must be a limit to their liability,” she said. “In return, they can agree to strict liability for the harm caused.”

Taylor said the reason international conventions on maritime law, like the WRC, can take decades to negotiate is because establishing that balance is very tricky.

“The marine insurance industry is taking an active role consulting with the Commonwealth Government on the impact these laws might have on vessel owners in Australia and appropriate liability for the clean-up operations,” she said.

Taylor said insurers can be “instrumental in the protection of the marine environment” in other ways, for example, by taking steps to curb illegal fishing.

“This is being done by insurers developing tools to identify wrongdoers and denying access to insurance for vessels engaged in such illicit activity,” she said. “This disincentivises illegal activities and reduces behaviour that is harmful to the environment.”

New Zealand’s biggest maritime incident

Taylor’s maritime law career has also involved acting in shipping casualties on behalf of Protection & Indemnity (P&I) Clubs. These clubs, she said, provide mutual marine liability cover for about 90% of the world’s ocean-going tonnage.

“The most noteworthy of these matters was when I acted for the P&I Club in the MV Rena grounding incident,” said Taylor. “In October 2011, the MV Rena, a Liberian-flagged container ship grounded on the Astrolabe Reef while approaching Tauranga Harbour in NZ. Three months later the ship broke in half.”

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She said the cost of the salvage operation was second only to the Costa Concordia which sank off Tuscany’s coast in 2012.

“It remains the most significant maritime incident in NZ’s history,” she said. “I was part of the legal team based in the incident response room in Tauranga in the aftermath of the oil spill and during the salvage operations.”