‘Game-changing’ aspect to wreck removal

April 2013

The Wreck Removal Convention still needs ratification by four more nations before it comes into force, but when it does, it will be game-changing, says Simon Tatham.

The recent sinking in UK waters of, reportedly, an uninsured vessel, the 1,700 GRT ship Emsstrom under tow to Turkey for scrapping, has attracted the attention of both the SOSREP and the MCA. The listing vessel sank in 25m off Brixham, and is regarded as a hazard to navigation. A wreck removal notice seems inevitable.

One of the few bright spots, in a currently depressed market for operators, along with, by coincidence, subsea work generally, is wreck removal. Reasons for this include a growing intolerance of coastal authorities, increasingly amongst developing nations, mixed with a genuine fear that older wrecks, including wartime wrecks, may be at risk of releasing their toxic cargoes if left untouched.

The incident prompted me to pick up a copy of the recent Wreck Removal Convention to see what impact this might have. This document, signed off at Nairobi in 2007, has been sitting on the UK’s statute book since July 2011, waiting to come into force 12 months after the necessary 10 nations have ratified the instrument.

The game-changing aspect of the Convention is that, once in force, the right of states to order the removal of wrecks will extend from territorial waters to the 200-mile exclusive economic zone. States will generally have to order removal within three years. Meanwhile no vessel, submersible, floating platform or craft (including towed craft) over 300 GT, will be allowed into the ports of a Convention state unless it is carrying a wreck removal insurance certificate. Failure to do so will be a criminal offence. This will also extend to vessels attending offshore installations. Owners will have strict liability for removal which will make enforcement very straightforward and, in effect, guarantee insurance funding for removal in most cases.

On the face of it, this should be good news for wreck removal contractors. For others operating tugs, OSVs and any barges or floating platforms in the North Sea, for example, these will all need to carry certificates.

One can see some problems for towing operators. Some long distance tows may not involve a visit to an intermediate port and so, if the tow is uninsured, as in the case of Emsstrom, the hirers might get away with that so long as the Convention is not enforced at the departure or destination ports.

However, where tug and tow are forced to put into the administrative area of a port to seek refuge, repair or simply to bunker, take on spares or change crew, an uninsured tow risks being detained. Whilst waiting for hirers to sort such problems out, the tug should be entitled to a delay rate, but could be stuck there for some time, which risks messing up positioning for the next voyage. Under TOWCON where payment is made in stages, lumpsum installments will be delayed which is bad for cash flow. Yet further scratching of heads will take place under HEAVYCON where, for example, a semi-submersible is carrying a cargo of vessels – will these be required to carry Convention compliant wreck removal insurance?

Right now, six nations, the UK included, have adopted the Convention. Therefore its application may be some years off. Pending the enforcement of the Convention, should anything be done by towage or heavy lift operators? The sensible approach is for the contract to always require the hirer to have and produce at least basic liability insurance, including cover for wreck removal. Obviously, however, if your competitors are less fussy, their terms may attract those hirers seeking to save costs and cut corners.

Simon Tatham

Simon Tatham is a partner of Tatham Macinnes LLP and a founding member of its new service, TugAdvise.com. He has 30 years’ experience in shipping law.

Reproduced with kind permission of International Tug & OSV magazine, March/April 2013. View original article.