Swire Shipping denies bunker spill payment claims

Operator says it wishes to achieve a 'mutually acceptable solution' regarding a cleanup payment.

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Updated on 06 Jul 2009 07:51 GMT

Swire Shipping, the operator of the Pacific Adventurer, has rejected assertions that it is not prepared to cover the cost of a 270-tonne bunker spill off Australia's Moreton Island [pictured], which resulted from the vessel's loss of containers during Cyclone Hamish.

The company said that it is in discussions with the State and Federal Transport Ministers and has written to Premier Anna Bligh saying that it wishes to achieve a "mutually acceptable solution" in line with its commitment to the people of Queensland.

"From the beginning, the company has always promised to meet its full responsibilities under Australian law for the accident clean-up.

"The company has not stated it would cover all costs. All costs are still unknown and there is a limit to the amount of claims the company and its insurers can accept," Swire Shipping said in a statement.

According to Queensland state Premier Anna Bligh, lawyers for Swire Shipping had informed the state government that the company only intends to pay the $US17 million required under international maritime conventions, leaving taxpayers to pay the rest of the estimated $US27 million despite previous assurances that it would pay above the cap.

"As the Queensland Government is aware, Australia is a party to the Convention on Limitation of Liability for Maritime Claims (the LLMC Convention) which limits the liability of a ship-owner for third party claims. In the case of the Pacific Adventurer, the Convention limits this liability to the equivalent of approximately A$14.5 million. The Federal Government Minister for Transport, the Hon Anthony Albanese MP, has reaffirmed the applicability of this limit since the Pacific Adventurer incident," Swire Shipping said.

The company added that the ship's insurer has already provided financial security to the Government by a letter of undertaking for up to A$20 million.

In addition, Swire Shipping said that immediately following the bunker spill it had provided $2 million of assistance with the clean-up. The company added that its oil pollution experts had flown from the Middle East and it had imported specialist equipment which was donated to the Government.

"The reason for the LLMC Convention is to place an upper limit on ship-owners' potential liability for a fuel oil spill. If ship-owners faced unlimited liability for such spills, the additional cost of insurance would result in a significant increase in freight rates, which would have a negative impact on international trade. Australian exports and imports would have to carry this additional cost," Swire Shipping said.

"Any decision by Swire Shipping to offer compensation that is significantly above the limit determined by the LLMC Convention would risk becoming a precedent in international law. As a result, insurance premiums and freight rates could rise significantly.

"Swire Shipping wishes to express its sincere regret to the people of Queensland for the oil spill. The company is committed to resolving the matter in a fair and equitable manner and remains ready to discuss it with the Premier of Queensland," the company added.