Gard seeks closure in ‘Nissos Amorgos’ case

Mar 21 2014

Gard has filed proceedings in the English High Court of Justice against the 1971 IOPC Fund to resolve outstanding issues in the ‘Nissos Amorgos’ oil spill incident.

The insurance giant seeks a ruling that the fund is bound to reimburse further amounts, which the club may have to pay in Venezuela and that by refusing to do so is it in breach of funding procedures they agreed to follow at the outset of the case.  

In October 2013, the administrative council of the 1971 Fund resolved to wind up its affairs. It is understood that it intends completing this process during the course of 2014.

However, Gard – along with the rest of the International Group of P&I Clubs – believes that the winding up the fund is premature pending a satisfactory resolution of outstanding compensation cases, of which the ‘Nissos Amorgos’ is one of five.

Sara Burgess, senior vice president, head of International Group Affairs, said: “Gard very much regrets that these proceedings have become necessary, but unfortunately we believe we are left with no choice.”

Colin Williams, International Group Pollution sub-committee chairman, said: “The International Group does not agree with the views which have been expressed by the 1971 Fund as to its obligations in the ‘Nissos Amorgos’ incident.  The group fully supports Gard in bringing these proceedings.” 

The oil spill occurred in February 1997 when the 89,400 dwt tanker, carrying some 75,000 tonnes of Bachaquero crude oil, ran aground while passing through the Maracaibo Channel in the Gulf of Venezuela.  An estimated 3,600 tonnes of crude oil escaped in the country’s largest ever oil spill.

The vessel was navigating under compulsory pilotage and was the first of three vessels to run aground in about the same location during a period of six weeks, raising questions about the condition of the channel and the navigable draft.  

Concerns were voiced about treatment of the vessel’s master, Konstantinos Spiropoulos, who was detained on criminal charges for over a year and the case also achieved notoriety for the long detention of the ship as security for claims.  

Under international law, the shipowners were entitled to the release of the ship by constituting a fund in accordance with the Civil Liability Convention, but it was nearly five months after the incident before the vessel was finally able to sail.

Claims for clean-up costs by oil spill response organisations and for economic losses suffered by shrimp fishermen and processors, were settled by Gard and the Fund by payments of nearly $25 mill.

In accordance with the normal practice Gard funded the first $6.5 mill of settlements, and the Fund paid the amounts needed after that point had been reached in December, 2000.

The main bone of contention has been a claim which the Venezuelan Republic presented for over $60 mill in respect of environmental damage.

In 2004, the Fund accepted an undertaking from the Venezuelan Government to stand last in the queue and agreed to pay 100% of established claims without pro rating. The problem with the claim is not that it threatens the Fund’s limit but that its nature is controversial, as it has been presented on the basis of theoretical models and abstract methods of quantification.  

(This story first appeared in the Maritime Executive daily newsletter)

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