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High Court relief for MV Rak insurer

Responsibility of the owner or the insurer towards the payment of damage

MVRak.jpgGranting relief to the Romanian insurer of the MV Rak carrier – a vessel that sank off Mumbai’s coast in August last year – the Bombay High Court directed the Director General (DG) (Shipping) to give the insurance firm a hearing before black-listing it and preventing other vessels, insured by the firm, from entering Indian ports.

Widening the issue, Justice P B Majmudar and Justice R D Dhanuka also asked the Qatar-based company Delta – that owned the MV Rak – and its Dubai-based charterer and agent to be joined as parties in the litigation.

The court said the issue of the responsibility of the owner or the insurer towards the payment of damages for environment pollution, caused by the sunken ship, needs to be ascertained.

“Somewhere it should be sorted out,” the court said pointing out that pollution caused by the leakage of oil from a sinking vessel poses serious environmental hazard. The court said it needs to be determined whether or not an insurer can be held accountable for the damages if the owner of the vessel fails to respond.

In the interim period, however, there would be no restriction on other ships insured with MV Rak’s insurer from entering Indian ports.

Astra Asigurari Insurance and Reinsurance Company (AAIRC), the insurer had moved court contesting the order of the the DG Shipping issued on September 2, 2011 asking the port authorities not to allow any other vessel with a certificate of entry issued by the AAIRC, berthing in Mumbai.

After the MV Rak sank, the government had asked the AAIRC to furnish a bank guarantee of Rs 1.75 crore on August 10, 2011, and pay an advance of Rs 50 lakh as damages on August 29, 2011.

The AAIRC, however, contended that under the Merchant Shipping Act, 1958 the insurer of the vessel is not liable to bear the cost of the environmental damages. AAIRC’s counsel Venkatesh Dhond stated that it would be the responsibility of the owner of the vessel to take care of the damages. The vessel was insured with AAIRC for US$ 10 million.

Rui Rodrigues, the counsel for the DG (Shipping) submitted an affidavit to the court stating that the step barring vessels insured by AAIRC was taken in “good faith and public interest” as there was no response to its notices to the insurer or owner of the ship.

“When the ship owner is not traceable and does not respond, the insurer has the responsibility to meet the expenditure of placing the marker buoy including the cost of clean-up/preventive measures incurred by the government agencies,” states the affidavit filed by Captain Deepak Kapoor, Deputy DG (Tech), DG (Shipping).

Source: Express India

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