Swire tactics blow up

[T-bone]

July 5, 2009 - 4:43PM

Premier Anna Bligh has threatened to sue the owners of a ship responsible for Queensland's biggest environmental disaster.

The cyclone-buffeted Pacific Adventurer leaked 270,000 litres of fuel into Moreton Bay in March, triggering a $34 million clean-up of Moreton and Bribie islands and Sunshine Coast beaches.

Hong Kong company Swire Shipping's lawyers has written to the premier refusing to cover those costs, siting an international maritime convention that caps clean-up payments to US$17 million.

Ms Bligh has attacked the company for trying to shirk its responsibilities after making repeated public assurances in the disaster's aftermath that they would do the right thing.

"I am very angry that Swire ... have just notified myself and the federal government that they will only be making payments up to the cap of $17 million," she told reporters today.

"We'll be taking advice on what further legal action we can take against the company, but there is an international convention on the cap for repaying costs.

"The really disappointing thing about this is that this company wrote to both myself and the federal government some months ago and said they would pay above the cap and pay to clean up the mess that they caused.

"It's not good enough that they now write to us and change their mind and want to do just the bare minimum.

"They caused a major environmental impact on our precious Moreton Bay and we're going to chase them."

But the company has rejected any suggestion it's not prepared to meet its responsibilities.

Swire Shipping said in a statement on Sunday it was in discussions with the state and federal governments and had asked to meet with Ms Bligh to come to a "mutually acceptable solution".

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

"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 said the ship's insurer had already provided financial security for up to A$20 million and provided $2 million of assistance with the clean-up.

But the premier's not satisfied.

"This oil spill cost us a lot more than that ... and together with the federal government I'll make sure the Queensland taxpayers don't pay it," she said.

She said increased fees on international ships may be considered to help collect what's still owing.

Federal Transport Minister Anthony Albanese said the company should do the right thing.

"We expect Swire to cover the full cost of cleaning up the pollution and the environmental damage caused by one their ships," Mr Albanese said.

"Now it's their chance to put their money where their mouth is and pay the full costs of this terrible spill.

"Their reputation as a good corporate citizen is on the line."

[rick.shaw]

No surprises there........They'll eventually come up with the money. Swire do seem to be shy of bad publicity...........

[ALPHA FLOOR]

More SLS anybody?

[FlexibleResponse]

This is big news in Australia.

It's such a shame that Swire Shipping are trying to shirk their responsibilities in trying to avoid paying full compensation for the damage they caused to the Australian beaches and wildlife...after saying previously that they would do so.

It would appear that they were operating into Australian (and in International waters) under-insured. And they don't want to put their hand into their own pockets to make up the difference in the bill which has resulted due to their lack of diligence.

It probably just that some Director's bonus is on the line as is usually the case when the lawyers are brought into the debate.

Unfortunately, all other Swire Groups will suffer the embarrassment and the fall-out due to the ineptness of the few.

[Busbert]

So a company has an accident in international waters...

In the case of AF447, I suppose that AFR are paying the cost of the 4 submarines and 3 survey vessels currently combing the South Atlantic for debris and flight recorders?

Hardly.

[cpdude]

Human recovery operations and retrieval of vital accident information stored in the Black Boxes is a far cry from actual damages incurred by a spill. There is a need and benefit for this recovery operation to continue for the residents of several nations and the aviation community.

IMO, ALL damages incurred by a spill should be paid!:ok:

[jed_thrust]

Busbert, the ship was in Aussie waters, not international. The company is citing an international maritime convention which is not the same thing.

[Fenwicksgirl]

Hhmm just wait till the Aussies connect the Swire=Cathay Pacific dots! Not good PR at all.

[FFRATS]

It would appear that they were operating into Australian (and in International waters) under-insured. And they don't want to put their hand into their own pockets to make up the difference in the bill which has resulted due to their lack of diligence.

I think 17Million is the international shipping limit and that is what Swire said they agreed to pay, not what the QLD gov thought, which was the full cost.
Qld Prem. Anna Bligh ran the Gold Coast Half Marathon on Sunday and she will be one sore, angry woman not happy to play Hong Kong back treading games.

FFRATS

[Traffic]

The International Convention on Civil Liability for Oil Pollution Damage and the International Convention on Civil Liability for Bunker Oil Pollution Damage, both of which Australia is a party to, clearly define the limit of legal liability. The calculation is based upon vessel gross tonnage and in this case, based on the gross tonnage of the Pacific Challenger, comes to about AUD20m.

This is the legal responsibility and covered by the insurance carried.

I believe Bligh may be alluding to a moral responsibility which is an entirely different matter that needs to be addressed through negotiation for additional compensation or legal action for negligence against the captain and the company.

It appears that the negotiations have yet to take place and the legal action has already commenced via the media. The Kangaroo Court seems to still be alive and well but could indeed prejudice the satisfactory outcome that Bligh seeks.

The last Bligh event in maritime history ended up with a long paddle in a very small boat. It is to be hoped that cooler heads prevail this time in the interests of a satisfactory outcome for all concerned.

A quick look at the CNCo website will attest to the current state of global shipping. That said, I am sure a sensible compromise could be reached if it is taken off-line and kept away from the lawyers.

Kitsune,

The sheep stations are no longer. They were bought last year by the NSW government as part of the Murray Darling preservation efforts.

[simplex]

swire.com - Business Activities (http://www.swire.com/eng/activities/australia.htm#Agriculture)
:confused:

[Traffic]

Simplex

I stand corrected. Only one of the larger properties was sold.

Bourke Council laments loss of Toorale Station revenue - 19/09/2008 (http://www.abc.net.au/rural/news/content/200809/s2368996.htm)

Cheers

[oriental flyer]

it strikes me that the simple solution to the issue would be to ban all swire registered ships from entering Australian waters until the clean up bill is paid in full.
If you can't play by my rules then stay out of my backyard. I would hazard a guess that the bill would be paid within a week

[FlexibleResponse]

It was big news again on the TV news tonight...I don't think Swire picked the right target to argue with in light of Australia's current "save the world" from greenhouse gases and general greenie mode.

The commercial damage to Swire Shipping's reputation (and collateral damage to other Swire companies) may well exceed the difference between $20m and the actual cost of around $35m?

Anyone who bothers to read the maximum insurance damage payout on the insurance certificate on the back of the cockpit door for aviation accidents and compares that with the miserly $20m with regard maximum marine insurance damage payout is likely to be very shocked.

Swire Shipping is luxuriating in the cozy realm of 19th (not 20th or 21st) century good old boys agreed restricted shipping collateral insurance damage which has proved to bear no resemblance to the reality of actual damage costs.

[Traffic]

Flexi

You are of course correct. Those that leave their commercial reputation in the hands of lawyers are destined to suffer the consequences.

Cheers

[Old Fella]

Not surprising to read the comments of the usual suspects when it comes to kicking the Swire's. The way some of you are carrying on one would think that the skipper of the Pacific Adventurer deliberately had the containers swept off the ship and hole it's fuel bunkers. The fuel spill was the result of an accident fella's. Of course Anna Blight has to make a noise, she is a politician. :ugh: :ugh: :ugh:

[freightdog188]

of course it was an accident.
so was the Exxon Valdez.
If I crash my car into 5 parked Ferraris and I'm not insured sufficiently to pay I'm still liable for the total damage - I won't be able to say "excuse me, I'll only pay for the 2 that my insurance is good for, because it was just an accident"

[Old Fella]

If the law says Swires, or any other shipping line owners, have a maximum liability of $20 Million blame the law makers, not Swire. The late Kerry Packer had the same approach to paying taxes when he said that he was not going to pay a cent more in taxes than required to and that anyone who did was a fool. He also added that the government did not do a good job of using the tax revenue wisely. Likewise, almost every government estimate of costs is inflated grossly, why not the amount to clean up after the fuel spill?

[FlexibleResponse]

Perhaps there is the "law" and then again, perhaps there is commercial reality and commonsense.

As alluded to earlier in this thread, perhaps someone has picked the wrong dog to fight with?

[Traffic]

Just because Swire has been a great corporate citizen, investor and employer in Australia for over 100 years when many others have just given up, Ms Bligh has decided to make an example of them...

Old John Swire is no longer involved so the article about him being shirt-fronted by testosterone-fuelled journos is an affront. They should have approached Sir Adrian or JHH.

If Australia wants shipping services at competitive prices they should adhere to conventions they promote.

The following provides some balance.



Llew Russell, the Chief Executive Officer of Shipping Australia said yesterday that he was shocked at the announcement made by Australian Federal Minister Anthony Albanese and the Premier of Queensland, Anna Bligh, that Hong Kong-based Swire Shipping should pay all the clean up costs as a result of the oil spill involving its vessel, the ‘Pacific Adventurer’.

“Australia is a party to the Convention on Limitation of Liability for Maritime Claims 1976, and there have been a number of subsequent amending protocols adopted by Australia,” said Mr Russell. “In other words, the company is meeting its full responsibility under that convention and in fact the ship’s insurance has already provided financial security for up to A$20 million (US$16 million) and the company provided even on top of that A$2 million (US$1.6 million) of assistance with the cleanup," said Mr Russell.

Some 230 tonnes of fuel oil, 30 tonnes of other fuel, and 31 containers of ammonium nitrate spilled into the Coral Sea on March 11 during Cyclone Hamish. In the ensuing days, the oil washed ashore along over 60km of coastline along the Sunshine Coast, Moreton Bay, Moreton Island and Bribie Island.

The Queensland and Australian Federal Governments both demanded that Swire pay the full costs relating to the ‘Pacific Adventurer’ oil spill. Queensland Premier Anna Bligh said that Queensland was not responsible for the oil spill and would not pay the US$27 million clean up cost.

“The nature of shipping operations is such that potential liabilities that may be incurred are out of all proportion to what a shipowner must invest in the enterprise. Even a small trading vessel could be carrying sufficient bunker fuel to cause environmental harm and necessitate a clean up to a value many times the value of the ship.

“The real question is how do you insure against an unidentifiable risk which could range up to many hundreds of millions of dollars?”

Mr Russell pointed out that despite some media comments, Swire has never officially agreed to pay above the cap as required under Australian law and promised to meet its full responsibilities under that law for this cleanup which was caused by such a terrible accident.

“Australia has also been at the forefront of impressing upon other countries the need to adhere to international conventions and has been eager to adopt many of the conventions in terms of its own national law but in cases such as this it simply throws the convention out the door.

“We will be certainly raising this internationally and it will be very interesting to see the reaction of the International Maritime Organisation. If Australia ignores the application of this convention then insurance costs for ships trading to and from Australia will skyrocket if one can obtain insurance at all for what in effect would be an uninsurable risk,” Mr Russell said.

[Lowkoon]

They did the honourable thing and changed the name of the ship..... :mad:

[FlexibleResponse]

“The real question is how do you insure against an unidentifiable risk which could range up to many hundreds of millions of dollars?”

An insurance actuary may disagree with this statement. On the contary, it is possible to identify risk and put a cost on that risk...the shipping and insurance industries have some hundreds of years of experience doing exactly that.

Limitation of liability suits the shipping industry and results in lower risk to the shipper, lower costs to the clients needing to ship goods and ultimately to the end consumers. But, when something untoward, but statistically entirely predictable happens (environmental damage resulting from loss of bunker fuel or loss of cargo), somebody needs to, and has to pick up the tab.

The argument here is whether we still all agree on who pays for the excess damage over and above that provided by the conventions...the shipping company...the insurance company...or the poor sucker that wears the damage in his own backyard (and who may have no commercial interest in the operation in the first place)?

[FlexibleResponse]

It seems that a negotiated happy ending has eventuated.

Well done to all...especially to Swire Shipping!