Scoop Election 08: edited by Gordon Campbell

Gordon Campbell on who should pay for the Rena clean-up

October 17th, 2011

So Transport Minister Stephen Joyce will be meeting this morning with the Mediterranean Shipping Company, the Greek firm that chartered the Rena from its Greek owners, Costamare Inc – with a view to getting MSC to front up to take some responsibility for how the ship was being operated.

Good luck with that. The cost of the Rena clean-up is likely to run into the tens of millions – and it is still unclear how much of that cost, if any, will be met by the insurance carried by the ship’s owners, and/or by the insurers for MSC, the charter operators of the vessel. Last week, MSC issued a press release pushing all the responsibility back onto the owners, Costamare:

In relation to the container vessel Rena accident, off the coast of New Zealand, MSC Group confirms that it is neither the owner of the involved vessel nor responsible for its management or the crew on board.

That’s plainly ridiculous. If you are the charter operator, you are the operational manager of the vessel, and have (immediate) responsibility for the state of the ship and the working conditions of the crew on board. The owners also have some responsibility. Like MSC, Costamare is a huge international player in the world of container shipping. While an apology for the grounding has been issued by Costamare’s managing director Diamantis Manos, it is still unclear how willing Costamare is to pay for the cost of the clean-up.

Costamare is owned by the billionaire Konstantakopoulos family, and it made most of its money in the China trade of containers to and from Asia. The family patriarch was Vassilis Konstantakopoulos (known as ‘Captain Vassilis’ in Greek shipping circles) who died in January of this year.

Before dying, Vassilis pumped a good deal of the family fortune into a luxury golf resort in the Pelopponese called Costa Navarino. The people of the Bay of Plenty who have been picking dead seabirds coated in oil off their beaches will find it bitterly ironic that the birdwatching of migratory species is listed prominently (in company advertising) as being among the environmental attractions at Costa Navarino. In fact, Costa Navarino depicts itself as a model of green tourism, one that positively embraces environmental regulation as a driving force in its operations:

* Regulation: The strict legislation regarding….sensitive habitats and ecosystems was the leading incentive for the creation of this eco-friendly hotel, as Messinia is one of the regions with the highest biodiversity in Europe, both in terms of species and ecosystems.
* Market demand: The combination of luxury services with environmental protection positions the hotel in a niche market.
* Green ethics: Environmental measures far exceed legal obligations….

If it has to, New Zealand should be willing to retaliate against the hypocrisy of Costamare Inc marketing the Costa Navarino in such terms, while the money that drives this exercise in luxury green tourism is being amassed by the sort of substandard container ship operations exemplified by the Rena.

According to Phil Goff, the government could have minimised its exposure to the cost of the cleanup if only it had ratified the International Convention on Civil Liability for Bunker Oil Pollution Damage.

The Bunker Convention certainly does seem relevant to the Rena situation:

The Convention applies to [pollution] damage caused on the territory, including the territorial sea, and in exclusive economic zones of States Parties. “Pollution damage” means:

(a) loss or damage caused outside the ship by contamination resulting from the escape or discharge of bunker oil from the ship, wherever such escape or discharge may occur….
(b) the costs of preventive measures and further loss or damage caused by preventive measures. The convention is modelled on the International Convention on Civil Liability for Oil Pollution Damage, 1969. As with that convention, a key requirement in the bunkers convention is the need for the registered owner of a vessel to maintain compulsory insurance cover.

Another key provision is the requirement for direct action – this would allow a claim for compensation for pollution damage to be brought directly against an insurer.

Ironically, the Mediterranean Shipping Company put out a press release on the 4th October ( one day before the Rena grounding) saying that from November 1st onwards, all of its clients would be covered by the Bunker Convention.

Surely in the circumstances, this should give the government some leverage to get MSC to backdate its coverage by a month? While the government has conceded it ‘ dropped the ball’ by not signing the Bunker Convention, it has also blamed successive governments for not signing New Zealand up to its protections.

That point has some validity, given that the Convention was adopted in March 2001, and came into force in November 2008 – and selective memory did appear to be at work when Labour leader Phil Goff was lambasting the government this morning for its failure to sign the Bunker Convention. Where was Goff between 2001 and 2008 on this point? Even so, the current government’s carelessness is reprehensible – especially given that the potential for oil spill damage to Bay of Plenty and East Cape beaches received a lot of publicity last year, during the furore over the awarding of oil exploration contracts to the Brazilian oil firm Petrobras.

Why didn’t the Petrobras furore spur the likes of Energy Minister Gerry Brownlee and Transport Minister Stephen Joyce into preventive action? One can only put the government’s slackness down to its ideological hostility to the regulation of business, and to its willingness to attract investment to this country by offering lowest common denominator environmental standards and labour conditions.

What New Zealand has done since the early 1990s is to de-regulate coastal shipping and virtually invite flag-of-convenience vessels (with their attendant substandard equipment and work conditions) to dominate our coastal shipping trade. It did so without ensuring that local and regional councils had in place viable oil spill contingency plans (OSCPs) and the equipment and management systems to enable a ready response.

Those are the lessons the Key government should be taking from this disaster. In particular, we need to ask what steps will Stephen Joyce and his Cabinet colleagues now (belatedly) be taking to ensure (a) that all local and regional councils have credible OSCPs in place and (b) that all ships plying our coastal waters carry sufficient insurance cover to meet the cost of any oil spill damage they cause?

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    1. 14 Responses to “Gordon Campbell on who should pay for the Rena clean-up”

    2. By Patrick Scott on Oct 17, 2011 | Reply

      I’m suspicious as to the motives behind not signing.

      Every now and again NZ shocks me by refusing to be a party to these sorts of things, and it always seems to be in the interest of quick profit – eg our current refusal to join other nations in declaring the Ross Sea a marine reserve.

      What was behind the continued failure to join this one, I wonder. Who benefitted?

    3. By Solo View on Oct 17, 2011 | Reply

      Talley’s fish for toothfish in this area

    4. By Neil Sanderson on Oct 17, 2011 | Reply

      Hi Gordon: Just wondering if you a reference or evidence for this statement in your column:

      “If you are the charter operator, you are the operational manager of the vessel, and have (immediate) responsibility for the state of the ship and the working conditions of the crew on board.”

      I haven’t seen the charter contract, but if I were to charter a boat or an airplane, I would not expect to be liable for mechanical defects or the actions of the crew.

    5. By Joe Blow on Oct 17, 2011 | Reply

      @ Neil

      Good point Neil!

      Who has responsibility for the management and maintenance of the ship depends on the type of charter agreement the charterer and owner have. Some agreements involve the charterer taking responsibility for the crewing and maintenance of the ship during the time of the charter, but you are right it is by no means a foregone conclusion that a charter operator will be responsible for the crew and maintenance of the ship.

    6. By Bazza in Blighty on Oct 17, 2011 | Reply

      MSC’s charter of the RENA, is I believe, a period timecharter of some 5 years duration. Under a timecharter, while the charterer has commercial control in being able to direct (within the limits agreed in the charterparty) the vessel’s employment – cargo to be loaded, itinerary etc – it is the owner (Costamare) who has operational control, is responsible for the safe navigation of the vessel and employs the crew (in this case almost certainly through a contract with a Philippine-based manning agency).
      Incidentally, I was a shipbroker for some 30 years and have also been involved in the commercial and operational managment of ships so believe I can comment with some authority on this.

    7. By Leon Henderson on Oct 18, 2011 | Reply

      Deregulation-Of-Shipping-Act (rammed into “Law” by the National and so-called “Labour” Parties in the early 1990′s to destroy the most powerful by far Trade Union in New Zealand: the Seamen’s and Watersiders” Union).

      What this new “Law” did was make “legal” what previously had been illegal: rotting rustbucket ships owned by Wall Street “investors” and crewed by virtual slave-labourers such as Phillipino’s on only a couple of New Zealand dollars a day.

      The entire crew (including the Captain) of the Rena were/are Phillipino’s.

      What is more (and completely unsurprisingly so) is that the actual owners of the ship are impossible to find in a morass of capitalist obfuscation.

      Where is the surprise, Joe Blow?

      Also Joe Blow, observe how the mass-media are refusing to interview the Mighty, Mighty, New Zealand Green Party about this colossal ecological disaster.

      The New Zealand Green Party are the first people any half-decent media would have gone to for information on this shipwreck, because the Green Party are the first “Ecological” Political Party of New Zealand, and they are the one’s who have got the international contacts of expertise for how to deal with a situation like this.

    8. By Bazza in Blighty on Oct 18, 2011 | Reply

      To suggest that ‘the actual owners of the ship are impossible to find’ etc is just not true. While the RENA in nominally registered through a one-ship company, Costamare are clearly the beneficial owners – with the vessel still listed as one of theirs on their website – see – http://www.costamare.com/our_fleet/fleet_list .
      Consult any knowledgable maritime lawyer and I believe they would confirm Costamare’s ultimate culpability in this affair. Their md’s apology through a video link is further evidence of this – should any be needed!
      And while the government must take the rap for not ratifying updated bunker pollution legislation there were several comments in a recent item on the Stuff NZ website by environmental lawyers which suggest that full cost recovery from Costamare’s insurers may well be possible under the RMA. One can only hope that when the time comes, the Ministry of Transport and Maritime NZ have the capability to select a top flight legal team to make sure this happens.

    9. By Bazza in Blighty on Oct 18, 2011 | Reply

      Following on from my last comment it is now very encouraging to see the report from your neighbours at the Dominion Post – http://www.stuff.co.nz/dominion-post/news/5803431/Rena-salvors-in-race-against-the-weather
      - advising that Costamare’s insureres, the Swedish Club (‘Club’ in this case is the traditional industry term for a mutual insurer of a shipowner’s third party liabilities. Visit http://www.swedishclub.com if you need more background)accept the owner’s liabilities in respect of oil pollution damage.

      ps. There is also now a statement about the RENA on the Swedish Club website at –
      http://www.swedishclub.com/main.php?mcid=1&mid=111&pid=19&newsid=1004

    10. By The Gingerbeer on Oct 19, 2011 | Reply

      Having had experience on a vessel that was chartered to MSC, I can assure all that commercial pressure is regularly used against ships masters to ensure that the schedule is maintained,often ignoring the IMO/flag state conventions about hours of work/fatigue. This includes taking navigation/weather risks that would not be normally be acceptable such as cutting corners to get to the pilot/tide.
      Most experienced ships masters ignore the paper boys(ships agents) however those masters
      from Asia are a lot more easy to influence, its called a long vacation & from where they are standing there are a lot of people on the beach that will take their place,hence the decision to take the risk.
      By all means go after MSC, the govt should tell them that if they don’t play ball then they will intervene & ensure that they are excluded from the NZ export cargoes,after all the charterer, MSC, generally orders & pays for
      the bunkers so technically it belongs to them!

    11. By Joe Blow on Oct 20, 2011 | Reply

      @ Bazza

      Thanks for that Baz. Don’t mind Leon he’s just living on a different planet from the rest of us most of the time is all…

      I’m not really up with maritime law, but as the shipowner is insured, I guess the real legal question is not going to be whether there is someone to sue, but rather, in the end, how much we can sue them for and what we can sue them for… In this case the government is just lucky that the owner’s insurance covers pollution damage. I guess there would be less worry about whether an insurer has cover for pollution damage if the government had ratified the Bunker Convention in the first place. I for one would prefer not to leave taxpayer liability for some thing as serious as the RENA disaster up to chance, would you?

    12. By Joe Blow on Oct 20, 2011 | Reply

      @ Bazza

      Correction: Sorry I just read the article about the missing $12 million as a result of not signing up to the Bunker Convention and noticed that you said “the government must take the rap for not ratifying updated bunker pollution legislation” so please ignore my last comment.

      What a screw up!

    13. By KJT on Oct 21, 2011 | Reply

      “The foreseeable results of Globalisation, de-regulation, the endless search for the cheapest, the socialisation of risks and the privatisation of benefits..

      Tired, overstressed, low paid crews, cheaply built and maintained ships, inadequate or ignored regulation and excessive workloads are the norm at sea.”"

      http://kjt-kt.blogspot.com/2011/10/rena-neo-liberal-failure.html

    14. By KJT on Oct 21, 2011 | Reply

      http://kjt-kt.blogspot.com/2011/10/kia-ora-contradictory-statements-and.html

      “Successive Governments have been told many times the race for the cheapest shipping costs makes more of this sort of accident inevitable. They all failed in their duty to prepare for it.

      Appointing chair polishing ignoramus as bosses in MNZ, allowing substandard FOC ships, many of which which would not be allowed on the EC coasts, to starving emergency response planning and equipping of funding, is at the door of all our Neo-Liberal Governments since 1984.

      The ineptitude and lack of preparedness does not make me confident of their ability to monitor deep sea drilling.”

    15. By Leon Henderson on Oct 21, 2011 | Reply

      You are Bang-On, The Gingerbeer and KJT, and things going wrong on a major scale in all manner of conceivable industrial and social area’s is only going to continue to get worse as Jewish-American capitalism and it’s relentless pressurisation for more and more deregulation/Globalisation and consequent escalation of poverty amongst the Working-Class masses continues mercillessly and viciously onwards.

      New Zealand is teetering right on the brink of being declared a Third-World nation by the OECD, so hideously has the Working-Class standard-of-living plummetted over the last twenty-five years of rabid (Jewish-American) “Market Reforms” (as the loathesome and utterly evil ideology and “Process” is called by Wall Street, The London Business District, the World Bank, IMF, and WTO – all of which are Rothschild’s controlled).

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