Discussion Paper
The Nairobi Convention is the result of several years of preparatory work in the Legal Committee of the IMO. The Convention is the first international instrument providing for strict liability, compulsory insurance and direct action in relation to wrecks located beyond the territorial sea of coastal states. It forms part of a framework of conventions dealing with liability and compensation for maritime casualties (including the CLC, IOPC and Bunkers Convention referred to previously).
Articles 1 to 4 of the Nairobi Convention address the Convention's scope, purpose and application.
The Convention applies to all seagoing vessels of any type or size, including fixed or floating platforms except when such platforms are engaged in the exploration, exploitation or production of seabed mineral resources. However, the Convention does not apply to warships and state owned or operated ships.
The Convention defines a 'wreck' as a sunken or stranded ship or any part or any object from a sunken or stranded ship. The definition includes any object from a ship that is stranded, sunken or adrift at sea, such as lost containers. It also includes ships that may reasonably be expected to sink or strand.
A 'hazard' is determined when a wreck poses a danger or impediment to navigation or is likely to result in major harmful consequences to the marine environment, or damage to the coastline or "related interests" of one or more States. "Related interest" includes the interests of the coastal state affected or threatened by a wreck such as fisheries, tourism attractions and other economic interests including wildlife preservation and the protection of offshore and underwater infrastructure9.
The Convention applies only within the EEZ of a State Party. However, State Parties can elect to extend the application of the provisions of the Convention to wrecks located within their territory, including their territorial sea. However, such an extension of the convention does not prejudice the rights and obligations of States to take measures in relation to wrecks located within their territorial waters, other than locating, marking and removing them in accordance with the Convention. The Convention's provisions regarding shipowner liability and the compulsory insurance cover (i.e., Articles 10, 11 and 12) shall not apply for costs arising from such additional measures taken within territorial waters.
The Convention does not apply to measures10 taken under the International Convention relating to Intervention on the High Seas in Cases of Oil Pollution Casualties, 1969, nor the Protocol relating to Intervention on the High Seas in Cases of Pollution by Substances other than Oil, 1973.
It should be noted that Article 2 of the Convention does limit the measures that a State Party may take in response to wreck within its EEZ to measures that are "proportionate to the hazard" and that are reasonably necessary to remove the hazard. Furthermore, such measures shall not interfere with the rights and interests of other States, including the state that registered the ship and of any person or corporation concerned.
Reporting, Locating, Marking and Removal of Wrecks
Articles 5 through 9 of the Nairobi Convention address the reporting of shipwrecks, determination of the hazard, locating and marking of wrecks and measures to facilitate their removal.
The Convention requires that the master and the operator of a ship11 that is registered in a State Party to report, in some detail, any maritime incident that results in a wreck to the State Party within whose exclusive economic zone the wreck is located (i.e., the Affected State). The Affected State shall then determine if such a wreck poses a hazard to navigation or to the environment and, if so, take appropriate measures to warn mariners of the wreck and to locate and mark the wreck in accordance with the internationally accepted system of buoyage or take steps to ensure the removal of the wreck. Article 6 of the Convention lists criteria for Affected States to consider in the determination of whether or not a wreck poses a hazard.
Article 9 of the Convention provides several measures to facilitate the removal of wrecks that are determined to pose a hazard by the Affected State. Upon such a determination, the Affected State must inform the State Party where the ship is registered and the registered owner and consult with them and any other Affected State about measures to be taken in relation to the wreck.
Ultimately, the registered owner of the ship is responsible for the removal of such hazardous wrecks. The registered owner may contract any salvor or other person to remove the wreck in accordance with conditions set by the Affected State to ensure that the removal proceeds expeditiously in a manner consistent with considerations of safety and protection of the marine environment. The Affected State may intervene to remove a wreck at the owner's expense should the owner fail to remove the wreck within a reasonable deadline set by the Affected State or in circumstances where the hazard becomes particularly severe. The Affected State must notify the owner in writing that it intends to intervene.
Article 10 of the Convention holds the shipowner strictly liable for the costs of locating, marking and removing the wreck unless the owner can provide that the wreck:
- resulted from an act of war or similar hostilities; or
- resulted from a natural phenomenon of an exceptional, inevitable and irresistible character; or
- was wholly caused by acts or omissions by third parties done with intent to cause damage; or
- was wholly caused by the negligence or other wrongful act of any Government or authority responsible for the maintenance of navigational aids.
Article 10 also permits a shipowner to limit liability under applicable national or international regimes such as the LLMC. However, many States including Canada, have exercised the reservation contained in the LLMC to exclude wreck removal claims, with the result that the costs of removing such wrecks by public authorities will not be subject to any limits of liability on the part of the owner of the wreck.
Article 10 also preserves the right of shipowners incurring any costs under the Convention to pursue a recourse action against a third party, such as, for example, costs arising from a collision with another vessel.
Article 11 provides that the shipowner shall not be liable for any costs that are dealt with under other international conventions, namely:
- International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended (CLC);
- International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996, as amended (HNS);
- Convention on Third Party Liability in the Field of Nuclear Energy, 1960 or the Vienna Convention on Civil Liability for Nuclear Damage, 1963;
- International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001, as amended (Bunkers Convention).
The Nairobi Convention has compulsory insurance provisions that correspond to the compulsory insurance provisions of other international maritime conventions on liability and compensation (i.e., CLC, Bunkers and HNS Convention).
Article 12 of the Convention requires the owner of a ship of 300 gross tonnes or more that is registered in a State Party, to maintain insurance or financial security to cover liability under the Convention. The amount of insurance that the shipowner is required to maintain is determined by the shipowner's limit of liability under the LLMC, as amended.
Upon determination that such insurance or financial security is in place, each State Party shall issue certificates of insurance or financial security to all ships that are included in their ship registry. The State Party is to ensure that no ships included in their registry operate without such a certificate. Ships registered in a state that is not party to the Convention may acquire certificates from any other State Party.
The Convention also requires that each State Party ensure that any ship, whether registered in a State Party or not, upon entering its jurisdiction has on board a certificate of insurance issued by a State Party. It would thus ensure that all ships of 300 gross tonnes or more operating within the State Party's EEZ are covered by insurance in the event of a shipwreck. To facilitate and further ensure the efficient settlement of claims, the Convention provides a right of direct action against insurers or persons providing financial security for the shipowner's liability for any claim arising under the Convention.
Most marine insurance policies include a "pay to be paid" clause12 that would normally require the shipowner to pay any claim before being indemnified by the insurer. The Nairobi Convention's provision for direct action against insurers would invalidate such clauses when it comes to claims against the shipowner's liability relating to the raising, removal, destruction, lighting or marking of a shipwreck. However, the insurer's liability would be limited to the amount insured, which, as previously noted, would be determined in accordance with the LLMC. Thus, the Affected State and any other party that may have a claim under this Convention could recover at least some of their costs from the insurers, even if the shipowner should become insolvent following a shipwreck.
Article 13 of the Nairobi Convention establishes a dual time bar on the filing of claims by any party that has incurred costs related to the marking or removal of a wreck. Claims shall be extinguished unless an action is commenced within three years from the date when the Affected State determines that a wreck is a hazard in accordance with the Convention. In any case, no action shall be undertaken after six years from the date of the maritime casualty that caused the wreck.
Article 18 of the Nairobi Convention stipulates that the Convention will come into force twelve months after ten States have ratified or acceded to it. To date, Nigeria is the only State that has agreed to be bound by the Nairobi Convention.
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9 Article 1. (6) of the Nairobi Convention.
10 Article 1 of the International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties, 1969, describes measures on the high seas necessary to prevent, mitigate or eliminate grave and imminent danger to their coastline or related interests from pollution or threat of pollution of the sea by oil, following upon a maritime casualty.
11 While both the master and operator are obliged to report all of the relevant information needed for a state to determine if the wreck poses a hazard, if one of those parties has completely fulfilled the obligation, the other party is not obliged.
12 For example: Rule 6.15 of the Standard Steamship Owners' Protection and Indemnity Association (Bermuda) Limited's 2009/10 Rules states: "Unless the managers otherwise determine, it is a condition precedent of a member's right to recover in respect of any liabilities that he must have first discharged or paid the same out of funds belonging to him unconditionally and not by way of loan or otherwise."