The Hindu Business Line : Ministry to modify wreck removal rules

The new rules to be notified shortly will only be applicable to ships entering Indian ports and port channels under Sections 6 and 14 of the Indian Ports Act, 1908 and not to Indian territorial waters. Earlier, in its draft Rules, the Ministry has sought to deny entry to ships into the Indian territorial waters if they do not have adequate and explicit cover for wreck removal and oil pollution risks from a Protection & Indemnity (P&I) Club.

At a meeting with the stakeholders in Delhi on Monday, the Ministry also decided to set up a panel under Mr G.S. Sahni, Director General of Shipping, to frame the criteria and prepare a list of non-Group P&I Clubs, fixed premium companies and hull underwriters including the subsidiaries of State-owned General Insurance Corporation (GIC) whose cover will be considered as valid enough to allow ships entry into ports and port channels, a Ministry official told Business Line. The meeting was attended, among others, by Mr D.J.L. Watkins, Secretary, International Group of P&I Clubs.

According to the earlier draft rules, all ports must ensure with the ship-owners that their vessels are covered against wreck removal and oil pollution risks by a P&I Club, which is also a member of an International Group of P&I Club, before granting them permission to enter the port. Ships not complying with this provision will be denied permission to enter the port.

For Non-Solas vessels, the burden of wreck removal and oil pollution risks would be with the owners and they must have adequate insurance coverage if not covered by a P&I Club.

The draft rules would have dealt a big blow to the business of New India Assurance, United India Insurance, Oriental Insurance and National Insurance, the four subsidiaries of GIC.

Currently, the international Group of P&I Clubs provide indemnity cover to about 90 per cent of the world's ocean-going tonnage while the remaining 10 per cent is covered with fixed premium companies and with hull underwriters including the GIC subsidiaries. The original plan to deny port entry to non-International Group of P&I Club tonnage would have automatically excluded the remaining 10 per cent of the tonnage exposing the rules to the charge of being "discriminatory" and " unconstitutional".

"The criteria and list of non-Group P&I Clubs, fixed premium companies and hull underwriters recommended by the Sahni panel will be approved by the Ministry of Shipping for the purpose of implementing the wreck removal rules," the official said.

The Ministry has also decided to adopt the principle of `pay to be paid' in P&I parlance instead of fastening the entire wreck removal/pollution liability on the P&I Club. The earlier draft Rules had said that "in the case of a mishap, the entire cost of wreck removal/pollution control shall be recovered from the P&I Club covering the ship which sank/caused pollution".

The P&I Clubs indemnify ship owners against any claims that may arise in different ports of the world to the extent of their legal liability. In other words, they reimburse the owners when they discharge such liability and seek reimbursement under the principle of `pay to be paid'. "We have now agreed to go by this principle. The new rules will not say anything on recovery in case of a mishap," the official said.