Protecting Against MARPOL Annex I Breaches
MARPOL Annex 1 represents one of the biggest potentially uninsured liabilities in today’s shipping industry. Chris Dyson, a senior partner and marine engineer at Brookes Bell, advises shipowners and operators on the most effective strategy to minimize risk:
MARPOL Annex I is a key regulatory driver supporting the delivery of the shipping industry’s sustainability transition. As efforts continue to ‘clean up’ vessel performance, so too will work to clamp down on polluters.
The majority of the shipping industry strives for compliance. However, as a shipowner or operator, being committed to rejecting intentional MARPOL Annex I breaches may not be enough to avoid prosecution.
This is because, no matter the size of the oil pollution discharge, and regardless of whether it is deliberate, inadvertent, or caused by poor risk management, all instances of oil pollution are liable for prosecution under MARPOL Annex I. In fact, Brookes Bell has seen some instances where a ship owner has been entirely incredulous to non-compliance of a vessel until the breach is discovered, and the culprit is found to be a rogue crewmember.
For shipowners, non-compliance comes with severe consequences, including fines that can reach tens of millions of dollars, further loss of earnings due to vessel time spent off hire and considerable reputational damage.
Furthermore, in the event of prosecution for intentional pollution discharge under MARPOL Annex I, P&I clubs have the option to walk away from the incident, leaving the shipowner exposed to the considerable financial impact of prosecution. In such incidences, prosecution under MARPOL Annex I is potentially one of the most costly uninsured liabilities in today’s maritime industry.
Beyond compliance risk management
The possibility of pollution by oil, and allegations of MARPOL Annex I breaches, cannot be eliminated. However, with the right risk management strategy, this can be managed and reduced. To achieve this, shipowners must have stringent procedures and sound documentation in place to effectively disprove MARPOL Annex I breach allegations and to demonstrate that reasonable measures have be taken to avoid intentional discharges.
Achieving this requires professional, honest and independent technical risk management counsel. This approach is in complete contrast to the industry-commonplace ‘tick box’ MARPOL Annex I risk management survey – an exercise which is ultimately meaningless if the evidence collected is not sufficiently robust to categorically disapprove MARPOL Annex I breach allegations.
Components of effective risk management
Risk management should not only help shipowners maintain effective pre-emptive MARPOL Annex I anti-breach measures, it must also document and record the measures taken in sufficient detail to satisfy authorities in the event of a suspected pollution incident. For example, as well as physically restricting the ability to manipulate overboard valves, pipelines, the oily water separator and oil content monitor, sound risk management should also involve the verification of these preventative measures.
For accusations of intentional discharge, the need for robust policy and procedures with adequate measures for recordability and traceability is even more essential. For example, in cases where a rogue crew member has caused a breach, the shipowner must satisfy its P&I Club that it has taken all reasonable measures to avoid intentional discharges, to increase the likelihood of maintaining insurance cover for the incident.
Mitigating fines and legal penalties
When confronted with a MARPOL Annex I breach allegation, it is critical that shipowners and operators make informed and correct decisions on how best to position themselves. By taking a thorough pre-emptive approach it is possible to mitigate exposure to the fines and legal implications of MARPOL Annex I breaches.
While it may be hard to quantify the value of such in-depth risk management counsel in day-to-day operations, owners and operators must take a long term view, focusing not only on the cost of the counsel but also on the overall aim of MARPOL Annex I risk management, which is to protect businesses against a hugely costly and potentially uninsured risk.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.