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The incident described below occurred when a vessel sailed right through the centre of a typhoon in Japan.

The incident
The incident involved a two-year-old car-carrier with space for about 6,000 cars.

One afternoon, while loading at Yokohama for carriage to the West Indies and US, the vessel was requested by the port authorities to leave the port due to the approach of typhoon HIGOS. The vessel left Yokohama promptly. The intention was to circumvent the Izu-Oshima Island for Suruga Wan and drift until the typhoon had passed Tokyo Bay. Unfortunately, the typhoon followed a different course from that expected by the master. This caused the vessel to come more or less in the dead centre of HIGOS, leading to loss of speed and engine force due to the heavy waves she encountered. Additionally, the tall ship-sides acted more or less as a sail in the fierce winds. Finally, in the early evening the vessel grounded on a rocky seabed in shallow waters approximately 50-60 metres from the shoreline near Habu Port on the south eastern tip of Izu-Oshima Island, after first having been forced onto a bank where her rudder and propeller were lost.

All members of the crew were rescued by the Japanese Coast Guard during the early hours of the next morning. There were no personal injuries. Following medical checks and interrogation by the Japanese authorities the crew members were repatriated to the Philippines.

After the grounding the vessel developed a list of 16-18° to port. Various inspections revealed severe structural damage to her double bottom. Parts of the bottom had been lifted by as much as nine metres. The engine room was flooded and most of the double bottom fuel tanks appeared to be empty. Significant quantities of oil had penetrated the car decks above. Further structural damage to the hull occurred over the next few days as a result of heavy weather.

The shipowners immediately entered into a Lloyd’s Open Form 2000 salvage contract with Nippon Salvage Co. Scopic was invoked by the salvors from the beginning. It soon became clear that the vessel could not be salved. The owners claimed a constructive total loss, which was accepted by the hull underwriters and Scopic remuneration was paid.

Following meetings with Japanese lawyers, it was made clear that the shipowners would not be entitled to limit liability in respect of Scopic remuneration paid to the salvor, or liabilities, costs and expenses incurred in respect of wreck removal or pollution clean-up and prevention. The owners were entitled to limit liability in respect of cargo claims and other pollution damage, including claims from fisheries for, inter alia, loss of revenue.

According to the 1976 Limitation Convention1 as incorporated into Japanese law, the owners’ limit of liability for property claims based on the vessel’s tonnage was about USD 11.5 million. Two months after the incident the shipowners established a limitation fund in the Tokyo District Court, which was secured by depositing with the court a letter of undertaking issued by Gard.

At the time of the incident the vessel had about 1,300 tons of heavy fuel oil in her bunker tanks, as well as some marine diesel and lubricating oils. The Japanese authorities ordered the shipowners to eliminate the risk of pollution, failing which the authorities would take appropriate measures and pursue a recovery claim for all their costs from the owners. A contract for fuel removal from the tanks and car decks was entered into with Nippon Salvage Co.

The estimated quantity of fuel remaining on board after the grounding was approximately 300 tons, which means that some 1,000 tons of oil escaped from the vessel during the first couple of days after the casualty. Fortunately, despite this significant escape of oil, there were only limited traces of oil on the beaches and shorelines in the vicinity of the wreck. The very heavy weather apparently caused the oil to be washed out into the open sea, and to smother and emulsify in the water. Pollution prevention measures were also taken by the Japanese authorities, and local fishermen were employed to assist in this regard.

Izu-Oshima Island is a national park area. The grounding took place in the middle of a special fishing area for abalones and various shells. Claims totalling USD 14.5 million were presented by local fishery unions. An expert from Tokai University, Tokyo was appointed by the shipowners to carry out local damage assessment. ITOPF and London experts were also retained for this purpose. The largest claim related to restoration works to the seabed, which had been damaged by the impact of the vessel. This part of the claim was deemed by the experts to be unfounded and was later withdrawn. The fishery unions’ claims were settled amicably for a reasonable sum.

At the time of the casualty, the vessel was loaded with 3,876 new and second-hand cars, as well as some high and heavy construction vehicles and spare parts. A helicopter was also part of the cargo. The estimated total sound value of the lot on board was about USD 42 million. All cargo had been loaded in Korea and Japan. Due to a fire on board (described below), the cargo was damaged to the point of being deemed to have no residual value beyond scrap steel. The disposal of the damaged cargo was part of the wreck removal operation.

All claims for loss of cargo were handled by the Tokyo District Court under the limitation proceedings. Due to difficulty in getting hold of some cargo interests, the cargo claims/limitation proceedings were protracted but were finally completed after four and a half years.

At the time of the incident the vessel had about 1,300 tons of heavy fuel oil in her bunker tanks.

Wreck removal
The Japanese authorities also ordered the shipowners to remove the wreck, failing which appropriate measures would be taken and a recovery claim for costs would be pursued against the owners. Invitations for tenders for removing the wreck were then submitted. However, shortly before expiry of the deadline for bids, another typhoon passed through the area, which caused the vessel to break up. A severe fire broke out on board, which was probably caused by twisting of the wreck in the mid section area, causing car lashings to break and cars to smash into each other with consequent release of petrol. The combination of petrol vapours and friction-generated sparks probably caused ignition. The fire caused the wreck and cargo to be totally burnt out. Subsequently, the hull further disintegrated to the extent that substantial wreck parts and cargo were spread on the seabed.

After a new round of tenders and negotiations, the owners entered into a wreck removal contract with Kasel Salvage (Hong Kong) Limited. The contract was on the Bimco Wreckstage 1999 Form amended by various rider clauses, and subject to a lump sum price plus possible additional payments for delays capped at 50 days. Due to the weather situation in the area it was important for the owners to limit the cost of this operation. Payments were to be made in seven stages in accordance with completion of defined services as confirmed by the shipowners’ special representative.

The intention was to have the wreck removed within approximately 24 months. Unfortunately nature did not co-operate and the operation lasted 36 months instead. In order to maintain good relations with the inhabitants of the island, including the fishermen, the shipowners chose to have a P&I correspondent on the spot all this time. This prevented a lot of misunderstanding and agony due to the prolonged operation and was a cost-effective measure.

Total exposure
The shipowners’ total liability in this matter was just over USD 40 million.

1 Convention on Limitation of Liability for Maritime Claims (LLMC), 1976.

Gard News 187, August/October 2007

Any comments to this article can be e-mailed to the Gard News Editor.

Gard News is published quarterly by Gard AS, Arendal, Norway.