DENMARK Trends and Developments Contributed by: Anders Amstrup Fournais and Sarah Bisgaard Møller, Hafnia Law Firm LLP
Thankfully, such casualties have not been seen, but there have been cases where shadow fleet vessels have run aground, such as the tanker Andromeda Star, which was later sanctioned by the EU. The Andromeda Star Case Andromeda Star is an Aframax crude oil tanker flying the flag of Panama. This tanker is part of the Russian “ghost fleet”, or shadow fleet, transporting Russian crude oil and violating international sanctions. For a long time, Andromeda Star was reported as hav - ing been sold to undisclosed interests. At one point, the vessel was listed as being owned by a Seychelles incorporated entity managed by a one-man company in Goa, India. Until November 2022, Andromeda Star was covered by standard insurance and undergoing regular port- control inspections in Western ports. In 2023, the ship was sold to Margao Marine Solutions as operator, and Algae Marine as owner, after which she underwent no further port-control inspections until her later accident with Peace. Andromeda Star and the smaller multipurpose freight - er Peace (IMO 9553983) collided on 2 March 2024 in Oresund, which, as already mentioned, is a strait between Denmark and Sweden. The collision caused only minor damage, but Andromeda Star had to stay in a Danish shipyard for around a week. The incident caused a stir in both Denmark and the EU. Androm - eda Star was en route to the port of Primorsk, Rus - sia, to load Russian crude oil. The ship was not car - rying the cargo of oil she would have been carrying had she been travelling in the other direction. In other words, she was in a ballast. Had the collision occurred when she was in a laden condition, it is highly likely – according to experts – that there would have been a leak causing considerable environmental harm in Danish waters. The Danish Maritime Authority inspected the vessel and requested copies of the vessel’s insurance certifi - cates. In maritime law, there are rules on the preven - tion of oil spills. Ship-owners assume strict liability (ie, no-fault based liability) for oil spills. The tanker and her owner must prove to the coastal state that they have
taken out valid liability insurance. This is evidenced by the vessel’s insurers issuing so-called blue cards, which are kept onboard and with the flag state. Panama, as flag state, responded to the Danish Mari - time Authority by providing copies of blue cards issued by the Russian insurance company Ingosstrakh. Thus, on paper, Andromeda Star was insured for pollution liability. The question is: were those blue cards really worth the paper they were written on? Industry experts state that 90% of Russian oil exports are sold in violation of the price cap, meaning the products are sold at higher prices than those permit - ted under the price cap. There are standard sanctions compliance clauses in most insurance contracts. However, maritime law rules on pollution liability prohibit the ship-owner and the liability insurers from agreeing on any clauses that limit or exclude the insurer’s liability towards the coastal state. In other words, Ingosstrakh was not per - mitted to limit its liability in the event of an oil spill by virtue of specific exclusion clauses in the insurance contract. The blue card serves as evidence of valid and binding insurance, and liability cannot be limited vis-à-vis the coastal state. That did not stop Ingosstrakh from making disturbing statements to the public about the lack of valid insur - ance cover. In an article published by The Financial Times, Ingosstrakh stated that, in the event of an oil spill – if the oil is of Russian origin and sold in viola - tion of the price cap – Ingosstrakh would not provide cover or pay restitution for a massive clean-up bill. Specifically, Ingosstrakh stated the following: “...we have sanctions clauses in our insurance policy, and if it turns out there is a sanctions breach, we will not be providing cover”. It is interesting to see a Russian- sanctioned insurer invoking a breach of Western sanc - tions as justification for evading insurance coverage. The Problem With Russian Insurers As mentioned, limitation clauses in an insurance con - tract cannot be invoked vis-à-vis the coastal state in case of an oil spill. The relevant maritime laws allow the coastal state to sue the ship-owner and the insurers in the courts of the coastal state. Judgments affirming
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