Swire Shipping has hit back at allegations that it is refusing to make full compensation for damages caused by a bunker spill from its cargo ship Pacific Adventurer in Australian territorial waters near Brisbane, Queensland.

In a statement the company “rejected assertions that it is not prepared to meet its responsibilities” and said that it “is in discussions with the State and Federal Transport Ministers and has written to Premier Anna Bligh saying that it wishes to achieve a mutually acceptable solution in line with its commitment to the people of Queensland.”

According to Swire, it has, from the the beginning, always promised to meet its full responsibilities “under Australian law” for the accident clean-up.

“The company has not stated it would cover all costs. All costs are still unknown and there is a limit to the amount of claims the company and its insurers can accept,” said Swire.

Australia is a party to the Convention on Limitation of Liability for Maritime Claims (the LLMC Convention) which limits the liability of a shipowner for third party claims.

In the case of the Pacific Adventurer, the Convention reportedly limits this liability to the equivalent of approximately A$14.5 million ($11.4 million).

According to Swire, “the Federal Government Minister for Transport, the Hon Anthony Albanese MP, has reaffirmed the applicability of this limit since the Pacific Adventurer incident.”

The incident in March saw one of the containers that fell overboard during a storm puncture the ship's bunker tank, leading to some 270 metric tonnes (mt) of bunker fuel leaking into the sea and resulting in Queensland's worst oil spill. (See story links)

Queensland state authorities have estimated total clean-up costs at some A$34 million ($27 million).

Swire says its insurer has already provided financial security to the Government by a letter of undertaking for up to A$20 million ($15.8 million), “a level of security accepted by the Government because it understood that the LLMC Convention was applicable.”

Swire explained that if shipowners faced unlimited liability for such spills, the additional cost of insurance would result in a significant increase in freight rates, which would have a negative impact on international trade.

“Australian exports and imports would have to carry this additional cost,” Swire warned.

According to Reuters, Queensland's state government, backed by the federal government in Canberra, has accused Swire of trying to use a legal loophole, presumably the LLMC Convention, to avoid full payment, even though Swire had pledged to pay for the damage. (See story links)