Derek Luxford Interviewed About Shen Neng 1 Case

Partner Derek Luxford was quoted in relation to the Shen Neng 1 running aground on the Great Barrier Reef in the London based Lloyd's List on 12 April 2010. A copy of the article, written by Colum Murphy, appears below.

Grounding may spur first bunker convention fine

As if global attention to its grounded vessel on Australia’s Great Barrier Reef were not enough, the ship’s owner, Shenzhen Energy Transport, soon may have another claim to fame.

Legal experts say that the Shen Neng 1 case could be the first in Australia under the International Convention on Civil Liability for Bunker Oil Pollution Damage. The 2001 convention came into force in Australia last June, said Derek Luxford, a partner with Australian law firm Hicksons.

If this happens, the ship’s mate could be looking at a fine of several hundreds of thousands of dollars, and its owners possibly in the region of millions of dollars, said Mr Luxford who specialises in legal issues related to trade, transport and energy.

The Shen Neng 1 ran aground on Australia’s Great Barrier Reef about 70 km east of Great Keppel Island over Easter weekend. The 69,110 dwt bulk panamax bulk carrier was carrying 975 tonnes of heavy fuel oil and 65,000 tonnes of coal it had loaded at Gladstone.

Mr Luxford was involved in the November 2000 case relating to the Bunga Teratai Satu incident, in which a Malaysian-flagged boxship en route from Singapore to Sydney grounded on the Sudbury Reef within the Great Barrier Reef Marine Park.

On Thursday, Prime Minister Kevin Rudd said that provisions exist under the Great Barrier Reef Marine Park Authority Act for penalties of up to A$5.5m ($5.1m). He said there could also be jail sentences for any master of any vessel found to have violated the provisions, and that the Act also allowed for restitution costs.

“That is, if any vessel is found to have acted irresponsibly, then under the Act there [are] provisions to obtain restitution costs for damage which is caused,” Mr Rudd said.

Queensland Premier Anna Bligh said: “If the Chinese crew are under any illusions that this is a minor incident, I am sure that when they get off the boat and see what the world has to say they will understand a bit more clearly just how serious this is.”

Mr Luxford said that in addition to criminal and environmental courts, the civil courts could also see cases as result of the incident.

He understood that the owner had declared “general average”, meaning that when a ship has cargo and experiences some kind of peril, then all the expenses should be shared by the shipowner and the cargo owner. Should the cargo owner disagree, then a legal dispute could erupt.

Similarly, if the cargo were jettisoned, then the owner of the coal could make huge claims on the shipowner.

The shipmanager could potentially face liability from the owner, for example, if the ship manager were found to have used poorly trained crew, he said. But usually the ship manager was not a major player in most legal proceedings, he said.

Salvage and clean-up costs will also have to be borne in mind.

The nature of legal proceedings will only take shape in the weeks and months ahead. “It all depends on the initial findings of the investigators,” Mr Luxford said.

Maritime Safety Queensland, the Australian Transport Safety Bureau, the Australian Maritime Safety Authority and the Australian Federal Police are among the agencies investigating the case.

For further information about this subject, please contact Derek Luxford on +61 2 9293 5474 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Transport Trade and Energy