- Nairobi Convention
Overview
2.1The Joint Standing Committee on Treaties (JSCOT) has been referred the following major treaty action (Category 1): Nairobi International Convention on the Removal of Wrecks (Nairobi Convention or the Convention). Further information on the treaty can be found on the JSCOT website in the full treaty documents and National Interest Analysis (NIA).
2.2The Nairobi Convention was adopted by an international conference held in Nairobi, Kenya on 18 May 2007 and entered into force on 14 April 2015. The Convention ‘provides the legal basis for States to remove, or have removed, shipwrecks that may have the potential to affect adversely the safety of lives, goods and property at sea, as well as the marine environment.’ The Convention applies to wrecks in the Exclusive Economic Zone (EEZ) which is beyond the territorial sea. The Convention also contains an optional clause whereby States Parties can apply certain provisions of the treaty to their own territory, inclusive of the territorial sea. Registered ship owners are held financially liable under the Nairobi Convention for the creation of wrecks. Vessels over 300 gross tonnage must have insurance or other financial security for the locating, marking and removal of any wrecks.
2.3The Government proposes for Australia to accede to the Nairobi Convention which will then apply in the EEZ and to consider extending the operation of the Convention to the territorial sea under the optional clause at a later date. Accession is the method used by states to become a party to a treaty which it did not sign up to when the treaty was open for signature.
2.4The Office of Impact Analysis (OIA) assessed the proposed treaty accession as being ‘exemplary’. The OIA highlights that ‘Australia’s economy and standard of living is dependent on efficient and effective international maritime trade.’ The OIA goes on to explain: ‘When something goes wrong, ship and cargo wrecks have the potential to interrupt trade, threaten the safety of other ships, incur significant loss of life and property, and damage the marine environment.’
Background
International Maritime Organization
2.5The depository of the Convention is the Secretary-General of the International Maritime Organization (IMO). The IMO, which facilitated the development of the Convention, is the United Nations (UN) specialised agency responsible for the safety and security of shipping, as well as the prevention of marine and atmospheric pollution created by ships.
2.6The IMO explains its role as being ‘the global standard-setting authority for the safety, security and environmental performance of international shipping.’ Further, the Organisation notes that, ‘Its main role is to create a regulatory framework for the shipping industry that is fair and effective, universally adopted and universally implemented.’ The role of the IMO is significant as international shipping transports more than 80 per cent of global trade and for most goods, is the most efficient and cost-effective method of international transportation.
2.7The IMO has six main bodies concerned with the adoption or implementation of conventions, namely the Assembly and Council, the Maritime Safety Committee, Marine Environment Protection Committee, the Legal Committee, and the Facilitation Committee. The need for a new convention or amendments can be raised by member states in any of these bodies.
2.8Since its inception, the IMO has worked on the development of new conventions and to ensure that existing instruments are in alignment with changes in shipping technology. The IMO is currently responsible for more than 50 international conventions and agreements and has also adopted numerous protocols and amendments.
Legislative framework
2.9Australia has existing legislation that respond to situations where a ship breaks down, spills its contents overboard or otherwise becomes a wreck in Australia’s EEZ and territorial sea, namely the Navigation Act 2012 (Cth) (Navigation Act), the Protection of the Sea (Powers of Intervention) Act 1981 and the Protection of the Sea (Civil Liability) Act 1981, which enables Australia to locate, remove, sink or destroy the wrecks, and recover costs from liable parties.
2.10Despite this existing regulatory framework, Australia cannot currently recover costs with respect to the three main scenarios that result in wrecks:
- a foreign vessel sinks or becomes stranded within Australia’s EEZ;
- any object (for example a shipping container, which is the most common form of wreck) from a foreign vessel or regulated Australian vehicle (RAV) that is not wrecked sinks and becomes stranded or is adrift in the EEZ or territorial sea;
- a domestic commercial vehicle (DCV) or recreational vessel creates a wreck in the EEZ.
Justification
2.11The primary justifications for Australia acceding to the treaty include:
- Most wreck incidents affecting Australia involve lost shipping containers from foreign flagged vessels in the EEZ. If Australia accedes to the Nairobi Convention it would legally be allowed to remove or to have removed wrecks in the EEZ that pose a danger or are an impediment to navigation or are expected to result in major harmful consequences to the marine environment, damage to the coastline or related interests.
- Registered ship owners are held financially liable under the Nairobi Convention for the creation of wrecks and owners of vessels over 300 gross tonnage are required to have insurance or other financial security to cover the costs of locating, marking, and removing wrecks. This means that Australia would be able to recover these costs from the ship owner’s insurer.
- Lost containers and other objects, goods or cargo that have fallen overboard from a ship are covered and defined under the Nairobi Convention but not the Navigation Act. It is important for Australia to have strong wreck-related laws to hold shipping companies responsible so that Australia can recover the costs of locating, marking, and removing wrecks.
- The risk of wreck incidents in Australia is likely to increase with the rising demands for shipping services to facilitate e-commerce. Ships are travelling more often and at full capacity. Ships also face pressures to load and unload as quickly as possible. It is estimated that by 2029-30 the number of containerised imports arriving in Australia will double while the number of containerised exports will triple. Movement of containers between Australian ports is estimated to double.
- Climate change is increasing the severity and variability of weather, contributing to container loss.
- Australia has a large number of DCV and recreational vessels. If Australia accedes to the Nairobi Convention, DCV and recreational vessels would be included in a single, uniform set of wreck removal rules for all vessels in the EEZ.
- Australia’s accession to this treaty would increase the circumstances in which Australia could recover wreck-related costs for wrecks in the EEZ. This is due to additional criteria to be taken into account in determining whether a wreck poses a hazard and should be removed; broader costs recoverable by the Government; the expansion of the definition of wreck; making the recovery of wreck-related costs simpler and more time-effective and requiring registered vessel owners to hold wreck-related insurance policies for vessels more than 300 gross tonnage.
- There is an optional clause in the Nairobi Convention whereby States Parties can extend the application of the Convention to its territorial sea. A high frequency of wreck incidents occurs in the territorial sea meaning that Australia would have a financial benefit from this change.
- Most large DCVs and recreational vessels that operate in Australia’s EEZ would be covered by the Nairobi Convention. These vessels are more likely to create a hazardous wreck due to their size.
- If Australia accedes to the Convention it would result in the adoption of a more internationally consistent regulatory framework for the removal of wrecks; this is due to 79 per cent of global shipping tonnage flagged to States Parties.
- The operations of shipping companies would also be simplified due to accession which may boost economic activity by encouraging investment and reducing administrative costs.
Obligations
2.12This section outlines key provisions in the Nairobi Convention. The Convention generally provides for:
- reporting and locating ships and wrecks; warnings to mariners and coastal states about the wreck and action by the coastal state to locate the wreck;
- criteria for determining the hazard posed by wrecks including the depth of water, proximity to shipping routes; traffic density, frequency and type and vulnerability of port facilities;
- environmental criteria including likely damage as a result of cargo or oil;
- measures to facilitate the removal of ships and wrecks including rights and obligations including the responsibility of the shipowner and when a state can intervene;
- liability of the wreck’s owner for the costs of locating, marking, and removing the ship or wreck; and
- settlement of disputes.
- More specifically, key provisions include:
Definitions
- The definition of ‘maritime casualty’ to mean a collision of ships, stranding or other incident of navigation, or other occurrence on board a ship or external to it that results in material damage or imminent threat of material damage (Article 1(3)).
- The definition of ‘wreck’ to mean a sunken or stranded ship, any part of a sunken or stranded ship, or any part of a sunken or stranded ship, or any object that is lost at sea from a stranded, sunken, or adrift ship. This also includes any ship that is about to, or may reasonably be expected, to sink or become stranded, where effective measures to assist are not already being taken (Article 1(4)).
Reporting
- A State Party must require the master and operator of a ship flying its flag to report when that ship has been involved in a maritime casualty that results in a wreck to government authorities who hold responsibility for the location (Article 5).
- When a State Party becomes aware of a wreck it must use all practicable means to issue an urgent warning to those concerned including states (Article 7).
Hazards
- The registered owner of a vessel is required to remove a wreck that is determined to constitute a ‘hazard’ by the affected State Party (Article 9(2)).
- If a wreck is reported in an affected State Party’s EEZ, there is criteria the State should follow in determining if the wreck poses a hazard including the type, size and construction of the wreck, the depth of the water, the tidal range and currents, proximity to shipping routes or traffic lanes, nature and quality of the cargo including the amount and types of oil, vulnerability of port facilities and height of the wreck (Article 6).
- There are steps the affected State Party must take if they determine a wreck constitutes a hazard, including taking all reasonable steps to mark the wreck (Article 8); informing the registered owner and the ship’s flag state (Article 9(1)); informing the registered owner of the deadline by which the wreck must be removed (Article 9(6)(a) and (b)) and advising the registered owner if the state intends to intervene immediately in severe circumstances (Article 9(6)(c)).
- The affected state may remove the wreck if immediate action is required, if the registered owner does not remove the wreck within the deadline set or it is not possible to contact the owner (Article 9(7) and (8)).
- A State Party must take appropriate measures under national laws to ensure their registered owners comply with their obligations under Articles 9(2) and (3) (Article 9(9)). These articles refer to the removal of wrecks constituting a hazard and providing evidence of insurance or other financial security.
Insurance and certificates of compliance
- The registered owner of a ship that is 300 gross tonnage and over and that is flying the flag of a State Party is required to maintain insurance or other financial security to cover liability to certain limits outlined in the 1976 Convention on Limitation of Liability for Maritime Claims (LLMC Convention). These limits are calculated based on the size of the vessel (Article 12(1)).
- While Australia is a party to the LLMC Convention, it has made a reservation which means that, in Australia, a ship owner will still be held liable for wreck related costs that exceed the coverage of their insurance.
- If a ship owner has obtained insurance, the flag state will need to issue a certificate of compliance as outlined in the Annex to the Nairobi Convention including the name of the ship, distinctive numbers, or letters of port of registry, gross tonnage of the ship, name and principal place of business of the insurer or other person giving security and period of validity of the certificate (Article 12(2)).
- Australia is responsible for determining the conditions of the issue and validity of the certificate (Article 12(3)).
- Australia is required not to allow any Australian ship that is 300 gross tonnage and above to operate unless it has been issued a certificate (Article 12(11)).
- Australia is required to ensure that under its domestic law, any ship of 300 gross tonnage and above regardless of the flag state, has a certificate if it is entering or leaving a port in its territory, or arriving at or leaving from an offshore facility in its Territorial Sea (Article 12(12)).
- Australia is required to accept the certificates issued by other States Parties (Article 12(9)).
- When Australia is required to remove a wreck, the measures taken should be limited to those reasonably necessary to remove the wreck and must stop as soon as the wreck has been removed. The measures should not interfere with the rights of other states and should not be used to claim or extend sovereignty (Article 2).
Implementation
2.14The current Commonwealth wreck removal provisions are contained in Chapter 7 of the Navigation Act. Following consideration by JSCOT, Australia would be required to pass new stand-alone legislation or introduce amendments to the Navigation Act to implement the obligations contained in the Nairobi Convention. There are no changes to state and territory legislation.
2.15The Government notes that while it is not strictly required to give effect to the Nairobi Convention, the Navigation Act should be amended to apply Nairobi Convention requirements to foreign flagged vessels and RAVs in the territorial sea.
2.16The Government notes that for Australia to accede to the optional clause there would need to be negotiations with state and territory governments as they have non-exclusive jurisdiction over coastal waters which comprise the first three nautical miles of the territorial sea. The wreck removal regimes of the states and territories would require modification to be consistent with the Nairobi Convention if Australia wanted to extend its application to the territorial sea.
Entry into force
2.17The Convention would enter into force for Australia three months after the date its instrument of accession is deposited. The Government has noted that Australia will deposit its instrument of accession as soon as practicable following consideration by JSCOT, authorisation by the Federal Executive Council, the passing of legislation and the making of any regulations.
Costs
2.18The Government notes that accession to the Nairobi Convention would be ‘broadly economically beneficial’ for Australia. This is because it would mean that disputes over the responsibility of wrecks would be avoided. Further, additional costs following accession would be negligible due to the reallocation of resources within the Australian Maritime Safety Authority (AMSA).
2.19There would be some ongoing compliance costs for most Australian ship owners.Compliance costs for the shipping industry would amount to $1 million per year.Following accession, in the event of a wreck, there will be costs for registered vessel owners.
Future treaty action
2.20If Australia would like to extend the scope of the application of the Nairobi Convention in the future to the territorial sea, it can notify the Secretary-General of the IMO.
Withdrawal or denunciation
2.21Any state can denounce the Nairobi Convention by written notification to the Secretary-General of the IMO if the Convention has been in force for one year for that party.
Consultation
2.22The Government notes that stakeholders were consulted including state and territory governments through the Maritime Agencies Forum and the National Plan Strategic Coordination Committee, as well as through the Commonwealth-State-Territory Standing Committee on Treaties. A range of industry stakeholders were also consulted as outlined in the NIA, which included industry peak bodies, legal professionals, and academics.
Issues raised
Value of shipping to Australia
2.23The Department noted the importance of shipping to Australia. As a coastal state rather than a major ship owning state, Australia has a significant number of foreign vessels in its waters each year. The Department said:
Australia's economy and standards of living are dependent on efficient and effective international maritime trade.[…] Ships are our primary mode of transport for the import and export of goods, and as demand grows so does the movement of ships through our EEZ.
2.24In 2020-21, 6,314 unique vessels made over 30,000 calls to Australian ports. Further, Australian ports handle the equivalent of eight million containers per year. Australia is the fifth-largest user of shipping services in the world. For these reasons the Department believes Australia would benefit from acceding to the Convention which would give broad coverage to the world’s fleet with currently 79 per cent of global merchant shipping by tonnage covered by the Convention.
Domestic regulatory gaps
2.25The Committee heard that Australia has regulatory gaps that impact on the Government’s ability to recover costs to locate, remove, sink, or destroy wrecks and the Convention would fill those gaps. Australia currently only has power over wrecks in the territorial sea (from the coastline to 12 nautical miles) but not outside the territorial sea in the EEZ from 12 to 200 nautical miles. This is because of limited sovereignty given to nations over their EEZ in the International Convention on the Law of the Sea.
2.26In the EEZ, powers are largely limited to natural resources, artificial structures, scientific research, and the maritime environment. Shipping containers are the most common form of shipwreck and Australia’s laws do not include powers in relation to objects that have become sunk, stranded, or adrift at sea from a ship that is not in distress.
Economic benefits
2.27The Committee heard that economic benefits of the Convention will include avoiding disputes over the responsibility for wrecks, obligations for the shipowner in Australia’s EEZ and expanded criteria for determining that a wreck has created a hazard and requires removal. The costs that can be recovered are also expanded to include prevention and mitigation and the elimination of a hazard created by the wreck.
2.28Professors Nicholas Gaskell and Professor Craig Forrest of the Marine and Shipping Law Unit at the TC Beirne School of Law at the University of Queensland argued that that ‘the Nairobi Convention will provide greater prospects of financial recovery than at present.’
Gravity of wrecks in Australia
2.29Since 2018 there have been three major wrecks or spills within Australia’s EEZ. The first was a Liberian flagged vessel, which lost 81 containers, 30 kilometres off Australia’s coastline but within the EEZ. The cost for remediation was in excess of $20 million.
2.30The second was a Singaporean vessel in 2020 which lost 50 containers, of which 15 have been recovered. The ship’s owners have reimbursed Australia $22 million for the incident. The third was another Liberian vessel which lost three containers. While Australia did not have to recover the containers as they sank, it did have to undertake an aerial search to confirm there was no remaining hazard, which resulted in costs. In this case, the contents of the containers were not expelled but went to the bottom of the ocean. In some instances, however, containers can sink but release their contents which potentially creates a maritime hazard or damage to the environment.
Optional clause and the territorial sea
2.31For the time being, Australia is not acceding to the Convention’s optional clause which applies to the territorial sea.
2.32The Department said that the Government has not ruled out pursuing the Convention’s application in the territorial sea in the future. However, there is complexity to the legal arrangements in the territorial waters where the Commonwealth Government does not have exclusive jurisdiction. State laws apply out to three nautical miles, and they exceed what is provided for in the Convention.
2.33The Department explained that if Australia were to accede to the Convention now in our territorial waters, our laws would put us in conflict with the requirements of the Convention as domestic laws offer a higher level of protection. The Department noted that Australia will need to work with states and territories on this matter to bring us in line with the Convention. The Department explained, ‘The view of the government was that that work will take some time, and delaying application to our EEZ while we undertook that work would delay the benefits in our EEZ for some time.’
2.34The Department confirmed that there had been consultation with all state and territory governments aside from the ACT. The Department said that in their consultation, several governments had indicated their belief that the current rules are adequate and did not think there was a need to change them for accession to the Convention. The Department said: ‘I think we'll have a quite a bit of work ahead of us to work through those issues, and to fully understand those perspectives. I'm reluctant to put a specific time frame on it beyond that I think they will be pretty challenging negotiations.’
2.35Other stakeholders, however, argued that Australia should prioritise extending the application of the Convention. Shipping Australia submitted that ‘the Australian Federal Government make use of the opt-in provision in Article 3 of the Convention and extend the application of the Convention to wrecks located within Australia’s territory’. Similarly, Professors Gaskell and Forrest argued that ‘our concern would be that a staged approach would seem to undermine the efficiency of the Nairobi Convention and the need for consistency across the maritime zones, given that most wrecks occur in coastal waters.’ They went on to note that, ‘There is a risk that legislative inertia would delay further action indefinitely.’
Underwater cultural heritage
2.36The Committee inquired into the interaction between the Convention on the Protection of the Underwater Cultural Heritage and this Convention. The Committee received evidence through a submitter that while the Convention considers wrecks to be an issue that should be responded to due to their representing a hazard to other shipping and the environment others view certain wrecks as a form of underwater cultural heritage. Rather than wanting them to be removed, advocates for the protection of underwater cultural heritage would be unhappy if these wrecks were removed, resulting in a tension between the two approaches.
2.37The Australasian Institute for Maritime Archaeology (AIMA) argued that Australia’s accession to the Convention ‘would benefit Australia in assisting safe navigation and a healthier ocean.’ AIMA did however observe that the Convention ‘may put historic shipwrecks in jeopardy if there is not also clear understanding of the protections of the Underwater Cultural Heritage Act 2018 as well as effective communication between regulatory agencies regarding the management of historic shipwrecks and hazards.’
2.38AIMA argued that the Convention does not exclude historic shipwrecks that are protected under Commonwealth or state legislation from the removal process, such as the Underwater Cultural Heritage Act 2018. AIMA recommended that if Australia accedes to the Convention, the removal of historic shipwreck hazards is managed in line with the Underwater Cultural Heritage Act 2018.
2.39AIMA noted that the Nairobi Convention, ‘does not include any allowance for the historic or archaeological values of a shipwreck which should be considered in the decision to remove the wreck, or at least in the methodology to remove that shipwreck so that those values are preserved.’
2.40Given the strong association between shipwrecks and early contact between First Nations peoples, Europeans, and Asian fishers, the underwater cultural heritage associated with wrecks is culturally significant. Both the Underwater Cultural Heritage Act 2018 and the Convention on the Protection of the Underwater Cultural Heritage define underwater cultural heritage to include all traces of human existence having a cultural, historical, or archaeological character which have been partially or totally under water, periodically or continuously. When work is done to clear wrecks, all care must be taken to preserve culturally important sites, together with their archaeological and natural context.
2.41The Nairobi Convention is not retrospective so it will not provide access to insurance to remove historical wrecks and does not provide an incentive to address shipwrecks already in Australia’s waters as it will not be able to access the costs for doing so. The Department said that if a historic shipwreck became dislodged from the seabed and presented a new risk, the removal of that wreck would have to comply with all relevant laws including the Underwater Cultural Heritage Act and requirements for the safe removal of shipwrecks. If Australia wanted to remove these objects that it would be at its own cost.
2.42The Department confirmed that the Convention does not create a new incentive to remove something that is not currently a danger. The Department clarified that even if a historic shipwreck was dislodged whereby a danger was created or it started leaking some sort of material, Australia would still not be able to seek costs for that remediation if it occurred prior to its accession to the Convention. Australia would pay for the associated costs and the matter would have to go through the existing system of the courts.
2.43The Department explained that Australia has an obligation to provide for freedom of navigation and safe passage through our waters so if an object became a risk to safe navigation, then it would need to be addressed. In such a case the existing system of wreck removals would apply, and Australia would work with the owner and operator of the vessel. The obligations fall to Australia and Australia would then seek the costs through the courts.
Maritime trade
2.44The Department said the Convention would not act as a barrier for new entrants to the maritime trade and explained that in international shipping the ‘vast majority’ of vessels already have this type of insurance therefore the cost to them is negligible. The insurance required by the Convention only applies at 300 gross tonnage and over. The Department said that the cost of insurance for the cost-benefit analysis was estimated by ACIL Allen at $2.30 per gross tonne which is $690 in insurance for a 300 gross tonne tugboat.
Vessels covered
2.45The Committee inquired into the vessels covered by the Convention. The Department noted that insurance is required by those over 300 gross tonnage (for example a yacht), while small vessels such as tinnies and fishing boats are outside of the scope as they are under the weight of the threshold. The Convention does not change for shipowners how they use the vessel, and only applies if they were to have a wreck in the EEZ, in which case Australia would be able to claim for the cost of cleaning up from the insurer. The shipowner will not have to pay for the costs, as they will be met by the insurer, and their only cost will be the insurance premium.
Border issues and shifting wrecks
2.46In response to questions about into the Convention’s applicability to wrecks on the border of the EEZ and situations where containers end up drifting or the wreck drifts outside the EEZ, the Department clarified that, ‘The drifting of wrecks, such as shipping containers, near the boundary of the area covered by the Nairobi Convention would be a rare occurrence.’ DITRDCA is not aware of any such cases globally that have relied on the Convention. The Department acknowledged that this is ‘a comparatively new convention, there may be legal interpretations of provisions in the Nairobi Convention that are yet to be tested with insurance claims, or in the courts.’ Ultimately the Convention applies to the EEZ, and ‘Where a wreck poses a hazard outside Australia’s EEZ, Australia would not be able to rely on the Convention to recover the costs of wreck removal.’
2.47The Convention provides for cooperation between states in a wreck that involves multiple states such as when a wreck goes overboard in one state and then drifts to another. Where a wreck occurs on the border, Australia would manage the wreck collaboratively with the other member state. Where the wreck drifts into another state’s EEZ whether the other state can recover the costs will depend on whether they are a State Party.
2.48The Department acknowledged that this type of scenario is complicated in the north of Australia where there is not 400 nautical miles between Australia and our closest neighbour. The Department said when the wreck is located on the border it is jointly managed and Australia would negotiate with the other government and the costs are shared and recovered in that way.
Current insurance situation
2.49AMSA will be responsible for compliance with requirements under the Convention for insurance. Professors Gaskell and Forrest further explain that, ‘The major benefit which the Nairobi Convention offers States is its compulsory insurance package’.
2.50Currently, under the Protection of the Sea (Civil Liability) Act 1981 and the Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008, vessels that come into Australian ports must hold insurance to cover liabilities for environmental incidents including oil spills. However, vessels entering Australian ports are not required to hold specific wreck-related insurance. Of note, the Department explained that approximately ninety per cent of all vessels entering Australian ports are flagged in a State Party to the Nairobi Convention therefore they must meet its insurance obligations.
Definition of a wreck
2.51The Department said one of the benefits of the Convention is that it provides greater clarity about what constitutes a wreck.
2.52The definition of a wreck is currently narrow; a wreck is only considered as such where it endangers human life, safety of navigation or the marine environment. This definition is broadened in the Convention to any condition or threat that poses a danger or impediment to navigation or may reasonably be expected to result in major harmful consequences.
Offshore gas and oil industry
2.53In relation to the interaction of the Convention with the offshore gas and oil industry and the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) with for example a Floating Production Storage and Offload (FPSO), the Department noted that the Nairobi Convention ‘includes a broad definition of “ship”, but expressly excludes vessels “on location engaged in the exploration, exploitation or production of seabed mineral resources”, for example, a [FPSO] vessel connected to the seabed.’
Conclusion
2.54As a country with a significant coastline and shipping industry, the Committee believes that acceding to the Nairobi Convention would be of benefit to Australia.The Convention will assist Australia in being able to remove or have removed wrecks in its EEZ, including objects lost at sea that pose a danger to navigation or may result in negative consequences for the marine environment, coastline, and human safety.
2.55The Convention also provides for financial benefits to Australia. The Convention would enable Australia to recover the costs associated with the location, marking and removal of these wrecks. The Convention outlines that the registered ship owners of States Parties are held financially liable for any wrecks they create and those over 300 gross tonnage must have insurance or other financial security. This insurance is intended to cover any costs associated with removing of these wrecks. This means that Australia would be able to recover these costs from the insurers of ship owners.
2.56The optional clause in the Convention which provides for the extension of the Convention to the territorial sea of State Parties will be considered by Australia at a later date. The Committee believes that having this option available to Australia to consider is beneficial and would enable Australia to better respond to wrecks in the territorial sea including the financial benefits of being able to recover costs. The Committee acknowledges that this would require negotiations with state and territory governments as they have non-exclusive jurisdiction over the first three nautical miles of the territorial sea (the coastal waters).
2.57The Committee believes the Nairobi Convention is in Australia’s best national interests. Under Australia’s existing legislative framework it is currently not possible for the Australian Government to recover costs in relation to the majority of the scenarios that create wrecks, including when a foreign vessel sinks or becomes stranded within the EEZ, when an object from a foreign vessel or RAV sinks, becomes stranded or is adrift in the EEZ or territorial sea, or when a DCV or recreational vessel creates a wreck in the EEZ.
2.58The demand for international shipping is increasing due to e-commerce, including the use of bigger container ships that travel more frequently at full capacity and the pressures associated with the swift loading and unloading of ships.
2.59Key issues raised during the inquiry included the value of shipping to Australia, domestic regulatory gaps, economic benefits, the gravity of wrecks in Australia, environmental hazards, the territorial sea and optional clause, underwater cultural heritage, maritime trade, vessels covered, border issues and shifting wrecks, the current insurance situation, the definition of a wreck and the offshore gas and oil industry. The Committee believes that these issues were adequately addressed through the inquiry process.
2.60The Committee supports the Nairobi International Convention on the Removal of Wrecks and recommends that binding treaty action be taken.