MT New Diamond fire: Singapore-based salvor settled AG's claims
Contrary to some reports, it was the Singapore-based salvor, and not the owners of MT New Diamond that settled the payment requested by the Attorney General over expenses incurred when fighting the fire that swept through the vessel.
The salvor, SMIT Singapore Pte Ltd, was appointed by the ship’s Greek owners M/s. Porto Emporios Shipping Inc. on September 6; three days after a boiler room explosion onboard the vessel started a fire onboard.
The salvor retained the services of local law firm M/s Julius & Creasy through their lawyers in London to make representation for and on behalf of them as their legal counsel in the country. The team from Julius & Creasy consisted of Senior Partner S.A. Cader, Upeksha Weerasinghe, Sumudu Dissanayake and Farha Huzair.
During their meetings with the AG, the firm had pointed out that it was acting in the national interest and working to convince their clients to agree to an immediate transfer of funds and a full and final settlement, rather than resolve the claims at Arbitration in London, as is the usual international practice.
The owners of the vessels and the salvor divided between themselves the responsibilities related to the ship, the Sunday Times learns. Accordingly, it fell on the salvor to take care of the claims submitted by state agencies in fighting the fire while the owners were required to take care of any claims made by the Marine Environment Protection Authority (MEPA) for environmental damage caused by any oil spill.
An authoritative source stressed that the owners had appointed the salvor under the Lloyd’s Standard Form of Salvage Agreement, universally known as the ‘Lloyds Open Forum.’ The salvage contract was under the “No Cure - No Pay” policy enshrined in the 1989 International Convention Salvage. According to the policy, salvors respond to incidents at their own risk in the expectation of fair reward if they are successful. “The Government did not do anything wrong, but under the agreement, it is the owners who appoint the salvors and that is how SMIT Singapore Pte Ltd was appointed as the salvor in this case. The Government could not have carried out the salvage operation without entering into a salvage agreement with the owners. Therefore, the notion that the state lost revenue (in relation to salvage) is without any basis,” the source added.
The salvor agreed to settle costs incurred by state agencies including the Sri Lanka Navy, Sri Lanka Air Force, Colombo Dockyard and the Sri Lanka Ports Authority. This was conveyed to the Attorney General by lawyers representing the salvor. After discussions, an agreement was reached to pay the total claim requested by the AG and accordingly, on October 1, USD 2, 130, 967.03 (Approximately Rs 390 million) was transferred to an account nominated by the Attorney General and maintained by the Treasury.