In the Wake of The Torrey Canyon

During the fight to keep the oil from the Torrey Canyon off the beaches, Britain's Prime Minister Harold Wilson reported to Commons last week, "We did not wait to settle matters of finance, compensation or legal liability." Now that the crisis is abating, he continued, "the government is urgently considering the question of claims." Britain, said the Prime Minister, intends to sue the Union Oil Co. of California for damages due to the wreck of its supertanker. If the suit ever gets to court, it will further complicate what is fast becoming not only the most costly maritime accident in history but also the most complex.

Well-Insured Hull. Recovering the value of the Torrey Canyon and the 118,000 tons of crude oil it carried is only the beginning of the problem. British Petroleum, for whom the chartered ship was hauling crude from Kuwait to England, had insured its cargo for $1,600,000. The ship itself, owned by a company called Barracuda Tanker Corp., which was incorporated in Liberia but is controlled from Wall Street, carried "hull" insurance of $16.5 million. As is traditional in marine insurance, the policy (with an annual premium of $330,000) had been spread among 120 syndicates in the U.S. and Britain, which will now pay off to Union Oil, the regular charterer of the ship and the beneficiary of the policy. Not since the Andrea Doria sank in 1956, with a loss of $16 million, have marine underwriters faced such a high claim.

What makes the case of the Torrey Canyon really complex is the threatened damage suits. Like most vessels afloat today, the tanker carried more than hull insurance; it also had P & I (for Protection and Indemnity), which is insurance against damage to persons, piers or other objects while the ship is in operation. The primary P & I insurer was the Marine Office of America in New York City, a consortium that carried $2,500,000 on the vessel. Union also had an undisclosed amount of P & I with other companies, enough presumably to match at least the $8,400,000 that Britons were talking about last week as the minimal total of losses.

If the insurance is not adequate, Union Oil will presumably have to bear the brunt of the claims. Conceivably, Union could fight back by entering a countersuit against the British government for, of all things, piracy. Although British fighter planes bombed the ship "in defense of the realm," the Torrey Canyon at the time was actually outside British territorial waters.

Before litigants against Union Oil can collect, however, they may have to go through lengthy court battles. In a similar though smaller case in 1950, the owners of a grounded tanker lightened ship by dumping 400 tons of oil into the water near Liverpool; they were sued for oil damages on grounds of faulty navigation. Ruling that unseaworthiness was the only ground for such a suit, a British judge dismissed the case.

Rules of the Sea. Apart from the inevitable claims and counterclaims now arising from the sunken Torrey Canyon, the wreck is almost sure to bring stricter laws of navigation and higher insurance rates on supertankers. Claiming that laws covering such ships are seriously out of date, Britain has already requested an emergency meeting of the 162-nation Inter-Governmental Maritime Consultative Organization to consider new ones. Marine underwriters are already holding meetings to determine how much insurance rates should be increased. "The size of tankers," said a Lloyd's of London executive with embarrassment last week, "has recently grown much faster than our knowledge of their underwriting."

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