Marine insurance and accidents in Spain

Insurance

Mandatory coverage

What maritime risks must be covered under the law and what is the mandatory level of coverage?

Maritime insurance is regulated in the Maritime Shipping Act and the Insurance Contract Act, allowing freedom of contract. Maritime insurance can cover:

• ships, boats and naval artefacts, even those under construction or scrapped;
• freight;
• cargo;
• the civil responsibility derived from the exercise of navigation; and
• any other asset interests exposed to the maritime navigation risks.

The Maritime Shipping Act establishes mandatory civil liability insurance for:

• passenger vessels transporting more than 12 passengers;
• nautical charter contracts;
• damage due to contamination derived from ships, boats and naval artefacts; and
• pleasure ships.

In addition, the Law on State Ports and the Merchant Navy requires shipping companies to hold insurance covering the civil liability which they could incur during operation of their ships. The mandatory insurance requirement stems from the applicable international conventions – in particular, the International Convention on Civil Liability for Oil Pollution Damage 1992 and the International Convention on Civil Liability for Bunker Oil Pollution Damage.

Insurable risks and ships

What other risks are typically covered by marine insurance contracts concluded in your jurisdiction and what ships are insurable?

The risks typically covered by insurance contracts are:

• voyage or time-charter ships;
• cargo; and
• civil liability that establishes direct action against the insurer.

Maritime insurance covers navigation risks, subject to certain exclusions. The other risks typically covered in a maritime insurance contract are loss of freight insurance and loss of rent insurance. Under maritime insurance contracts, the following ships are insurable:

• merchant ships in all their modalities;
• fishing ships;
• pleasure ships and vessels with the option of boat race coverage; and
• naval artefacts.

Subrogation rights

What is the legal regime governing marine insurers’ subrogation rights?

The subrogation of the insurer’s rights is regulated in the Maritime Navigation Law, which establishes that once compensation has been paid by the insurer, it will be subrogated in the rights and actions corresponding to the insured until the limit of the compensation against whoever is liable for the accident. The insurer will be incapable of performing the rights to which it has subrogated in detriment of the insured. In case of concurrence of the insurer and the insured with the responsible third party, the return obtained will be distributed between them in proportion to their respective interests. The exemption from liability of the third party causing the damage, as agreed by the insured or the policy holder with the third party, is not opposable to the insurer, unless the exemption was expressly accepted by it and included in the policy.

Marine accidents

Collision and pollution

What rules and procedures (under both domestic and international law) apply to the prevention of, liability for and remedy of:

(a) Collision?

Collision is governed by the Maritime Navigation Act, which refers to the Brussels Convention 1910 on the unity of certain rules as regards boarding and other conventions on the same issue (eg, the International Regulation to Prevent Boarding in the Sea).

(b) Oil pollution?

Oil pollution is governed by the Maritime Navigation Act and two conventions (the International Convention on Civil Liability for Oil Pollution Damage 76/92 and CFC 76/92), as well as other conventions to which Spain is a signatory. The liability regulations fall on the shipowner or the holder of the jacket platform. An almost objective system is established. Spanish membership of the European Union imposes higher requirements and higher quality regarding the construction of ships and imposes liability on whomever causes the pollution in line with the principles of prevention at source and polluter pays. Indemnity is foreseen only due to inevitable force majeure. Therefore, parties must take out insurance against civil liability for contamination.

(c) Other environmental damage caused by a ship?

Civil liability is also foreseen for damages caused by radioactive or nuclear substances.

Salvage

What is the legal regime governing salvage and general average?

With regard to salvage, the Maritime Navigation Act refers to the International Convention on Maritime Salvage (London 1989) in terms of risk and useful results. The act regulates salvage contracts but imposes only a requirement to act with the necessary due diligence in order to avoid or reduce damage to the environment; otherwise, the contract is left to the will of the parties. If the returned result is useful, entitlement to an award is limited by the ship’s value and the value of the goods rescued, and the award must be distributed between the shipowner and the contributors. A right to retention over the ship and the rescued goods is also established provided that it does not constitute a guarantee.

With regards to general average, the contribution and absence of formalities are established. A retention right over the merchandise is established provided that the liability to contribute is not guaranteed. Private liquidation is accepted in the absence of procedures before a notary public. The parties are free to agree how to take care of the liquidation; in the absence of an agreement, the York-Antwerp Rules apply.

Places of refuge

What framework governs access to places of refuge for ships in distress?

The maritime administration may impose requirements and conditions on the entry into safe havens of potentially polluting ships in order to guarantee the safety of people, maritime traffic, the environment and goods. The competent authority is the general director of the merchant navy; at present, no specific safe haven ports or the constitution of a guarantee is required.

Wreck removal

What rules and procedures apply to the removal of wrecks in your jurisdiction?

These are regulated by the Law of State Ports and Merchant Navy. In the scenario of a ship sinking, the procedure is administrative and subject to appeal. The port authority will require owners, shipping agents, charterers, consignees or insurers to start the removal and will determine where the cargo, fuel, remains or the refloated ship will be placed within the established term, as well as the guarantees or safety measures that must be taken in order to prevent new sinking. For reasons of urgency, the port authority can demand the adoption of measures, potentially at the expense of the forced parties. If the port authority’s orders are not complied with, the authority can use execution mediums to remove the sunk ship, its fuel or the load on board. In all cases, the owner or shipping agent must pay the expenses. If the amounts accrued due to the removal are not paid, the port authority can dispose of the wreckage, taking its costs out of the sum raised by the disposal.

Under what circumstances can the authorities order removal of wreckage?

If the wreckage affects port activity or poses a serious risk to people, goods or the environment, the port authority will require owners, shipping agents, charterers, consignees or insurers to remove the wreckage and determine where the cargo, fuel, wreckage or the refloated ship may be placed, within the term fixed, as well as the guarantees or safety measures that must be taken to prevent a new sinking.

Insurance

Mandatory coverage

What maritime risks must be covered under the law and what is the mandatory level of coverage?

Maritime insurance is regulated in the Maritime Shipping Act and the Insurance Contract Act, allowing freedom of contract. Maritime insurance can cover:

• ships, boats and naval artefacts, even those under construction or scrapped;
• freight;
• cargo;
• the civil responsibility derived from the exercise of navigation; and
• any other asset interests exposed to the maritime navigation risks.

The Maritime Shipping Act establishes mandatory civil liability insurance for:

• passenger vessels transporting more than 12 passengers;
• nautical charter contracts;
• damage due to contamination derived from ships, boats and naval artefacts; and
• pleasure ships.

In addition, the Law on State Ports and the Merchant Navy requires shipping companies to hold insurance covering the civil liability which they could incur during operation of their ships. The mandatory insurance requirement stems from the applicable international conventions – in particular, the International Convention on Civil Liability for Oil Pollution Damage 1992 and the International Convention on Civil Liability for Bunker Oil Pollution Damage.

Insurable risks and ships

What other risks are typically covered by marine insurance contracts concluded in your jurisdiction and what ships are insurable?

The risks typically covered by insurance contracts are:

• voyage or time-charter ships;
• cargo; and
• civil liability that establishes direct action against the insurer.

Maritime insurance covers navigation risks, subject to certain exclusions. The other risks typically covered in a maritime insurance contract are loss of freight insurance and loss of rent insurance. Under maritime insurance contracts, the following ships are insurable:

• merchant ships in all their modalities;
• fishing ships;
• pleasure ships and vessels with the option of boat race coverage; and
• naval artefacts.

Subrogation rights

What is the legal regime governing marine insurers’ subrogation rights?

The subrogation of the insurer’s rights is regulated in the Maritime Navigation Law, which establishes that once compensation has been paid by the insurer, it will be subrogated in the rights and actions corresponding to the insured until the limit of the compensation against whoever is liable for the accident. The insurer will be incapable of performing the rights to which it has subrogated in detriment of the insured. In case of concurrence of the insurer and the insured with the responsible third party, the return obtained will be distributed between them in proportion to their respective interests. The exemption from liability of the third party causing the damage, as agreed by the insured or the policy holder with the third party, is not opposable to the insurer, unless the exemption was expressly accepted by it and included in the policy.

Jurisdiction and dispute resolution

Competent courts

What courts are empowered to hear maritime cases in your jurisdiction?

According to the Law on the Judiciary, the mercantile courts have exclusive competence to hear matters of maritime law.

Exclusive jurisdiction and arbitration clauses

Under what conditions will exclusive jurisdiction and arbitration clauses in shipping contracts be held as valid?

The jurisdiction and arbitration clauses are valid only if they have been expressly accepted without prejudice to the international conventions valid in Spain and EU regulations. Therefore, the clauses to submit to a foreign jurisdiction or arbitration abroad will be found void and considered inapplicable, provided that it is not part of the European Union and contained in the contracts of use of the ship or the auxiliary contracts for navigation, as long as these have not be negotiated individually or separately. Recent judgments have held that when there has been a transmission of the contracts or subrogation of the insurer, it is considered that there is no subrogation in the jurisdiction or arbitration clause.

Maritime arbitration

What is the general state and prevalence of maritime arbitration in your jurisdiction?

Arbitration is accepted in Spain as an alternative to ordinary jurisdiction, and arbitration submission agreements are valid. Arbitration offers advantages such as the specialist knowledge of arbitrators, confidentiality and a less strict procedure.

Recognition and enforcement

What regimes govern the recognition and enforcement of foreign judgments and arbitral awards?

This is regulated under Article 523 of the Civil Procedure Law. The Brussels Regulation (1215/2012) highlights that judicial resolutions dictated in a member state and which have executive force will also have executive force in other member states without a declaration of enforceability, and may be executed in those member states as if they were national resolutions

The Spanish courts directly apply treaties with bilateral and multilateral recognition and the execution of foreign judgments and arbitral decisions.

Marine security

Legal regime

What regime governs the imposition of security measures on ships and in port facilities?

If the wreckage affects port activity or poses a serious risk to people, goods or the environment, the port authority will require owners, shipping agents, charterers, consignees or insurers to remove the wreckage and determine where the cargo, fuel, wreckage or the refloated ship may be placed, within the term fixed, as well as the guarantees or safety measures that must be taken to prevent a new sinking.

Security officers

What rules apply to the qualification and conduct of security officers on ships and in port facilities? Are armed guards allowed on ships?

The port security officer and port staff with specific protection functions must have adequate training in maritime protection in order to perform their functions and the necessary qualifications or certificates to act as protection officers.

The port’s custody competence is attributed to the Spanish Civil Guard through Law 2/1986 on Law Enforcement.

Royal Decree 1628/2009 provides that safety on board ships carrying the Spanish flag outside Spanish territorial waters and in situations posing risks to people and goods can be guaranteed by security staff through the use of adequate weapons in order to meet protection and prevention goals.

Security information

What rules govern the provision of security information to port authorities?

Royal Decree 1617/2007, which establishes measures for the improvement of the protection of ports and maritime transportation, regulates the supply of protection information to the port protection authority and corresponding maritime captain before the entry of a ship into port. This information should be provided at least 24 hours before the ship enters the port. The port protection authority will deny port entry to any ship which does not supply this information, unless the ship is exempt from the supply of such information.

Source: San Simón & Duch – Carlos Cerdá