The cost of “making good” after a marine casualty is no longer just about repairing steelwork or replacing a vessel. In January 2022, the 143-metre bulk cement carrier Goliath was arriving in Devonport after sailing from Melbourne when it collided with two moored harbour tugs. Both tugs were severely damaged and later sank spewing diesel into the water. The post-casualty cost spiral quickly outgrew the initial hull damage and became the dominant driver of liability, recovery strategy and claims complexity.
“Of the $22 million total, the wreck removal and clean up part of the claim is around $17 million, so it is a very significant component,” said Kennedys partner Peter Craney (main picture).
Historically, marine liability has long revolved around the concept of limitation: a mechanism that, in many circumstances, caps what a shipowner (and ultimately its liability insurers) must pay by reference to the vessel’s tonnage. But litigation involving this incident in Tasmania has put one category of loss under a harsh spotlight.
“As of April 2025, though, the position in Australia under the Full Court’s decision is that wreck removal and clean up costs are not limitable,” said Craney. That matters because it effectively decides whether wreck removal sits inside the “fixed pot” of a limitation fund or outside it, as a separate, uncapped liability.
For brokers, the practical implication is immediate and uncomfortable: the exposure they are helping clients buy protection for may not behave the way traditional marine casualty models assume. Craney is blunt about the current state of play. “At the moment, shipowners face exposure for uncapped liability for wreck removal expenses under Australian law,” he said.
That shift does not hit only shipowners. It reframes how ports, terminals and their insurers think about recovery strategy and how competing claimants might line up against a limited fund. In the Devonport matter, the numbers make the point: a roughly $16 million limitation fund against roughly $22 million in claims, with wreck removal representing the bulk of the loss. When the biggest head of damage is either inside or outside the cap, the downstream consequences can be stark.
“If, on the other hand, that $17 million sits outside the fund, those of us seeking recovery of the other head of loss, including hull losses for the tugs themselves are likely to receive a higher rate of recovery, if otherwise successful,” said Craney.
This neatly captures the tension between different insured interests watching the same litigation and hoping the law falls their way. The broader context is that Australia is not alone in wrestling with how wreck removal should be treated — and that divergence itself is a risk.
“In some jurisdictions, you can limit for wreck removal claims,” said Craney. In other words, international placement strategies, wordings and expectations built in London, Singapore or Hong Kong may not map cleanly onto Australian exposures, particularly where ports and coastal authorities move quickly to protect navigation and the environment.
Wreck removal is not a tidy line item. It can include locating and securing the wreck, removing pollution and debris, contracting specialist salvors and meeting regulatory directions.
Australian regulators have already pointed to how expensive “debris at sea” can become. For example, in the YM Efficiency container-loss incident, industry reports citing the Australian Maritime Safety Authority (AMSA) said the total cost of the recovery operation to remove and dispose of 63 containers was about $17 million.
Reports from other jurisdictions also show that wreck removal and other marine clean-up costs can be astronomical. That is one reason the industry has been watching the Nairobi International Convention on the Removal of Wrecks 2007. Insurers and brokers are alert to the way high-profile casualties turn into long-tail, reputation-heavy clean-up operations.
For brokers on the ground, the challenge is that the pricing and structure of marine liability has to reflect both the frequency of smaller events and the severity of the rare but catastrophic ones — and wreck removal can be the “severity multiplier” that blows past expectations. If the legal framework removes the cap in certain waters, then policy limits, reinsurance structure and aggregation scenarios all need re-testing.
Sitting behind the court fight is a second potential shift: whether Australia accedes to the Nairobi wreck regime, which is designed to give coastal states clearer rights and a direct-action path against insurers, backed by compulsory insurance. The International Maritime Organization (IMO) says the treaty “require[s] them to take out insurance or provide other financial security to cover the costs of wreck removal” and provides a “right of direct action against insurers.”
Craney frames the broking and underwriting consequence in very specific terms: “If, in addition, Australia accedes to the Nairobi Wreck Removal Convention, as was recommended by the Joint Standing Committee on Treaties, to extend it beyond the EEZ [Exclusive Economic Zone], there will be compulsory wreck removal insurance requirements for vessels of 300 gross tonnage [GT] or higher,” he said.
That 300 GT threshold aligns with how the Convention’s compulsory insurance regime is commonly described internationally, with industry commentary noting a “requirement for state issued Certificates for vessels of 300 GT or more.”
For insurers and brokers, the key is that the Nairobi wreck regime doesn’t just change who pays; it changes how cover must be evidenced, how vessels trade and how ports and authorities pursue recovery. It may also reshape market opportunity. Craney said that if compulsory insurance bites more broadly, domestic operators could look outside traditional P&I arrangements and into local markets - a shift that would create placement work, but also new questions about wording adequacy, limits and claims-handling expertise.
For now, the Devonport appeal path has become a real-time test case for the industry’s core assumptions about what can be capped - and what can’t. For brokers, the key is that “wreck removal” is no longer a technical afterthought buried in the schedule. It is a board-level severity risk, a wording-and-limits problem, and, increasingly, a live conversation with clients about worst-case liability in Australian waters while the law continues to move.
