Spain $1 Billion Lawsuit Over Sunk Tanker Dismissed

By | August 5, 2010

A U.S. federal judge dismissed Tuesday Spain’s $1 billion lawsuit against an organization that declared seaworthy a tanker whose 2002 sinking created one of the world’s biggest oil spills.

U.S. District Judge Laura Taylor Swain ruled in favor of the American Bureau of Shipping, a Houston-based organization Spain accused of misclassifying the ability of the tanker, MT Prestige, to carry fuel.

Swain announced her ruling on the same day BP Plc began its “static kill” operation to permanently plug its leaking Gulf of Mexico oil well.

The Bahamas-flagged Prestige sank off Spain’s rocky northwest coast in November 2002, spilling most of its 77,000 metric tons of fuel oil in that country’s worst environmental disaster.

Spain alleged the defendant was negligent in its inspection of the 26-year-old, single-hulled tanker six months before the sinking and failed to detect and warn about corrosion and other problems.

In her 20-page ruling, Swain said she recognized a “general imperative to hold appropriate parties accountable for oil spills that cause major economic and environmental damage.”

She nevertheless said classification societies could not under U.S. maritime law be liable to injured countries on the basis of reckless conduct in its certifications.

“By relieving shipowners of their ultimate responsibility for certified ships, such a rule would be inconsistent with the shipowner’s non-delegable duty to ensure the seaworthiness of the ship,” she said. “The shipowner is ultimately in control of the activities aboard ship.”

Swain previously dismissed Spain’s case in 2008 on the ground she lacked jurisdiction. A federal appeals court in New York last year ordered her to reconsider the matter.

Brian Starer, a partner at Squire Sanders & Dempsey LLP representing Spain, said he was disappointed with the ruling.

“To give them in essence a free pass is shocking in this day and age,” Starer said in an interview.

A decision on whether to appeal has not been made.

Stewart Wade, an ABS spokesman, said he was pleased with the decision, calling it “correct and appropriate.”

The release of oil from the Prestige damaged land, water, marine life and other resources off the Spanish coast, harming several hundred miles of coastline and leaving hundreds of fishermen without of work.

The case is Reino de Espana v. American Bureau of Shipping et al, U.S. District Court, Southern District of New York, No. 03-03573.

(Reporting by Jonathan Stempel; additional reporting by Basil Katz in New York; editing by Andre Grenon)

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