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Cases / Staged loss / scuttling · Senegal (offshore) · 1979–1985

Salem tanker

Nature's voice · report
About 15,000 tonnes of oil entered my waters.
Residue that sank with the ship; no slick was quantified.
Did nature suffer? Yes. Harm is on record.
What the record lacks: 5 none on record · 1 insufficient See the gaps

A supertanker sank off West Africa in January 1980. Most of its cargo had already been sold in Durban, and Lloyd's cargo insurers refused to pay for it.

12: 1Cargo sold in Durban vs cargo sunk with the ship
About 180,000 t discharged in Durban; about 15,000 t of residue went down. Insurers paid only for the residue.
What?
In January 1980 the supertanker Salem was scuttled off West Africa after secretly discharging about 180,000 of its 194,000 tonnes of Kuwaiti crude in Durban, South Africa. Lloyd's cargo underwriters refused Shell's claim for the cargo sold in Durban, and the English courts upheld the refusal. UK Supreme Court
Where?
Loaded at Mina al Ahmadi, Kuwait; discharged at Durban, South Africa; scuttled off West Africa. Litigated in London; criminal trials in Piraeus and Houston.
When?
Cargo loaded in December 1979; ship scuttled on 17 January 1980; English judgments in 1981, 1982 and in the House of Lords in 1983. A shipping agent and four crew were jailed in Piraeus in 1984–85.
Who?
Gained
  • The conspirators who owned the ship (Oxford Shipping, Houston) — Paid more than US$32m for the cargo (UK Supreme Court; other reports give US$43m or US$45m) UK Supreme Court
  • South African Strategic Fuel Fund Association — Received about 180,000 t of crude in Durban while South Africa was under an oil embargo Wikipedia
Lost
  • Shell International Petroleum — Claim for about 180,000 t of cargo sold in Durban went unpaid; its interest was insured for about US$56m, and recovery was limited to the residue that sank UK Supreme Court
Harmed
  • Sea off West Africa (off Senegal in most sources, off Guinea in others) — About 15,000 t of crude residue sank with the ship; no slick was quantified Wikipedia
Why?
The English courts found the ship's owners were conspirators privy to the crew's acts, so there was no barratry, and that the cargo was effectively taken in Durban, not lost at sea (as summarised by the UK Supreme Court in 2018). The cargo was sold to South Africa while it was under an oil embargo. UK Supreme Court
How?
During the voyage the charterer Pontoil resold the cargo to Shell; the ship entered Durban under the name 'Lema', discharged about 180,000 t, took on ballast and sailed again before being sunk with the residue. Investigators noted almost no oil on the surface, which helped expose the fraud; the owners never filed a hull claim. Wikipedia
In proportion About 12 tonnes of cargo were sold in Durban for every tonne that sank with the ship (about 180,000 t against about 15,000 t). UK Supreme Court
6 of 6 questions answered from the record

What happened

The record, in order.

In December 1979 the tanker Salem loaded about 194,000 tonnes of Kuwaiti crude at Mina al Ahmadi for the charterer Pontoil SA. During the voyage Pontoil resold the cargo to Shell.

The ship entered Durban under the name "Lema" and discharged about 180,000 tonnes to the South African Strategic Fuel Fund Association, at a time when South Africa was under an oil embargo. It took on ballast and sailed again.

On 17 January 1980 the ship was scuttled with about 15,000 tonnes of crude residue on board. The crew was picked up by the tanker British Trident. Investigators noted almost no oil on the surface, which helped expose the fraud.

Lloyd's cargo underwriters refused Shell's claim for the cargo. The English courts found for the underwriters between 1981 and 1983: there was no barratry because the owners were privy to the crew's acts, and the cargo was effectively taken in Durban, not at sea. Shell recovered only for the residue that sank.

The conspirators were paid more than US$32 million for the cargo. A shipping agent and four crew members were jailed in Piraeus in 1984–85. The owners never filed a hull claim.

  1. 1979About 194,000 t of Kuwaiti crude loaded (December); cargo resold to Shell during the voyage
  2. 1980About 180,000 t discharged in Durban; ship scuttled off West Africa (17 Jan)
  3. 1981Commercial Court judgment, Shell v Gibbs [1981] 2 Lloyd's Rep 316
  4. 1982Court of Appeal [1982] QB 946
  5. 1983House of Lords [1983] 1 Lloyd's Rep 342; cargo underwriters not liable for the Durban cargo
  6. 1985Shipping agent and four crew jailed in Piraeus (reported April 1985)

What was said

Claims, in the words of those who made them.

“because the conspirators who owned the vessel were privy to its crew's acts”

UK Supreme Court, summarising the House of Lords ruling on barratry · 2018 · UK Supreme Court

“its effective taking was not at sea, but was in Durban”

UK Supreme Court, summarising the House of Lords ruling · 2018 · UK Supreme Court

“a price of over USD32m”

UK Supreme Court, on the payment to the conspirators · 2018 · UK Supreme Court

How it looked

What was shown, beside what was recorded.

Shown

  • A loaded supertanker lost at sea off West Africa
  • Crew rescued by a passing tanker

Recorded

  • About 180,000 of 194,000 t had been discharged in Durban before the sinking
  • Almost no oil on the surface where the ship went down
  • Conspirators paid more than US$32m for the cargo
  • Courts: no barratry, and the cargo was taken in Durban, not at sea
  • Shell's interest insured for about US$56m; recovery limited to the sunk residue

Who gained

Money that reached nature, beside money that stayed elsewhere.

Reached nature or the ground

Not published
No figure published.

Gained elsewhere

Not totalled
Paid to the conspirators for the cargo discharged in Durban$32m
UK Supreme Court figure. Other reports give US$43m or US$45m.
Currency: USD · Window: 1980. All figures cover the same period. * Estimate built from cited figures.

In court and with insurers

Every proceeding and every insurer decision on record.

Lawsuits and rulings

  1. 1983Defendant won
    Shell International Petroleum v Gibbs (The Salem)
    Commercial Court (Mustill J, 1981), Court of Appeal (1982), House of Lords (1983) · Appeal · Shell International Petroleum (cargo owner) → Gibbs, for the cargo underwriters at Lloyd's

    The courts held there was no barratry and no taking at sea for the cargo discharged in Durban; Shell recovered only for the residue lost with the ship, as a loss by perils of the sea under a special clause. UK Supreme Court

  2. 1985Claimant won
    Criminal trial in Piraeus
    Criminal court, Piraeus · Criminal · Greek prosecutors → A shipping agent and four crew members

    A shipping agent and four crew members were jailed in 1984–85, according to a Los Angeles Times report cited by Wikipedia. Wikipedia

Insurers

  1. Claim refused$56m insured value (about)
    Cargo underwriters at Lloyd's (defendant Gibbs) → Shell International Petroleum
    Stated reason: No barratry, because the ship's owners were privy to the scuttling; the cargo was taken in Durban, not at sea

    The underwriters refused to pay for the roughly 180,000 t sold in Durban, and the courts upheld the refusal. UK Supreme Court

  2. 1983Partly paid
    Cargo underwriters at Lloyd's (defendant Gibbs) → Shell International Petroleum
    Stated reason: Residue lost with the ship treated as a loss by perils of the sea under a special clause

    Shell's claim for the residue that sank succeeded; the amount was not found. UK Supreme Court

What nature saw

Outcomes measured on the ground, and nature's note.

Nature's report opens this page. Below: further outcomes measured on the ground.

Crude that sank with the ship
about 15,000 t
No slick was quantified
Cargo sold before the sinking
about 180,000 t
Discharged in Durban

What we don't know

Undisclosed, unproven, untried: recorded as data.
Court ruling exists

Record

  • None on record The full text of the House of Lords speeches was not retrieved; the holdings are taken from the UK Supreme Court's 2018 summary.
  • None on record Sources disagree on the price paid in South Africa: over US$32m, US$43m or US$45m.
  • None on record Sources disagree on whether the ship sank off Senegal or off Guinea.
  • Insufficient Trials were also held in Houston; no sentences were found. A claim that the owner received 35 years in the United States comes from a family-history site and is unverified.
  • None on record No quantified oil slick or environmental assessment was found.
  • None on record The hull claim the owners never filed would have been about US$26m, according to a 1985 press report.

Did the harm stop?

The fraud was exposed after the ship had sunk; about 15,000 t of crude went down with it.

Who paid?

Shell, whose claim for about 180,000 t of cargo sold in Durban was not paid; insurers paid only for the residue that sank.

Sources

Voices on record: — Company or project— Government and regulators✓ Courts✓ Press and investigations— Communities and civil society✓ Researchers

Courts

Press and investigations

  1. Salem (supertanker)
    Wikipedia · current
  2. Salem
    Talking Drums · 1985-01-21

Researchers

  1. Cargo owners not entitled to a recovery.. (case note)
    Journal of Maritime Law and Commerce · 1983

Connected cases

Related matters, and cases linked to this one through the same organisations, with the role each played in both.
Terms used on this page

Insurance

Hull insurance
Insurance on a ship itself, covering damage to or loss of the vessel.
Underwriter
An insurer, or a person at an insurer, who assesses a risk and decides whether and on what terms to insure it.

Law and courts

Arbitration
A private dispute process in which an appointed arbitrator, instead of a court, decides the case.
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