The Japanese Natural Disaster And Its Consequences: Legal Issues Arising For The Shipping And Trade Industries

The earthquake that struck off the northern Pacific coast of Honshu, Japan's largest main island, in the early hours on Friday 11 March was the fourth largest recorded in the world since 1900. It caused extensive damage to property within several hundred kilometres of its epicentre. However, the greatest impact of the earthquake was from the resultant tsunami which swept through many coastal towns causing significant loss of life and human suffering.

The tsunami also affected the ports and coastlines of Fukushima, Miyagi, Iwate and Aomori, collectively known as the Tohoku region. In addition to tsunami damage to ports, shipyards and the regional fishing fleet, there were various reports of ships and ferries running aground and suffering damage.

Furthermore, the nuclear power station at Fukushima was damaged and this has caused considerable concern over the risk of uncontrolled radiation leaking from the damaged nuclear reactors. The authorities have evacuated the immediate area and are monitoring radiation levels to ensure that those in the area do not suffer the effects.

The tsunami has proven to be the biggest natural disaster to affect Japan since an earthquake levelled Tokyo and Yokohama in 1923. The Japanese Cabinet Office reported on Wednesday 23 March that direct losses of between 16 trillion yen (US$198 billion) and 25 trillion yen (US$309 billion) have been incurred as a result. If this estimate is correct, the resultant losses will exceed those resulting from Hurricane Katrina in New Orleans in 2005, which the insurance industry assessed to be in the region of US$125 billion.

Beyond the unimaginable human cost of the disaster, there has been and will continue to be significant impact on the Japanese economy and widespread repercussions for the shipping and international trade industries. This briefing aims to set out some of the issues that have been encountered by these industries as a result of the tsunami and that will continue to be faced in the immediate future.

Shipping

The principal effects of the tsunami on the shipping industry relate to port infrastructure and the flow of import and export cargoes. Japanese ports, which handle about 7 percent of the country's industrial output, were badly hit. The ports in the northern part of Japan were severely damaged, although the Japanese transport ministry reported on 23 March that most key ports (12 out of 15) had re-opened and were usable for recovery efforts and general use. Only the ports of Ofunato, Ishinomaki and part of Ibaraki remained too damaged to be used, although the ministry stated that it was working to re-open the sea routes at those three ports. It has further been reported in the press that grain cargoes are reaching Japanese ports after disruptions at terminals, the shipments having been transferred to southern Japanese ports without much difficulty. Nonetheless, there remain a number of concerns for ship-owners and charterers.

Safe port issues

Various safe port issues arise, including as a result of damage to port facilities and equipment, the risk of damage to vessels, the possibility of aftershocks and potential radiation risk from the Fukushima nuclear plant. Owners might also be concerned that if they call at...