The sinking of the MSC ELSA 3, a Liberian-flagged container ship, off the southern coast of India has sparked a significant crisis. This incident has led to environmental damage, disrupted local economies, and complicated insurance issues. The Kerala state government is now seeking around ₹9,531 crore, or about $1.1 billion, from Mediterranean Shipping Company (MSC), one of the largest shipping companies in the world.
The Kerala High Court has received a claim that aims to cover ecological destruction, cleanup costs, and financial losses faced by local fishing communities. The ship capsized in late May, spilling hundreds of containers, including hazardous materials, into the Arabian Sea.
The MSC ELSA 3 was sailing from Vizhinjam to Kochi on May 25 when it developed a severe list and sank approximately 13 nautical miles off Alappuzha’s coast during rough monsoon weather. It was carrying around 643 containers, including 72 filled with plastic pellets and 13 with calcium carbide, a dangerous chemical that reacts with water.
So far, authorities have managed to recover only a small portion of the cargo. Over 600 tons of nurdles have been collected along the coasts of Kerala and Tamil Nadu, but much of the cargo remains missing. The state’s initial estimates for damages include ₹86.26 billion for ecological harm, ₹3.78 billion for cleanup efforts, and ₹5.27 billion to compensate the fishing community for lost income and damaged gear.
In response to the sinking, the Kerala government has officially classified the incident as a “State-Specific Disaster” and set up a multi-tiered response system, which includes scientific and legal teams. Cleanup operations are currently underway, and environmental monitoring is ongoing in affected regions.
The insurance responsibilities for the MSC ELSA 3 are shared among several parties. The ship was insured under a Hull and Machinery (H&M) policy for physical damage or total loss. Meanwhile, liability for environmental damage falls under the Protection and Indemnity (P&I) coverage from the Steamship Mutual Underwriting Association, part of the UK P&I Club.
According to maritime law, cargo owners are responsible for insuring their goods. If losses are not covered, they may need to prove the carrier’s negligence to recover damages. There is also the possibility of declaring General Average, which would require MSC and cargo owners to share losses.
The Kerala government plans to pursue its claims through the ship’s insurers. However, due to a lack of attachable assets in India, the Kerala High Court has ordered the arrest of two MSC-linked vessels currently docked at Vizhinjam Port until proper security is provided.
Efforts to recover the remaining containers and stabilize the site are ongoing. The Directorate General of Shipping (DGS) has reported that the salvage support vessel Canara Megh is on 24/7 duty at the site. A Dutch firm, SMIT Salvage, is expected to begin diving operations soon, pending visa and customs clearance.
So far, aerial and water quality surveillance has not found any new oil spills, but officials have noted the presence of lingering plastic nurdles and some disruption to local fishing activities. The DGS is also reviewing cargo documentation to check for any misdeclarations regarding hazardous materials.
This incident highlights the potential scale of marine environmental losses and the challenges in determining responsibility. As legal proceedings unfold in India, insurers and reinsurers may face lengthy negotiations over liability issues. The case could set a significant precedent in Indian maritime law, especially concerning environmental claims and vessel arrest processes.
As the Kerala High Court prepares to address the matter again on July 10, the ongoing cleanup along the coastline underscores the intersection of environmental vulnerability and global shipping liability—an issue that could reshape marine insurance practices in the region for years to come.