The Kerala High Court on Thursday, 19th June, put a temporary stop to the ongoing negotiation process between the State Government and MSC Company. The negotiations were aimed at deciding compensation related to the loss and damages caused by the sinking of the cargo ship MSC Elsa 3.
The State had formed a dedicated committee to conduct negotiations with the company. This committee was tasked with evaluating compensation for several critical concerns — including the collision damage, destruction of marine ecosystems, coastal livelihood loss, removal of the sunken wreck, and financial loss to local fishermen.
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However, the Division Bench, comprising Chief Justice Nitin Jamdar and Justice Basant Balaji, raised strong doubts over the transparency of this process. The Court stated that such private negotiations, particularly involving public interest and environmental damage, should maintain transparency and possibly be monitored through judicial oversight.
“Various questions should arise for consideration. Whether such a negotiation results in an agreement with the respondent company? Whether it could have transparency? Whether jurisdiction of this court will be affected?”
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The Court noted that since the State is contemplating an Admiralty suit against MSC Company, any negotiation or settlement should ideally occur through the legal route. The Bench highlighted that Section 3 of the Admiralty Act could be invoked to proceed with a court-monitored negotiation if necessary.
“Prima facie such negotiation can also take place if the State moves the Court under Section 3 of the (Admiralty) Act…It would be appropriate that the avenue of negotiation is deferred at present.”
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Taking note of the situation, the Court has stayed all ongoing negotiations with the MSC Company until further consideration.
This decision was made during the hearing of a Public Interest Litigation (PIL) filed by former Member of Parliament T. N. Prathapan. The petitioner had raised concerns about the ecological and economic impacts of the shipwreck on the environment and the fishing community.
In response, the State submitted an affidavit informing the Court of the steps it has taken so far. It mentioned plans to take legal action under the Environment Protection Act. The State also appointed the Special Secretary of the Department of Environment as the Principal Impact Assessment Officer to assess the damage and suggest further action.
Additionally, the Ministry of Fisheries had organized meetings with relevant stakeholders. The Fisheries Department submitted a detailed loss assessment report to the Environment Department for review.
The matter is expected to be taken up for detailed hearing in the coming week.
“The State has the option of doing settlement talks through the Court, especially when the State has expressed its intention of filing an Admiralty suit against MSC.”
Case Title: T. N. Prathapan v Union of India and Others
Case No.: WP (PIL) 50/2025
