Subsea cables, the shadow fleet and shipowner liability

Damage to subsea power cables, telecom cables and gas pipelines by dragging anchors has become a recurring Baltic risk. On 25 December 2024 the EstLink 2 interconnector between Estonia and Finland failed and the fault was located in the subsea cable; on 2 January 2025 Fingrid applied to the Helsinki District Court for the seizure of the m/v Eagle S to secure its claim for damages.¹ For property, business interruption and P&I insurers, these incidents raise four Estonian-law questions: who is liable and can liability be limited; what insurance the ship must carry; where and how the claim can be secured; and how the infrastructure owner's own policy responds. This guide answers them for incidents with an Estonian connection.

1. Liability of the shipowner

Damage to a cable or pipeline is a tort claim against the shipowner and, depending on the facts, the operator and crew. A person who continuously uses another in its economic activity is liable for the damage that person unlawfully causes as for its own damage.² The applicable law and jurisdiction depend on where the damage occurred (territorial sea or exclusive economic zone) and where the ship is when the claim is brought; for damage in the EEZ these questions can be contested and should be analysed at the outset.

2. Limitation of liability

Estonia applies the 1976 Convention on Limitation of Liability for Maritime Claims as amended by the 1996 Protocol, the 1992 Civil Liability Convention for oil pollution and the 2001 Bunker Oil Pollution Convention. The limitation rules extend to the owner, charterer and crew.³ A defendant may raise limitation as a defence without constituting a limitation fund.⁴

The breaking of limitation is where Estonian law requires care. Under the Merchant Shipping Act (kaubandusliku meresõidu seadus, KMS), the person liable may not limit liability if the damage resulted from its own act or omission committed intentionally or through gross negligence.⁵ The LLMC uses a different test: personal act or omission committed with intent to cause such loss, or recklessly and with knowledge that such loss would probably result.⁶ Under the Estonian Constitution, where Estonian law conflicts with a treaty ratified by the Riigikogu, the treaty applies.⁷ In a contested limitation case, which test the court applies, and to which claims, is therefore a real issue. For the infrastructure owner and its subrogated insurer, evidence of the owner's own conduct (crew instructions, anchor procedures, prior incidents, vessel condition) is decisive from day one.

3. Compulsory insurance and certificates

The owner of an Estonian-flagged ship of 300 GT or more, and the owner of a foreign ship calling at an Estonian port, must hold liability insurance covering maritime claims subject to limitation under the LLMC, including damage to harbour works, waterways and navigational aids; the policy must be kept on board.⁸ Using a ship without the required policy or certificate is a misdemeanour.⁹

Shadow-fleet tankers often cross the Estonian EEZ without calling at Estonian ports, so the port-state requirement does not reach them. Since June 2024 Estonia has checked insurance documents of vessels anchored in its economic zone, by radio and physically.¹⁰ In April 2025 the Estonian Navy detained the tanker Kiwala, which had left without a valid flag certificate, was under EU and other sanctions and lacked insurance; it was released on 28 April 2025 after deficiencies were rectified.¹¹ For claims purposes, the identity and solvency of the liability insurer may be unknown or doubtful, which makes security against the ship more important.

The CLC and the Bunker Convention give injured parties a direct action against the insurer for pollution damage. For other maritime claims, such as cable damage, a direct action is not straightforward and depends on the applicable law and the type of cover; whether the compulsory insurance under KMS § 77¹ triggers the direct claim available under Estonian law in compulsory liability insurance is an open question. See direct action against liability insurers.

4. Security: ship arrest

Estonia is party to the 1999 Arrest Convention, and a ship may be arrested for a maritime claim, including loss of or damage to property caused by the operation of the ship. The procedure, the release against security and the forum rules are set out in the separate guide ship arrest in Estonia.

5. The infrastructure owner's own insurance

Whether a property policy responds depends on whether subsea assets are insured property, whether loss of revenue from the interrupted link is covered, and how war, terrorism and sabotage exclusions are drafted. If the incident is attributed to state-directed sabotage, war exclusions and the burden of proving attribution become central. See war exclusions and cyber and sanctions and insurance.

After payment, the insured's claim against the shipowner passes to the insurer by subrogation.² Its value depends on early security and on whether limitation can be broken.

6. Checklist for insurers

1. Secure evidence immediately: AIS data, anchor-chain inspection, crew statements, the vessel's documents and certificates.
2. Identify the shipowner, the registered owner, the manager and the liability insurer; check sanctions exposure before any payment or communication involving listed parties.
3. Consider arrest in Estonia or another jurisdiction where the ship (or a sister ship) is or will be.
4. Analyse limitation early, including the KMS § 70¹ and LLMC art 4 tests.
5. Check the war, terrorism and sabotage exclusions in property and BI wordings and the evidence needed for attribution.
6. Coordinate with Finnish or other foreign counsel where the infrastructure crosses borders.

Related pages

• Ship arrest in Estonia
• War exclusions and cyber
• Sanctions and insurance in Estonia
• Subrogation and recovery in Estonia
• War and geopolitical risks

References