The Kerala High Court has lifted a stay on a state-appointed committee of government officials, allowing negotiations with MSC Mediterranean Shipping Company to resume over compensation arising from the sinking of the containership MSC Elsa 3 off Kerala’s coast. The development, on October 27, comes 17 months after the vessel sank and as the court continues to hear the state’s admiralty suit and multiple claims relating to the incident.
The committee is expected to negotiate compensation covering remedial measures, economic losses, environmental damage and the impact on the fishing community. However, the court clarified that the committee cannot independently conclude a final settlement or enter into a binding agreement. Any proposed settlement will have to be submitted to the court for consideration.
The Kerala government did not oppose the resumption of negotiations. The committee was originally constituted to help resolve the dispute without undue delay.
Dispute Over Compensation and Liability
The MSC Elsa 3 sank approximately 14.6 nautical miles off the Kerala coast, causing disruption to the local fishing industry and raising concerns over marine pollution. Containers and cargo, including nurdles—small plastic pellets used in manufacturing—were reported to have washed ashore. Salvage teams also worked to contain oil leaks, followed by coastal cleanup operations.
In June 2025, the Kerala High Court had restrained negotiations with MSC and its insurers, directing the state to pursue the matter through an admiralty suit.
The Kerala government subsequently filed an admiralty claim of ₹9,531 crore, equivalent to approximately $1.1 billion, seeking compensation for the consequences of the sinking. MSC has challenged the scale of the claim, describing the state’s demands as inflated, and has sought to limit its liability to approximately $14.8 million.
The company has also initiated proceedings to limit its liability. In accordance with the court’s directions, MSC provided a bond of approximately $133 million.
Concerns Persist Over Wreck and Remaining Cargo
Environmental concerns remain unresolved, with containers still aboard the sunken vessel and questions continuing over the potential release of pollutants from the wreck.
The vessel’s cargo manifests included calcium carbide, rubber chemicals and nurdles, in addition to fuel carried on board. Authorities have indicated that removing the remaining containers may be necessary to address the risks associated with the wreck.
MSC’s lawyers, however, have cautioned that attempting to lift waterlogged containers could cause them to break apart, potentially releasing additional contaminants into the marine environment. The company informed the court that approximately 437 tonnes of fuel and contaminants had already been pumped out of the vessel.
The parties have also been discussing a proposal to conduct a multibeam survey of the wreck to assess its condition and environmental risks. MSC had proposed that the scope of the survey be jointly determined by the stakeholders.
Environmental Survey to Proceed
The court has permitted the Directorate of Shipping to proceed with the process initiated through meetings held on October 17 and 20. C-Trck Surveys was selected to undertake the environmental assessment of the wreck.
The Kerala State Pollution Control Board has been given one week to submit its suggestions regarding the proposed survey. The assessment will be carried out at the vessel owner’s expense.
The findings are expected to help authorities assess the condition of the wreck, identify potential environmental risks and determine the appropriate course of action regarding the remaining containers and possible pollution threats.
The Kerala High Court has scheduled the next hearing in the MSC Elsa 3 matter for November 24, when the legal proceedings and outstanding issues surrounding compensation, liability and environmental remediation are expected to remain under consideration.