Losses and submarine cables: focus on Spain

Submarine cables are one of the main resources for facilitating communications between countries, being a key element integrating the internet connections between servers and data centres globally. According to Google data, 98% of all international internet traffic currently circulates through submarine cables.

This network of connections has experienced an unprecedented test due to increase of demand caused by COVID-19. As a consequence of the different restrictions imposed by governments around the globe, such as lockdowns and work restrictions, the internet has been essential for providing the necessary support for keeping alive business, educational and social activities, supporting remote work and remote learning, and delivering food and medical supplies. Peaks of 50% growth in international internet traffic have been identified in 2020, with Europe having the highest regional capacity.

As the internet will remain key as society recovers from the COVID-19 impact, the submarine cables network will be essential for providing the necessary support to all kinds of services. As reliance on these cables increases, so does the opportunity for growth – and for insurable losses to occur.

Losses on submarine cables

The main concerns regarding losses to submarine cables are:

  • Durability. Depending on the technical and material components of the cable, the minimum design life of the cable is usually estimated in 25 years. Even if they are prepared to operate in the aggressive environment underwater, they may suffer damages either in the installation phase or in their service phase.
  • Damages. Fishing boats and shipping accidents are the main cause of damages to submarine cables. Use of anchors are frequently involved in loses, as fishing activities. Other possible causes are marine hazards, including earthquakes, tropical cyclones, submarine landslides, and turbidity currents.
  • Internet services disrupted. In addition to the physical security and maintenance works to be performed on the cable, a subsea cable loss may imply severe disruption on internet services.

Spain

Spain has a total of 28 anchor points for submarine cables, but the expansion of these is foreseen due to its privileged geographical position towards Europe (north), South America (southwest) and Africa (south).

Some examples of submarine cables in the Peninsula are the Ellalink cable (linking Sao Paulo and Fortaleza with Lisbon and Madrid), Orval cable (linking Valencia and Oran), Marea (links Virginia Beach in the US with Bilbao), and the Grace Hooper cable expected for 2022, that links Spain (Bilbao) with United Kingdom and the US.

Spain is expected to have increasing importance on the global submarine cables net. The government has included, as part of its ‘Digitalisation Agenda’ for 2025, the promotion of Spain as a mooring point for subsea cables. This is a privileged alternative to the traditional route and is accompanied by a growing industry of digital storage and infrastructure.

Recovery actions on submarine cables damages in Spain

Some losses on submarine cables have already been analysed by Spanish case law, mainly recovery actions taken by the owners or insurers of cables against ship owners. For these actions, claims for compensation require clear evidence on causal link between property damage on the cable and action or omission from the ship owner.

Principles that apply were set out in the court decision from the Appeal Court from Baleares (Judgement nº 492/2018 of 13 December 2018). The Appeal Court considered a claim based on repair costs and loss of profits by damages on a submarine cable anchored in Baleares, allegedly caused by the hook of a ship from the Netherlands.

The court stated the following:

  • Spanish law applies to the claim under Rome II regulations, applicable to non-contractual obligations.
  • Even if the sued company denied ownership of the vessel at the time of the loss, this opposition was rejected based on the information provided by the Maritime Authorities in place.
  • Analysing the applicable rules of burden of proof, the Appeal Court found the owner of the ship and its insurer liable for the loss. The existence and location of the submarine cable was proven to be indicated on all nautical charts. This served as a warning to the vessels that sailed through the area. The owner and insurer of the ship should have been aware of the submarine cable and should have sounded the appropriate precautions to avoid damage to the cable.

Comment

Considering the above, it is expected that expansion of submarine cables projects in Spain will provide new opportunities of support to the increasing needs of the internet services providers all around the world.

New business opportunities for operators and their insurers are anticipated, and a subsequent increase on the number of potential loses and claims on submarine cables events is expected.