The Federal Government will have to pay the costs of an oil spill in Antarctica after the High Court refused to allow an appeal against a decision favouring Vero.

The Government had appealed a Federal Court decision that ruled Vero’s ultimate net loss policy applied to buildings, plant and equipment but not land at the Australian Antarctic Division’s (AAD) Casey base station.

An oil spill at Casey in 1999 contaminated 2000 tonnes of soil, but the AAD did not tell Comcover, the Federal Government’s captive insurer, about it until 2004.

At the time of the emerged later beneath the snowline 40 metres from the source.

Remediation was first estimated at $3 million but the cost has since doubled.

Comcover initially rejected the claim but reconsidered in 2005, paid the in-house retention and claimed against its Vero policy that year.

The Federal Court agreed with Vero that land damage was not covered by the policy.

When the case went to appeal before the full bench of the Federal Court, two of the three judges ruled in favour of Vero but the third wrote a dissenting judgement.

The court also held that the claim was brought within the limitations period of the policy.