Exploration into the Laws Governing Claims arising out of Oil Spills

I. Introduction

The world has seen the devastating effects of oil pollution on the marine ecosystem and in today’s time it is becoming more of a concern. “Oil spill” is closely associated with marine pollution because it is one of the primary causes of the destruction of marine life. The term marine pollution is defined under Article 1 (4) of the United Nations Convention on the Law of the Seas (UNCLOS), 1982 to mean “the introduction by man directly or indirectly of substances or energy into the marine environment, which is likely to result in living resources, hazards to human health, a hindrance to marine activities including fishing and other legitimate use of the sea, impairment of quality for the uses of the seawater and reduction of amenities”.³The main reason for the destruction of marine life by way of oil spill is when refined petroleum products, crude oil, ships' bunkers or oil mixed in waste is let free into the coastal waters; it forms a layer on the water preventing oxygen circulation.⁴

Oil spill takes place due to many reasons, a few that have commonly taken place is because of break down of equipment in the vessel, natural disasters such as hurricanes, intentional oil spills also take place when the nations are at war or through acts of terrorism, or sometimes it could be even because of carelessness or mistakes⁵. In addition, it is to be noted that costs involved for restoration are huge and also time consuming. This results in major damage to the ocean as the spills cannot be cleaned up easily in days and rather takes months and years.The understanding of the present laws and conventions along with the lacunas is important because like mentioned above there are oil spills that take place intentionally which is a wrongful act that affects not only the marine ecosystem but also the offshore is devastated. The liability and compensation for oil contamination are currently among the most important scientific and legal issues being debated upon. Although there exists the Civil Liability Conventions (CLC) which are a legally binding agreement that governs questions of liability and compensation for oil pollution damage, there are still questions on the effectiveness of those instruments in protecting the maritime ecosystem.

II. Lessons from maritime oil spills:

Oil is most widely transported around the globe via the water mainly because of its physical and chemical nature it is chosen to be the convenient mode of transportation. The oil spills are of a national and international concern firstly because it is inevitable and secondly because of its losses pertaining to the marine habitat, economy and local livelihood. The danger of significant oil spills persists, despite technical and regulatory preventative measures and improved business standards. Every day, hundreds to thousands of accidental spills in the oceans are expected to occur around the world, ranging from crude oil to refined products. The impact of oil spills is determined by its properties and reactions. The Oil Spill Prevention and Response recommendations from API Energy outline three main goals for dealing with the aftermath: preventing the spill from trying to reach the shore, reducing the damage on marine creatures, and hastening the deterioration of oil that hasn’t been unrecovered.⁶To understand the importance of how oil spills affect the environment, looking at the past incidents is very much essential to prevent the same in the future.

Ixtoc-1 (1979 - 1980):

On June 3, 1979, an unexpected leak in the Mexican Gulf occurred when a Pemex-operated oil well in the Bay of Campeche collapsed due to underwater pressure that produced a sudden outburst. The explosion destroyed almost all the platforms, marking the largest marine oil spill in the rich history of oil exploration.⁷ Over ten months, 140 millions gallons of petroleum were released into the Gulf of Mexico, resulting in a slick measuring over 1,100 square miles.⁸ To stop the flow of mud, oil, iron, steel, and lead balls were dropped down Ixtoc-1's shaft yet Pemex could not halt the oil, till two relief wells were constructed in the area of spill, even though the procedures had decreased the leakage.

From this incident, we understand that the biological diversity in the tropical ecosystem could delay the capacity to determine the lastingdamage caused to the marine environment, making it cumbersome to clean the spills.While it may not aid in disaster prevention, knowledge of the regional maritime ecosystem is essential when cleaning to lessen the happening of disasters.⁹

Atlantic Empress (1979):

In 1979, two packed supertankers from Greek origin, “Atlantic Empress” and “Aegean Captain”, collided near the Trinidad coastal region in the Caribbean Sea. Combining both vessels, around 90 million gallons of crude oil leaked into the sea and the sea was on fire. The “Atlantic Empress” blew up around 300 nautical miles offshore and around 26 members of the crew on board were killed. On 3^rdAugust 1979, the “Atlantic Empress” sank, leavingbehind a “fiery slick of oil”. Aftermath of the collision, there was no impact study conducted with respect to the collision and cause of pollution due to the incident was not examined properly. Reports following the investigations found that the “Atlantic Empress”was more than hundreds of miles offshore¹⁰ and either vessel provided adequate lookouts or they could effectively reduce their speed. Extent of the disaster was ultimately eclipsed by the Ixtoc-1 explosion.¹¹

Moreover, it’s to be understood from this incident that these days many tankers have a radar and navigation system which includes GPS tracking, and automatic identification systems, and radio communications as well. Such accidents could be avoided if the technology is used in the manner required.

Gulf War - Persian Gulf (1991):

In the Gulf War –I, Troops of Iraq while receding from Kuwait unlocked the valves of numerous offshore oil wells and pipelines to restrict the forthcoming US Army. This was said to not be an accident and if looked into, it caused one of the largest oil spills in the history of mankind where crude oil about 260 million gallons set into the Persian Gulf¹². The oil spills in the coastline of Saudi ended up in wetlands, shallow lagoons and flats covered with vegetation and produced considerable harm on the vegetation and animals in the intertidal zone. As a result, the oil destroyed most of the mangroves and marshes around the wetlands besides the affected coast.¹³

Deepwater Horizon Oil Spill (2010):

In 2010, the Gulf of Mexico had the biggest oil spills of all times wherein oil gushed from the seafloor 5,000 feet below after an explosion at the Deepwater Horizon offshore.¹⁴The effects of hydrocarbons had been established evidently; the damage along the shoreline, in the marine ecosystem, for the fisheries, and to the coastal amenities was significant. Such damage parallels a lot of commercial, financial, and various related losses.¹⁵ The incident had killed and injured several workers and was brought under control only after three months. By then, the oil spill wreaked havoc on marine ecosystems and affected the fishing and tourism businesses in the Gulf.¹⁶

It is to be noted that this incident that had taken place, has paved way for the body of information and resources that could be pertinent not only in the United States but globally, to help develop the best in class relative to oil spill liability and related assessment and rebuilding practices.¹⁷

Ennore Oil Spill (2017):

Fast-forward to the year 2017 in Tamilnadu, India commercial vessels, “MT Dawn Kanchipuram” and “MT BW Maple” collided at the Kamarajar Port at Ennore in Tamilnadu. The magnum of the oil spill was estimated at 200 liters and it was later raised up to a whooping 40 tonnes. The varying estimations and unsynchronized official’s statements not only raised questions on our idea of the disaster but more significantly, on our readiness and capability to react to it.¹⁸Furthermore, this has had a negative impact on India's environmental liability regime.¹⁹

Having looked at the various incidents of oil spills that have taken place in the world from the time of 1970s we can see that they have been major damage to the marine environment, the workers and the offshore. From all this, it's important to understand that along with the harm to the marine ecosystem, the pollution can have an impact on the economy, on the tourism industry and in the marine resource extraction industries. To highlight the incident discussed above on the Deepwater Horizon oil spill, we see that it affected tourism along the beach and fishing by the locals, and the parties who were responsible for the act were made to recompense victims economically.²⁰ The other aspect to be aware of is that crude oil consists of poisonous chemicals which are predominantly hydrocarbons that can have a negative impact on human health upon inhalation.²¹

III. International legal framework on oil pollution

The concern on oil pollution became significant only during the World War II since the year 1945, though the first move which was a failure was taken by the International Maritime Conference in Washington in the year 1926²².The Stockholm Declaration on the Human Environment, 1972²³in its Principles 7 and 22 address the issue of marine pollution that includes oil pollution. Principle 7 states that “States shall take all possible steps to prevent pollution of the seas by substances that create hazards to human health, harm living resources and marine life, damage amenities or interfere with other legitimate uses of the sea”. Principle 22 touches upon the liability and compensation aspect of marine pollution damages thereby requiring the States for its co-operation in coming up with the customary rules of international law.

The Geneva Conventions, 1958 addresses the protection of the ocean from oil pollution. Article 24 of the Geneva Convention on the High Seas²⁴ puts an obligation on the States to outline its own national laws on the prevention of pollution from ships, pipelines or sea bed activities. Article 5 of the Geneva Convention on the Continental Shelf²⁵ mandates the coastal State to make sure the absence of any unjustifiable interference with the conservation of the living resources of the sea, navigation or fishing.. The United Nations Convention on Law of the Seas, 1982 in Part XII deals with the protection of marine environments which are general regulations. Agenda 21 in its chapter 17 deals with the “Protection of the Oceans, All Kinds of Seas, including Enclosed and Semi-enclosed Seas, and Coastal Areas and the Protection, Rational Use and Development of their Living Resources”. The chapter talks on the need to minimize the danger caused by gas operation and offshore oil in the marine environment.

International Conventions on Oil Pollution:

The foremost International Convention on oil pollution was the International Convention for the Prevention of Pollution of the Sea by Oil, 1954. The scope of this convention included the discharge of oily wastes and oil into the water. Any kind of intentional discharge of oily mixtures in specified areas of oceans is prohibited under this instrument.²⁶. The discharge made must be recorded in a book named oil record book which is out for inspection at regular intervals as per this convention.

A new Legal Committee and a Sub Committee of the Maritime Safety Committee was established by the International Maritime Organization to deal with the lacunas that existed in the international arena on the liability and compensation for oil spill damages. Accordingly, the IMO adopted the International Convention relating to Intervention on the High Seas in cases of Oil Pollution Casualties in 1969. This instrument facilitates the States to take preventive measures and proper action on an accident in international waters or threat of oil pollution to the sea due to maritime casualty when it endangers its coastlines with pollution. The Convention declares the principle of polluter pays, if the measures went beyond what was considered reasonable. ²⁷

The International Convention for the Prevention of Pollution from Ships (MARPOL), 1973/1978 adopted by IMO covered the pollution by oil, harmful substances in packaged form, chemicals, garbage and sewage. The aim of the convention is to minimize accidental spills and prevent negligent pollution²⁸. The Annex I of this Convention regulated the prevention of oil pollution both accidental discharges and operational measures. It mandates the existing takers a phase in schedule in double hulls and new tankers for double hulls. The Convention prohibits the discharge of oil in vulnerable areas which are prone to pollution. It mandates to carry on board the International Oil Pollution Certificate failing which the sailing permission may be withheld.

The Convention on Civil Liability for Oil Pollution Damage resulting from Exploration and Exploitation of Seabed Mineral Resources, 1977is a liability convention for gas operations and offshore oil. The convention could not be entered into force due to the bilateral agreements that existed between the coastal States.²⁹.

Through the International Convention on Oil Pollution Preparedness, Response and Co-operation, 1990, the IMO developed a framework for global cooperation in fighting major oil pollution incidents. The Convention mandates the Party States to set up a national system to deal with the oil pollution incidents. The Convention recognises the ability of states to respond to oil pollution incidents, as well as mutual assistance, incident reporting, contingency planning, including research and development in the combat against oil pollution incidents. The convention makes it mandatory to set up an onboard oil pollution emergency plans for offshore units and vessels³⁰.

The International Convention on Civil Liability for Bunker Oil Pollution Damage (BUNKER), 2001 covers the territorial seas and exclusive economic zones of the Party States. It ensures immediate compensation for that damage caused by oil spills carried as fuel in ships’ bunkers. The Convention mandates the registered vessel owner to have compulsory insurance cover and the claim could be brought against the insurer directly³¹.

International Conventions on Liability and Compensation for Oil Pollution:

The liability and compensation for the damages caused by oil pollution is governed at the international level under two main instruments namely, the International Convention on Civil Liability for Oil Pollution Damage, 1969³², which is popularly called as CLC, 1969and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971³³, popularly called as FUND, 1971.

The CLC, 1969 was entered into force in 1975. The principle embodied under the CLC, 1969 is the polluter pays principle. This convention facilitated for a uniform set of procedures and rules for the determination of liability and compensation for oil pollution. The aim of the CLC, 1969 is to provide sufficient compensation to those affected by oil pollution damage from maritime casualties through oil carrying ships. This convention is applicable only to those State-owned merchant fleets. It makes the owner of the ship strictly liable irrespective of the absence of any fault for the discharge from the ship. The exemptions out of “strict liability” rule include damages resulting from a grave natural disaster or an act of war or sabotage by a third party³⁴. The liability insurance is made compulsory under the CLC, 1969. The account unit of the convention is the Special Drawing Right (SDR) as defined by the International Monetary Fund.

The CLC, 1969 could not cover all the circumstances and provide the compensation. Therefore, to cover those situations that remain uncovered under CLC 1969, an international fund was established through the FUND, 1971. The FUND, 1971 was entered into force in 1978. The Party States established this fund as an intergovernmental organization. Those States which agree to the FUND Convention will also become a member of the International Oil Pollution Compensation (IOPC) Fund. The FUND is maintained through the levy imposed on the corporations and individuals that export and import oil in contracting States. The ship owners are mandated to undertake liability insurance. Any person or company that suffers oil pollution damage in a member State of IOPC Fund can claim compensation from the ship owner and his/her insurer and when that compensation falls insufficient then the IOPC Fund comes as supplementary compensation.

In circumstances, where no liability arises under the CLC or the ship owner is economically unable to meet the CLC requirements and the insurance coverage is insufficient to meet the liability, the FUND compensates the ship owner.³⁵.The 1992 Protocol amended both the conventions thereby extending the compensation limits and jurisdiction of the conventions to the exclusive economic zones of contracting States. The 1992 Protocol further replaced both the conventions. The FUND, 1971 was terminated on 24^th May, 2002³⁶. The features of CLC, 1992 and FUND, 1992 are similar to the CLC, 1969 and FUND, 1971 respectively with the only difference in the enhancement of ship owner’s liability and the amount of compensation.

The Supplementary Fund Protocol was adopted in 2003 and came into force in 2005. This protocol established the International Oil Pollution Compensation Supplementary Fund, 2003. This Fund provides supplementary compensation in addition to the amount obtainable under the 1992 Fund Convention in Member States.³⁷

Thus, currently the civil liability for damage caused by oil pollution is essentially governed by the Convention on Civil Liability for Oil Pollution Damage, 1992 (CLC, 1992);³⁸the Convention on the Establishment of an International Fund for Compensation of Pollution Damage, 1992 (FUND, 1992);³⁹ and the 2003 Supplementary Fund Convention⁴⁰which had brought in the International Oil Pollution Compensation Funds⁴¹that have two intergovernmental organizations known as the 1992 Fund and the 2003 Supplementary Fund.

IV. Pitfalls in the existing legal structure on liability and compensation of oil spills:

The Civil Liability Conventions (CLC) establishment is responsible for compensating sufferers of oil spills. But not all claims are compensable under the convention because under CLC 1969, the definition of pollution damage does not specifically examine the aspect if compensation is given for claims of environmental harm apart from the expense of actual restoration.⁴²Hence, the concept in CLC 1969 was particularly subject to the interpretations of the national law of the individual States who adopt the convention. Thereafter the definition of pollution damage was altered in the CLC 1992 which gave room for compensation for environmental damage on a much wider aspect.⁴³

Because of disparities in legal systems in different member states, the application of the CLC regime in State parties can be challenging in some situations. Moreover, even within the same State, various courts may interpret the conventions differently. Therefore, while deciding the compensation and liability aspect of oil pollution in State parties' courts, a variety of national laws and processes have been used, particularly where there is a vacuum in the international regime. With the implementation of national laws in such a manner would distort the objective of harmonization of laws and procedure for oil pollution damage issues around the world and would not long-term success⁴⁴ as at a future period this could endanger the international regime’s relevance. Furthermore, the Civil Liability Convention regime has left a gap in terms of liability and compensation for oil pollution harm mainly because even with the Bunkers Convention of 2001, that is said to be the final piece of the puzzle, there are still unregulated sites around the world, such as oil rigs and storage units, which represent a risk of oil contamination.

Since we see that even with the international conventions present, the State laws are essential, analysis of the Indian legal framework is done below on this particular aspect. After the Ennore Oil Spill case of 2017 there were a lot of issues that had come across and the need for a unified framework arose. To give an overview of the domestic laws, it is seen that, the Merchant Shipping Act, 1958 establishes the regulatory framework for maritime pollution and oil pollution liability in India. It includes certain notions that India agreed to through international treaties, such as the International Convention on Civil Liability for Oil Pollution Damages of 1969 (renewed in 1992) and the International Convention for the Prevention of Pollution of Sea by Oil of 1954.

Further, Section 14 of the Coast Guard Act, 1978 vests the Indian Coast Guard with the duties to protect the maritime environment and requires “taking such measures as are necessary to preserve and protect the maritime environment and to prevent and control marine pollution”.⁴⁵The National Oil Spill Disaster Contingency Plan (NOS-DCP) had also been put in place to deal with oil spills which has been updated to incorporate the best international practices and technical know-how.⁴⁶

There is no cohesive framework in India to deal with the repercussions of an oil leak, hence the regulatory system governing oil spill liability is considered to be woefully fragmented. On seeing the response to the Ennore oil spill case, for instance, it is clear that the State instrumentalities specifically responsible for actions are not properly set-forth and that the lack of preparedness was apparent in the incident. Hence, it can be understood that with the number of State and State instrumentalities involved and a lack of a single-window response mechanism delays reaction time and allows the responsible authorities to transfer responsibility.⁴⁷

V. Conclusion and suggestions

The legal framework and the incidents of oil spills that have been discussed above leave us with no doubt the transportation of oil brings along with its immense risk. But, with time protection of the marine ecosystem is becoming indispensable. Furthermore, the losses frequently outstrip the capacities of individuals, companies, and even Governments. The legal structure shows that we have a well-established framework but this structure could neither help in preventing the oil spills nor adequately compensate the victims. Effective solutions are not viable without the cooperation of the regional States. The international community must develop uniform legally binding technological standards and human resources in the field of marine oil contamination with an aim to prevent and reduce the damage. As the pollution at sea typically has a large-scale impact, it is necessary to make a better implementation of the laws and in addition, the Governments and international organizations must collaborate to alleviate the damage caused by oil pollution.

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