Attorney-at-Law/Legal Counsel, an expert in Law of the Sea and Maritime Law and Former Executive Director, Ceylon Shipping Corporation and Former Dean, Faculty of Management, Humanities & Social Sciences, CINEC Campus Dr. Dan Malika Gunasekera says the compensation for the X-press Pearl vessel’s ecological disaster is pittance. “It is very unfortunate how our local enforcement officials have operated on the MT New Diamond and X-press Pearl accidents, failing to secure the requisite recompense from the responsible when the country has incurred loss and harm,” Dr Gunasekera told Ceylon Today.
By Sulochana Ramiah Mohan
Excerpts of the interview:
Recently, the Committee on Public Enterprises (COPE) called for explanation from the Marine Environment Protection Authority (MEPA) in Parliament and heavily questioned the claims and compensation issues in respect of MT New Diamond and MV X-press Pearl ship disasters that took place in the waters of Sri Lanka. What is your view on the outcome?
A: In the first place, I appreciate the move by COPE to address these matters in the presence of the local regulator on marine environment, which is the MEPA, and questioning its officials on the failure to receive adequate compensation in both instances, as a matter of the Parliament, which is the responsible arm of the State towards the people of the country, as spelt out in the Constitution, that the sovereignty of the people is vested with the Parliament itself. It is very sad how our local enforcement authorities have acted in these two cases, having failed to obtain the necessary compensation from the responsibles where the country has suffered loss and damage.
Initially, we must look at these two incidents separately in order to have a better and clear understanding. As we witnessed, the MT New Diamond incident took place on 3 September 2020 with the tanker carrying approximately two million barrels of petroleum oil catching fire following an explosion in its boiler. Thanks to the swift action of a joint operation, carried out by Sri Lankan and Indian Naval and Air Forces respectively, what seem to have been a major maritime disaster could be averted.
Nevertheless, a considerable amount of oil had already escaped from this vessel to the waters of the exclusive economic zone (EEZ) of Sri Lanka before the fire was doused and the vessel had been towed to the high seas. Although, MEPA publicly announced at COPE that no environmental impact was caused due to this incident, and it was a surprise to me as to where all that oil had gone. My observation is in connection with the Damage Assessment Report, which had been compiled by the team of experts, though no further committees were appointed to conduct further investigation and fact finding.
It is a common understanding, that when an event of this nature occurs, other countries in the world take measures to investigate and publish reports in order for the law enforcement authorities to seek the relevant compensation from shipowners or Protection and Indemnity (P&I) Clubs. In the case of MV X-press Pearl, we all witnessed the unprecedented disaster that took place due to chemicals that were carried on board, leaving a much dilapidated condition on the marine environment at large. The effects have resulted in much magnitude as far as the marine environment is concerned while seriously threatening the futuristic behaviours of both living and non-living resources at sea.
However, sadly the country has not received adequate compensation for any of the said events as obtaining compensation is the least option available for this country at stake. I see that all parties concerned in the technical and legal aspects of remedying the loss and future damage have failed to effectively carry out their respective duties thus leaving the people and the State in the dark. Therefore, questioning by COPE was at least timely and a positive approach towards delivering justice to the said public stake holders, namely the people and the State.
If we take the first incident, the MT New Diamond, where do you see the country’s administration went wrong?
A: Actually, I have conducted a number of legal researches within my field of expertise and competence on this. Firstly, I have conducted research on the issue of obtaining compensation for statutory salvo, conducted by the authorities of the governments of Sri Lanka and India, and secondly on the environmental impact and damage caused to the exclusive economic zone and other waters regimes of Sri Lanka. As a matter of fact, salvage exercise in relation to MV New Diamond was coordinated between Sri Lanka and India in terms of the Intervention Convention 1969 though the incident took place in the EEZ of Sri Lanka in order to avert extensive damage to the coastal areas of both the countries.
The exercise was a sheer success in controlling pollution damage nonetheless to say that there was indeed some pollution impact caused to the marine environment of the EEZ area of Sri Lanka. I don’t know how MEPA could strike out any claim that Sri Lanka would have against the shipowner. MEPA being the coastal State control in this country has an utmost duty to take necessary steps under Section 24 of the Marine Pollution Prevention Act (MPPA) No. 35 of 2008. In view of that, it could ask the P&I Club to provide a guarantee or a Letter of Undertaking (LOU) prior to the handing over of the vessel to the contractual Salvors.
MEPA having extensive powers, as vested by the MPPA, could resort to the obtaining of such an undertaking either through the Attorney-General’s Department or through its own designated Attorneys. Handling of the matters by Sri Lanka Navy is no excuse amidst the powers vested upon it to take the necessary measures by itself as the responsible authority that is obliged to implement the National Oil Spill Contingency Plan (NOSCOP) at that juncture.
However, the duty cast on the Attorney-General’s Department, to handle legal matters, can in no way exempt itself from obtaining the LOU to cover compensation for losses and damages. What I see is a ball game of throwing responsibility at each other than anything else. All these institutions have failed in their respective duties towards the country that has experienced huge losses as a result of this incident. The MPPA covers this particular scenario within its legislative competence of setting up liability limits.
Since, oil pollution from tankers falls within the ambit of the International Convention on Civil Liability for Oil Pollution Damage 1969/1992, where Sri Lanka has become a State party to the 1992 Convention, thus providing limitation figures in the MPPA, which could have been easily determined based on the gross tonnage of the vessel. This would have led for our authorities fixing the amount in LOU to be obtained from the P&I Club quite easily and retaining the said guarantee to ensure compensation. This is where the State administrations went wrong and lost the opportunity to obtain a sizeable compensation package in line with what we could have obtained legitimately.
The only component received as yet has been distributed among the two forces that joined in the operation, namely the Sri Lankan and Indian forces. Other than that, no compensation has yet been obtained to restore the marine environment. A mere statement that no environmental impact has thus taken place is an irresponsible act by whoever has stated so before the COPE. It is now the duty of the COPE to investigate the Damage Assessment Report related to this incident in order to ascertain the correct picture.
Don’t you think that we could still obtain compensation from those responsibles if the authorities take necessary action?
A: I would not opt-out of the chances even now. However, it would all depend on the nature of the instruments that the Government has entered into with the shipowners/P&I. As you know, Sri Lanka obtained a tiny-little package of around 450 million rupees initially. Since then, we have not obtained any further compensation raising doubts whether the two parties mentioned above have already concluded their respective rights and obligations by contract.
If in case, the Government has agreed to receive the said package as full and final settlement, the match is over. It would operate as an estoppel for the Government in proceeding for further compensation. Although, the government spokesmen had been repeatedly making public statements that the Attorney-General’s Department is pursuing on further claims, we have not witnessed any legal suit being brought up against the shipowner/P&I anywhere in the world.
Therefore, I clearly have doubts that the parties have entered into contract that spells out the already settled amount as full and final. It is very unfortunate on the part of our country, if this turns out to be true. Therefore, the responsible authorities of this country must come up with proper evidence that they are pursuing further claim against those responsibles.
Why do you say that the X-press Pearl incident differs from that of the New Diamond in terms of compensation that Sri Lanka has failed to obtain from the shipowner or P&I?
A:The two incidents differ extensively in the respective application of the law as well as to the contents of those incidents. It is true that both those incidents had tremendous impact on the marine environment. However, the magnitude of the X-press Pearl damage surpassed that of the New Diamond. The X-press Pearl differs from the New Diamond in various dimensions. The latter incident involved some chemical spillage subsequent to a fire, and a total loss of the ship that resulted in the wreck being submerged and still posing environmental threats, with increasing caution that prevailed for a considerably long period believing that the bunker oil was still on board. Had the bunker oil caused a further damage, if it was on board, the damage would have been much severe.
Fortunately, we have not received any information of an oil spill, which would have otherwise been one of the disastrous marine pollutions of our time. Nevertheless, the pollution caused by chemicals and other substances cannot be ignored. Apart from that, the involvement of State authorities, from the Director General of Merchant Shipping (DGMS), Harbour Master, MEPA and security forces such as the Sri Lanka Navy (SLN) and Air Force, was very much relevant to the minimising and preventing of the disaster of this magnitude.
It was eminent that the activation of the Emergency Response Plan for Chemical Spills under Section 6(b) of MPPA by DGMS, SLN, and MEPA was inevitable in taking measures to douse the fire using high expansion foam recommended by the Manual provide by the International Maritime Organisation (IMO) under HNS Protocol, rather than applying chemical powder. The International Dangerous Goods Code and Code prepared under MARPOL Convention’s Annex II also recommends these measures in line with the Safety of Life at Sea (SOLAS) Convention especially for ships over the gross tonnage of 150 DWT.
These measures should also be taken in combination with the ship’s oil pollution emergency plan and that of the hazardous and noxious substances (HNS). Since the chemical leak resulted due to the Nitric Acids which were carried on board, a duty was cast on the port-based response officers and the State’s port controllers. The suspicions surrounding the way in which the dispersants and other fire-dousing means were used have now paved way for the shipowner to allege contributory negligence on the part of our officials.
Do you see any possibility of Sri Lanka successfully claiming adequate compensation over the already obtained extremely insufficient interim claim of USD 3.6mn?
A: As an expert in this area of pollution damage, and having researched on spill related civil liability and compensation, I cannot be convinced of what the country has gained till now. I can bravely state that we have lost the opportunity though I have been pushing the State authorities to obtain adequate compensation. In relation to the type of damages caused by X-press Pearl, the MPPA being the principle legislative enactment does not provide any proviso to let the shipowner/P&I to limit its’ liability to any amount. This advantage can also be viewed as a detriment to the shipping industry where right to limit even under the prevalence of a strict liability regime, entitles shipowners/P&I to rely on the same.
However, due to the fact that Sri Lanka is not a party to the Conventions on the Limitation of Liability for Maritime Claims 1976 or 19996, and not having any legal provisions domestically in relation to such limitations, the country could have gone to the accepted upper limits. It is sad that the law implementing authorities as well as the Attorney-General’s Department overlooked this opportunity, and failed to obtain any security in the nature of guarantee or LOU from the P&I thus depriving the State from obtaining the necessary safeguards either through court or administratively.
Had our relevant authorities taken the necessary steps in obtaining such securities, the COPE wouldn’t have any ground to blame MEPA on that day. Even in the process of removing the wreck and its debris, the authorities have failed to secure the wreck removal insurance from the P&I Club amidst the fact that the DGMS has all the powers to do so under the Merchant Shipping Act having the custodianship of the vessel’s documents and being the receiver of the ship. At this juncture, I have doubts whether the ship indeed had proper validated policies in respect of the HNS type carriage of cargo and specific insurance policies to cover its’ liabilities against such wreck.
Therefore, the authorities should attend to these matters without fail before it could be questioned by the COPE at a future instance, and also in the fundamental rights case filed by the Centre for Environmental Justice before the Supreme Court. Whatever it is, I wish to place on record that the damage caused to the marine environment of our country is irreparable, and any involvement of a ball game by responsible authorities, if it may appear, should be duly handled for the sake of the country’s gain.