Rs 3.4B in damages yet to be recovered


The 20-year-old crude oil tanker MT New Diamond, flying the Panamanian flag, caught fire on 3 September 2020, 38 nautical miles east of Sangaman Kanda Point in Sri Lanka. 

On 3 September 2022, two years will elapse since the disaster occurred. Strangely, no civil cases regarding compensation recovery have been filed under the Marine Pollution Prevention Act.There are concerns that if a lawsuit is not brought within two years, Sri Lanka might be unable to recover compensation.

Not to be forgotten

The tanker, which is owned by the Greek company Porto Emporios Shipping and was chartered by the Indian Oil Corporation, left the United Arab Emirates in late August 2020 to transport crude to an Indian refinery. When the fire started, the tanker was 40 nautical miles off the coast of Sri Lanka and two days away from its destination. In the explosion and fire that occurred in the engine room, one crew member perished, and another was injured and flown to a hospital in Sri Lanka with burns.The 22 other crew members were transferred to a nearby tanker and Sri Lanka Coast Guard vessels.Later, all of the crew except for the captain were brought home.

Sri Lanka announced that it was seeking compensation from the vessel’s owners for its efforts after a week of firefighting involving Navy and Coast Guard vessels and Air Force support. Sri Lanka apparently presented a bill and reached a USD 2.4 million settlement with the owners and its insurance for its services. Sri Lanka demanded the payment before allowing the tanker to be moved out of its territorial waters. Indian officials were considering billing for their services as well.

Sri Lanka arrested the skipper of the New Diamond on suspicion of operating the ship improperly and causing an oil disaster. He consented to enter a guilty plea to accusations of violating the Marine Environment Protection Authority Act and causing an oil spill.The Court reduced Sri Lanka’s request for around USD 1 million in restitution to approximately USD 65,000.After the payment was made in October, the captain was granted permission to leave Sri Lanka.The salvage strategy for the burned-out tanker was altered multiple times due to worries of an environmental catastrophe.Plans to tow the vessel to India were later changed and a month ago it was agreed that the hulk would be instead towed back to the UAE.

But why haven’t any cases been brought yet?

‘Insurance company taking its time’

Marine Environment Protection Authority (MEPA) Chairman Dharshani Lahandapura asserted that the lawyers representing the insurance company for the oil ship in Sri Lanka had received the Environmental Damage Assessment Report from the expert panel through the Attorney General (AG).

She said the AG’s Department has told MEPA that the insurance company for the oil tanker requested more time to study, and after receiving a few reminders from MEPA, the AG’s Department is presently looking at civil litigation to recover the compensation.

“They constantly ask the AG’s office for more time. The AG’s office is presently pursuing legal action against them. Therefore, that matter is still in progress,” she said.

When queried if Sri Lanka would be unable to receive compensation if any charges against the oil tanker were filed after two years, she acknowledged the possibility and stated that is why they are constantly sending reminders to the AG.

In response to another query regarding the methodology utilised by the insurance firm to determine the environmental damage estimate, she said it was The International Oil Pollution Compensation (IOPC) Funds.She said they gave a directive and that the Environmental Damage Assessment was completed in compliance with that directive, and she added that the MEPA assessment was completed withe help from the MEPA Expert Committee.

“We assessed the damage, the degree of the oil pollution, and the affected species. Only the insurance company had produced the report based on that. Following a few incidents, MEPA launched an investigation into the shipwreck, and the AG’s Department received the findings on 7 April 2021. We do not communicate with the shipping firm directly. When we filed that with the AG’s Department, they only sent local lawyers from shipping companies,” she said. 

‘Absolutely no environmental impact’

Internal and credible sources in the AG’s Department claimed that the MT New Diamond ship’s issues and concerns have already been resolved and that filing charges against the insurance company was not at all problematic. 

Unlike the X-Press Pearl, which was carrying 1,486 containers and was in our territorial waters and caught fire near Colombo on 20 May 2021, the MT New Diamond was outside our territorial waters.

According to sources, there was no environmental damage, as the MT New Diamond was towed away and did not sink, which prevented any environmental harm.

“So, all we did was try to get the Air Force and Navy to help put out the fire, and the most we could hope for was reimbursement for our firefighting charges. Since MT New Diamond did not sink, it was not a significant issue. It was removed, and the Bay of Bengal was covered in an oil slick. There is no issue as long as it only had an impact on the high seas and avoided our coasts,” according to sources.

Speaking about the X-Press Pearl, sources asserted that the ship was in our territorial waters and was too close to the coast, and that plastic pellets were carried away and turtles were killed.

“The MT New Diamond, though, was not all that horrible. Our Courts would not have jurisdiction if the matter was outside our territorial waters. Twelve miles offshore, our territorial water is regarded as an extension of our land mass. All of the laws in our Penal Code that apply on land also apply on that section of ocean,” they elaborated.

The sources claim that since it is high seas, they have absolutely no control after that. They said as Sri Lanka is a coastal state, the Law of the Sea Convention applies there and it has no authority.

“We are conveying this information in accordance with the general rule. Our impression is that the MT New Diamond was not too much of a problem, it was sort of towed away and was a few miles outside of our territorial waters. Nevertheless, the Air Force and Navy went to assist them,” they said.

Speaking further, they added that the best course of action would be to send a bill to the shipping company for the fuel, water, and other materials utilised to put out the fire. They also noted that this might be the reason there aren’t any cases, as local Courts would not be able to handle those problems if they were outside of their jurisdiction.

“X-Press Pearl was different,” they added. “This is well within our jurisdiction.”

Attorney-at-Law Dr. Jagath Gunawardana voiced his opinion on the AG’s Department’s sluggish filing of lawsuits against the owners of oil tankers.

He asserted that Sri Lanka was the party that suffered the most, therefore how could the captain of the ship have been charged with a criminal offence under Section 26 of the Marine Pollution Prevention Act if there was no jurisdiction?

He said the captain of the vessel was charged and fined. 

“If there is no jurisdiction as the AG’s Department source claims, then how was the captain charged and how was he fined? It is the same AG’s Department which prosecuted. I also stand by this principle that this is well within our jurisdiction and it is corroborated with the fact the captain was charged under the same Act.More than that, he pleaded guilty and was fined and the ship was also released after they agreed and paid the amount that was the cost of firefighting,” he said.

“So, this claim by the AG’s Department is totally unacceptable and we do not like people dragging their feet. Because what we are losing is just renumeration for the cost we had to bear because of this. And therefore, we expect the AG to revisit it and take it up as soon as possible before the time lapses.We are aware of the vessel being towed to high seas, to India, and that was of course after the fire was extinguished. So, up to the time of extinguishing the fire, it was well within our jurisdiction,” he added. 

Speaking further, he also said a criminal case was filed against the captain of the ship for failing to take proper precaution to prevent the ship accident.

He said the captain pleaded guilty, received a Rs12 million fine, and paid it.“However, an estimated Rs 3,480 million in environmental damage has yet to be paid.Sri Lanka is required to recover this amount through a civil suit under Section 34 of theMarine Pollution Prevention Act.

“In March 2022, the Committee on Public Enterprises (COPE) revealed that the relevant files had been sent to the AG. Although the MEPA has the authority to enforce the Marine Pollution Prevention Act, Section 50 of the Act delegates the authority to prosecute to the AG. Therefore, the AG should file this case. The issue is that this case has yet to be filed,” he said.

By Thameenah Razeek