The Erika Disaster and the Liability Scheme of 1992 CLC

SWANSEA UNIVERSITY

INSTITUTE OF INTERNATIONAL SHIPPING AND TRADE LAW

The Erika Disaster and the Liability Scheme

of 1992 CLC

by

GUNASEELAN KUPPUSAMY

Supervisor : Professor Simon Baughen Student ID : 749925 Academic Year : 2013/2014 Date of Submission : 30th September 2014

TABLE OF CONTENTS

Contents

INTRODUCTION ............................................................................................................... 1

1. CURRENT LEGAL FRAMEWORK FOR LIABILITY AND COMPENSATION

FOR OIL POLLUTION DAMAGE ON THE SEA ........................................................... 5

1.1 The 1969 CLC and 1971 Fund Convention .............................................................. 5

1.2 The 1992 Protocols .................................................................................................... 6

1.3 2003 Supplementary Fund Protocol ......................................................................... 8

1.4 Bunker Oil Pollution Damage ................................................................................... 8

2. EUROPEAN COMMISSION’S REACTION TO THE ERIKA DISASTER ............. 11

2.1 Erika-Package ......................................................................................................... 11

2.2 Safety of Seaborne Oil Trade .................................................................................. 12

2.2.1 Lengthy Judicial Procedure ............................................................................. 13

2.2.2 Inadequate Maximum Limits for Compensation ............................................ 14

2.2.3 Substandard Tankers ....................................................................................... 14

2.3 Channelling of Liability........................................................................................... 15

2.4 No Additional Claim can be made outside the CLC Regime ................................. 17

2.5 The Direction of the EU........................................................................................... 17

3. THE ERIKA DISASTER ............................................................................................... 19

3.1 ECJ in Commune de Mesquer v Total France SA and Total International Ltd ....... 20

3.1.1 Can Heavy Fuel Oil Sold as a Combustible Fuel may be classified as Waste?

.................................................................................................................................... 21

3.1.2 Can the Producer / Seller / Charterer be Held Liable? ................................... 21

3.1.3 Can Total be Held Liable?................................................................................ 22

3.2 French Court of Cassation in The Erika ................................................................. 24

3.2.1 The Criminal Jurisdiction of the French Courts ............................................. 25

3.2.2 The Criminal Liability of a Group of Parties in the Shipping Chain ............. 27

3.3.3 Compensation for Pure Environmental Damage ............................................ 31

CONCLUSION ................................................................................................................. 33

BIBLIOGRAPHY ............................................................................................................. 35

1

INTRODUCTION

National regulations and the interpretation of the international

conventions by domestic judges and the pressure of a transnational

organization, such as the European Community, can exert a strong influence

on the development of the international oil pollution damage regime.1 Current

international oil pollution damage regime that governs the compensation

schemes for oil spills from tankers is the International Convention on Civil

Liability for Oil Pollution Damage 1969 (hereinafter the 1969 CLC). This was

followed by the International Convention on the Establishment of an

International Fund for Compensation for Oil Damage 1971 (hereinafter the

1971 Fund Convention) which established a fund (1971 Fund) financed by

levis on the oil industry to compensate victims who were unable to receive

adequate recompense from the shipowner under the 1969 CLC regime. The

1992 Protocols updated both the CLC regime (hereinafter 1992 CLC) and the

Fund provisions (hereinafter 1992 Fund Convention)2, and subsequently the

2003 Supplementary Fund Protocol was adopted.

This oil pollution damage compensation regimes will be discussed in

detail below. However, for present purpose, it is important to look into the

definition of pollution damage under the 1992 CLC. Article 1(6) of the 1992

CLC defines pollution damage as:

1 G Gonsaeles, ‘The Impact of EC Decision-Making on the International regime for Oil Pollution Damage: The Supplementary Fund Example’ in F Maes (ed), Marine Resource Damage Assessment: Liability and Compensation for Environmental Damage (Springer 2005)

2 S Baughen, Shipping Law (5th edn, Routledge 2012) 317

2

a) loss or damage caused outside the ship by contamination resulting from the escape or discharge of oil from the ship,

wherever such escape or discharge may occur, provided that compensation for impairment of the environment other than loss

of profit from such impairment shall be limited to costs of reasonable measures of reinstatement actually undertaken or to

be undertaken;

b) the costs of preventive measures and further loss or damage caused by preventive measures.

While it was clear from the beginning that this wording covered

economic losses connected with personal injury or property damage, the

absence of any reference to environmental damage left this aspect to the

interpretation of national courts according to the domestic implementation of

the convention.3 Concerns expressed by states at the International Maritime

Organization (hereinafter IMO) conference on marine liability and

compensation in 1984, that some liberal court rulings on damage were

destabilizing the regime’s uniformity of application, led to the formulation of a

new clause on environmental damage.4

More recently, the right of a state as public trustee to claim

environmental compensation has been championed by the French government

- within The International Oil Pollution Compensation Funds 1992

(hereinafter 1992 IOPC Funds)5 Working Group reviewing the international

3 P Wetterstein, ‘Trends in maritime environmental impairment liability’ (1994) 2 LMCLQ 230

4 M Mason, ‘Transnational Compensation for Oil Pollution Damage: Examining Changing Spatialities of Environmental Liability’ (LSE Research Online, 2002) <http://eprints.lse.ac.uk/archive/00000570> accessed 29 July 2014

5 IOPC Funds - are three intergovernmental organisations (the 1971 Fund, the 1992 Fund and the Supplementary Fund) which provide compensation for oil pollution damage resulting from spills of persistent oil from tankers.

3

oil pollution liability conventions. Despite being one of the first states to ratify

the 1992 protocols and incorporating their rules into domestic law, French

ministers – facing a public outcry following the break-up in December 1999 of

a Maltese-registered tanker, the Erika, which badly contaminated with heavy

fuel oil an extensive section of the Brittany coast – severely criticized the 1992

Fund Convention over its claims handling and fixed compensation ceilings.6

The cross-border impact of environmental law on the shipping industry

has become stunningly clear in the judgment of the Court of Justice of the

European Communities (hereinafter the ECJ) in Commune de Mesquer v Total

France SA and Total International Ltd.7 The judicial action, introduced by the

Commune de Mesquer against Total Raffinage Distribution and Total

International Ltd (hereinafter jointly referred to as ‘Total’), claimed

compensation for oil pollution damage following the sinking of the Erika. 8

It is however to be noted that the current evolution of entwining

environmental law and shipping law may lead to undesirable consequences.

Since the latter follows specific patterns, the application in se of general

environmental law - developed from a terrestrial point of view - to the

shipping industry is to be avoided. The danger therefore lies in the current

evolution of applying general environmental regulations to particular shipping

cases. Thus, the implementation of international regulations in the field of 6 Reports on the Activities of the International Oil Pollution Compensation Funds (2001) 113-114 available on <http://www.iopcfunds.org/publications/>

7 Case C-188/07

8 E Somers and G Gonsaeles, ‘The Consequences of the Sinking of the MIS ERIKA in European Waters: Towards a Total Loss for International Shipping Law?’ (2010) 41 J. Mar. L. & Com. 57

4

maritime safety and protection of the marine environment arising from

European legislation, especially the influence of European environmental law

on the shipping industry, is to be closely watched.9

On the other hand, it is also worth mentioning that the underlying

motivation of the ECJ in the case Commune de Mesquer was apparently in

keeping with some of the more subtle policy elements introduced by the EU

institutions to address substandard shipping, especially where such vessels are

engaged in hydrocarbon transportation with the potential to cause considerable

environmental and economic damage to coastal regions with in the Member

States.10

This article will discuss how the decision of ECJ in Commune de

Mesquer case has contribute to achieving EU’s legal objective of providing

full and just compensation for victims and compensating environmental

damage, rather than solely undermining the liability scheme of 1992 CLC.

9 Ibid

10 R Caddell, ‘Expanding the Ambit of Liability for Oil Pollution Damage from Tankers: The Charterer’s Position un EU Law’ (2009) 15 JIML 219

5

1. CURRENT LEGAL FRAMEWORK FOR LIABILITY AND

COMPENSATION FOR OIL POLLUTION DAMAGE ON THE SEA

International legal framework for liability and compensation is very

robust and well developed, providing significant compensation for loss or

damage arising from oil pollution incidents. Relevant international

conventions, collectively known as the CLC-IOPC Fund regime, have been

developed and improved upon, primarily in the aftermath of some particularly

large oil spills. The first of these, the 1969 CLC and the 1971 Fund

Convention were negotiated following the Torrey Canyon disaster in 1967,

representing a clear legislative response of the international community to an

oil pollution incident which – at the time – was of unprecedented proportions.

The 1969 CLC and 1971 Fund Convention were subsequently amended,

leading to the adoption of the 1992 CLC, the 1992 Fund Convention and the

2003 Supplementary Fund Protocol which today represent the most advanced

and modern legal instruments in the field.11

1.1 The 1969 CLC and 1971 Fund Convention

The 1969 CLC, which entered into force in 1975, established a first tier

of compensation for oil spills from ships that carry oil as cargo. It provides for

liability of a shipowner in respect of any oil pollution damage suffered in the

territory or territorial sea of a Contracting State. The shipowner’s liability

under the Convention is strict, i.e. independent of fault, but limited according

11 United Nations Conference on Trade and Development, ‘Liability and Compensation for Ship-Source Oil Pollution: An Overview of the International Legal Framework for Oil Pollution Damage from Tankers’ (UNCTAD/DTL/TLB/2011/, 2012) p 1 <http://unctad.org/en/PublicationsLibrary/dtltlb20114_en.pdf>

6

to the ship’s tonnage up to an aggregate maximum amount and subject to a

number of exceptions.12

The 1971 Fund Convention, which entered into force in 1978, provide

a second tier of compensation in respect of damage in excess of the liability

available under the 1969 CLC but, once again, subject to an overall monetary

cap per incident.13 The maximum available compensation in respect of an oil

pollution incident under the 1969 CLC is 14 million SDR,14 depending on ship

size.15

1.2 The 1992 Protocols

The 1992 CLC and 1992 Fund Convention build upon their

predecessors, maintaining the system of tiered liability and compensation,

with limited liability of a shipowner, depending on the ship’s tonnage, and

additional compensation available from the 1992 IOPC Funds, up to an overall

maximum amount per incident. However, the two Conventions introduce

some important changes to the earlier legal regime, in particular by widening

the relevant geographical scope of application and by increasing the maximum

amounts of compensation available under each Convention.

12 Ibid p 12

13 Ibid p 9-10

14 The SDR is an international reserve asset, created by the International Monetary Fund in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies (the U.S. dollar, Euro, Japanese yen, and pound sterling), and SDRs can be exchanged for freely usable currencies.


7

The 1992 Conventions entered into force on 30 May 1996. However,

in the light of a major oil pollution incident in 1999, involving the Erika, the

need for a further increase of the compensation amounts became apparent and,

in 2000, by way of tacit amendment procedure,16 the compensation levels

available in the 1992 Conventions were raised by 50%. The amendments

entered into force on 1 November 2003 for all Contracting States to the 1992

CLC and 1992 Fund Convention and the higher limits of compensation are

available in respect of all oil pollution incidents in Contracting States

occurring after this date. 17

Both the 1969 CLC and the 1992 CLC co-exist at the international

level. By contrast, the 1971 Fund Convention, intended to work in tandem

with the 1969 CLC, ceased to have effect on 24 May 2002 and does not apply

to any incidents occurring after that date. A second tier of compensation is,

therefore, at present only available under the 1992 Fund Convention, in

respect of pollution damage in Contracting States to that Convention.18 Oil

pollution victims in a State which is both a Contracting State to the 1992 CLC

and 1992 Fund Convention benefit from an overall aggregate amount of

16 No formal ratifications were required; the amendments came into force automatically in 2003

17 United Nations Conference on Trade and Development, ‘Liability and Compensation for Ship-Source Oil Pollution: An Overview of the International Legal Framework for Oil Pollution Damage from Tankers’ (UNCTAD/DTL/TLB/2011/, 2012) p 10-11 <http://unctad.org/en/PublicationsLibrary/dtltlb20114_en.pdf>

18 Ibid p 11

8

compensation of 203 million SDR per incident, irrespective of ship size, and

also could benefit from accession to the 2003 Supplementary Fund Protocol.19

1.3 2003 Supplementary Fund Protocol

The 2002 Prestige incident called for a renewed review of the

compensation amounts, as it soon became clear that the aggregate of

admissible claims resulting from that incident would exceed the maximum

amount available under the 1992 CLC and 1992 Fund Convention.

Accordingly, the 2003 Supplementary Fund Protocol was adopted, to

introduce an optional third tier of compensation for Contracting States to the

1992 CLC and 1992 Fund Convention. It must be noted that only Contracting

States to the 1992 Fund Convention may become Parties to the 2003

Supplementary Fund Protocol. The Protocol, which entered into force on 3

March 2005, established the International Oil Pollution Compensation Fund

(hereinafter the 2003 Supplementary Fund), which provides additional

compensation for established claims under the 1992 Fund Convention, up to

an aggregate maximum amount of 750 million SDR per incident.20

1.4 Bunker Oil Pollution Damage

The 1992 CLC and 1992 Fund Convention cover bunker oil pollution

damage only if the bunker oil escapes from a ship “constructed or adapted for

the carriage of oil in bulk as cargo”.21 This restrictive coverage left an

19 Ibid p 12

20 Ibid p 11

21 Article 1 of 1992 CLC

9

important gap in the regulatory regime, as bunker spills from other types of

vessel, such as dry-cargo and passenger ships, were not covered even though

such vessels carry substantial quantities of bunker fuel, in some cases

exceeding the cargo carrying capacity of some oil tankers. The oil used for

bunker fuel is generally of a lesser quality than that carried as cargo and, as a

result, even a relatively small spill may cause significant damage and

disproportionate clean-up costs.22

In recognition of the need for international regulation, in March 2001,

the International Convention on Civil Liability for Bunker Oil Pollution

Damage 2001 (hereinafter 2001 BOPC) was adopted, which entered into force

on 21 November 2008, under the auspices of the IMO, to provide for liability

and compensation in relation to bunker oil pollution from all types of sea-

going vessel, other than oil tankers.23

The 2001 BOPC is closely modelled on the 1992 CLC and many of its

substantive provisions are similar. In particular, the Convention imposes strict

but limited liability for pollution damage on the shipowner, coupled with

compulsory insurance and a claimant’s right of direct action against the

insurer. Further, in contrast to the 1992 CLC, the 2001 BOPC does not specify

1. “Ship” means any sea-going vessel and seaborne craft of any type whatsoever constructed

or adapted for the carriage of oil in bulk as cargo, provided that a ship capable of carrying oil and other cargoes shall be regarded as a ship only when it is actually carrying oil in bulk as cargo and during any voyage following such carriage unless it is proved that it has no residues of such carriage of oil in bulk aboard.


23 Ibid p 34

10

a shipowner’s limit of liability. Instead, the 2001 BOPC states that it does not

affect the right of the shipowner, or his insurer, to limit their liability under

any applicable national or international regime. This is a considerable

weakness of the Convention, as it means that a shipowner's limit of liability

will depend on any domestic or international regime that determines liability

amounts, and will differ between States.24

24 Ibid p 34-35

11

2. EUROPEAN COMMISSION’S REACTION TO THE ERIKA

DISASTER

Before analysing the important judgment of the European Court of

Justice in Commune de Mesquer, it is instructive to look into the motives as

written down in the European Commission's Communication of 21 March

2000.

2.1 Erika-Package

The European Commission's reaction to the devastating consequences

of the Erika disaster was swift and ambitious. In a first phase the Commission

responded only three months after the sinking of the vessel. On 21 March

2000 a first set of proposals was launched in a Communication on the Safety

of the Seaborne Oil Trade. This so-called Erika I-Package proposed for:25

i. an amended Directive on port state control,

ii. an amended Directive on common rules and standards for ship

inspection and survey organizations and for the relevant

activities of maritime administrations and

iii. a regulation on the accelerated phasing-in of double hull or

equivalent design requirements for single hull oil tankers.

The Erika I-Package was completed with the Communication on a

second set of Community measures on maritime safety following the sinking

25 G Gonsaeles, ‘The Impact of EC Decision-Making on the International regime for Oil Pollution Damage: The Supplementary Fund Example’ in F Maes (ed), Marine Resource Damage Assessment: Liability and Compensation for Environmental Damage (Springer 2005)

12

of the oil tanker Erika - the Erika II-Package. This communication

contained:26

i. a proposal for a Directive on the establishment of a Community

monitoring, control and information system for maritime

traffic,

ii. a proposal for a Regulation on the establishment of a European

Maritime Safety Agency and

iii. the abovementioned proposal for a Regulation on the

establishment of a Fund for the Compensation of Oil Pollution

Damage in European Waters and related measures (COPE Fund

Proposal).

2.2 Safety of Seaborne Oil Trade

In its analysis of the safety of seaborne oil trade, the Commission

established three criteria against which the adequacy of a system of

compensation for oil pollution victims needs to be assessed.27 Such

compensation system:

i. should provide prompt compensation to victims without having to rely on extensive and lengthy judicial procedures;

ii. the maximum compensation limit should be set at a sufficiently high level to cover claims occurring as a result of

an oil tanker accident; and

26 Ibid


13

iii. the regime should contribute to discouraging tanker and cargo interests from transporting oil in substandard tankers.

2.2.1 Lengthy Judicial Procedure

According to the Commission the system has a number of

shortcomings. In particular whenever claims for compensation threaten to

exceed the maximum compensation limit, significant delays in the payment of

compensation would occur due to uncertainty as to the final cost of the oil

spill. Similarly, if it appears that the total of valid claims may exceed the

maximum amount of compensation available, it would result in a 'pro rating'

of approved claims causing at least some lengthy delays in paying

compensation. In addition, whenever victims of major oil spills are dissatisfied

with the international compensation procedures through the application of the

1992 CLC or through the 1992 IOPC Funds, they tend to turn to national

courts for a final settlement process causing further delays. The long delays

shown in various major oil spill cases are, however, according to the

Commission - not so much the result of deficiencies in the compensation

procedures as such, but rather of the insufficient maximum compensation

limits as found in the 1992 CLC and Fund Conventions. Therefore, the

Commission is of the opinion that the existing international compensation

system satisfies the first criterion relating to the adequacy of the procedures

for compensating victims of an oil spill.28

28 Ibid

14

2.2.2 Inadequate Maximum Limits for Compensation

With respect to the failing maximum limits for compensation, the

Commission strongly reacted in proposing a third tier in the compensation

scheme, which was fulfilled by the IMO later with the creation of the 2003

Supplementary Fund. The introduction of a maximum liability limit of 750

million SDR per incident is considered to provide the necessary safeguard of

coverage for any foreseeable disaster. As such the second criterion of

adequacy as mentioned supra was being met.29

2.2.3 Substandard Tankers

The third criterion aiming at discouraging ship interests as well as

cargo interests from using substandard tankers. In the opinion of the

Commission, the focus of a system addressing liability and compensation for

oil pollution damage from vessels should not look solely to adequacy of

compensation. It should also aim at discouraging ship owners on the one hand

and cargo owners and all those involved in transporting oil overseas on the

other hand from deliberately taking risks with the transporting vessel. In other

words, oil should only be carried on board tankers of an "impeccable" quality -

whatever this might mean in practice. Therefore, a liability and compensation

system should contain sufficient incentives for carriers and oil interests to

abandon the use of low quality tonnage.30

29 Ibid

30 Ibid

15

In this respect the Commission considers the thresholds for losing the

right to limit liability for ship owners too high. Indeed, the requirement of

'intent' or 'wilful misconduct' borders upon nearly unbreakable limitation, 31

finds the Commission: "a situation which is not to the advantage of the marine

environment and of those relying upon it". So the threshold for loss of

limitation rights should be lowered relating more closely to the actual conduct

of the carrier with exposure to liability. As such, at least gross negligence on

behalf of the ship owner should exclude the right to limitation.32

2.3 Channelling of Liability

Another essential element against the existing liability system for oil

pollution damage is the exclusive position of the registered ship owner. Under

the 1992 CLC, liability for oil pollution damage is channelled to the registered

ship owner only and claims against a number of other parties involved in the

transport are not allowed.33 Therefore, operators, managers, charterers, who

31 Article V of 1992 CLC

2. The owner shall not be entitled to limit his liability under this Convention if it is proved that the pollution damage resulted from his personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result.


33 Article III of 1992 CLC

4. No claim for compensation for pollution damage may be made against the owner otherwise than in accordance with this Convention. Subject to paragraph 5 of this Article, no claim for compensation for pollution damage under this Convention or otherwise may be made against:

(a) the servants or agents of the owner or the members of the crew;

(b) the pilot or any other person who, without being a member of the crew, performs services for the ship;

16

may well exercise as much control over the transport as the registered owner

of the ship are protected from any compensation claims unless the damage

"resulted from their personal act or omission, committed with the intent to

cause damage, or recklessly and with knowledge that such damage would

probably result."34 The Commission is of the opinion that this is

counterproductive to the goal of including all players in the maritime industry

in the liability regime as an incentive to behave more responsibly in order to

avoid damaging the marine environment.35

The exclusive channelling of liability towards the registered ship

owner for vessel-source oil pollution damage under the 1992 CLC can - in the

eyes of the Commission - no longer be considered appropriate. Thus, the

prohibition of claiming compensation from a number of key players involved

in the transport of oil at sea should be removed from the 1992 CLC. At the

least they should lose their right to limit also in cases of gross negligence if it

(c) any charterer (how so ever described, including a bareboat charterer), manager or

operator of the ship;

(d) any person performing salvage operations with the consent of the owner or on the instructions of a competent public authority;

(e) any person taking preventive measures;

(f) all servants or agents of persons mentioned in subparagraphs (c), (d) and (e);

unless the damage resulted from their personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result.

34 Ibid


17

is considered necessary that they should still be protected in cases of ordinary

negligence.36

2.4 No Additional Claim can be made outside the CLC Regime

According to the existing international liability and compensation

regime, no additional claims can be made outside the conventional regime.37

The Community perceive this as a hurdle to impose additional individual

liabilities on ship owners or any of the protected parties without being in

conflict with the international conventions.38

2.5 The Direction of the EU

The European Parliament and the Council, by endorsing the

aforementioned communications, demonstrated that they intended to

fundamentally contribute to and interfere in the international legal setting

aimed at improving safety at sea as well as guaranteeing ample compensation

for oil pollution victims. The Commission has taken this position out of

dissatisfaction with the existing international schemes available precisely with

an eye to improve the liability and damage compensation system actually in

force. This underlying motivation is a noble one, but also seemingly explains

implicitly if not explicitly the ensuing ruling of the ECJ in the case Commune

de Mesquer where the Court apparently was guided by the principle of full and

36 Ibid

37 Art. III, para. 4 of 1992 CLC


18

just compensation for victims of oil pollution as inspired by the polluter pays

principle. It is against this background that the ECJ judgment in the case of

Commune de Mesquer should be analysed.39

39 Ibid

19

3. THE ERIKA DISASTER

In 1999, in France’s worst ever oil disaster several million litres of

heavy fuel oil were spilled into the sea after the oil tanker Erika. The Italian

electricity company ENEL had a contract with Total for the supply of heavy

fuel oil to Italy, to be used as combustible fuel in a power station. Total

chartered the tanker Erika to transport the oil to the port of Milazzo in Sicily.

While transporting oil for Total, Erika came into distress. The French

municipality Commune de Mesquer was particularly heavily affected, incurred

great expenditure in respect of the operations for cleansing its territory and

brought an action against Total for responsibility for polluting its coastline

with heavy fuel oil. In essence, the case before the French Court of Cassation

boiled down to the question of whether Total could be held liable for pollution

damage under Directive 75/442/EEC on waste (hereafter, the Waste

Framework Directive). Total Raffinage Distribution (now called Total

France), which was the “producer” of the waste,40 and Total International

Ltd., which was the seller and carrier and hence the “holder” of the waste, both

within the meaning of the Waste Framework Directive.41

40 Article 1of the Waste Framework Directive

(b) ‘producer’ shall mean anyone whose activities produce waste (‘original producer’) and/or anyone who carries out pre-processing, mixing or other operations resulting in a change in the nature or composition of this waste

41 C Eckes, ‘Commune de Mesquer v. Total France and Total International Ltd.’ (2010) 47 CMLR 899

20

3.1 ECJ in Commune de Mesquer v Total France SA and Total

International Ltd

The Court of Cassation referred three questions to the ECJ. Questions

one and two concerned the classification of heavy fuel oil, while question

three addressed the responsibility for the costs arising in connection with the

spilled heavy fuel oil. Firstly, the referring court asked whether heavy fuel oil

sold as a combustible fuel may be classified as waste within the meaning of

Article 1(a) of the Waste Framework Directive.42 Secondly, the Court asked

whether heavy fuel oil that is accidentally spilled into the sea following a

shipwreck could be classified as waste within the meaning of the Waste

Framework Directive. In question three, the national court asked whether (1)

the producer of the spilled heavy fuel oil and/or (2) the seller of the fuel and

charterer of the ship carrying the fuel could be held liable for the arising costs.

The answer to the third question depended inter alia on the status and

relevance of the 1992 CLC and the 1992 Fund Convention. This required the

ECJ to look beyond the boundaries of its own legal order and relate European

law to the Law of the Sea.43

On 24 June 2008, the Grand Chamber of the ECJ rejected all attempts

to submit the interpretation of the Directive to the two international

42 Article 1of the Waste Framework Directive

(a) ‘waste’ shall mean any substance or object in the categories set out in Annex I which the holder discards or intends or is required to discard. The Commission, acting in accordance with the procedure laid down in Article 18, will draw up, not later than 1 April 1993, a list of wastes belonging to the categories listed in Annex I. This list will be periodically reviewed and, if necessary, revised by the same procedure


21

conventions concluded by the Member States. The Court fully confirmed the

autonomy of the European legal order and reminded national authorities that

their first priority must remain European law.44

3.1.1 Can Heavy Fuel Oil Sold as a Combustible Fuel may be classified as

Waste?

In reply to the first question, the ECJ held that heavy fuel oil sold as a

combustible fuel does not constitute waste within the meaning of the Waste

Framework Directive,45 but it is a residual substance.46 It results from a

production process that is primarily intended to produce refined oil. However,

without further processing it is “capable of being exploited commercially on

economically advantageous terms”.47 Therefore, it cannot be classified as

“waste”.48

3.1.2 Can the Producer / Seller / Charterer be Held Liable?

In reply to the second question, the ECJ ruled that oil spilled into the

sea following a shipwreck classifies as waste under the Waste Framework

Directive.49 It is no longer capable of being exploited or marketed without

44 Ibid

45 Judgment of the Court (Grand Chamber) of 24 June 2008 [2008] ECR I-4501 para 48

46 Ibid para 46

47 Ibid para 47



22

prior processing. This took the case within the scope of the Waste Framework

Directive.50

3.1.3 Can Total be Held Liable?

The third question was essentially whether Total could be held liable

for the costs of disposing of the waste under Article 15 of the Waste

Framework Directive,51 even though at the time of the accident, which

transformed the heavy fuel oil into waste, the oil was being transported by a

third party. As a first step the answer to this question required examining

whether Total could be regarded as the producer and/or holder of waste within

the meaning of Article 1(b) and (c)52 of the Waste Framework Directive. The

Court held first that if the seller and charterer (Total) contributed to the risk

that caused the pollution they could be considered holder (or previous holder)

within the meaning of the Waste Framework Directive. This would in

principle allow holding them responsible for the costs of disposing of the

waste. Secondly, the ECJ held that where national law precludes the costs

being borne by the shipowner and/or charterer and insofar as the costs are not


51 Article 15 of the Waste Framework Directive

In accordance with the ‘polluter pays’ principle, the cost of disposing of waste must be borne by:

— the holder who has waste handled by a waste collector or by an undertaking as referred to in Article 9, and/or

— the previous holders or the producer of the product from which the waste came.

52 Article 1 of the Waste Framework Directive

(c) ‘holder’ shall mean the producer of the waste or the natural or legal person who is in possession of it

23

borne by an international fund, provisions have to be made to ensure that the

costs are borne by the producer of the product from which the waste came,53 if

that producer contributed to the risk.54

Total disputed the application of Article 15 based on the argument that

two separate but interlinked international conventions; the 1992 CLC and the

1992 Fund Convention, definitely regulated the issue of responsibility for

costs resulting from oil pollution damage at sea and took precedence over the

Waste Framework Directive.55This required the ECJ to look into the

relationship between the Directive and these two Conventions.

In conclusion, the ECJ rejected the precedence of the 1992 CLC and of

the 1992 Fund Convention. First, the Court emphasized that the Community

had not formally ratified them.56 Secondly, the Court ruled out the possibility

of a de facto or functional succession, stating that the EU “cannot be regarded

as having taken the place of its Member States, if only because not all of them

are parties to those conventions.”57 Thirdly, the Court added that the EU was

not bound by Article 235(3) of UN Convention on the Law of the Sea58



55 Ibid


57 Ibid para 85

58 Article 235 of UNCLOS 1982

Responsibility and liability

24

(hereinafter UNCLOS 1982) because this provision is confined to establishing

a general obligation of cooperation between the parties to the Convention59 but

does not require a specific action.60

3.2 French Court of Cassation in The Erika

Following the Erika incident, criminal proceedings were commenced

at international level, under the CLC and IOPC Fund conventions, and at

national level, in the French courts. After payment by the shipowner of

12,843,484 million Euros in compensation under the CLC convention, 129.7

million Euros were awarded (October 2012 figures) under the 1992 IOPC

Funds. The ruling on 25 September 2012 by the French Court of Cassation

brought to a close the proceedings commenced in France. Additional

compensation totalling 203.8 million Euros was awarded: 165.4 million for

material damages, 34.1 million for moral damages, and 4.3 million for pure

environmental damage.61

3. With the objective of assuring prompt and adequate compensation in respect of all

damage caused by pollution of the marine environment, States shall cooperate in the implementation of existing international law and the further development of international law relating to responsibility and liability for the assessment of and compensation for damage and the settlement of related disputes, as well as, where appropriate, development of criteria and procedures for payment of adequate compensation, such as compulsory insurance or compensation funds.



61 Technical Paper from the CPMR General Secretariat, ‘Following the ‘Erika’ Ruling by the French Court of Cassation, what steps should be taken at European and International level?’ (16 May 2013) CRPMNTP130019 A1 p 10

25

The French Court of Cassation based its judgement on three points

which are of key importance for the victims, among them local authorities,

including the Regions. These are:62

1. The competence of the French courts to judge the consequences

of an incident which took place outside France’s territorial

waters but within its Exclusive Economic Zone (hereinafter

EEZ).

2. The criminal liability of a group of parties in the shipping chain

- the charterer (Total), the shipowner (Tevere Shipping), the

classification society (RINA) and the ship management

company (Panship).

3. The existence of, and possibility of obtaining compensation for,

pure environmental damage in addition to other kinds of

damage for which compensation has been awarded at

international level and in France.

3.2.1 The Criminal Jurisdiction of the French Courts

The criminal jurisdiction of the French courts in this case was

questioned by the Avocat Général, who had issued an opinion whereby the oil

pollution in question had been committed within the French EEZ and not

62 Ibid

26

within French territorial waters where the jurisdiction of the flag State – Malta

- would have prevailed over that of the coastal State - France.63

The Court of Cassation on the contrary recognised the jurisdiction of

the French courts. The Court considers that although the status of the EEZ is

not completely clear, there are two provisions which justify, in these

circumstances, the jurisdiction of the French courts:64

i. Article 220 of the UNCLOS 1982 provides that where there is

clear evidence that a vessel has committed an offence of

pollution causing major damage to a coastal State, that State

may “institute proceedings”65

ii. Article 228 UNCLOS 1982, which provides that if a coastal

State has instituted proceedings for an offence committed

beyond territorial waters for which the flag State has also

instituted proceedings, the coastal State shall suspend its

proceedings. Since in the present case the flag State (Malta)

has not instituted such proceedings, the coastal State continues

to have jurisdiction to impose any penalties for that offence.66

63 Incidents Involving IOPC Funds – 1992 Fund (26 March 2013) IOPC/APR13/3/3 available on < http://documentservices.iopcfunds.org/>

64 Ibid

65 Article 220 of UNCLOS 1982 - Enforcement by coastal States

66 Article 228 of UNCLOS 1982 - Suspension and restrictions on institution of proceedings

27

The Court of Cassation summarised its reasons in the following

terms:67

“By the combined application of Articles 220 and 228, when proceedings have been instituted by the coastal State with a view to

imposing penalties for a violation of applicable laws and regulations or international rules and standards relating to the prevention,

reduction and control of pollution from vessels committed beyond its territorial sea by a foreign vessel, that State shall have jurisdiction

when it relates to a case of serious damage.”

3.2.2 The Criminal Liability of a Group of Parties in the Shipping Chain

The proceedings commenced in France were of a criminal nature,

given that it was a matter of determining the liability of the parties concerned

with regard to a criminal offence under Act No. 83-583 of 5 July 1983 on

pollution from ships. In the course of the proceedings, the competence of the

French criminal judge to pronounce on civil interests was challenged, on the

grounds that the 1992 CLC established a specific liability regime offering

victims the possibility of taking legal action, but any fault recognised in this

context could not be likened to a criminal offence. The French Court of

Cassation, however, considered that the competence of the criminal judge was

only excluded in cases where the parties concerned enjoyed the benefit of the

channelling of liability to the shipowner via the 1992 CLC. Consequently,

those persons who cannot benefit from the channelling of liability set out in


28

the 1992 CLC may be ordered to pay compensation in the context of criminal

proceedings.68

The criminal proceedings were commenced in the Criminal Court of

First Instance in Paris against the master of the Erika, the representative of the

registered owner of the vessel, the president of the vessel’s managing

company, the classification society, RINA, and against Total and its chartering

subsidiary. As the proceedings were criminal, the IOPC Fund was not

involved as a party and was not represented.69

The court found the representative of the owner of the Erika and the

president of the management company guilty for lack of proper maintenance

of the vessel. RINA was found guilty for carelessly renewing the classification

of the vessel based on an unprofessional inspection of the hull. Total was

found guilty of imprudently vetting the ship. This flowed from the testimony

of a Total manager who admitted that he had overridden Total’s in-house

vetting system to allow the Erika to be cleared prior to confirming the charter.

Criminal Court of First Instance in Paris held the four offenders jointly and

severally liable for the damages caused by the incident. The channelling

provision of Article III Para 4 of the 1992 CLC was a point of contention

before the court. The court ruled that Total could not avail itself of the

provision since the charterer of the Erika was not Total, but one of its

68 Incidents Involving IOPC Funds – 1992 Fund (28 March 2013) IOPC/APR13/3/3/2 available on < http://documentservices.iopcfunds.org/>

69 A.H.E. Popp and J.G. O’Connor, ‘The Erika and the Erosion of the Civil Liability Convention: Vetting, Non-use and Environmental Damage before the French Cour de Cassation’(2013) CMLA < http://www.cmla.org/papers/ErosionCLC-Popp.pdf> p 11

29

independent subsidiaries. The court held that RINA was not protected by

channelling as a classification society was not a person performing services

for the vessel. 70

The decision was appealed to the Court of Appeal in Paris. The Court

of Appeal held that although the representative of the owner was an “agent of

the owner” as defined in Article III Para 4(a) of 1992 CLC, and therefore

theoretically entitled to benefit from the channelling provision, he had acted

recklessly, with knowledge that damage would probably result, thereby

depriving him of protection. In the Court of Appeal’s opinion, the president of

the management company was not an agent of the ship owner but rather an

agent of a company that performs services for the ship, or a sub-agent of the

ship, and thus unable to benefit from channelling provision. The Court of

Appeal found that RINA was not a person who performs services for the ship

under Article III Para 4(b) of the 1992 CLC, but was rather an agent of the

flag state and thus not protected by channelling provision. However, Total was

found by the Court of Appeal to be the de facto charterer of the Erika and thus

could benefit from the channelling provision of Article III 4(c) of the 1992

CLC. The Court of Appeal reversed the finding of the lower court and held

that Total could have no civil liability.71

The decision of the Court of Appeal was appealed to the Supreme

Court of France, the French Court of Cassation. The high court, reversing the

Court of Appeal on this point, found that RINA was a person providing 70 Ibid p 11

71 Ibid p 12

30

services for the vessel and was thus eligible to benefit from the channelling

provision under Article III Para 4 of the 1992 CLC. The court also reversed

the finding of the Court of Appeal as to the eligibility of Total as charterer to

benefit from channelling. The Court of Cassation agreed that Total as charterer

was able to invoke channelling, but found that the Court of Appeal had erred

in allowing such a defence on the facts of the case. The Court of Cassation

found both RINA and Total ineligible on the facts of the case to benefit from

protection, both were sufficiently reckless to lose their right to protection. The

high court noted that the channelling provision of Article III Para 4 of the

1992 CLC does not apply where the party claiming the benefit has been

reckless and was aware of the consequences. This was the case for both RINA

and Total.72

The court found that the senior representative of Total, although not

held personally liable for overriding the vetting system, was “ necessarily

aware that pollution damage was likely to occur” from such a gesture, thus

removing any chance Total had to protection by way of channelling under

Article III Para.4(c) of the 1992 CLC. Similarly, although reversing the

decision of the Court of Appeal with regard to RINA, the classification society

could not benefit from the protection of channelling under Article III Para 4(b)

as its participation in the inspection of the Erika could only be qualified as

recklessness and it too was aware of the outcome of any such accident. A

similar logic applied to the representatives of both the registered owner and

managing company. The Court of Cassation agreed that the owner’s

72 Ibid p 13

31

representative could not benefit from channelling due to his recklessness, but

reversed the Court of Appeal with regard to the representative of the managing

company, finding him also covered by Article III Para 4(c) of the 1992 CLC,

but ineligible to benefit therefrom due to his recklessness.73

3.3.3 Compensation for Pure Environmental Damage

Some of the appellants before the Court of Cassation had criticised the

decision of the Court of Appeal for having awarded damages to a variety of

local communities and associations for the protection of the environment in

respect of pure environmental damage. Upon rejecting this thesis the Court of

Cassation on the contrary upheld the decision of the Court of Appeal and held

that:74

'The Court of Appeal has, both adequately and without contradiction, justified its awards of proper compensation to make good the

environmental damage, consisting of direct or indirect damage to the environment arising from this offence.”

These types of damages had been defined by the Court of Appeal as

“all non-negligible damage to the natural environment, that means notably the

air, the atmosphere, water, the soil, land, the countryside, natural sites, the

biodiversity and interaction between these elements, which has no

repercussions on any specific human interest but affects a legitimate public

73 Ibid p 13


32

interest”. The Court of Cassation thus approved the principle under French

law of the right to compensation for pure environmental damage.75

75 Ibid

33

CONCLUSION

The Erika disaster has proved to be rather a cause celebre in the

development of a particularly `European' strand of the regulation of oil tankers

and associated spillages. Following the disaster itself, the Erika-package of

measures, adopted swiftly by the EU institutions, introduced a series of

sweeping policies, including clamping down on rogue classification societies,

improving vessel design in the form of double-hulled tankers and establishing

a tentative basis for further compensation for damage resulting from oil spills.

At first glance, the ruling in Commune de Mesquer appears to contribute

further to this novel approach by opening up the settled liability regimes

provided under the 1992 CLC and 1992 Fund Convention, by advancing a

new class of defendants within the European Union via the rather unorthodox

backdoor of waste legislation. The ruling itself is in keeping with some of the

more subtle policy elements introduced by the EU institutions to address

substandard shipping of vessels engaged in hydrocarbon transportation with

the potential to cause considerable environmental and economic damage to

coastal regions with in the Member States. Just as the European Commission

has sought to regulate the classification industry more stringently, the ruling in

Commune de Mesquer exerts further financial pressure upon operators and

charterers to eschew the use of riskier vessels.76 As such, the decision in

Commune de Mesquer and that of the French Court of Cassation in the Erika

should be perceived as a welcomed decision which is in line with the EU’s

objective, rather than solely undermining the liability scheme of 1992 CLC.

76 R Caddell ‘Expanding the Ambit of Liability for Oil Pollution Damage from Tankers: The Charterer’s Position un EU Law’ (2009) 15 JIML 219

34

Total number of words: 6,587 (excluding table of

contents and footnotes)

35

BIBLIOGRAPHY

BOOKS

• Baughen S, Shipping Law (5th edn, Routledge 2012)

• Gonsaeles G, ‘The Impact of EC Decision-Making on the International

regime for Oil Pollution Damage: The Supplementary Fund Example’

in Maes F (ed), Marine Resource Damage Assessment: Liability and

Compensation for Environmental Damage (Springer 2005)

• Soyer B (ed) and Tettenborn A (ed), Pollution at Sea: Law and

Liability, (Routledge 2012)

• Wilson JF, Carriage of Goods by Sea (7th edn, Pearson 2010)

CASE LAWS

• Case C-188/07 Commune de Mesquer v Total France SA and Total

International Ltd

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• Council Directive on Waste 75/442/EEC of 15 July 1975

• International Convention on Civil Liability for Bunker Oil Pollution

Damage 2001

• International Convention on Civil Liability for Oil Pollution Damage

1992

• United Nations Convention on the Law of the Sea

36

JOURNAL ARTICLES

• Caddell R, ‘Expanding the Ambit of Liability for Oil Pollution

Damage from Tankers: The Charterer’s Position un EU Law’ (2009)

15 JIML 219

• Eckes C, ‘Commune de Mesquer v. Total France and Total

International Ltd.’ (2010) 47 CMLR 899

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MIS ERIKA in European Waters: Towards a Total Loss for

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• Mason M, ‘Transnational Compensation for Oil Pollution Damage:

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in Community Law: Recent Developments’ (2011) 48 ET 99

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(1994) 2 LMCLQ 230

37

OTHER SOURCES

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(October 2013) available on

<www.iopcfunds.org/uploads/tx_iopcpublications/claims_manual_e.pd

f>

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IOPC/APR13/3/3 available on

<http://documentservices.iopcfunds.org/>


IOPC/APR13/3/3/2 available on



IOPC/OCT12/3/5/1 available on


• Reports on the Activities of the International Oil Pollution

Compensation Funds (2001) available on

<http://www.iopcfunds.org/publications/>







38

• Technical Paper from the CPMR General Secretariat, ‘Following the

‘Erika’ Ruling by the French Court of Cassation, what steps should be

taken at European and International level?’ (16 May 2013)

CRPMNTP130019 A1

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Compensation for Ship-Source Oil Pollution: An Overview of the

International Legal Framework for Oil Pollution Damage from

Tankers’ (UNCTAD/DTL/TLB/2011/, 2012) p 1

<http://unctad.org/en/PublicationsLibrary/dtltlb20114_en.pdf>

The Erika Disaster and the Liability Scheme of 1992 CLC

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