The Supreme People's Court held an expert argumentation meeting to formulate a judicial interpretation of Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Cases of Disputes over Compensation for Vessel-induced Oil Pollution Damage (hereinafter referred to as Provisions) in Qingdao on June 24 and 25, 2010. Present at the meeting were 30 more senior experts of relevant professions from the Supreme People's Court, relevant departments of the State Council, higher people’s courts, maritime courts, maritime safety administrations, colleges and universities, shipping companies, P&I clubs and law firms, etc. Mr. Yang, director of Yang & Lin Co., Law Firm, was invited by the Supreme People's Court to participate in the meeting.
At the expert meeting, Mr. Yang proposed a number of amendments to the draft of the Provisions. Main amendments proposed by Mr. Yang were as follows:
1. On application of international conventions and domestic laws
Most experts said at the meeting that foreign element was indispensible for the application of international conventions into which China had acceded. Therefore, International Convention on Civil Liability for Oil Pollution Damage, 1992 (hereinafter referred to as 1992CLC) and International Convention on Civil Liability for Bunker Oil Pollution Damage，2001 (hereinafter referred to as Bunkers Convention) to which China was a party were applicable to the compensation dispute arising from oil pollution damage or threat of oil pollution damage in territorial sea of the People's Republic of China by foreign-related vessels or Chinese vessels engaged in international voyages. The two Conventions were not applicable to Chinese vessels engaged in domestic voyages.
Mr. Yang firmly urged to remove the limitation of foreign elements to secure an equal treatment of Chinese flagged vessel and foreign flagged vessel, and to safeguard the legitimate rights and interests of the damage victims. Foreign vessels and Chinese vessels (international and domestic voyages) should be governed by 1992CLC and the Bunkers Convention. He also added that Convention on the International Regulations for Preventing Collisions at Sea, 1972 was applicable to both foreign vessels and Chinese vessels whether there were foreign-related elements or not.
2. On the application scope of vessels and oils
(1) Vessel type
Mr. Yang suggested that vessel as referred to in the 1992CLC meant vessels built or rebuilt for the carriage of persistent oil cargo in bulk and vessels used for the carriage of persistent oil cargo in practice. Vessel specified in the Bunkers Convention meant marine ships and boats of any kinds. Therefore, vessel as referred in the Provisions should include all vessels specified in the 1992CLC and the BunkersConvention, namely, oil tanker and non-oil tanker in international and domestic voyages.
(2) Oil type
Mr. Yang suggested that oils should include persistent oil cargo onboard, and persistent and non-persistent bunker oil used for vessel operation in accordance with the 1992CLC and the Bunkers Convention. Non-persistent oil cargo was excluded.
3. On liability for oil spill from a single vessel that is caused by collision of two or more vessels
Regarding the liability for compensation where the oil pollution damage was caused by oil spills from a single vessel that is caused by collision of two or more vessels, some experts believed that vessel owners should undertake their liability respectively according to their faults, and others held all vessel owners jointly and severally liable for the damage.
To make his suggestion, Mr. Yang cited an early oil pollution case in which he represented the defendant in 1999. In that case, a sunk bunkering tanker “Min Fuel Supply 2” had a significant oil spill during a collision with vessel “Donghai 209”, and both vessel owners were sued for oil pollution damages. Guangzhou Maritime Court initially heard the case held the bunkering tanker spilling the oil was solely liable for the damages. Whereas, the appellate court overturned the original judgment and held the vessel owners should undertake their liability respectively according to their faults.
Mr. Yang also observed that in Circular of the Supreme People's Court on the Issuance of the Minutes of Second National Foreign-Related Commercial Maritime Trial Work Meeting, the Supreme Court opined that holding the vessel owners outside the scope of 1992 CLC jointly and severable liable or be respectively liable according to their faults are not consistent with the principles of the 1992 CLC and the Bunkers Convention. Since China is already rectified those two international conventions, the judicial practice should be in line with the international rules. In the situation of an oil spill from a single vessel that is caused by collision of two or more vessels, the victims are entitled to claim all the pollution damage against the spilling vessels, and then the spilling vessel owner is allowed to seek damages against other collided vessels in accordance to the their respective faults.
4. On limitation of liability
At the meeting, some experts proposed that oil pollution caused by vessels or oils outside the 1992CLC should not be subject to the limitation of liability for maritime claims other than claims for loss of life or personal injury provided in Maritime Code of the PRC. In other words, those vessels should not be entitled to the limitation of liability. Mr. Yang argued that the limitation was constituted for an initial intention and purpose of protecting shipowners against the relatively high shipping risks. The 1992CLC, the Convention on Limitation of Liability for Maritime Claims, 1976, and the Maritime Code of the PRC constituted limitation of liability respectively, and the liability limitation of the Bunkers Convention was subject to domestic laws. If neither the liability limitations of 1992CLC nor claims not subject to limitation stipulated in Article 208 of the Maritime Code applied to the oil pollution caused by vessels or oils that were not covered by the 1992CLC, the claims subject to limitation stipulated in Article 207 of the Maritime Code should apply. In other words, oil pollution caused by vessels or oils that were not covered by the 1992CLC should be entitled to the limitation of liability in accordance with the Maritime Code of the PRC.
5. On whether the cleaning up cost was subject to limitation of liability
Some experts were in the opinion that the cost of cleaning up caused by ship oil spills should be subject to the limitation of liability. Mr. Yang said that the Article 9 of the Provisions of the Supreme People's Court on Some Issues about the Trial of the Cases of Ship Collision Disputes (effective as of May 23, 2008) stipulated that, in case compensation is required for expense of refloating, clearing and demolishing the sunken, wrecked, grounded and abandoned ship and cargo on board or making it harmless, the possible party shall not be entitled to the benefit of limitation of liability for maritime claims provided for in Chapter 11of the Maritime Code; Article 17 of Several Provisions of the Supreme People's Court on the Trial of Cases of Disputes over the Limitation of Liability for Maritime Claims (effective as of September 15, 2010 ) stipulated that, maritime claims that may be subject to limitation of liability as set forth in Article 207 of the Maritime Code shall not include claims filed in respect of raising, removing, destructing or rendering harmless a vessel which is sunk, wreck, stranded or abandoned or claims filed in respect of removing, destructing or rendering harmless the cargo on the vessel. If the cleaning up cost arises from the oil pollution caused by the sunken, wreck, stranded, or abandoned vessels as set forth in the preceding two provisions, the cleaning up cost should not be subject to the limitation of liability in accordance with both provisions.
6. On the amount of cleaning up cost
Considering the increasing cost of vessel-induced oil pollution response for the last decade or so, Mr. Yang proposed to establish principle regulations to account for the rationality of the amount of expenses for pollution response, including the amount of oil spills, oil types, pollution areas, contamination degree, and the number of ship equipments and personnel involved in the cleaning up.
7. long-term fishery loss
In 1994, the Ministry of Agriculture promulgated regulations that the long-term fishery loss caused by vessel-induced oil pollution shall be no less than three times the direct economic loss. Mr. Yang referred that the compensation for damage to the marine environment stipulated in 1992CLC was confined to the costs of reasonable recovery measures actually taken or to be taken. The 1992CLC did not apply to the long-term fishery loss. This judicial interpretation of the Opinions on oil pollution should be in line with the provisions of the 1992CLC . In other words, this judicial interpretation should not apply to the long-term loss of fishery resources, and should include reasonable measures of reinstatement of the marine environment actually undertaken or to be undertaken.
8. On pure economic loss
Whether pure economic loss (indirect losses) caused by vessel-induced oil pollution should be compensated is a long-standing controversy. Mr. Yang advised that compensation should be payable for a reasonable amount, if there was sufficiently close link of causation between the contamination and the pure economic loss (indirect losses) caused by vessel-induced oil pollution.
9. On unlicensed aquaculture
Some experts suggested at the meeting that compensation should be payable for the losses suffered by unlicensed farmers caused by oil pollution. Mr. Yang held against the compensation because compensation for the loss suffered by unlicensed farmers in oil pollution would encourage violation of laws and do harm to management and regulation.
10. On whether constitution of a limitation fund should be placed as a prerequisite to the right of limitation
In examining that issue, the beneficiary recommended to make a distinction between the oil damage within the scope of 1992 CLC and that outside the application of the convention. If the claim within the application of 1992CLC, constituting a limitation fund is a prerequisite according to the 1992CLC and Special Maritime Procedure Law of the PRC. If the claim outside the application of 1992CLC, constituting a limitation fund is not a prerequisite.
11. On whether the expenses incurred by active cleaning up of shipowners can be compensated from the fund
Mr. Yang proposed that if the shipowner took the initiative to clean up after the vessel spilt oil. The initiative should be encouraged, and the expenses incurred should be compensated from the fund.
12. On whether the cleaning up cost should enjoy priority in compensation
Mr. Yang said that Article 55 of Regulation on the Prevention and Control of Vessel-induced Pollution to the Marine Environment (effective of March 1, 2010) stipulated that, in the event of a vessel-induced oil pollution accident, the necessary expenses for emergency measures and cleaning up by relevant units under the instruction of the state shall have the priority in the compensation for pollution damage losses. To encourage cleaning up and reduce pollution damages, the cleaning up cost shall have the priority over other claims.
13. On claimants
In the past decade or so, the main claimants for the vessel-induced oil pollution damage to the marine environment, fishery resources, etc. were the State Oceanic Administration and its sub-bureaus, provincial, municipal or county marine fisheries bureaus and fishery administration departments, as well as maritime safety administrations at various levels. There were a number of different claimants. In addressing this issue, Mr. Yang proposed in the meeting that ocean and fisheries bureaus, instead of multiple departments of different system, should claim for the expenses of handling damages to the marine environment and fishery resources, and of restoring the marine ecological environment.
14. On establishment of oil pollution funds and implementation of a compulsory oil pollution insurance system
Because of the limited compensation for vessels engaged in costal and inland river transport, the oil pollution victims in a vessel-induced oil pollution accident were unable to obtain full compensation in most cases (including but not limited to compensation for losses suffered by farmers and fishermen, and the cost for restoration of marine ecological environment). Considering the dilemma, Mr. Yang suggested that China set up its own oil pollution fund as soon as possible, and impose mandatory oil pollution duties on vessels, because China had not yet joined the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971.
Most suggestion proposed by Mr. Yang gained support from most of the experts present at the meeting.
