“Injustice, swift, erect, and unconfin’d,
Sweeps the wide earth, and tramples o’er mankind” – Homer, The Iliad.
Everything was just the way it was supposed to be in Pompeii on August 24, 79 A.D. An abundance of wealth was bestowed upon the inhabitants of this Roman trading town. Things were near perfect. Life was agreeable, affable, and idyllic for all…and it was only getting better or so it seemed. Yet, just then, when things couldn’t have seemed more certain, Mount Vesuvius blew.
Where there had been life and a thriving civilization…there was silence for the next 1,669 years.
Viewing events through the lens of history and hindsight is unfair to its participants. Their missteps are too obvious, their vanities are too abundant, and their inferiorities too absurd. They appear to be mere imbeciles on parade. Still, they were human just like we are human…no smarter, no dumber. We’re not here to ridicule them; but rather, to learn from them.
In the case of Pompeii, the warning signs were evident to those who bothered to heed them. Unfortunately, ignoring these warnings proved fatal.
The superhuman feat by Sri Lankan naval officers saved the lives of the crew on board MT New Diamond and curbed a greater tragedy, that of oil spillage. Yet, what ingenuity have we innovated to face a similar or worse situation, if God forbid – it ever occurs again…? Are we willing to heed the warning or do we like the residents of Pompeii remain stoic in the face of the emitting gases of ‘Mount Vesuvius’ before it exploded?
On the 3rd of September 2020, a distress call was received by the Maritime Rescue Coordination Center confirming a fire in the engine room of the supertanker MT New Diamond caused by an explosion of a boiler. At the time, the vessel was approximately 38 NM off Sangamankanda Point on the East coast of Sri Lanka.
MT New Diamond was on charter to the Indian Oil Corporation (IOC) by the vessel manager, Athens (Greece) based New Shipping Limited, and was carrying an estimated two million barrels of crude oil, on its way from the port of Mina Al Ahmadi in Kuwait to the Indian port of Paradip, where the state-owned IOC has a refinery.
The initial fire irrupting on board the supertanker was doused by a team of experts which included Sri Lanka Navy, Sri Lanka Coast Guard, Indian Navy, ship salvors and local maritime service providers.
Various sea and air crafts including, tugboats, naval ships and coast guard aircraft, were required to bring the blaze under control and was finally extinguished after three days of round-the-clock coordination.
With the engine disabled, MT New Diamond needed to be towed back out to sea, away from the coast of Sri Lanka as it had drifted closer to shore when a re-conflagration was reported on the 7th of September. The vessel was then carefully towed back out and was held with tug assistance in international waters, while sampling and survey efforts were being carried out.
Assessment of the damage and salvage work commenced as the fire was extinguished on Wednesday 9th September. Rescue operation specialists and marine pollution analysts with the help of military and civilian vessel crew and various other marine experts attempted to arrive at the best course of action to mitigate a marine disaster never before experienced in the Indian Ocean region.
The fire injured a crew member who was hospitalized in a stable condition and another was missing, presumed dead. Twenty of the uninjured crew members were then taken to Galle where they remained till repatriation was arranged. The captain remained on board a rescue vessel to help with firefighting efforts. There was a total of 23 crew members on board when the initial distress call was received.
The chance of a crude oil leak or of the fire spreading into the crude oil storage area was carefully managed, and divers deployed to seal a crack which had emerged in the hull as a result of the fire. The vessel was then, towed to Fujairah port in the U.A.E escorted by Indian Coast Guard vessels, reaching Fujairah on the 8th of November, after four weeks under tow. The supertanker was to be sold for scrap, given her age (20 years) and extent of the damage by fire, once the cargo on board was discharged.
The explosions which resulted in fires, began in the engine room and later spread to the deckhouse and stern areas of the tanker. The fires on board the vessel caused a bunker fuel (commercially known as heavy petroleum distillate or HPD) leak identified by aerial imagery as stretching over an expanse of 2 NM. Chemicals were sprayed to disperse the oil and minimize impact on marine life. This region of the Indian Ocean is home to several species of whales, dolphins, sea turtles, sharks and for its size, one of the most diverse marine ecological systems in the world.
The Indian Coast Guard (ICG), Sri Lanka Coast Guard (SLCG) and Sri Lanka Navy worked tirelessly, along with the Marine Environment Protection Authority (MEPA) for five continuous weeks to prevent an unprecedented marine disaster.
The Indian Coast Guard (ICG) is the Competent National Authority under the South Asian Co-operative for Environment Protection (SACEP), an eight-member inter-governmental organization established in 1982 to promote and support protection, management and enhancement of the environment in the South Asian region. Sri Lanka Coast Guard (SLCG) is the Sri Lankan equivalent of the (ICG). A bilateral Memorandum of Understanding (MoU) between the Indian Coast Guard and Sri Lanka Coast Guard also exists detailing cooperation on several maritime issues including emergency response coordination and marine pollution prevention, in the Indian sub continental waters.
As the fire was contained to the superstructure of the tanker, there was no damage to the cargo hold, preventing the leaking of crude into the ocean. However, authorities monitoring the situation ensured that the required pollution response equipment was on hand, ready for immediate deployment if needed.
Claims of the State & Ship Owner’s Liability
Sri Lanka Attorney General (AG’s Department) has, as of date, submitted claims for services provided by the Sri Lankan Navy, Air Force, Ports Authority and Marine Environment Protection Authority (MEPA). The captain of the vessel pleaded guilty to the charges related to causing an oil spill and violations of the Marine Pollution Prevention Act No. 35 of 2008. He was permitted to leave Sri Lanka in October after the payment of the fines to the Court as ordered.
Required reports and documented evidence of the incident to support the claims of the state were filed by MEPA on the instructions of the Attorney General’s Department. The assessment of the ship owner’s liability in the case of MT New Diamond was complicated than most due to several reasons, one of which was the three-tiered operating structure of the vessel. IOC was the charterers of the supertanker while New Shipping Limited (Greece) was the ship operator whereas the registered owner of the vessel was Porto Emporios Shipping Inc., (Greece) at the time of this grave incident. Part of the settlement of the costs of the rescue operation was settled by the vessel’s Protection & Indemnity (P&I) Club. Protection & Indemnity (P&I) or Ship owner’s liability insurance is a form of marine insurance which protects ship owners, ship-operators, and charterers of ships against third party claims for liabilities attributable to (the) operation of a ship. The P&I Clubs provide insurance to its members against, among other things, the liability claims as a result of a collision, damages to or loss of cargo, damages to fixed or floating objects as well as civil liabilities imposed after pollution or an oil spill.
In light of the potential marine disaster which was skillfully averted, and the costs of restitution had the worst occurred, the question remains whether local subject experts are adequately informed of the laws and legislations both locally and internationally that preside over matters relating to marine environmental damage caused by commercial shipping.
Another aspect of the potential costs associated with a disaster of this magnitude, is the inadequacy of local regulations governing safety of the marine environment. The Marine Pollution Prevention Act does not provide a fuller coverage in punishing the perpetrators while obtaining the maximum damages for losses incurred, which left the AG’s department to resort to ratified global conventions such as the International Convention on Salvage (Salvage Convention) 1989.
Under the Law of Salvage, contractual salvors undertaking operations would be entitled to a reward of one-fourth the value of cargo salvaged subject to the ‘no cure, no pay’ concept. However, in this instance under the instructions of the AG’s Department, MEPA unwittingly took on the role of the statutory salvor foregoing any rewards allowed, which could now be claimed by Boskalis Smit Singapore Pte Ltd, the contractual salvors appointed by the owners of the distressed ship.
The International Maritime Organization (IMO) being the watchdog of commercial shipping drafts and adopts international maritime legislations where MARPOL convention (1973, 1978) plays a leading role in such environment related area, out of a total of 21 international legal instruments.
Sri Lanka, as of date is a party to only 4 of 21 IMO Conventions related to the marine environment and its protection. This leaves the State exposed to huge potential clean-up costs and no recourse to claiming damages from the offending party.
“Our Southern coastal belt sees over half of the world’s crude oil tankers sail by, yet we are still not adequately equipped to handle situations of this nature. The MT Diamond incident exposed our vulnerability, but it is still not too late to rectify matters for the prevention of further disasters,” – stated Dr. Dan Malika Gunasekera, Attorney-at-Law of the Supreme Court of Sri Lanka. He obtained his Master of Laws (LLm) degree from University of Utrecht, The Netherlands in International Law with honours cum laude, and Doctor of Philosophy (PhD) from University of Hamburg, Germany in International Commercial Maritime Law with honours cum laude. He is a Scholar of International Max Planck Research School for Maritime Affairs, Germany, and the former Dean of the Faculty of management, Humanities and Social Sciences, CINEC Maritime Campus, Sri Lanka, former Executive Director of Ceylon Shipping Corporation (CSC), Representative for Sri Lanka for the Comite Maritime International, Ex- Executive Council Member of Ceylon Association of Shipping Agents (CASA), and Member of the Executive Committee of the Nautical Institute, Sri Lanka Branch. He served in the Boards of Ceylon Shipping Lines, Lanka Coal Company, and Ceylon Ports Service as a Director. His publication on Civil Liability for Bunker Oil Pollution Damage based on the Bunker Oil Convention of 2001 is an internationally renowned piece of literature, which is available in prestigious libraries and universities worldwide.
With an extensive experience and expertise in the technical, business and legal areas of the maritime sphere, Dr. Dan shares his expert opinion with regard to the MT New Diamond catastrophe that serves as a warning for Sri Lanka to take immediate action in securing its maritime space.
- What was your involvement in this matter?
As a private practitioner in law and other areas related to the maritime industry and having researched and published materials in oil pollution damage caused by ships piqued the interest within media circles who sought my opinion and that led to my involvement in the matter.
- Explain the conventions which SL is subject to.
There are number of conventions or regimes related to liabilities on oil pollution by ships while there remains three main Conventions that deal with the liabilities of the ship owners.
International Convention on Civil Liability for Oil Pollution Damage 1969 that was adopted in the aftermath of the SS Torrey Canyon disaster off the western coast of Cornwall, England, on 18 March 1967 that caused a huge environmental disaster. At that time she was the largest vessel ever to be wrecked. Thus led to the imposing of liabilities on the perpetrators who are four folded – the ship-owner, manager, operator, and charterer of the ship.
Yet the particular polluter would not be absolutely liable due to the presence of a maximum liability cap as an absolute liability would draw the ire of ship-owners who would refuse to transport crude oil. This convention was also imposed to safeguard the shipping trade, oil trade and address environmental concerns. The limitation of liability is based on the tonnage of the ship. Subsequently the 1971 FUND Convention enabled a 2nd tier compensation regime that would facilitate potential claimants.
With the gradual development of super tankers and the enlargement of the oil trade, the 1969 and 1971 conventions were revised and replaced by 1992 CLC and 1992 FUND conventions which increased the limitation of liability based on tonnage.
Thereafter in the year 2001 third important convention came into being that of the Bunker Oil Convention (BOC), which was adopted to ensure the settlement of adequate, prompt, and effective compensation to be made available to persons who suffer damage caused by spills of oil, when carried as fuel in ships’ bunkers. This Convention applies to damage caused in the territory, including the territorial sea, and in the exclusive economic zones of States Parties. The Bunkers’ Convention provides a free-standing legal regime covering pollution damage and preventive measures.
- What were the conventions SL was able to adopt in this case?
Since MT New Diamond was a tanker, and Sri Lanka being a party to CLC 1992 we were covered by that regime, but however the BOC is not yet in force as Sri Lanka still lacks a corresponding local legislation. Nevertheless, the Marine Pollution Prevention Act covers this area domestically as it has incorporated the provision of CLC 92.
“Marine Pollution” is a subject associated with the responsibility of which is vested in the Minister-in-Charge of the subject of “Environment”. The Marine Pollution Prevention Act No. 35 of 2008 has designated the Marine Environment Protection Authority (MEPA) as the “National Agency responsible for marine pollution prevention related activity”. Formulation and implementation of National Oil Spill Contingency Plan is one of its more important functions. The National Oil Spill Contingency Plan (NOSCOP) which has been prepared by the MEPA provides a guideline, and enables control of marine pollution including these types of incidents with oil spill contingency plans in place.
- What are the governing bodies that control the coastal areas of Sri Lanka?
There are three kinds of controls, namely the Port-State Controller being the Director General of Merchant Shipping together with Sri Lanka Ports Authority (SLPA),
Coastal-State Controller being the MEPA aptly supported by the Sri Lanka Navy and Sri Lanka Coast Guards, while the Flag State Controller in relation to Sri Lanka flagged vessels being again the DGMS.
- What is the area covered by these acts around Sri Lanka?
The 12 NM zone known as the Territorial Sea is connected to the sovereignty of the land territory while the 188NM of Exclusive Economic Zone beyond the territorial sea boundary is within the competence of the local authorities attending to marine environmental issues having jurisdictional competence. Thus, the said EEZ falls within the pollution buffer zone of the country so that the Marine Pollution Prevention Act provides the necessary teeth to act against these kinds of pollution incidents.
The MT New Diamond disaster occurred in the EEZ but even if an incident occurs in the high seas beyond the 200 NM zone (188NM + 12NM), the Act will be still imposable had the pollution damage caused within such waters of the land. Furthermore, MEPA is also competent to act in cases where any pollution incident that occurs internally within a 3 KM radius to the baseline of the country as enacted therein.
- What was the total compensation received?
While a sum of LKR 443 million was awarded to SL Navy and the Indian counterpart, MEPA received LKR50 million for the oil slick.
- At the time of releasing the ship was there an understanding on the under-taking?
We let the ship go on the undertaking that the agreed compensation will arrive. Compensation matters were handled by a law firm in SL for the Shipowner and the Salvor.
- Who were responsible to pay the compensation?
The ship owners while the contractual salvors paid us as they could obtain reimbursement as against their reward.
- Is there a provision to arrest anyone in this case?
No arrests are allowed and the Magistrate handled the dispute correctly by refusing to arrest the Captain while imposing a greater penalty as much as LKR 12 million on the Captain of the ship who was merely detained until released upon payment of the fine. By this tactical initiative, she avoided an international controversy which we would have been embroiled in, had we resorted to taking matters to our own hands.
- Had the tanks carrying the crude oil been damaged and started to seep out into the ocean, what would have been the repercussions of this?
It would have been considered the second largest oil disaster at sea over the disaster in Parana River, Argentina when a collision between a tanker and a bulker resulted in an oil spill ten years ago, and after the Exxon Valdez incident. Even with all the salvage operations underway, the futility of those attempts are seen in the oil drenched marine life and its environs even to this day. Our tourist hotspots such as Arugambay and Nilaveli would have been drastically affected.
- In what capacity did we lose out?
It was our failure to adhere to proper legal measures as we missed out on a golden opportunity due to the incompetence and lack of knowledge.
Operational wise we were on top and the credit should go to the SL Navy for their prompt action in boarding the ship and diffusing the fire in spite of less technical know-how we have comparing to other developed States.
Yet legally there were a number of errors which were made viz., when the SL Navy boarded the ship they attained the status of statutory salvor unlike the contractual salvor whom the ship had appointed beforehand.
When a salvage operation is performed, the law entitles you to claim a reward subject to ‘no cure no pay’. However, the contractual salvor arrived from Singapore after the salvaging operations were thus completed by SL Navy and the Indian counterpart, and the ship was simply handed over to the contractual salver without any legal binding in order to secure a significant claim as what we received was a mere pittance compared to the salvage reward claimed by the contractual salvor and it was through them that the SL Navy received a compensation.
The psychological trauma and other factors such as the fact that preventive measures in all its entirety were taken by the SL Navy has to be compensated. Even a conference call or a media briefing is compensable but were not taken into consideration when the matters were being discussed. By entering into a proper legal agreement and coordinating the legal framework strategically, we could have earned more for the country and channeled it into developing our salvage operations by acquiring sophisticated equipment such as oil booms, skimmers, oil collecting vessels and marketed our capabilities while seeking international expertise to attain a higher level of competence in salvaging operations as they would have stepped in with gusto, at least in this Indian Ocean region.
- What has impeded our progress in this area?
The problem in this country is the dualist system which follows the commonwealth tradition that requires the adoption of local laws in line with that of the international legal regimes to which we become party. While the IMO has developed over 100 conventions we have ratified only four in this area of protection and preservation of the marine environment due to various challenges which are primarily technical. For instance the international laws which are to be implemented in Sri Lanka have to be translated to the vernacular but certain legal and technical jargon pertaining to these international laws do not have the corresponding word in the Sinhala language, i.e. it was very recently that the term for ‘logistics’ was included in the Sinhala dictionary.
During the IMO audit which was conducted about four years ago, it was apparent that Sri Lanka was lagging behind in enacting the international laws into the domestic legal system.
- With all these impediments is it apt to call ourselves a maritime hub?
Bona fide maritime experts realize that we are only a transshipment hub but the potential to attain the zenith as a maritime hub is still on the horizon unless we act fast.
- What are some of the lessons learned and how can we rectify these matters?
Reforms are needed for our laws, and integrate the international laws to the local system with immediate effect. For example, our local law on Salvage harks back to 1984 and considered archaic as the salvage operations have evolved considerably.
The Marine Pollution Prevention Act which was amended a few years ago, further requires moderations, and the recommendation placed before the cabinet are in a state of limbo as it has to be reformed expeditiously though till now there has been no debate.
Bring in international laws or at least if we are not capable of doing so due to the terminology and other drawback, it can be included in our Marine Pollution Prevention Act or by amending the Merchant Shipping Act appropriately, thereby being capable of handling these situations. Further a clearer law on statutory salvage needs to be established.
The lead role in handling the legal lacunae can be taken by Ceylon Association of Shipping Agents (CASA) due to the local representation of international lines and direct access to the DGMS who is the local regulator connected to IMO. There are other stake holders as well that can expedite these processes, and myself who can be present as a legal expert.
We have to understand that most incidences end up in a court of law, hence the reformation of the law is crucial to the future of the industry and our country.
The erstwhile Chairman of SLPA, Dr. Parakrama Dissanayake emphasized the importance of forming a single regulatory body similar to the Maritime Bureau in Singapore, which would not function as a monopolizer but a centralizer in all maritime related matters of the country.
During the recently concluded draft National Maritime and Logistics Policy, which I moderated, saw over 80 agencies converging to discuss matters pertaining to maritime and logistics which proves that one centralized body will help channel all the resources we have in terms of experience and expertise as many of the stakeholders function in isolation and each one has something of value towards the strengthening of the trade through a One-Stop-Shop solution.
The government too has to give ear to the Maritime Policy, which has been drafted for the sixth time already, but sadly it has not been tabled in Cabinet yet, thus nullifying the time and effort which has gone into creating a concise document. The inertia in policy transferring to legislation which is needed to create the framework for success has to be addressed as the public and private sector participation in tandem is pivotal for progress in the maritime industry.
by Chamindhri Wimaladharma & Rochelle Palipane-Gunaratne
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