Review of Cases Exempting the Polluter from Liability under the International Convention on Civil Liability for Oil Pollution Damage of 1992*

International conventions on maritime pollution liability were developed in response to the catastrophic consequences of large-scale oil spills in various regions of the world. The 1969 Liability Convention and the 1971 Fund Convention were established following the 1967 Torrey Canyon disaster. Subsequent amendments led to the adoption of the 1992 Convention, the 1992 Fund Convention, and the 2003 Supplementary Protocol, forming the international legal basis for assigning responsibility and compensating damage for marine oil pollution¹.

This article examines cases where the owner is exempted from liability despite the strict liability principle enshrined in the International Convention on Civil Liability for Oil Pollution Damage of 1992. The authors analyze the reasons for these exceptions, explore them, and address the question of who bears responsibility for the inflicted damage when these exceptions are applied.

The study of the provisions of the International Convention on Civil Liability for Oil Pollution Damage of 1992 (hereinafter referred to as “CLC”) is of particular urgency because the relevant chapter XVIII of the Merchant Shipping Code of the Russian Federation reproduces the Convention’s provisions. Analyzing these provisions is significant for regulating relationships at both national and international levels².

Strict Liability Principle

The CLC imposes strict liability on the registered owner who has caused pollution damage³. Strict liability, in this context, means that the claimant only needs to prove the following circumstances:

1. The damage from pollution was caused by oil falling under the CLC’s scope.

2. The oil originated from a vessel falling under the CLC’s scope⁴.

There is no need to prove the registered owner’s fault; the owner can avoid liability only under specific limited exceptions due to the principle of strict liability⁵. However, strict liability does not prevent the owner from filing a claim against the party responsible for the pollution damage. Essentially, it facilitates and expedites compensation payments, reduces legal proceedings and significantly decreases the likelihood of seizing the owner’s property, contingent on whether the shipowner has established a limitation fund.

It is interesting to note that the Soviet Union opposed the strict liability standard, arguing that it deviated from the principles of maritime law. The Vienna Convention on Civil Liability for Nuclear Damage of 1962 made an exception by introducing strict liability. According to the Soviet Union’s position, strict liability was justified in the case of nuclear energy, as it cannot be controlled, and potential damage could be substantial, which is not applicable to oil pollution. However, after the final voting by delegations on this issue, the majority of votes (22 against 17) favored imposing strict liability on the registered owner⁶.

Why Are There any Exceptions?

As mentioned earlier, the CLC establishes the principle of strict liability - fault does not matter in determining the liability of the registered owner. Nevertheless, the CLC provides several cases where the owner can be exempt from liability in the absence of fault. Why do these exceptions exist? The prevailing view is that these exceptions are necessary to make liability insurable⁷.

Article 7 of the CLC stipulates that any shipowner transporting more than 2, 000 tons of oil in bulk must obtain insurance or provide other financial security for liability coverage. In this regard, insurers often do not want to bear the risks associated with force majeure and exclude them in standard insurance contract terms.

For example, reference can be made to the Institute Bulk Oil Clauses – standard cargo insurance terms that can be included in the insurance contract. Clauses 6-7 of the Institute Cargo Clauses contain provisions excluding risks related to war and strikes⁸.

Therefore, the inclusion of exceptions in the CLC is conditioned by practical purposes and represents a “compromise” between the principle of strict liability and the shipowner’s obligation to insure their liability.

Grounds for Exemption from Liability

The CLC in Articles 3(2) and 3(3) contains an exhaustive list of grounds exempting liability which include:

• damage resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character;

• actions or omissions by third parties intending to cause damage;

• negligence or other wrongful act of any Government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function;

• act or omission by the suffered party intending to cause damage or their negligence leading wholly or partially to damage.

Let's consider them in more detail.

1. Damage resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character. It is crucial to understand that the criteria for inevitability and irresistibility may vary on land and at sea. For example, a storm often may not be considered an unavoidable and insurmountable circumstance, as it can be avoided on a vessel⁹.

2. Damage was wholly caused by an act or omission done with intent to cause damage by a third party. This provision pertains to damages entirely resulting from the deliberate actions or inactions of third parties, such as acts of terrorism or sabotage¹⁰.

It is crucial to note the specific wording used here, namely, “wholly caused”. This phrase implies that the shipowner cannot claim exceptions if there was any additional factor contributing to the damage, even if it was minor, such as the failure to take adequate security measures¹¹.

3. Damage wholly caused by the negligence or other wrongful act of any Government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function.

This exception applies only if the shipowner can prove that the damage was “wholly caused” by circumstances falling under this exemption. Consequently, a registered owner cannot rely on this exception in cases where the pollution damage was also caused by another concurrent factor, such as the negligence of individuals on board the ship or, more significantly, those on board a colliding vessel, which is a common factor in maritime accidents. This exception was thoroughly examined by the Supreme Court of Sweden in the case of the Soviet tanker “The Tsesis” (1977). In this case the inability of the Swedish government to mark a shoal on nautical charts led to the exemption of the owners from liability for a spill of approximately 500 tons of oil - nautical charts published by the Swedish authorities were recognized as navigational aids¹². However, the exemption of owners from liability under this provision does not affect the right to compensation under the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage of 1992 (hereinafter referred to as the “Fund Convention”)¹³.

It is noteworthy that in cases of negligence by the entity responsible for maintaining navigational aids, the registered owner is held liable regardless of the existence of alternative means of protection against oil pollution damage. Otherwise, the norm would specify the mandatory presence of alternative means of protection.

The question of whether to retain this provision in the CLC sparked significant debate in 1984¹⁴. Arguments “against” retaining this clause included the assertion that this provision does not fit the classical definition of “force majeure”, thus not aligning with the principle of strict liability. Moreover, it was argued that the injured party would have to file a lawsuit directly against the state, rather than utilizing the CLC mechanism for recovery, leading to substantial costs and prolonged legal battles against the state in some countries. Therefore, it would be more logical to burden the registered owner rather than the injured party¹⁵. These arguments do not withstand criticism. One may question why the obligation to file a lawsuit against the state should be imposed on the registered owner. It would be more logical for the injured party to address the state directly, given that the damage was caused by the state’s actions.

Arguments “in favor” of retaining this provision in the CLC included the following points: the maintenance of navigational aids falls outside the registered owner’s sphere of control, and if another cargo were on the ship, it would certainly not be held responsible. Imposing responsibility on governmental authorities would serve as an incentive to maintain navigational aids properly¹⁶. Additionally, states that are parties to the International Convention for the Safety of Life at Sea of 1974 have a legal obligation under this Convention to maintain lights and other navigational aids in proper condition¹⁷.

Apart from discussing the retention of the provision itself in the CLC, there were deliberations on its wording. Suggestions were made to supplement the wording with the terms “charts” and “sailing directions”, but this proposal was rejected due to the possibility of the court interpreting the term “navigational aids” to include specific charts. This interpretation was essentially confirmed by the incident involving the tanker “The Tsesis”.¹⁸

4. Damage from pollution wholly or partially caused by the conduct of the suffered party.

If the pollution damage wholly or partially results from the intentional actions or inactions of the injured party or their gross negligence, the liable party may be wholly or partially exempted from liability. As an illustrative example falling under Article 3(3) of the CLC 1969/1992, the 1997 case of the vessel “Katya” is pertinent. During maneuvering in the port of Le Havre, France, the vessel collided with the pier, resulting in a spill of 190 tons of oil. Among other claims, the port administration sought compensation for cleanup expenses totaling 878,000 euros. However, the shipowner and their insurer initiated legal proceedings against the port administration, arguing that (a) the port directed the tanker to an unsuitable berth and was therefore fully or partially responsible for the incident and (b) the port’s inadequate assessment inflated the scale of pollution damage. However the port administration initially rejected these arguments, a global settlement was reached between the parties in 2008. According to the agreement, the shipowner and their insurer agreed to pay 70,000 euros, and all parties withdrew their lawsuits¹⁹.

It is evident that the circumstances allowing exemption from liability are very narrow. It is crucial to bear in mind that these cases are exceptions, and it is the registered owner who must prove their applicability.

How is Compensation for Damage Handled When an Exception is Applied?

In instances where liability is exempted under the CLC, insurers do not make insurance payments²⁰. This raises the following question: how will the compensation for the damage occur? To answer this query, it is necessary to turn to the Fund Convention, which establishes the creation of a special fund for compensation. This fund represents an international organization funded by the member states of the Fund Convention²¹. Countries, in turn, receive funds from organizations involved in oil trade²².

The CLC and the Fund Convention operate in conjunction. Firstly, compensation for damage takes place under the CLC. When the compensation amount under the CLC is exhausted, the second level comes into play – the International Fund.

Consequently, in cases where liability is exempted under the CLC but not under the Fund Convention, the injured party can seek compensation from the fund²³. However, the Fund Convention also outlines situations when the Fund is exempt from the obligation to pay compensation. Paragraphs 2 and 3 of Article 4 of the Convention stipulate that risks associated with acts of war, hostilities, civil war, or insurrection are not subject to compensation by the Fund.

But are there any chances for the injured party to receive compensation if liability is excluded under both the CLC and the Fund Convention? Let us refer to the United Nations Convention on the Law of the Sea of 1982 (hereinafter referred to as the Law of the Sea Convention)²⁴. Article 194 of the Law of the Sea Convention establishes the obligation of states to take measures to prevent, reduce, and control marine pollution. As the state is obligated to take specific measures, it is logical that in case of non-compliance with these measures, the injured party has the opportunity to approach the respective state under vicarious liability. ■

* The authors express their gratitude to A.G. Arkhipova for the recommendations provided during the preparation of this article.

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