Tankers, Big Oil and Pollution Liability

Thanks to the position the US took, the international community has been unable since 1969 to agree on how to deal with victims suffering from damages polluting tankers caused and how to manage the associated waste management.

The following pages represent a personal journey in search of solutions that began some 40 years ago. Can we attain cleaner seas, pay adequate compensation and still get cheap gas for our cars and heating oil for our homes?

Having worked with tanker owners from 1965 to 1995, I might seem presumptuous to believe that an objective picture can be presented. However, 13 years’ work as a judge should hopefully provide sufficient distance to undertake a more unbiased re-examination.

In any case, my ambition is only to bring to light commercial considerations which otherwise seem disguised in legal and technical agendas. Sometimes, the forest might be hidden behind all the trees.

There is very little disagreement about the “polluter-pays principle.” In an ideal world, a polluter should be easy to identify and be compelled to pay for the damage with his own money.

It seems logical that if the principle is not applied to cover the costs of the environmental damage, either the environment has to cure itself by the process of nature, or the coastal state – and ultimately the taxpayer – has to pay for the damage caused.

In the real world, the situation is more complicated. Principles are fine, but the crucial test is their implementation in practice. In general, a major problem remains: To find – often hidden behind the curtains – the concurring polluters.

The tanker owner is the easy target. The standards of tankers vary from vessel to vessel. Most of the tankers in the world fleet are well maintained.

But not all.

During the last decade, increased attention has also been paid to oil companies that select old, low-cost tankers to carry their oil. Thereby, financial results improve and shareholders are happy to see the dividend going up.

The story about the 24-year-old tanker, Erika, hoisting the flag of Malta illustrates the role of the other participants involved in the game of marine oil transportation.

Pollution management

Ship management, manning, operations, maintenance and cargo-handling are closely interlinked functions that need to be considered in unison if tankers are to be operated in the optimum manner.

A number of initiatives have been taken to improve safety and avoid pollution. It may be fair to say that the tanker safety record has improved more or less steadily after the enforcement of the MARPOL Convention of 1973/78 and a series of mutually reinforcing industry mechanisms introduced after 1980.

On the surface, the “polluter-pays principle” is just fine. But the quality of the classification societies, the navigational aids governments provided, together with the role of the insurers, the pilots and the terminal or harbour masters, as well as the charterers, are all relevant elements when considering the value of the “polluter-pays principle.” As important links in the marine safety chain, they deserve proper attention.

Waste management solutions

This book seeks to show how the various actors are involved: Cargo owners, charterers, tanker owners, classification societies, port authorities, terminals, pilots and the salvage industry. Together, these groups form the links in what may be seen as the “responsibility chain.”

By focusing on the master of the tanker as the only accountable part, together with the owner, one is running the risk of contributing to “a culture of blame” which might hide the real reasons for pollution accidents and the loss of life at sea.

Each of the groups mentioned forms a part of the fabric that controls a tanker, and it is essential that all parties involved follow up their obligations of their contribution to the transport chain. If one or more links fails to perform, a serious accident might occur.

The Greek shipowner Philip Embiricos, who for several years was a major “safety spokesman” of the International Association of Independent Tanker Owners (INTERTANKO), presented his view in the association’s 1997 annual review of “The Chain of Responsibility.”

On the following pages, the focus is on oil tankers – ships that carry or are designed to carry oil as cargo. Prevention will always be better than cure, but even so, the reader will find only minor references to the technical discussions about safety rules and pollution prevention.

Information on that important subject will have to be sought elsewhere. Instead, the intention is to review the “cure,” which on the following pages is the development of compensation and liability rules in light of their origin and a number of spectacular tanker accidents.

Notes: A report, “Ships of Shame” from the Australian House of Representatives’ Standing Committee on Transport, sent to the Parliament in December 1992 states (paragraph 25): “While incidents involving oil tankers have recently received publicity, the Kirki for example, the Committee has not received a great deal of evidence concerning the operation of oil tankers.

It is generally recognised that the condition of oil tankers are better than dry bulk carriers.”

The “polluter-pays principle” is a cornerstone in environmental policies. Its first official mentioning seems to be in 1972 in a recommendation the OECD Council passed.

It is later adopted by a number of bodies such as IMO and the European Community. It is no legal rule in the strict sense, rather a policy declaration or a slogan that appeals to common sense: “If you make a mess, it is your duty to clean it up. If there is damage, you should repair.” It says a lot, but lacks a clear definition and may perhaps sometimes serve as a soporific for an impatient regulator.

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