Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of Parallelewelten.
In the context of worldwide economics, since second half of the previous century, oil has played a extremely important role in the development and prosperity of many countries over the world particularly in developed countries in which the vast amount of energy has been consumed every year. The enormous number of inventions of domestic equipment to make the life of human being become more comfortable and the requirement of energy resources in the period of industrialization has created the dramatic growth of oil demand. In order to keep abreast to the increased oil supply, the water transportation has represented remarkable changes in the development of shipping operation with the significant increase in the transport capacity. The world has witnessed the noticeable changes of size of ship that ceaselessly increase throughout the history of maritime transportation. In early year 1776, the economist Adam Smith in his book named ‘An Inquiry into the Nature and Causes of the Wealth of Nations’ regarding to the important role of maritime transportation mentioned a ship with “two hundred ton weight of goods”  . One hundred years later in 1876, cargo capacity of a handy vessel was 3,000 tons and the current handy vessel is known with the cargo capacity 45,000 tons. The ship generally has shown the increase in size and oil tanker is not outside that tendency. At the end of the Word World II, supertanker was recorded with 25,000 tons of oil. This amount of oil capacity was dramatic increase to 100,000 tons, classified as Very Large Crude Carriers in 1960s and then 200,000 tons of Ultra Large Crude Carriers. The largest oil tanker ever constructed until now is Seawise Giant built in 1990 with 555,843 dead weight tons. This size shows a remarkable change in size of ship compared to 200 tons of the early period.
However, although the ceaseless increase in oil capacity has conferred an enormous effectiveness in economic sector, the oil transportation on the sea also exposes risks for the environment. There have been continuously casualties related to oil transport particularly since the second half of the twenty century. The casualty caused oil spillage was begun by the notable catastrophe named The Torrey Canyon in 1967 in which 80,000 tons (919,000 barrels) of crude oil spilled on the coast of the United Kingdom in 1967. Following this were major casualties such as Horta Barbosa (840,000 barrels of crude oil, 1972), the Amoco Cadiz (1.6 million barrels of crude oil, 1978), Castillo de Bellver (1.8 million barrels, 1983), Exxon Valdez (240,000 barrels, 1989), 240 million gallons of oil in 1991 which caused an onerous damages for the environment.
The oil spillage is considered as an enormous threat for the environment because of oil’s chemical characteristics that are tenaciousness and undissolved in water. Environmental damages have adverse impact on maritime life such as fish, sea birds as well as on the health and business of human being.
Although the International Convention for the Prevention of Pollution of the Sea by Oil in May 1954 was set up, the oil pollution from ship issue was not really received proper attentions from international community until the occurrence of The Torrey Canyon (1976). There was a notable example for the insufficient attention as well as improper legal regime regarding to the oil pollution from ship. In the Esso Petroleum Co Ltd v Southport Corp  1954, in order to avoid the vessel from breaking down, the master released the oil into the sea to refloat his vessel. However, under the legal system at that period of time, the tanker owner was not liable to recover the oil spillage damage into the sea because his action discharging the oil into the sea was condemned to be not negligence.
Nevertheless, after The Torrey Canyon (1976), as the result of the continuous series of casualties caused by oil tanker on the sea, in the period from last fifty years of twenty century, the word witnessed the appearances and modifications of many legal regimes in respect of oil transportation on the sea. The next International Convention on Civil Liability for Oil Pollution was held in 1969 by the Intergovernmental Marine Consultative Organisation (IMCO) to regulate the liability for damages caused by oil to the environment and preventing measures on the area including the sea area of a contracting country such as the cost for cleaning up or for the damage caused by spraying detergent on the sea  . The definition of ‘ship’ in this convention means ‘any sea-going vessel and any sea-born craft of any type whatsoever, actually carrying oil in bulk as cargo’  . Therefore, it could be argued that the CLC 1969 may not be applicable on the oil pollution caused by bunker of ordinary ship or tankers on ballast run  Particularly, ‘oil’ mentioned in CLC 1969 refers to ‘any persistent oil’ which reflects the undispersed characteristic in the water of the oil, however it limits non-persistent oil such as diesel, home heating oils. Under this convention, tanker owner is liable for pollution damage which results from ‘the escape or discharge of oil from the ship’ in which appertains to the territory and territorial sea of the Contracting Parties  and also ‘includes the cost of preventing measures and further loss or damage caused by preventing measure’. The liability of tanker owner caused oil pollution is limited as exceptions under Article III section 2 such as damages caused by war, hostilities, third party or negligence of government or authority. It means in the case where oil spillage was caused by booming of war, the tanker owner is not required to compensate the damages. Moreover, there was a case Tsesis where tanker owner was not liability for spilling oil on Swedish territorial sea in 1977. The judgement was made by adopting Civil Liability Convention and held that the tanker struck against rock leaded spilling oil due to the fault of Swedish authority in not performing rock mark on the relevant map. The CLC 1969 also provided the limitation of liability that the tanker owner has to pay for based on the weight of ship. Accordingly, the tanker owner is liable for 2,000 francs (approximately 133 Special Drawing Rights (SDRs)) of the International Monetary Fund for each registered tonnage and maximum to 21 million francs (14 million SDRs) in total  . Furthermore, due to the vast amount of compensation have to pay, the tanker which weighs over 2,000 tonnes registered in Contracting Sate is required to be maintained ‘insurance or other financial security’ in order to make sure the compensating ability of the tanker owner to ‘cover his liability for pollution damage to the environment under this Convention’  . However, CLC 1969 was not enforced until 1975.
In addition to the Civil Liability Convention, the International Convention on the Establishment of an International Fund for Compensation is found in 1971 to provide the additional amount of adequate compensation to the victims of oil contamination damages who can not be paid by the tanker owner because it might be out of limitation of tanker owner under the 1969 Convention or is not covered in the liability under 1969 Convention. Accordingly, the victims could claim for compensation when he has not met his own satisfaction from tanker owner pursuant to the CLC 1969. However, the compensation paid by the Fund Convention is not applicable to the oil pollution caused by war or by ship owned by government because these kinds of damages have already covered by other measures  . The amount of compensation is only limited under 450 million francs  . It is also mentioned the responsibility of oil cargo interest in oil pollution. This Fund Convention was enforced in 1978 with 50 Contracting State. The countries which receive approximately 150,000 tons of oil each year was liable for contributing this fund.
This is the fact that the 1969 Convention and the 1971 Fund Convention were not in force, until 1975 and 1978 respectively, there were two voluntary compensation schemes including 1969 TOVALOP (Tanker Owner Voluntary Agreement Concerning Liability for Oil Pollution) provided for the liability of tanker owner and 1971 CRISTAL (Contract Regarding Interim Supplement to Tanker Liability for Oil Pollution) dealing with the liability of the oil cargo interest to fulfil the gap in this peroid. These voluntary schemes were relatively similar to the 1969 International Convention on Civil Liability for Oil Pollution and 1971 Fund Convention respectively. However, the victims of oil pollution must seek the compensation from the tanker owner or relevant party caused oil pollution prior going to CRISTAL. The TOVALOP seems to have the effect wider than CLC when the victims could claim for compensation where oil pollution caused by bunker of tanker on ballast run. The compensation also includes removal costs such as expenses spending on preventing the risk of pollution damage though it has not yet occurred. The amount of compensation under CRISTAL also doubled as much as TOVALOP with 36 million US Dollar and 16.8 million US Dollar respectively  . These two interim solutions for oil pollution compensation have already expired because of the validity of the CLC 1969 and the 1971 Fund Convention.
The fundamental principle of international legal regime in respect of oil pollution from ship set up in the CLC 1969 and the Fund Convention 1971 were amended by the CLC 1992 and the Fund Convention 1992. Generally, the CLC 1992 still keeps providing strict liability to the tanker owner on loss or damage to the environment caused by oil contamination, and also increase provision stipulated in TOVALOP but has not been mentioned in 1969 CLC  . The first different point from the CLC 1969 is the provision of geographical area to be applied. Under Article II of the CLC 1992 the applicable area refers to the territory that not only including the territory sea but also expanding over the Exclusive Economic Zone (EEZ) or equivalent area of the joining parties compared to the stipulated area in the previous CLC  . Furthermore, although the definition of ‘oil’ is not modified, the ‘preventing measures’ in ‘pollution damage’ concept is provided clearer that it refers to the ‘measures to prevent or minimize pollution damage’  . Therefore, damages from oil pollution stipulated in this CLC could be the property damage, the clean-up cost, economic losses for tourism area, fisheries, mariculture as well as environment damage  Another modification of the CLC 1992 is the expansion of ship concept that not only the ships ‘carrying oil in bulk as cargo’ but also the bunker oil from unladen tankers  . The CLC 1992 still stipulates similarly to the CLC 1969 the strict liability for the tanker owner who actually registered the tanker with limited exceptions that the tanker owner could rely on. The significant change of the CLC 1992 could be the limitation of compensation for the tanker owner with the increase up to 50% compared to the previous CLC. Accordingly, the owner of under 5,000 gross tonnes are entitled to limit his liability to 4.51 million SDRs and 89.77 million SDRs for the tanker weighs from 140,000 gross tons. In addition, the modification in providing the liability of tanker owner regarding to oil pollution from ships is also represented by the compulsory insurance to the tankers contain over 2,000 tons of persistent oil cargo transporting the area of State Party regardless of the registered location. The CLC 1992 does not limit the victim requiring compensation against the tanker owner; furthermore, it also expands to other persons who not having responsibility serving on the tanker such as the servants, crews, captain or even salvors. The CLC 1992 had been ratified by over one hundred state in which the majority is the European countries. In practice, the amount of compensation payable offered by the CLC 1992 seemed to be not insufficient in fulfil its function to compensate for oil pollution damage for example the Erika incident.
With the similar purpose of the Fund Convention 1971, the new legal regime is set up to provide additional compensation for victims of oil pollution from ships who have not obtained sufficient protection from the CLC. The subjects for applying compensation from the Fund Convention 1992 are shown no different from the old version 1971. The amount of compensation from the Fund Convention 1992 limit to 230 million SDRs that has already included the amount offered by the CLC 1992 per incident. This international fund is contributed by state parties in which over 150,000 tonnes of crude or heavy oil are transported every year. The amount of contribution is based on the report that the State parties are obliged to submit. However, this calculating compensation encountered financial obstacle when the collection of report can not complete due to the incompletion of obligation of some member states.
Regarding to international legal regimes for damage to the environment caused by oil pollution from ship, the world has witnessed the appearances of a number of Conventions with the participating of many countries all around the world. The United State notwithstanding except the CLC 1969 has not further ratified any international conventions and has established own regime for itself in 1990 named Oil Pollution Act (OPA 90). The first reason is given by the American oil industry that there would be an improper contribution for resolving oil pollution damage taken place in the countries outside the United States  . Furthermore, the insufficiency in the amount of compensation of international regime payable for oil contamination could be another reason for the United States refuses its participation. The limitation of CLC did not seem to be applicable in The Exxon Valdez  catastrophe. The tanker Exxon Valdez from Alaska to Los Angeles spilled a vast amount of oil into Alaska up to 240,000 barrels of crude oil into Alaskan shores and caused a severe damage for the environment as well as habitant inside that area. The scale of liability in the Exxon Valdez was thought to exceed the limitation of compensation stipulated in the CLC. This is considered to be one of the most important the United States do not sign in international conventions. After the Exxon Valdez, the United States quickly enacted the Oil Pollution Act of 1990 (OPA 90) for itself. OPA 90 is condemned to be more proper than international regime. This is due to the fact that the OPA 90 does not merely limit on the liability and compensation, but also extent to more issue relating to oil pollution from ships such as ‘enforcement, prevention and restoration’  . Furthermore, the OPA 90 not only covers the oil tanker as in the CLC 1992, it additionally includes to oil pollution regardless of any type of ship. The ‘owner’ concept in OPA 90 does not only refer to registered owner compared to the CLC 1992, those operating or participant in demise charterparty are also imposed on liability of oil pollution. The limitation of liability under OPA 90 is seen to be much higher than the amount of limitation compensation in the CLC 1992. Generally, it could be argued that the OPA 90 seems to be wider than the international regimes in respect of conception as well as the limitation of liability.
The negative happening in oil pollution from ships issue since the second half of the twenty century in fact have changed awareness of the importance of protecting the environment towards the oil contamination from ships. In addition to the modifications in the enactment of many international legal regimes, the majority of areas of oil transportation industry have been witnessed a vast number of changes particularly changes in salvage area. It could be reasonable to argue that the oil pollution from ships have changed the nature of the salvage as well the emphasis of the salvage agreement especially since the last fifty years of the twenty century due to its serious degree caused to the environment.
Salvage is considered as one of the unique concept of maritime law. It might be argued to be built the first foundation in eighteenth century by an illustrious Admiralty judge named Doctor Stephen Lushington (1782 to 1873). However, it did not have a official definition of Salvage until the adoption of ‘Civil Salvage’ of Kennedy by MacFarlan J. in the Cythera . Accordingly, the definition of Salvage is mentioned to four prerequisites factor constituted Salvage including ‘recognised subject of salvage’, ‘the property in danger’, ‘voluntariness, and ‘the success of Salvage’  .
One of significant changes in Salvage area is argued to be the appearance of professional salvors due to the increase in scale of the ship and the occurrence of oil tanker. Operating salvage the ship with large dead weight tons requires more sophisticated equipment as well as the specific knowledge particularly in case of saving the oil tanker. It might be reasonable to say that the oil pollution from ship partly make the salvors more professional.
The nature of Salvage prior the second haft of the twenty century was represented relatively straightforward in the International Convention on Salvage 1910. In the Gas Float Whitton (No.2) in the House of Lord, Lord Esher indentified the recognised subject of Salvage, accordingly, it constitutes of ‘ship, her apparel’ and ‘freight’  . In addition, ‘life salvage’ is also included as ‘recognised subject of salvage’ in the status  . The International Convention on Salvage 1910 seemed to discourage salvors in endeavour reducing the environmental damage caused by oil pollution from ships because there was no reward imposed on that salvage. Under the 1910 Salvage Convention, in order to receive reward, the salvors must be successful in salving property of the shipowner and human life which were in danger. In other word, the salvors would not be entitled to claim for a reward if he failure in salving ship, cargo and human life despite of performing his best endeavour. This is proved in the case The Melanie v The San Onofre  . Generally, these features of Salvage might only be considered contingent on the maritime property of the shipowner regardless of the public interest as well as the awareness of protecting the environment.
Insufficiency of regulating the specific liability of relevant participants related to oil spillage case as well as the proper attention of the environment have been proved in the case of the Torrey Canyon  1967 and The Amoco Cadiz 1978. The Torrey Canyon was classified as a Very Large Crude Carries (VLCCs). It was damaged by a granite reef belong to the international sea area close to English Channel and the crude oil began leaking quickly into the sea after the strike. The salvors tried their best endeavour to save the ship, and probably could have saved the ship, however, their efforts came to an end when the government ordered to bomb the ship in order to burn off the oil cargo on the ship and avoid further oil spillage into the sea. The salvors in this case were not entitled to require reward despite of their effort because theoretically there is no reward without success in saving the ship, cargo. The intervention of government may represent the awareness of the protecting the environment by minimizing the oil pollution damage compared to the earlier period, however, it seems to be unfair for salvors when there was not proper legal system to keep up-to-date this tendency. This might be motivation of modifying Salvage latter.
Another case occurring in 1978 The Amoco Cadiz  , the ship carrying over 200,000 tons of light crude oil suffered serious damage by encountering severe weather. The salvors concentrated on salving human life without endeavour reducing or minimizing oil cargo spilling on the sea. Consequently, entire oil cargo was released into the sea caused tremendous damage for the environment in that area such as mollusks, sea birds, and sea organism. In addition, it also leaded claim for approximately 250 million US Dollar damage for fisheries and tourism.
In the Atlantic Empress  1979, a supertanker contained 270,000 tons of crude oil collided Aegean Captain tanker with 200,000 tons of crude oil. The salvors in this case succeed to prevent a large amount of oil spillage in the vicinity area, however, the reward was not accepted because there was no ship or cargo salved. Therefore, it seems to be right to say that the failure of protecting the environment of salvor in the Amoco Cadiz and improper in rewarding salvors in the Atlantic Empress may show the inadequacy in the salvage system.
Under the pressure of changing the law of Salvage, the 1989 International Convention on Salvage was found to replace its previous version with providing further environmental protection. The first change of nature of Salvage is shown in widening the meaning of ‘Property’ over the early definition. Accordingly, the limitation of recognised subject of Salvage has not been constrained by ‘ship, her apparel and cargo’  in 1896 and ‘life salvage’ which additionally add by the statue, it also expands to ‘any property not permanently and intentionally attached to the shoreline and includes freight at risk’. The additional subject of salvage seems to confer benefit upon the salvors due to the increase severable categories. However, the more importance change may be represented in the further insertion of ‘Damage to the environment’ under the 1989 Salvage Convention. ‘Damage to the environment’ refers to ‘substantial physical damage to human health or to marine life or resources in coastal or inland waters or areas adjacent thereto, caused by pollution, contamination…’  . This is considered as one of significant changes in the nature of Salvage in respect of protecting the environment caused by oil pollution from ship compared to the traditional Salvage. The 1989 Salvage Convention encourages the salvors not only focus on owner’s property but also give an incentive for salvors to protect the marine environment. However, it could be argued that there might be still some restriction in this definition. The ‘physical damage to human health or to marine life or resources’ here does not appear to include the other category of damages such as property damages caused by oil pollution as well as the damages on the high seas. This is considered as one of foible of 1989 Salvage Convention due to the fact that though the oil contamination on the high seas might not have direct influence on the life of human being, it may be a sensible place to be impacted by exterior factors  .
The change of Salvage regime under the influence of oil pollution from ships is also recognised by imposing the ‘due care’ of salvor, owner, and master of the ship ‘to prevent or minimize damage to the environment’  . This duty is implied in all categories of contract in order to avoid the divergence in refuse or accept further cooperation from the other salvors because this may partly reduce the reward of salvors by sharing award. Furthermore, there is also the co-operation from public authorities to increase the effectiveness of reducing or minimizing the damage resulted from oil pollution from ship  . The 1989 Salvage Convention also shows the attention of Salvage authorities on damages caused by oil pollution from ship by providing criteria to evaluate reward through ‘the skill or efforts of the salvors in preventing or minimizing damage to the environment’  . This principle absolutely differs from the oil principle of ‘no cure – no pay’. It means the reward could be acquired if the salvors perform proper skill or efforts to protect the environment.
Regarding to the reward for salvors, the 1989 Salvage Convention also offers further incentive by extra compensation to protect the environment  . This is considered as the most significant change in the nature of Salvage caused by oil pollution. Under the Article 14.1 the salvor who has not received the reward under Article 13 and did not confer any benefits on the shipowner can be entitled to acquire ‘special compensation’ which is equivalent to his actual expenses without increment if there is risk of polluting the environment from the cargo. The salvor is also entitled to claim for special compensation up to 30% of expenses incurred and even up to 100% if it is properly if he could successful prevent or minimize the damage to the environment  . The amount of this special compensation may depend on the degree of threat of vessel or its cargo to the environment. This is seen as one of the special features in this convention which the salvors do not need to obtain any success from reducing or minimizing the damage to the environment but still earn a reward form his service. This differs from one of requirement of the previous Salvage regime that the salvor must achieve success in salvage operation. Therefore, it could be concluded that the nature of Salvage has changed significantly by damages resulting from oil pollution from ship and those changes are performed clearly through the provision stipulated in the 1989 International Salvage Convention.
In addition to modification in respect of nature of Salvage since the second half of the twenty century, the oil pollution from ship is also linked to changes in the emphasis of the salvage agreement. Firstly, the professional degree of salvage agreement may increase through the history of salvage together with the development of salvage operation. The agreement of Salvage therefore requires sophisticated provision in respect to modern equipment to deal with salving super oil tanker as well as specialist knowledge of the salvors.
The fundamental doctrine of Salvage legal system in early period was that the reward is only achieved if the salvors success in saving property in danger or also called ‘no cure no pay’ agreement. This principle was applied universally and inserted in the Lloyd’s Standard Form of Salvage Agreement (LOF) which was the most common in the period prior to the appearance of later form. Under ‘no cure – no pay’ principle, the shipowner is likely pay for remuneration if there is not property saved. In the Renpor  , a agreement was made to take a vessel in distress to a safe position. However, the distressed vessel sank prior to be taken to nominated place. Therefore there was no available remuneration for the salvor due to the application of ‘no cure – no pay’ principle.
The ‘no cure – no pay’ principle probably encourages the salvor focus on saving the property in order to earn the reward for his work, on the other hand, discourage all efforts to protecting the damage from oil pollution because there is no proper reward for him to do so. This may be the reason why the damage to the environment in the oil spilling catastrophe such as the Torrey Canyon, the Amoco Cadiz was so tremendous. The salvor only carried out saving human or cargo which could offer remuneration and undervalued the damages caused by oil pollution from ship.
Under the pressure of oil spilling catastrophe from mid-1950s, the new form which is known as LOF 80 was published in 1980 by the Committee of Lloyd’s to replace the old version. The specific feature of the LOF 80 was the introduction of ‘safe net’ term as an exception of the ‘no cure – no pay’ principle with the purpose of filling the gap of ‘no cure – no pay’ principle in the environmental protection. Accordingly, the salvor could be entitled to claim up to 15% of salvage expenses for increment if he carries out the salvage operation to ‘a tanker laden or partly laden with oil cargo without negligence’ regardless of success of salvage operation  in case where he has not earned an adequate amount of his reward. The shipowner is provided to be liable for paying the ‘safe net’. The change in offering the ‘safe net’ in LOF 80 could be considered as an encouragement for the s
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