The Norstar case at the International Tribunal for the Law of the Sea. Panama wins but awarded less than 1% of its claims.

 

In the Norstar case (Panama v Italy) on 10 April 2019, the International Tribunal for the Law of the Sea found that: Italy had violated article 87, paragraph 1, of the UN Convention on the Law of the Sea; article 87, paragraph 2, of UNCLOS was not applicable in the case; and that Italy did not violate article 300 of UNCLOS. The Tribunal awarded Panama compensation for the loss of the M/V “Norstar” in the amount of US$ 285,000 with interest.

The Norstar, a Panamanian-flagged vessel was engaged in supplying gasoil to mega yachts in the Mediterranean Sea. On 11 August 1998, the Public Prosecutor at the Court of Savona, Italy, issued a Decree of Seizure against the M/V “Norstar”, in the context of criminal proceedings instituted against eight individuals for alleged smuggling and tax evasion. At the request of Italy, the vessel was seized by Spanish authorities when anchored in the bay of Palma de Mallorca, Spain, in September 1998. The Tribunal found that art. 87 might be applicable as the bunkering activities of the M/V “Norstar” on the high seas in fact constituted not only an integral part, but also a central element, of the activities targeted by the Decree of Seizure and its execution.

The Tribunal noted that article 87 “proclaims that the high seas are open to all States” and that “save in exceptional cases, no State may exercise jurisdiction over a foreign ship on the high seas”. In this context, it observed that the “[f]reedom of navigation would be illusory if a ship … could be subject to the jurisdiction of other States on the high seas” Recalling its jurisprudence in  The Virginia G, the Tribunal then expressed the view that “bunkering on the high seas is part of the freedom of navigation to be exercised under the conditions laid down by the Convention and other rules of international law” and found that the bunkering of leisure boats carried out by the M/V “Norstar” on the high seas fell within the freedom of navigation under article 87.

In the view of the Tribunal, “if a State applies its criminal and customs laws to the high seas and criminalizes activities carried out by foreign ships thereon, it would constitute a breach of article 87 of the Convention, unless justified by the Convention or other international treaties” and “[t]his would be so, even if the State refrained from enforcing those laws on the high seas” adding that, “even when enforcement is carried out in internal waters, article 87 may still be applicable and be breached if a State extends its criminal and customs laws extraterritorially to activities of foreign ships on the high seas and criminalizes them” . The Tribunal concluded that Italy, through the Decree of Seizure by the Public Prosecutor at the Court of Savona against the M/V “Norstar”, the Request for its execution, and the arrest and detention of the vessel, had breached article 87(1) of UNCLOS.

The Tribunal found that art.87(2) which provides “These freedoms shall be exercised by all States with due regard for the interests of other States in their exercise of the freedom of the high seas,…” was not applicable in this case as it was Panama, not Italy, that was subject to the obligation of due regard. The Tribunal held that Italy had not violated art. 300 (Good Faith and Abuse of Rights). Article 300 cannot be invoked on its own and a State Party claiming a breach of article 300 must, inter alia, “establish a link between its claim under article 300 and ‘the obligations assumed under this Convention’ or ‘the rights, jurisdiction and freedoms recognized in this Convention’.

The Tribunal turned to reparation and held that Panama was entitled to compensation for damage suffered by it as well as for damage or other loss suffered by the M/V “Norstar”, including all persons involved or interested in its operation and emphasized the requirement of a causal link between the wrongful act committed and damage suffered.  The causal link between the wrongful act of Italy and damage suffered by Panama was interrupted on 26 March 2003” – when the shipowner received an official communication from the Court of Savona that the vessel was unconditionally released from detention – and any damage that may have been sustained after 26 March 2003 was not directly caused by the arrest and detention of the M/V “Norstar”.

The Tribunal awarded US$ 285,000 as the value of the M/V “Norstar” together with interest This was less than 1% of the total claims put forward by Panama. The tribunal did not award compensation with regard to Panama’s other claims: loss of profits; continued payment of wages; payment due for fees and taxes; loss and damage to the charterer of the M/V “Norstar”; and material and non-material damage to natural persons.

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