Trump, the IMO and scrubbers

 

US President Trump’s plans last week for delaying the 0.5%  sulphur cap were defeated in the IMO who have introduced a supplementary measure about banning carriage of non compliant fuels unless the ship is fitted with scrubbers, to come into effect on 1 March 2020.

One method of ensuring compliance with the sulphur cap which comes into effect on 1 January 2020 would be the fitting of scrubber systems which though costly initially may prove more economical than the use of low sulphur diesel. Maersk has recently outlined its plans to go down the scrubber route, backtracking from its earlier position not to fit them to its fleet.

An article in todays ‘Guardian’ claims that the use of open-loop scrubbers which discharge wash water into the sea will simply transfer pollution from air to sea. Such discharges would have to comply with IMO regulations but there may still be a risk of some pollution involved. A 2015 study by UBA, a German environment agency, concluded that “wet scrubbers influence the marine environment through ph decrease, temperature increase, pollutant discharges and possibly through the use of active substances. Open scrubbers in particular have a greater environmental impact than closed or dry scrubbers due to their high water consumption and significantly larger amounts of generated washwater…The discharges of large amounts of washwater with partially persistent substances, lower ph and elevated temperature, however, are not compatible with the precautionary principles of [the EU’s] waste framework directive and Marine Strategy Framework Directive.”

The use of open-loop scrubbers is effectively banned in German and Belgian waters. However, the use of low sulphur diesel fuel in ports will contribute to other forms of air-borne pollution, such as from Nitrogen Dioxide emissions.

Sea here? What’s with the Caspian?

 

On August 12 2018 the five Caspian states- Russia, Iran, Turkmenistan, Kazakhstan, Azerbaijan – signed the Convention on the Legal Status of the Caspian Sea. The surface of the Caspian is treated as a sea and the five states are granted jurisdiction over 15 nautical miles of water from their coasts and fishing rights over an additional ten miles. However, allocation of the seabed and its mineral deposits is left to the five countries to agree on a bilateral basis. Pipelines along the seabed may be constructed, with the approval of the countries whose seabed they cross, subject to environmental conditions. The Convention forbids deployment of military vessels by non-Caspian countries in the waters of the Caspian.

 

Oil spill in EEZ. Rights of coastal state to instigate proceedings against offending vessel.

 

 

In The Bosphorus Queen Case C-15/17, ECLI:EU:C:2018:557, the CJEU has ruled on the interpretation of art. 220(6) of the UN Convention on the Law of the Sea 1982 (UNCLOS) in relation to the rights of a coastal state to initiate proceedings against a vessel arising out of pollution in its exclusive economic zone (EEZ). The vessel spilt oil on the edge of Finland’s EEZ and on its return through the Finnish EEZ it was detained and required to provide security to cover the amount of a possible fine for the spill. A fine of 17,112 Euros was subsequently imposed on the ground that the spill had caused  major damage to or a threat of major damage to Finland’s coastline or related interests, or to resources of its territorial sea or EEZ. In the event the oil spilt did not reach the coastline, caused no damage, and no counter-measures were taken.

The CJEU held:(1) The EU as a party to UNCLOS, had jurisdiction to interpret its provisions. UNCLOS had primacy over secondary EU legislation. The EU was not a party to the 1969 Intervention Convention but could take account of it as it formed part of the relevant rules for interpreting UNCLOS.

(2) The relevant EU legislation was art.7(2) of Directive 2005/35 which incorporated  into EU law the provisions of art.220(6) with almost identical wording, and had to be interpreted in accordance with art. 220(6).

(3) Article.220(6) provides: “ Where there is clear objective evidence that a vessel navigating in the [EEZ] or the territorial sea of a State has, in the [EEZ], committed a violation referred to in paragraph 3 resulting in a discharge causing major damage or threat of major damage to the coastline or related interests of the coastal State, or to any resources of its territorial sea or [EEZ], that State may, subject to section 7, provided that the evidence so warrants, institute proceedings, including detention of the vessel, in accordance with its laws.” Paragraph 3 of art.220 refers to “violations of applicable international rules and standards for the prevention, reduction and control of pollution from vessels or laws and regulations of that State conforming and giving effect to such rules and standards.”

The coastal state’s powers under paragraph 6 were subject to clear objective evidence both  of the commission of a violation under paragraph 3 and also of the consequences of that violation.

(4) The reference to ‘coastline or related interests’ in art. 220(6) and art 7(2) of Dir 2005/35 could be interpreted as having the same meaning as the definition of these terms in art II(4) of the 1969 Intervention Convention, bearing in mind UNCLOS also applied to non-living resources. ‘Resources’ referred to harvested species and living species associated with them or which depended on them.

(5) It was not necessary to take account of the concept of ‘significant pollution’ referred to in art. 220(5) when assessing the consequences of a violation under art. 220(6). In assessing the extent of damage caused or threatened to the resources or related interests of the coastal state account should be taken of, inter alia,

– the cumulative nature of the damage on several or all of those resources and related interests and the difference in sensitivity of the coastal State with regard to damage to its various resources and related interests;

–  the foreseeable harmful consequences of discharge on those resources and related interests, not only on the basis of the available scientific data, but also with regard to the nature of the harmful substance(s) contained in the discharge concerned and the volume, direction, speed and the period of time over which the oil spill spreads .

The specific geographical and ecological characteristics and sensitivity of the Baltic Sea area have an effect on the conditions of applicability of Article 220(6) would have an effect on this assessment.

(6) Although art 1(2) of Dir 2005/35 allowed Member States to impose more stringent measures, it did not allow them to impose more stringent measures in accordance with international law that those laid down in Article 7(2) which authorised coastal states to take measures equivalent in scope to those laid down in Art. 220(6).

Autonomous Ships- Regulatory Work Begins

The idea of developing smart ships that have ability to navigate without human input has been around for some time and as a result of technological developments in recent years, it is believed that this could be a reality in near future.

The Maritime Safety Committee (MSC) of the International Maritime Organisation (IMO) at its most recent meeting (MSC 99) in May 2018 agreed to establish a Working Group (WC) (named as Maritime Autonomous Surface Ships (MASS) WC) to undertake a scoping exercise with a view to identifying which of the existing international instruments dealing with maritime safety should be amended and what new instruments should be developed to facilitate the operation of such vessels in international waters.

For the purposes of this exercise, a number of provisional definitions have been prescribed. Most significantly, MASS is defined as “a ship which, to varying degree, can operate independent of human interaction”. This is a very broad definition and encompasses all of the ships that are currently under consideration. The WG has prescribed four degrees of autonomy: (MSC 99/WP.9 Annex 1, para 4)

  1. Ship with automated processes and decision support. Such ships have on board seafarers to operate and control shipboard systems and functions.
  2. Remotely controlled ships with seafarers on board. The ship is controlled and operated from a distant location.
  3. Remotely controlled ships without seafarers on board. The ship is controlled and operated from a distant location.
  4. Fully autonomous ships. Here, the operating system of the ship is able to make decisions and determine actions by itself.

The categorisation seems to be rather basic but perhaps simplicity is necessary at this early stage. We suppose in case of (ii), it is envisaged that seafarers on board will have technical knowledge and knowhow to intervene and take control in case of an emergency. It is also worth noting that ever increasing cyber risks should be taken into account and especially in case of (iii), it is curious to know what steps can be taken to ensure that the safety is not compromised in a case where contact between the ship and offshore operator is lost. This could be also a significant issue with regard to vessels which have full autonomy (e.g. iv).

It is worth reminding ourselves that the scope of this exercise is restricted to instruments concerning maritime safety (i.e. COLREG 1972, SOLAS 1974, STCW 1974, SAR 1979 and International Convention on Loadlines 1966). Once smart ships become operational other problems, i.e. the liability of manufacturers/software producers, impact of cyber risks on traditional division of liability, salvage law, are also likely to arise. These issues do not form at this stage part of the IMO’s work on the subject.

It is expected that the work of the MASS WC will be completed by the end of 2020. Even then, this is only beginning of a long journey. It will possibly take another decade or so to formulate new legal rules and amend existing ones to enable autonomous ships to engage in cross-border commercial operations. However, as Lao Tzu once famously said:

“The journey of a thousand miles begins with one step”.

Please note that smart ships will form part of the discussion in our 14th Annual Colloquium to be held on 10-11 September 2018:

https://www.eventbrite.co.uk/e/new-technologies-and-shippingtrade-law-tickets-46148370017

 

IMO sets greenhouse gas targets for shipping.

Shipping currently contributes about 2.2% of global greenhouse gas emissions and emissions are predicted to increase between 50% and 250% by 2050 – depending on future economic and energy developments. However, shipping is excluded from the 2015 Paris Agreement on Climate Change, so responsibility for reducing its contribution to climate change falls on the IMO.

Last Friday, 13th April, at the 72nd session of the IMO’s Marine Environment Protection Committee (MEPC), a meeting attended by 100 states, the IMO adopted an initial strategy on the reduction of greenhouse gas emissions from ships, setting out a vision to reduce Greenhouse Gas (GHG) emissions from international shipping and phase them out, as soon as possible in this century. The initial strategy envisages a reduction in the total annual GHG emissions by at least 50% by 2050 compared to 2008, while, at the same time, pursuing efforts towards phasing them out entirely. The strategy sets a carbon intensity reduction target – the amount of emissions relative to each tonne of shipping cargo – of at least 40 per cent by 2030, rising to 70 per cent by 2050. The strategy includes a specific reference to “a pathway of CO2 emissions reduction consistent with the Paris Agreement temperature goals”.

The MEPC agreed to hold the fourth Intersessional meeting of the Working Group on Reduction of GHG emissions from ships later in 2018. This working group will be tasked with developing a programme of follow-up actions to the Initial Strategy; further considering how to progress reduction of GHG emissions from ships in order to advise the committee; and reporting to the next session of the MEPC (MEPC 73), which meets 22-26 October 2018.

 

Compensation for the unlawful arrest and detention of the Arctic Sunrise and its crew

Arbitral Tribunal orders the Russian Federation to pay a little under 5,4 million euros to the Netherlands

On 18 July 2017, almost two years after that an Arbitral Tribunal (Tribunal) found that the Russian Federation must compensate the Netherlands following the wrongful arrest of the Arctic Sunrise and its crew, the Tribunal handed down its Award on the issue of compensation.

Background

Before looking at this recent decision in more in depth, the history of the dispute will be laid out. Starting on 18 September 2013, when Greenpeace activists tried to enter the Russian offshore oil platform (the Prirazlomnaya) in order to protest against attempts to begin exploiting oil and gas resources in the Arctic. One day later, the Russian Federation boarded and arrested the Arctic Sunrise and detained its crew. Subsequently, the vessel was brought to the port of Murmansk and the crew was charged with having committed a range of administrative and criminal offences, including acts of terrorism and hooliganism.

The Netherlands initiates Proceedings before an Arbitral Tribunal 

Some two weeks later, on 4 October 2013, The Netherlands, being the flag State of the Arctic Sunrise, started proceedings before an Arbitral Tribunal that was established pursuant to Annex VII of the 1982 Law of the Sea Convention. The Russian Federation refused to participate in the Arbitral proceedings that were initiated by the Netherlands. The position of the Russian Federation was, that this type of dispute was beyond the jurisdiction of an international court or tribunal, due to a declaration it had made at the time of becoming a party to the 1982 Law of the Sea Convention. However, the proceedings went ahead, despite the non-participation of the Russian Federation.

The Netherlands requests Interim Measures from the ITLOS

On 21 October 2013, the Netherlands requested interim measures from the International Tribunal for the Law of the Sea (ITLOS). According to the Netherlands, the Russian Federation had to immediately release the Arctic Sunrise and its crew, after the posting of a bond, upon which they would be free to leave Russian territory as well as any maritime areas under its jurisdiction. ITLOS gave an Order on interim measures on 22 November 2013. Initially, the Russian Federation did not comply with the Order of the ITLOS – eventually, however, the vessel and crew were released in late November 2013. The Russian release of vessel and crew was based on its national laws, the Order of the ITLOS played no decisive role in this, according to the Russian Federation  – as it happened, the effect of the national laws and regulations on which the Russian Federation relied, coincided with what was set out by the ITLOS in its Order containing interim measures.

Arbitral Award on the Merits

One of the main substantive issues on which the Arbitral Tribunal was asked to rule during the merits phase, was the (un)lawfulness of the response of the Russian Federation to the presence of the Arctic Sunrise and its crew. The gist of the argument of the Netherlands was that, as the flag State, it had sole jurisdiction over the ship and the crew on-board during the entirety of this incident (Article 58 of the 1982 Law of the Sea Convention). On 14 August 2015, the Tribunal released its Award on the merits. The Arbitral Tribunal found that the Netherlands had exclusive jurisdiction over the Arctic Sunrise whilst it was operating in the exclusive economic zone of the Russian Federation. This means that the Russian Federation could have only lawfully initiated steps against the vessel that was flagged to the Netherlands and its crew with the latter’s consent. After coming to this conclusion, the Tribunal went on to state that the Netherlands had to be compensated.

Arbitral Award on Compensation

In its recent Award on compensation, the Tribunal set the total amount of compensation owed by the Russian Federation to the Netherlands at a little under 5,4 million euros. This sum was arrived at by adding up the damage that was done to the Arctic Sunrise (EUR 1,695,126.18); compensation related to the unlawful arrest, prosecution and detention of its crew (EUR 600,000); a variety of other damages incurred by the Netherlands, including the failure to release the vessel and crew in a timely manner (EUR 2,461,935.43); costs made by the Netherlands in issuing a bank guarantee (EUR 13,500); and lastly, the Netherlands had to be reimbursed for paying the full amount of deposits required by the Tribunal (EUR 625,000) – meaning that the Russian Federation had to pay the half it owed of the costs that were needed for the proceedings to be initiated. Although the Russian Federation is required under international law to abide by the ruling on compensation, whether it will actually do so remains to be seen.

 

IISTL’s Engagement with Insurance Industry on IUU Fishing

The Institute of International Shipping and Trade Law (IISTL), a research centre within the College of Law and Criminology, continues to expand its operations. On 26 June, it collaborated with marine advocacy group Oceana to organise an afternoon seminar in London on the insurance and regulatory aspects of irregular fishing (known in the trade as fishing that is illegal, unreported and uncontrolled (IUU)). The main purpose of the event was to disseminate as widely as possible the results of a study carried out by three members of the Institute (Barış Soyer, George Leloudas and Dora Nikaki) in collaboration with researchers from University of British Columbia (Canada). In summary, the study found that it had been disconcertingly easy for vessels involved in IUU fishing to get liability insurance in the market. The study recommended an urgent review of underwriting processes and consideration of regulatory changes to put insurers under a legal duty to deny cover to vessels known to be connected with IIU activities.

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Professor Soyer delivering the findings of the project to the delegates

The event, which attracted an impressive 60 delegates, provided an excellent opportunity for those throughout the sector to engage in the debate. Presentations from Lasse Gustavsson (Senior Vice President of Oceana Europe) , Kjetil Saeter (Norwegian Business Daily), David Vajnai (Vice President Marsh Global Marine Practice),  Baris Soyer and Gerorge Leloudas (IISLT) and Dana Miller (a marine scientist with Oceana Europe) were followed by a lively debate led by insurers, brokers and policy-makers. The afternoon ended with a reception generously sponsored by the Waterloo Foundation, which was also the funder of the project. An academic article, which is co-written by Professor B. Soyer, Associate Professor G. Leoudas and Dr D. Miller, detailing main findings of the project is to appear in Transnational Environmental Law later this year.

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Mr David Vajnai (Marsh Global Marine Perspective) debating the matter from the perspective of the insurance brokers
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Dr Leloudas talking about the regulatory aspects of the issue

Admiralty jurisdiction over torts in the UK’s EEZ.

 

Virgin Media Ltd v Joseph Whelan T/A M and J Fish [2017] EWHC 1380 Admlty is an interesting decision on whether the Admiralty Court has jurisdiction in personam over a tort claim arising in the exclusive economic zone of the United Kingdom.  The claimant alleged that its fibre optic telecommunications cable, which ran across the Irish Sea between Dublin and Lytham St Annes, was damaged by a trawler at a location within the exclusive economic zone of the UK, but outside its territorial waters. The issue before the Admiralty Court was whether the courts of England and Wales had jurisdiction under the 2012 Recast Judgments Regulation. Under art.4 of the Regulation the defendant should be sued in the place of its domicile, the Republic of Ireland, subject to any of the additional grounds of jurisdiction provided for in the Regulation. Here the relevant one was contained in art 7(2) which provides that “A person domiciled in a Member State may be sued in another Member State in matters relating to tort, delict or quasi-delict in the courts for the place where the harmful event occurred or may occur”.

The Admiralty Registrar held that the Admiralty Court had no greater rights over a collision with a fixed structure than it would in respect of any collision between ships which would be none unless the action is brought in rem or falls within one of the exceptions in s.22 of the Senior Courts Act 1981. Any extension of jurisdiction would have to be established by reference to an international convention or treaty. The relevant treaty would be the UN Convention on the Law of the Sea (UNCLOS).

Article 60(2) of UNCLOS provides that the coastal state has exclusive jurisdiction over artificial islands, installations and structures within its EEZ, and this formed the basis for Burton J’s decision in Conocophillips (UK) Ltd v Partnereederei MS Jork [2010] EWHC 1214 (Comm) that the Commercial Court had jurisdiction over a negligence claim against a shipowner in connection with a collision between a vessel and an unmanned oil platform 40 miles off the coast of Norfolk. Where there is a collision between a vessel and a platform which is an effective prolongation of the territory of the United Kingdom, the Court would have jurisdiction. The concept of ‘place’ in the predecessor provision to art 7(2) in the 2001 Judgments Regulation was limited to matters addressed in UNCLOS art. 60.

In contrast, art.58(1) provided that all States, and not just the Coastal State had the freedom to lay submarine cables and pipelines within their EEZ, but did not provide for the coastal state to have jurisdiction. Article 56 of UNCLOS gives an English court jurisdiction over matters with respect to fishing, but did not provide that the coastal state may assume jurisdiction with regard to civil disputes arising out of fishing. Accordingly, the Admiralty Court was not a court for the place where the harmful event occurred under art 7(2) and the Court declared it had no jurisdiction over the claim. The appropriate jurisdiction was in the Courts of the Republic of Ireland under art. 4 of the Recast Regulation.

Did Obama Just Permanently Block All Offshore Drilling in US Federal Arctic Waters?

He just might have!

The 1953 Outer Continental Shelf Lands Act (OCSLA) provides federal jurisdiction over the leasing of the outer continental shelf (i.e. submerged land lying seaward of state coastal waters and extending to 3 miles offshore) for the purposes of energy exploration. Interestingly however, under the same act the President of the United States has the right to withdraw from disposition any of the lands of the outer continental shelf which are unleased (see § 1341 – Reservation of lands and rights).

Using this authority, yesterday President Obama, in co-ordination with Canada’s Prime Minister Trudeau (who is enacting parallel actions within Canada, albeit with a five-year time limit), announced the withdrawal of almost 119 million acres of US ocean from future mineral extraction (including areas within the north and mid Atlantic, and the US Arctic Ocean, thereby encompassing the entirety of the US Chukchi Sea and significant portions of the US Beaufort Sea). It is usual for the President to announce a five year plan for the leasing of federal waters (Obama announced his 2017-2022 plan earlier this year), but the enactment of this right to withdraw is rare and might have long-lasting consequences: while it has been used in the past by previous presidents (the most recent being Clinton), most of those enactments were limited to a certain period of time – President Obama’s is not, with the White House having described the ban as indefinite.

Considering the policies of the current President-Elect it’s unlikely that such a move will remain unchallenged once the new regime comes into power. This then begs the question: can the decision be reversed?

The short answer is not anytime soon. The OCSLA might endow the President with the right to withdraw these lands from being leased for offshore exploration and exploitation, but it doesn’t provide him (or subsequent presidents) with any express authority to repeal that decisionIt’s even possible to argue that had Congress intended this right to be reversible, they would have drafted the relevant OCSLA provision accordingly.

It means that if Trump wants to fight this, he’ll have to do it through the courts – this would be unprecedented and therefore the potential outcome is unclear. The ban has been enacted in the past without a time limit (Eisenhower did it back in the 1950s when he permanently blocked drilling off the Florida Keys) but while the ban still remains in place to this day, it’s never had to withstand the test of a battle in court and thus offers no real guidance on establishing whether the withdrawn lands could be un-withdrawn.

Of course, Trump’s other option would be to convince Republican-dominated Congress to amend the OSCLA to expressly allow for such a rescission (thus saving himself the trouble of needing to establish whether the right to un-withdraw existed in the first place), but were Congress to agree, the amendments would take time to enact; meanwhile, the ban would remain in place.

It’s difficult to say definitively whether or not Obama has managed to permanently ban offshore drilling in the US-controlled areas of the Arctic Ocean, but it’s going to be a while before anyone can answer that question with absolute certainty, let alone actually try to reverse his decision.

As a side note (considering this is a maritime law blog) it’s also worth noting that in the White House’s announcement yesterday it was stated that Canada and the US are launching the first processes ever to identify sustainable shipping lanes throughout their connected Arctic waters. I’ll be honest, I don’t know what those processes are or could entail, but I suppose it’s nice to see that they’re trying…

IX European Colloquium of Maritime Law Research 2016

This is a free conference taking place in Bilbao, Spain on 14-15 September, at the Bizkaia Aretoa. The theme is maritime liens, mortgages and forced sales. Details here. A large number of excellent speakers, including Profs Erik Røsæg and Paul Myburgh. Two IISTL stalwarts will be speaking, Prof Andrew Tettenborn and Prof Rhidian Thomas.  For information contact Olga Fotinopoulos, Olga.fotinopulos@ehu.eus, Tel + 00 34 945 01 3417.