On 12 December 1999, the oil tanker Erika sank off the coast of Brittany, leading to the contamination of more than 400km of coastline: one of the most extensive oil pollution incidents in maritime history.

The resulting damage to the coastline and the local economy and the adverse impact this had on public opinion highlighted the fact that the compensation limits under existing international pollution legislation were insufficient to provide for oil spills of this magnitude. As a result, in dealing with the Erika litigation, the French courts examined the interaction between national environmental pollution law and international oil pollution legislation. In doing so, they reaffirmed their jurisdiction over oil pollution incidents taking place within France’s Economic Exclusive Zone and implemented reforms to French maritime criminal law.

International Oil Pollution Legislation

In most parts of the world outside the USA, laws governing compensation for oil spills from oil tankers is covered by a tiered international regime of compensation. The first tier of this international regime is provided by the Civil Liability Conventions (“CLC”). France initially signed up to this regime by way of the CLC 69 which came into force in France on 19 June 1975. France subsequently signed up to CLC 92 which increased the compensation limits, simplified the mechanism for calculating the limitation amount and introduced a substantially lower risk to the owner that his right of limitation would be lost. The key feature of the CLC is that liability is channelled squarely onto the ship-owner whose liability is strict (i.e. without any fault or negligence on his part).

The second tier of compensation is provided by the Fund Conventions which established the International Oil Pollution Funds 1972 and 1992. The Funds are inter-governmental bodies headquartered in London. 28 states (including France) have also adopted the Supplementary Fund Protocol which provides for a third tier of compensation. This Protocol was adopted in 2003, following the Erika and Prestige oil disasters. The main object of the Funds is to pay additional compensation in cases where the amounts recoverable from the ship-owner are insufficient to pay legitimate claims. The Funds are financed by levies imposed on oil receivers in member states. The upper limit of compensation available from all three layers is SDR 750m, currently equivalent to approximately US$1.1 billion.

The main aim of the international regime is to shift, through the “channelling” provisions of CLC, the financial responsibility for pollution damage onto the ship-owner (and their insurers) up to a limited amount after which the IOPC Fund takes over, thereby limiting recourse against other parties and individual liability for any single event. In 1999, however, the compensation limits were much lower than the potential financial liability for major oil spills as was clearly demonstrated by the Erika catastrophe: the ship-owner’s liability was limited to 13 million Euros, as compared with the 400 million Euros claimed for direct and indirect losses caused by the incident.

Waiving the limitations of the CLC

The Erika litigation in France went right up to the French Supreme Court, where final judgment was given on 25 October 2012. Through all the lower courts, as well as in the Appeal and Supreme Courts, the French judges held that France had jurisdiction in respect of all civil and criminal proceedings to decide liability in oil pollution cases involving damage to its coastal line, even where the casualty occurred outside French territorial waters.

Under French environmental pollution law, enacted in 1983, harmful environmental damage caused willingly, or by acts of omission or negligence, is a criminal offence. This results in strict liability for all parties exercising control or direction over a ship for damages resulting from oil spills. Subsequent French pollution legislation introduced on 3 May 2001, 9 March 2004 and 1 August 2008 established a list of all damages to the environment that qualify for compensation before the French courts (Article 161-1 of the Code of the Environment) and eventually raised the maximum amount of criminal fines from 375,000 Euros to 1 million Euros.

In the Erika litigation, the French courts held that national law on environmental pollution was not incompatible with the MARP OL 73/78 Conventions that provides for the liability only of ship-owners and managers for pollution resulting from deliberate illicit discharges of oil. Having found that the Erika had not been properly maintained, the French courts concluded that Total SA, although acting as the agent of the charterer, their subsidiary Total Transport Corporation, and not the owner of the ship, were not entitled to rely on the exemption for charterers and charterers’ agents and were nonetheless guilty of criminal conduct in carrying out their voluntary vetting operations and could be held individually liable for criminal damages and jointly liable for civil damages, together with the ship-owner, classification society and the ship management company.

In addition, the French Judges stated that, in accordance with established principles of French transport law, a finding of intentional negligence (or “faute inexcusable”) meant that there was no right to rely on the CLC’s channelling provisions or limitations of liability.

A finding of intentional negligence was made against the Erika’s owner and manager for failing to properly maintain the ship, despite its apparent bad condition, and against the ship classification company for failure to withdraw the ship’s classification. Furthermore, Total SA, the parent company of the voyage charterer, and the entity which vetted the ship was also held to be intentionally negligent, because it had acquired a role in the technical maintenance and control of the ship through its voluntary vetting procedure.

The new French legislation

In the Erika, the French Supreme Court had to consider a number of issues on which the law was far from obvious. These issues included the scope of the French courts’ jurisdiction over oil pollution incidents, the enforcement of the CLC channelling provisions and the parties that can be held liable for oil spills where the actual ship-owner cannot be clearly identified.

As a result, and in order to clarify the applicable legislation and enable the prosecution of all parties involved in oil spill incidents, regardless of the legal, financial and corporate structures in place, a new Regulation has been issued (Ordinance n°2012-1218 of 2 November 2012) providing in particular that:

  1. Specific criminal maritime courts are to be created (Tribunaux maritimes) and the transfer of information is to be facilitated between State representatives and the authorities in charge of preserving navigational safety at sea;
  2. All ships entering French waters should possess adequate insurance and present a financial guarantee or an insurance certificate from a first rate institution;
  3. Deterrent penalties will be imposed where the ship fails to obey navigational instructions issued by a maritime authority;
  4. Owners, charterers or their legal representatives, or any other person exercising any right allowing them to manage or control the ship, can individually be found criminally liable for any damage resulting from oil pollution;
  5. Any criminal fine imposed on the Captain of the ship may be transferred by right to the ship-owner, if he has been validly summoned before the French courts as part of the proceedings;
  6. Additional penalties can be issued by the criminal courts against the Captain or crew working on board, including a temporary or permanent prohibition on navigation in French territorial waters; and
  7. Provisions of the French Labour Code regarding formalities and compulsory references included in employment contracts are to be extended to sailors and crew employed on-board ships.

Comment

The new Regulation has been submitted to the French Parliament for ratification and is expected to be promulgated by the end of 2013. However, many uncertainties remain relating to the practical implementation of the new obligations under the Regulation. For example, clarification is still needed as to the scope, extent and practical consequences of the new obligation to take out insurance cover before entering French territorial waters. There are also issues arising as to the constitutional validity of the wording of the Regulation regarding the criminal transfer of fines and the obligations imposed by those fines.