Brain Booster Articles
A CRITIQUE OF THE INDIAN REGIME OF LIABILITY IN OIL SPILLS
Author: Anjani Tewary, IV year of BA LLB (Hons.) from Jindal Global Law School
With almost nine states and four union territories surrounded by water and its long coastline, India is a maritime nation. The nation’s dependence on imports, primarily for oil and natural gas which are sourced via water signifies the economic importance of these multiple shipping lanes. Despite the economic significance that oil imports bring with them, they carry with them a devastating risk which very often challengesthis economic benefit - the risk of oil spills. The 2017 BW Maple and M.T. Dawn Kanchipuram collision and the consequent toxic sludge, harm to marine ecology and the authories’ incompetence and inability to contain the situation made it one of India’s worst ecological disasters.It led to semi-permanent impacts which are observed till date. There is therefore, a need to pin liability to ensure remediation under the polluter pays principle, deterrence and enforce compliance with safety and precautionary standards as specified by the law. In light of such circumstances, it is imperative to re-examine the domestic regime governing oil spills in India and to explore the existing lacunae. At a time when environmental protection is becoming imperative, it becomes quintessential to adopt reformatory measures. The paper begins by analysing international provisions governing oil spills, identifying and highlighting the lacunae in the domestic regime governing liability in case of oil spills in India, explores the ramifications of adoption of the absolute liability regime in India, and advocates for adoption of reformatory measures.
The conflict between environmental protection and economic development is one that has been prevalent for a long time, but has gained ground in recent times due to instances of environmental degradation. The 2020 Baghjan oil well blowout in Assam bears testimony to the irreversibility of environmental damage, and the fact that it may take years for even an iota of recovery of the environment. Oil spills and their detrimental impact on the environment is of serious concern and warrants attention.
Oil spills may occur due to collisions, damaged bunkers, the decision to reduce the weight of the vessel, or due to tankards, ships and installations. While some instances of oil spills may be accidental, development of tar aggregates in Goa stems from intentional or operational release of oil into the waterbody.
The Chennai oil spill of 2017 and the Deepwater Horizon Oil Rig explosion which led to the leak of 2.52 million gallons of oil per day into neighbouring waterbodies are only a few instances that highlight the massive nature of oil spills. Consequently, the impact of such oil spills on the environment is devastating. Not only do such spills disturb the ecological balance by seriously harming marine life, the surrounding flora and fauna and the lives of locals, they also have economic repercussions. The economic loss due to spillage of oil combined with the added resources required to remediate the situation in case of a spill is a serious economic concern. Moreover, it has an impact on other industries as well. The Deepwater explosion heavily impacted the Florida tourism industry, which suffered a loss of 3 billion dollars. The consequences include both short and long term economic uncertainties which may be extremely difficult to recover from. Moreover, the risl of oil spill promopted by cyclone Tauktae highlight the unstable climatic and weather conditions that India experience which may propel such oil spills.
In light of such circumstances, It is imperative to have in place a comprehensive and integrated framework of rules, regulations and laws in India that not only help pin liability and ensure remediation of the environment under the polluter pays principle, but also have a strict enforcement mechanism that ensures compliance with set safety standards and provisions enacted as an extension of the precautionary principle, deterrence, compliance and execution of court orders regarding environmental clean up.
Oil spills and their massive consequences have been an international concern and they have been called a ‘collective action problem’. Focus on compensation and emergence of international efforts to address the problem stemmed after the Torey-Canyon oil spill in 1967, and others including the Amoco Cadiz and Sea Empress oil spills.
Owing to the economic consequences of spills, determination of compensation that covers not only the physical damage but also economic ramifications is quintessential and of utmost importance.
While OILPOL and MARPOL had been instrumental in setting standards and regulating discharges, they did not tackle the issue and remediation of oil spills at the grassroots level. It was the civil liability regime that brought with it major transformative changes. With reference to Brown’s system of classification of distinguishment of laws, the civil liability regime essentially covers the Civil Liability Convention (CLC) and the Fund Convention. The International convention on Civil Liability for Oil Pollution Damage, 1969and the International convention on the establishment of an international fund for compensation for oil pollution damage , 1971 later superseded by the Civil liability Convention, 1992(hereinafter CLC) and the 1992 Fund Convention respectively, were the international community’s collective efforts to tackle the problem efficiently. While the CLC focused on strict liability, compensation of victims and compulsory liability insurance, the Fund convention set up the International Oil Pollution Compensation Fund (IOPC fund) which ensures compensation over and above the compensation cap. Collectively, both conventions form a two tier system of compensation. However, post the Prestige incident, the 2003 Supplementary Fund Protocol acts as a third tier by further increasing the compensation cap.
The International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (hereinafter ‘Bunker Convention’) also governs and regulates compensation when fuel in ships’ bunkers may lead to spills. It is in line and is modelled on the same lines as the CLC. While it allows for direct action against an insurer, it calls for specific ships to have a financial security to remediate pollution consequences, but these cannot exceed the amount specified in the Convention on Limitation of Liability for Maritime Claims, 1976 (LLMC).
There also exist other international regulations such as the UN Convention on the Law of the Seas and Oil Pollution, Preparedness, Response and Co-operation (OPRC) that attempt to tackle and address the problem of oil spills.
India’s stance has stemmed and been inspired by international treaties, agreements and conventions, customary law and precedents that have been relied on by courts. The Indian regime governing marine pollution and oil spills have been contextualised in the Merchant Shipping Act, 1958; and the Merchant Shipping (Prevention of Pollution by Oil from Ships) Rules, 2010.
Post adoption of the OPRC, India worked on developing its National Oil Spill Disaster Contingency Plan and set up the National Coast Guard (NCG). The NCG is vested with powers to ensure maritime protection and control. Pollution.The Regional Oil Spill Disaster Contingency Plans (ROS-DCP) and National Oil Spill Disaster Contingency Plans (NOS-DCP) are responsible for monitoring and taking action.
The Merchant Shipping Act, 1958 (hereinafter MSA) applies not only to Indian commercial ships, but any foreign ship that falls in India’s territorial waters. The MSA only provides for holding the owner liable, and not others unless wilful or reckless damage can be proven, and contains provisions for strict liability of owners when it comes to oil pollution. In World Tanker Corporation vs. SNP Shipping Services Pvt. Ltd, the Court held that the purpose for limitation of liability in the MSA was to protect the shpowener against excessive claims. Part X-B, Part X-C and Part XI-A of the MSAdiscuss civil liability for pollution, international oil pollution fund and containing pollution at sea respectively. By virtue of Part X-B and X-C India has incorporated the CLC and Fund convention, by not only limiting the liability of owners but also ensuring a limitation fund. Part IX contains precautionary and safety standards that ships must abide by.
LACUNAE IN THE EXISTING FRAMEWORK
Despite the aforementioned provisions, there are certain lacunae in India’s regime governing oil spills that need to be addressed at the earliest. There is a lack of a singular integrated and comprehensive mechanism or regulation that governs oil spills and pollution. The multiple instrumentalities and bodies involved delay the response time and lead to unnecessary red tapism. The infamous Chennai spill and the failure of the Kamarajar Port in addressing the situation is concerning. It bore testimony to the lack of trained personnel specialised equipment, information asymmetry and lack of coordination between different departments and instrumentalities. Both aptitude and attitude led to one of the most devastating ecological disasters witnessed by the country.
The 20thcentury report on NOC-DSP preparedness advocated for statutory enaction and basis for bodies such as the NOC-DSP to ensure enforcement. An important observation in this report was that regarding multiple regulations and bodies to deal with environmental protection. Concern regarding lack of equipment was also expressed by the Parliamentary Standing Committee on Transport, Tourism, and culture in its 224thReport. The report advocated for adoption and institution of newer technologies and equipment to effectively deal with the problem of oil pollution.
While both the CLC and MSA hold owners strictly liable for escape or discharge of oil owing to any incident, it does not include the harm caused to the ecological system and natural resources as a whole. It only includes within its ambit the direct and easily determinable consequences of the incident. Therefore, other stakeholders such as fishermen may not be able to apply for compensation owing to the impact on their employment and livelihood.
Moreover, India has not included such incidents under the criminal sphere. In other words, people contributing to such incidents do not attract criminal liability. Although characterisation as a public nuisance would bring it under the ambit of the Indian Penal Code, these cases only allow for meagre compensations. What is required is a more stringent mechanism that includes harsher fines and imprisonment clauses. The feasibility of an absolute liability regime has been discussed later.
Further, there is a major problem with holding the shipowner solely liable. Other state actors and authorities who contributed to the problem by not playing a proactive role and acting to control the problem must be allowed to be included while pinning liability, apart from those who contributed to the incident by acting negligently or wilfully caused harm.
THE INTRODUCTION OF AN ABSOLUTE LIABILITY REGIME IN INDIA
Considering the aforementioned loopholes and lacunae that have plagued the domestic regime concerning oil spills and marine pollution, it has become imperative to rethink certain provisions. It is a highly contested debate as to whether or not the introduction of the absolute liability regime in India would improve circumstances.
The principle of strict liability, developed in the case of Rylands v Fletcher states that if an dangerous substance is being harboured by a person, then they shall be held liable for the consequential mischief owing to its escape. The liability is subject to certain defences, such as act of god, act of third parties, voluntarily consenting or volunti non fit injuria, and the plaintiff’s own negligence.
The Supreme Court, in the case of MC Mehta v UOI increased the extent of this liability by introducing the principle of absolute liability, wherein none of the defences under strict liability would reduce or diminish the respondent’s liability. The respondent, in other words, would be held absolutely liable for making good whatever loss or damage they contributed to owing to escape of the ‘hazardous’ and ‘inherently dangerous’ substance.
Courts, in the case of MC Mehta v UOI had given their verdict and opinions based on ideas of environmental protection, social welfare and maintenance of the ecological balance. An analysis of the detrimental impact of oil spills supports the contention that they essentially violate and infringe on human rights and constitutional provisions of the fundamental right to life and the right to a healthy and safe environment under Directive principles of state policy. The relationship between constitutional violations and environmental degradation has been observed by the European Court of Human Rights in the cases of Hatton and others v United Kingdom,Powell and Rayner v UKamong others. This coupled with the interference with trade, loss of livelihood, intergenerational health impact of oil spills and its tendency to become an ecological and health disaster is what has prompted the suggestion that the activity is one that involves utmost skill, care and caution and the introduction of the absolute liability regime in India would pin liability in the strictest sense, ensure deterrence, enforce compliance and improve the existing mechanism in India.
The short and long term impacts of oil spills, as argued by some, are enough to replace strict liability with absolute liability in India. While it may be argued that it is too strict a measure and it goes against the objective to place a limit on the liability by negating excessive claims, academics have argued for supplementation of the absolute liability regime in India with insurance facilities by insurance providers and fund for compensation convention ratified by member states. All excess compensation beyond the capacity of the shipowner would be paid through the fund. Absolute liability must be shared by all those who contributed, either wilfully or negligently, apart from the shipowner.
Introduction of absolute liability in India would also escape shipowners and those involved from escaping liability by making use of the available defences and loopholes. It would help narrow down liability and ensure compensation for remediation of environmental protection. It makes the process more efficient by ensuring that no one evades the course of justice. Moreover, owing to the stringent mechanism, shipowners and other stakeholders would exercise more caution, skill and care and abide by all laws and regulations. This would not only reduce instances of oil spills due to non maintenance and safety violations by complying with the Rio Declaration precautionary principle, but would also consequently reduce the environmental damage that would have accrued.
THE WAY FORWARD
Considering the economic significance of oil imports for India, the activity needs to be heavily regulated to minimise the risk of oil spills. A balance has to be achieved between economic development or requirements and environmental protection. To achieve this requisite balance, certain reformatory measures need to be adopted.
India needs to adopt and reformulate a singular comprehensive and integrated framework which acts as an umbrella legislation and governs all aspects relating to oil spills including but not limited to pollution and compensation. A stakeholder approach must be adopted while construing provisions of the same, taking into account all those affected. Considering the nature of environmental concerns and the impact of degradation, all peripheral concerns must be addressed while drafting the legislation. This legislation must focus on absolute liability.
There should be adequate contingency plans and response mechanisms in place to handle the situation as soon as possible and curb and contain the effects. These mechanisms must be backed by adequate allocation of resources. To ensure the same, the government may want to enter into public private partnerships for attainment of modernised equipment and technology.
What is required is not an increase in the number of bodies monitoring and regulating the activity, but creation of a centralised force equipped with technical equipment and knowledge. The focus should be on monitoring, augmenting, training and reporting. The Chennai oil spill is a tragedy which we must take lessons from. There should be effective mechanisms for coordination and effective communication among various departments to ensure speedy action. Moreover, an enforcement wing that ensures execution of court orders and implementation of remediation mechanisms is advocated for.
In the short run, there is a need to provide statutory backing to the NCG. There is a need to deploy resources, focus on modernization and adopt more efficient equipment and mechanisms.
Moreover, the amendments to the MSA must be passed at the earliest to ensure compliance with the Bunker convention. This will not only improve the compensation obtaining procedure when comes to pollution emanating from tankers, but will also be cost effective and more efficient.
The increase in the volume of trading activities and marine traffic signify the economic importance of marine transport. However, oil spills have also been a serious concern for the international community at large owing to its devastating consequences.
While countries including India have played a proactive role in tackling the problem, there are certain lacuna that still prevail in case of the domestic regime concerning liability in oil spills in India. The reformatory measures proposed in this paper would bridge the gap between policy and practice, and would ensure compliance with international standards to a greater degree.
 World Tanker Corporation vs. SNP Shipping Services Pvt. Ltd ,AIR 1998 SC 2330 Rylands v. Fletcher (1866) LR 1 Exch 265 Rylands v. Fletcher (1866) LR 1 Exch 265 Hatton and others v. The United Kingdom - 36022/97  ECHR 338 (8 July 2003)  Powell and Rayner v UK ECHR 2 World Tanker Corporation vs. SNP Shipping Services Pvt. Ltd ,AIR 1998 SC 2330