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Dalian Oceanic and Fishery Administration v. Ondimar Transportes Maritimos Ltda and the Britannia Steamship Insurance Association

Accurately INTERPRETING the 1992 International Convention on Civil Liability for Oil Pollution Damage
Expressly Excluding the Claims for Damages beyond the Scope of Damages Permitted by the Convention
---- Dalian Oceanic and Fishery Administration v. Ondimar Transportes Maritimos Ltda and the Britannia Steamship Insurance Association (Case concerning retrial review of dispute over compensation for marine pollution damage) 
[Basic Facts]
A Portuguese oil tanker “Arteaga” (with gross tonnage of 77,399 tons) stranded at the Dalian Xianjiao Reef (38º57.34'N, 121º54.53'E) dated April 3, 2005, with the main body of the tanker damaged and crude oil leaked, resulting in pollution to the ocean. The owner and oil pollution damage insurer for the tanker are Ondimar Transportes Maritimos Ltda and the Britannia Steamship Insurance Association, respectively. Dalian Oceanic and Fishery Administration brought an action to Dalian Maritime Court dated May 23, 2005, petitioning the court to hold Ondimar and the Insurance Association jointly and severally liable for damages of an amount of CNY 59.076 million (including loss of marine environmental capacity and marine ecological value loss of CNY 56.476 million as well as loss assessment and appraisal cost of CNY 2.60 million). 
[Judgment]
Dalian Maritime Court held, after the first instance trial, that the Oceanic and Fishery Administration is the agency exercising the supervision and management authority regarding ocean environment, and qualifies as the party claiming damages for oil pollution in this case; however, the Oceanic and Fishery Administration failed to prove that it had actually taken mitigation measures after the occurrence of the pollution. To the contrary, as illustrated by the report issued by the Judicial Appraisal Office, National Marine Environmental Monitoring Center, the ocean affected by the oil leakage had been restored without any actions taken. Therefore, the court dismissed the claim of the Oceanic and Fishery Administration. The Administration was not satisfied with the judgment and appealed.
After the trial of second instance, High Court of Liaoning Province held that the ocean ecological losses claimed by the Administration comprise of marine ecological value loss and loss of marine environmental capacity, which are claims for ocean environment damages; the Administration had delivered a certificate proving its payment of CNY 500,000 for loss assessment and monitoring cost during the hearing of the second trial. Such amount of payment shall be deemed reasonable and shall be borne by Ondimar Transportes Maritimos Ltda. As such, the High Court of Liaoning Province delivered a judgment of second instance to overrule the judgment of first instance, which ordered Ondimar Transportes Maritimos Ltda to indemnify the Administration for the cost of loss assessment and monitoring cost of CNY 500,000,  but dismissed other claims of the Administration. The Administration was dissatisfied with the judgment of second instance and petitioned to the Supreme People’s Court for a re-trial.
After due examination, the Supreme People’s Court held that the People's Republic of China is a signatory state to the 1992 International Convention on Civil Liability for Oil Pollution Damage, and thus the judgment of first instance and the judgment of second instance properly applied the Convention in the determination of this case. In accordance with Paragraph 6, Article 1 of the Convention, damages for an environment damage shall be limited to expenses reasonably incurred or to be incurred in the recovery of the affected ocean. As provided in Paragraph 4, Article 3 of the Convention, no pollution claims shall be filed against any vessel owner, except those in compliance with the Convention. Whether the claim for the ocean ecological losses filed by the Administration is justified is predicated on whether such losses fall within the scope of damages liability as provided by the Convention. The Administration failed to present evidence to prove that it had actually taken measures to restore the affected ocean and incurred expenses in that regard. It claimed in its loss assessment report that the amount of CNY 55.20 million spent for polluted water treatment fell under the category of “reasonable recovery actions to be taken”. However, as seen from the inspection result issued by the North China Sea Environmental Monitoring Center, State Oceanic Administration and the Judicial Appraisal Office, National Marine Environmental Monitoring Center, on April 28, 2005, 25 days after the oil leakage incident, the water quality of the ocean affected by the oil leakage had not exceeded the Class 2 water quality standard; By October 2005, the ocean environment had recovered, and the Administration had not presented evidence to show the necessity of polluted water treatment for such ocean. As such, the judgments of first instance and second instance had not erred in ruling that the expenses above do not fall under the category of expenses incurred in the recovery action taken or to be taken under the Convention. The ruling by Supreme People’s Court on December 29, 2015 dismissed the application filed by the Administration for retrial. 
[Significance]
This case is a dispute over ocean environmental pollution damages in a region along the “Belt and Road”, with the owner and oil leakage liability insurer for the vessel being a Spanish company and a UK company, respectively. Moreover, this case is also between parties from countries along the “Belt and Road”. The Supreme People’s Court has played a leading and guiding role by properly implementing Several Opinions on Provision by People’s Courts of Judicial Services for the Building of the “Belt and Road” numbered FF [2015] No. 9. China, as a responsible ocean country, will strictly interpret the Convention in good faith and in accordance with the ordinary meanings of terms therein and their context, by reference to the purpose and intent of the Convention and consistent with Vienna Convention on the Law of Treaty. Specifically, the environmental damages under 1992 International Convention on Civil Liability for Oil Pollution Damage shall be limited to expenses reasonably incurred in the recovery (including monitoring and assessment expenses), in order to ensure consistency, steadiness and forseeability in the application of international conventions. Under the current convention system, vessel leaked oil pollution damages are special. However, certain parties, due to their failure to properly apprehend the spirit of the Convention, file claims for ocean ecological damage caused by vessel-leaked oil pollution based on the marine ecological losses and loss of marine environmental capacity instead of expenses in the recovery. This is inconsistent with the provisions of the Convention, and is expressly excluded from the permitted damages under the Convention. The judgment for this case is significant in that it would play a guiding role in accurately assessing claimed amounts by the agencies exercising ocean environment supervision and management authority. Although the Plaintiff is a Chinese government authority, the courts of all three levels under this case dismissed the claim filed by the plaintiff that is unfounded in fact and law,adheared to the law and based on the evaluation of facts. This hence proves that Chinese courts will strictly abide by the principle of equal protection for Chinese and foreign parties. 


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