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Oil Spills: Law on Liability with Special Reference to the Indian Regime

Article  in  SSRN Electronic Journal · January 2011

DOI: 10.2139/ssrn.2044827

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 4BJL 2011(1) 48
Oil Spills: Law on Liability with Special Reference to the Indian Regime *

I. Introduction

Rapid development and advances in science and technology have brought in their own
basketful of problems. The following two illustrations show the type of dangers and
consequences thereof that one has to face as a result of application of technology. Illustration
one: an offshore drilling oilrig explodes in the Gulf of Mexico, 41 miles from the coast of
Louisiana while drilling an exploratory well. Illustration two: a merchant vessel collides with a
panaman ship carrying oil cargo in Mumbai harbor. Two maritime accidents, one common
effect-OIL SPILL. Aftereffects- immediate shock to the system, immediate toxicity and
immediate mortality-marine life oiled, coastline tarred, total economic losses running into
millions of dollars and the entire picturesque landscape transformed into slicky black unsightly
scenery. Pictures of the Deep Water Horizon1 in the Gulf of Mexico and MSC Chitra and MV
Khalijia 3 collision2 in the Arabian Sea splashed across the print and television media educe the
latent potential of environmental calamity a marine accident might cause. Accidental pollution of
sea by oil is inevitable. It is the price that mankind has to pay for the benefits of an industrial
society. Now the big question arises as to who is to be held liable for accidents that lead to such
catastrophic effects on the marine environment?
Oil is not only the most sought after but also the most transported commodity worldwide
and because of its physical and chemical nature, sea is the most convenient medium of
transportation.3 Oil pollution is a recurring phenomenon and has gravest effects on marine
environment as well as economic conditions of the people inhabiting the areas around the

*Saadiya Suleman LL.M. (Two-Year Course), Indian Law Institute, New Delhi.
1
Deepwater Horizon was an offshore drilling unit, licensed to British Petroleum (BP) by Transocean limited,
designed to operate in waters as deep as 8,000 feet and to drill down 30,000 feet. The Horizon was drilling an
exploratory well about 41 miles off the coast of Louisiana, when on April 20, 2010 an explosion killed 11 workers
and began the release of massive amounts of oil into the Gulf. Hereinafter referred to as BP oil spill. For details of
the incident see http://www.eoearth.org/article/Deepwater_Horizon_oil_spill.
2
On August 7, 2010 Panama-flagged MSC Chitra, outbound from South Mumbai’s Nava Sheva port, collided with
the inbound MV Khalijia-III, which caused about 200 cargo containers from MSC Chitra to be thrown into the
Arabian sea. MSC Chitra tilted to about 80 degrees soon after the collision, spilling an estimated 400 tonnes of oil.
The ship was loaded with an estimated 2,600 tonnes of oil, 300 tonnes of diesel and 70 tonnes of lubricating oil at
the time of the accident. See http://timesofindia.indiatimes.com/city/mumbai/Mumbai-oil-spill-continues-300-
containers-tumbled-into-water-so-far/articleshow/6280073.cms for details.
3
Oil is generally transported by sea either using pipelines or tankers. Oil tankers transport some 2400million tonnes
of crude oil and oil products around the world by sea. Please see www.imo.org for details.

Electronic copy available at: http://ssrn.com/abstract=2044827

affected areas. Oil pollution of the sea began with the introduction of oil fuel in ships and
increased with the carriage of oil cargo in bulk and has been ever increasing ever since. 4 Oil
pollution might result from collision of vessels carrying oil cargo or from its bunkers. It might
arise as an accidental escape or from the conscious decision of the master to lighten his stricken
vessel.5 Tanker accidents, however, are not the only source of oil pollution. Marine based oil
pollution can emanate either from ships or from offshore installations.6 Apart from dramatic
accidental spills like the Exxon Valdez,7 intentional discharges by the ships form an important
cause of oil pollution. The recent appearance of tar balls on beaches of Goa is an example of
intentional oil discharge by a ship on high seas.8 Natural seepages may also cause oil pollution
but due to the fact that it is not caused by human activity such incidents are generally excluded
from the ambit of marine based oil pollution.9
The effects of oil spill are multitude in number and magnanimous in character. An oil
spill contaminates sea water, natural resources and coastlines; it adversely affects marine life if
not permanently damaging it. Oil spills don’t just create oily beaches, they can disrupt a broader
range of ecological processes that ultimately can affect wetlands, commercial fisheries,
recreation, and species abundance for years to come.10 Individuals with business interest in the
environment of the region incur loss of earning of revenue owing to the impairment of that
environment. It is due to the hazardous effects of oil spillage a sound legal regime is required in
place to regulate the transport of oil by sea. States either enter into regional as well as
international instruments or depend on common law principles or statutory laws to tackle the
menace of oil pollution. Fourteen international conventions and protocols provide a framework
for international co-operation to combat emergency situations threatening the marine
4
David W. Abecassis, The Law and Practice Relating to Oil Pollution from Ships, 3 (Butterworth, London, 1st
ed/1978).
5
Simon Gault, Marsden on Collisions at Sea, 413 (Sweet and Maxwell, London, 13th ed./2003).
6
As in the case of BP oil spill.
7
The “Exxon Valdez” super tanker carrying 1,264,155 barrels of crude oil ran aground on Bligh reef off Alaskan
coast, spilling eleven million of gallons of crude oil into Prince William Sound, Alaska, on March 24, 1989. Prior to
the BP oil spill, Valdez was considered to be the largest oil spill in terms of the sheer volume discharged in the sea in
the accident. For details see “The Exxon Valdez Oil Spill: A Report to the President (Executive Summary) available
at http://www.epa.gov/history/topics/valdez/04.htm.
8
August 31, 2010 Goan beaches were swept away by tar balls which are generally formed as a result of waste oil
dumped by ships reacting with sea water. See “Tar Balls invade Goa’s Coastline”as reported in Times of India,
August 31, 2010, 06:08IST available at http://timesofindia.indiatimes.com/city/goa/Tar-balls-invade-Goas-
coastline/articleshow/6465768.cms
9
Supra note 4. Ibid.
10
James Boyd, “Lost Ecosystem Goods and Services as a Measure of Marine Oil Pollution Damages”, Discussion
Paper 10-31, RFF May 2010 available at www.rff.org (accessed at October 31, 2010 at 21:00hrs).

Electronic copy available at: http://ssrn.com/abstract=2044827

environment. They were developed in response to individual oil pollution incidents beginning
with the Torrey Canyon accident11 which resulted in the escape of 117,000 tons of crude oil in
the western approaches of United Kingdom, causing extensive damage to the British coast and
the coast of France.12
The international order is principally concerned with the avoidance of accidents at sea,
and with regulation of the operational discharge of oil in the cleaning of ballast tanks of oil
tankers. Civil liability for oil pollution has been the subject of international conventions for
decades.13 The law of oil spill liability is a mixture of civil liability and criminal regimes in
certain jurisdictions like U.S. The liability and fund conventions limit the liability of the ship-
owner in case of maritime accident causing oil pollution. Principles governing the law on oil
spill liability are strict liability, channeling of liability, and caps on liability limit. The issue
arises as to the propriety of capping the liability limits in the cases of oil spill where the
implications of one incident are immense, costs involved in the cleanup are massive and the
damage caused to the natural resources and private parties is also grave.
India which has a vast coastline is susceptible to pollution by maritime oil spill accidents
and in the wake of recent incidents it has become imperative to analyze the Indian scheme of
laws governing oil spills and see whether it is appropriate enough to meet the challenges of
claims arisen by such an incident. The paper seeks to analyze the international liability regime in
case of marine based oil pollution and the status of Indian laws in dealing with accidental oil
spills. Before analyzing the liability regime it would be desirable to discuss briefly the different
ways in which oil spill might occur.

II.OIL SPILL
Oil spills attracts great public attention because of the visible nature of the incident and
the fact that people encounter it generally either first hand on bathing beaches or from tragic

11
The Torrey Canyon was the first spectacular oil spill that occurred in March 1967 when the giant Liberian tanker
ran aground the rocks off the Sicily isles, Britain. It brought to light the considerable deficiencies in the international
and private law relating to civil liability for oil pollution. See http://www.itopf.com/information-services/data-and-
statistics/case-histories/tlist.html for details.
12
Phillippe Sands Q C, Principles of International Environment Law, 448 (Cambridge University Press, New York
2nd ed./2009).
13
Since the coming into force of International Convention on Civil Liability for Oil Pollution Damage in 1969.
Hereinafter, CLC.
pictures of ruined beaches, tar-soaked waterfowls and poisoned fishes on television or the
internet in case of spectacular oil spills14 like Deep Water Horizon or MS Chitra.
Physical properties of oil are as such that it does not mix with water so when large
quantities of oil are discharged into the aquatic environment a thick layer of crude oil or refined
petroleum oil spreads out in a layer that hovers on top of the ocean. This release of oil into the
marine environment is referred to as oil spill. The crude oil after floating on ocean for some time
changes its properties. Some of the oil evaporates, some weathers and some emulsifies with
water to form an emulsion resembling chocolate pudding. This thickened emulsion then goes
through wear and tear by wind and waves and forms tar balls.15 An Oil spill might occur due to
various causes. It could be due to an operational or an accidental discharge in the sea/ocean.
A. Operational Discharges
An oil spill might be caused by operational discharge from a crude oil tanker or ship. The
problem is bigger in case of tankers. After the tanker has discharged its cargo, a proportion of it
remains in the tanks, caught mainly on the horizontal surfaces of the joists which give the tank its
structural strength. Such clingage has to be removed regularly to avoid the risk of explosion and
this was traditionally done by washing the tanks with water. This water is then to be discharged
into the sea. Prior to 1960’s this was done without separating the water from oil. After the 1962
revision of the 1954 International Convention for the Prevention of Pollution of the Sea by Oil, a
technical solution of the oil discharge problem was designed by the oil industry. The process so
designed is called Load on Top(LOT) which is an excellent anti oil pollution device however,
not all the tankers have adopted the device due to some practical difficulties.16
Other then tankers, vessels which burn bunker C or other heavy fuel oil face the problem
of fuel oil purification. During the course of a voyage the purification of the fuel oil produces a
quantity of sludge which is stored in sludge tanks but eventually has to be discharged to a shore
reception facility or to the sea. Also almost inevitably pumps, tanks and machinery leak small
quantities of various types of oil mainly lubricating oil. This can amount to appreciable
quantity.17 Disposal of oily ballast is also a problem that many dry cargo ships face. This
problem arises where the vessel has to use its bunker tanks for water ballast to ensure stability.

14
R B Clarke, Marine Pollution, 33 (Oxford Science Publication, Oxford, 2nd ed./1989).
15
Please see http://response.restoration.noaa.gov for details of formation of tar balls.
16
For details see supra note 4 pg 8-22.
17
Supra note 4 at 9.
The oily ballast is normally discharged only when the vessel is nearing port.18 Tarring of Goan
beaches is an example of an operational discharge by a ship near the coast.
The International Convention for the Prevention of Pollution of the Sea by Oil, 195419
adopted under the auspices of IMCO20 recognized that most oil pollution resulted from routine
shipboard operations such as the cleaning of cargo tanks. OILPOL’54 prohibited the dumping
of oily wastes within a certain distance from land and in ‘special areas’21 where the danger to
the environment was especially acute. In 1962 the limits were extended by means of an
amendment adopted at a conference organized by IMO.22

B. Accidental discharges
Accidental spillage of oil from ships occur either in association with an operational
procedure aboard ship or with an accident to the vessel. Examples of accidents that might occur
during operational procedure are -while loading or discharging oil cargo, lightening, bunkering,
ballasting or deballasting. The most likely causes of accidental oil spills are grounding and ship
to ship collision. Structural failures, foundering and loading-unloading errors can also cause
sizeable spills; in these cases the human element, which can play a role also in case of grounding
and collision is particularly important.23 Generally, the vast majority of incidents occur in
association with operational procedures aboard the ship but the vast majority of oil spills occur
as a result of accidents to the vessels.
From 1967 Torrey Canyon disaster till the recent sinking of Chitra in the Arabian sea in
2010, the world has witnessed many accidental spillages by ships that have shook human
sensibilities from time to time. A series of tanker accidents occurred in and around United States
waters in the period of 1976-1978 the most important of them being the stranding of Argo
Merchant that ran aground off Massachusetts in December, 1976.24 On March 16, 1978 the

18
Ibid.
19
Hereinafter OILPOL’54.
20
IMCO or Inter-Governmental Maritime Consultative Organization is the United Nations specialized agency with
responsibility for the safety and security of shipping and the prevention of marine pollution by ships. In 1948, an
international conference in Geneva adopted a convention formally establishing IMCO. In 1982, the name of the
organization was changed to International Maritime Organization(IMO). For a brief history of establishment of IMO
see http://www.imo.org/About/HistoryOfIMO/Pages/Default.aspx.
21
Areas defined in Annex A of the Convention.
22
Please see www.imo.org for details.
23
Andrea Bigano and Paul Sheehan, “Assessing the Risk of Oil Spills in the Mediterranean: the Case of the Route
from the Black Sea to Italy”, Working Paper no. 32 FEEM 2006 available at http://ssrn.com/abstract=886715.
24
Argo Merchant was a small Liberian flagged oil tanker, carrying 27,000 tons of oil that ran aground and
subsequently sank southeast of Nantucket Island, Massachusetts. Argo Merchant with its tainted history of
world witnessed another catastrophic accident that of the Amoco Cadiz25 which was then
considered to be the worst oil spill till that time as it destroyed marine life extensively and ruined
the beaches. Exxon Valdez disaster followed in 1989 which was highly televised and led to a
string of litigation and ultimately the passing of Oil Pollution Act, 1990 in the United States of
America. February 1999 saw the sinking of Panamanian-flagged, Japanese-managed wood chip
carrier New Carissa26 and 70,000 gallons of fuel spilled. In December, the same year, Erika27
sunk off the cost of France highlighting yet again the importance of maintenance of vessels and
the need of sound international measures to check such incidents which could have been
prevented provided due care. The sinking of Prestige28 in 2002 off the Galician coast polluted
beaches along the French and Spanish coast highlighting yet again the question of liability in
such accidents where multiple parties are involved. March 2009 witnessed the Southeast
Queensland oil spill in Australia when unsecured cargo on the container vessel the Pacific
Adventure went down the sea during a cyclone.29
Apart from vessel, offshore installations and gas pipelines are major contributors to oil
pollution. When an oil well is being drilled, mud is pumped down the well. These maintain a
head of pressure and prevent a “blow out’ when oil is struck. An offshore platform may suffer
from a blow out, resulting in an uncontrolled discharge of oil.30 Immense precautions are taken
to prevent blow outs, nevertheless, accidents happen occasionally and great quantities of oil may
be released into the sea before the blow out is brought under control. Some of the notable spills

involvement with a dozen shipping accidents caused huge public concern as the oil slick threatened New England
resorts and Georges Bank fishing ground. See www.imo.org for details.
25
Amoco Cadiz ran aground Portsall Rocks 5 km from the port of Brittany, France. The tanker, filled with 210,000
tons of crude oil, lost its entire cargo, covering more than 130 beaches in oil. See infra note 67.
26
New Carrisa was a 639 foot-wood chip carrier with 400,000 gallons of bunker and diesel fuel aboard. The vessel
had split into two parts due to surf action and intentional burning, resulting into fire. Approximately 140,000 gallons
of fuel burned and up to 70,000 gallons of fuel spilled outside the bay of Coos, Oregon. See
http://www.csc.noaa.gov/magazine/2006/02/article2.html for details.
27
Erika, a Maltese tanker, controlled by two Liberian companies and time chartered by a Bahamian company to an
intermediary company and voyage chartered by the intermediary to a subsidiary of a large French-based oil
company, carrying 30,884.471 metric tons of fuel ran into storm soon after entering the Bay of Biscay and sank
releasing tons of oil into the sea around Brittany, France. See
http://www.imo.org/OurWork/Environment/PollutionPrevention/OilPollution/Pages/Background.aspx#6 for details.
28
Prestige was carrying 77,000metric tons of cargo of two different grades of heavy fuel oil when one of its twelve
tanks burst during a storm off Galicia in northwestern Spain. See http://www.itopf.com/information-services/data-
and-statistics/case-histories/plist.html#prestige for details.
29
The ship Pacific Adventure containing 230 tonnes of fuel oil, 30 tonnes of other fuel and 21 shipping containers of
ammonium nitrate spilled into the Coral Sea, north of Moreton Bay during cyclone Hamish. See news item reported
March 11, 2009 13:28 hrs available at http://www.brisbanetimes.com.au/news/queensland/oil-spills-from-
ship/2009/03/11/1236447253484.html.
30
Supra note 14 at 58.
caused by blow outs are Ekofisk 1977,31 Pemex Ixtoc I 1979,32 Texaco 1980,33 Montara 200934
and the recent BP’s Deep Water Horizon.35 Niger delta is notorious for oil spills which have
become a common phenomenon. According to the UN Human Development Report, around
6,817 oil spills occurred between 1976 and 2001.36

III. International Conventions on Oil Pollution: Evolution across the Years

Water knows no boundaries and seas are beyond state desires of absolute sovereignty.37
Marine pollution affects the environment which is a part of the collective commons. As Posner
points out that in our increasingly complex and interconnected world, problems emerge that
cannot be solved by the actions of one nation.38 Oil spill is one such problem area that exceeds
the scope and capabilities of an individual state to solve the problem in the absence of an
effective international legal regime. Marine based oil pollution is an international problem39 and
can be categorized as “collective action problem”.40 In 1954, the first ever international
convention on the subject of liability of the ship-owners for sea pollution came into existence.41

31
A well in Ekofisk fields in the Norwegian sector of the North Sea blew out in April 1977, discharging some
20,000-30,000 tons of oil. See http://www.incidentnews.gov/incident/6237 for details.
32
Ixtoc I was an exploratory well being dug by the Mexican owned company Pemex in the Bay of Campeche. In
June 1979, the well suffered a blow out and caught fire. It took some 9 months to bring it under control and by the
time the well was capped it had discharged some 350,000 tons of crude oil into the Gulf of Mexico. See
http://www.incidentnews.gov/incident/6250 for details.
33
In 1980, Texaco offshore station had a blow out and dumped an estimated 400,000barrels of crude oil in to the
Gulf of Guinea. See http://www.rrc.state.tx.us/data/drilling/blowouts/allblowouts80-89.php for details.
34
The Montara well head platform had a blow out in the Montara oil field in Timor sea in august 2009 releasing a
large quantity of oil in the sea. The well was capped in November 2009. See
http://www.ret.gov.au/Department/responses/montara/factsheets/Pages/FactSheets1.aspx for details.
35
Supra note 1.
36
Niger Delta Human Development Report, 2006 available at
http://hdr.undp.org/en/reports/nationalreports/africa/nigeria/name,3368,en.html
37
Article 17 of the United Nations Convention on the Law of the Sea(hereinafter UNCLOS) guarantees the right of
innocent passage to all ships. It reads- Subject to this Convention, ships of all States, whether coastal or land-locked,
enjoy the right of innocent passage through the territorial sea.
38
Eric A. Posner, “The Perils of Global Legalism”, 38 Denv. J. Int’l. L. & Pol’y 687 (2009).
39
Supra note 4 at 24.
40
Posner draws analogy between goods and services that private organizations in a state cannot provide to citizens
like transportation and national defense with same types of problems that exist which national governments cannot
solve on their own. He categorizes them as “collective action problems” and sites pollution as an example along
with war, overfishing, disease, terror, global macroeconomics shocks and transnational crimes.
41
The International Convention for the Prevention of Pollution of the Sea by Oil, 1954(OILPOL) was adopted under
the auspices of IMCO that was later amended in1962, 1969 and 1971.
The establishment of IMCO in 1958 was a reinforcement of the pledge undertaken by the
international community to curb the problem of marine pollution.42
Till date the international community has evolved a comprehensive legal regime to
regulate the transport of oil by sea. Environmental catastrophes like the Torrey Canyon, Exxon
Valdez etc. have time and again highlighted urgency of strengthening the international legal
order and have helped in evolving the legal regime in place for curbing the menace of oil spill.
The international community has developed a complex and bewildering range of rules to
minimize oil pollution from ships. E.D. Brown43 adopts a system of classification of the rules to
distinguish them on the basis of- 1) provisions for the enforcement of standards; 2) coastal states
right of intervention; 3) coordinated international response to oil pollution incidents; 4) civil
liability regime. For the purpose of this paper only the rules falling under the fourth category
i.e., rules establishing civil liability regime would be analyzed.
However before analyzing the civil liability regime it would be reasonable to give a brief
outline of the international conventions which regulate marine based pollution of the sea by oil.
OILPOL played the central role for the period of 1954-71 which was superseded by the
International Convention for the Prevention of Pollution from Ships, 1973 as modified by the
Protocol of 1978(MARPOL73/78). Both OILPOL and MARPOL embody standards specifically
relating to oil pollution caused by intentional discharges from ships or accidental discharges
which are avoidable by improving tanker design and operating procedure. Prevention measures
mainly focus on the technical requirements such as ship structure standards and safety standards,
which should be enforced by the contracting states. Both the conventions try to ensure
compliance with these standards by making provisions for survey and certification of ships and
enforcement by state parties.44 However the introduction of such standards can do little to undo
the damage caused by oil spills.

Once there is an oil spill, immediate measures have to be taken to contain it, minimize the
damage and restore the natural environment as far as possible. And for that purpose international

42
Article 1(a) of the Convention, summarizes the purpose of organization “to provide machinery for cooperation
among Governments in the field of governmental regulation and practices relating to technical matters of all kinds
affecting shipping engaged in international trade; to encourage and facilitate the general adoption of the highest
practicable standards in matters concerning maritime safety, efficiency of navigation and prevention and control of
marine pollution from ships”. Also see supra note 20.
43
E.D. Brown, The International Law of Seas 377 (Dartmouth Publishing Company, Sydney Vermont, 1st ed/2004).
44
Id at 378.
arrangements have a very important role to play. Realizing the importance of the international
cooperation in matters relating to exchange of information respecting the capabilities of States to
respond to oil pollution incidents the preparation of oil pollution contingency plans, the
exchange of reports of incidents of significance which may affect the marine environment or the
coastline and related interests of States, and research and development respecting means of
combating oil pollution in the marine environment45 an International Convention on Oil
Pollution Preparedness, Response and Co-operation46 was entered into in 1990. The preamble
to the OPRC includes a number of provisions of relevance to general rules of international
environmental law noting the ‘importance of precautionary measures and prevention in avoiding
oil pollution in the first instance’ and taking ‘account of the polluter-pay principle as a general
principle of international environmental law.’ The convention commits parties to take all
appropriate measures in accordance with its provisions to prepare for and respond to an oil
pollution incident. It is important to note that OPRC’s provisions are applicable to ships, offshore
units, sea ports and oil handling facilities. Prior to OPRC, there were regional agreements on
similar lines- the Bonn Agreement for Cooperation in Dealing with Pollution of the North Sea by
Oil and other Harmful Substances, 1983,47 the Copenhagen Agreement between Norway,
Denmark, Finland and Sweden Concerning Cooperation in taking measures against pollution of
the Sea by Oil, 1971.

Prevention and preparedness covered, now we come to the question of liability. Rules of
liability and compensation for damage to the marine environment establish an incentive to
prevent harm and also may require restoration. UNCLOS requires the states to cooperate in the
implementation of existing international law and the further development of international law
relating to responsibility and liability for the assessment of and compensation for damage and the
settlement of related disputes, as well as, where appropriate, development of criteria and
procedures for payment of adequate compensation, such as compulsory insurance or
compensation funds.48

45
Infra preamble.
46
Hereinafter OPRC, 1990.
47
The 1983 Convention replaces the earlier Bonn Convention, 1969 and provided for active cooperation in
responding to oil pollution which presented a grave and imminent danger to the coast or related interest.
48
Article 235.
 Following the Torrey Canyon disaster, an international conference held at Brussels
adopted the International Convention on Civil Liability for Oil Pollution Damage, 1969(CLC).
The CLC imposed strict but limited liability on owners of ships from which oil was discharged
for cleanup costs and private damages, and introduced compulsory liability insurance. Two years
later, The International Convention on the Establishment of an International Fund for
Compensation for Oil Pollution Damage, 1971(Fund Convention) set up an international fund
which provided compensation in excess of the vessel owner’s liability under the CLC, or where
the owner is insolvent or not liable under the CLC. CLC, 1969 was amended by a Protocol in
1976(CLC PROT 1976) which entered into force in 1981 and simply changed the unit of account
used in the convention. Another amendment was made by a protocol in 1984(CLC 1984) which
did not enter into force. An IMO conference in 1992 adopted the Protocol of 1992 to amend the
CLC, 1969(CLC PROT 1992). After entering into force CLC 1969 and CLC PROT 1992 are to
be read together as a single instrument as the International Convention on Civil Liability for Oil
Pollution Damage, 1992(CLC 1992).
The Fund Convention 1971 was amended by a Protocol in 1976 bringing it in line with
the CLC 1969 by changing the Unit of the account from Gold franc to the SDR. More substantial
amendments were introduced by a Protocol in 1984(FUND PROT) which unfortunately did not
come into force. An IMO conference in 1992 adopted the Protocol of 1992 to amend the Fund
Convention 1971(FUND PROT 1992). Once in force, the Fund Convention 1971 and the FUND
PROT 1992 to be read and interpreted together as a single instrument and known as the
International Convention on the Establishment of an International Fund for Compensation for Oil
Pollution Damage, 1992(Fund Convention 1992). United States is not a party to the CLC.
In the year 2001, International Convention on Civil Liability for Bunker Oil Pollution
Damage49 was adopted to adopt uniform international rules and procedures for determining
questions of liability and providing adequate compensation in case of pollution resulting from
the escape or discharge of bunker oil from ships.50
Before proceeding to the liability and compensation regime, a point that needs to be kept
in mind is that although civil liability has been a subject of international conventions for decades,
the United States has chosen to opt out for its own system outside the international regime. It

49
Hereinafter the Bunker Convention 2001.
50
The convention does not apply to pollution damage as defined in the CLC.
follows a special law enacted for oil pollution damage, the Oil Pollution Act, 1990(OPA) which
has higher liability caps with likelihood of additional liability under the state laws.
The present paper purports to analyze only the International civil liability regime
excluding the analysis of the American liability regime.

IV. Liability and Compensation Regime

Implications of oil spills are of highly dramatic magnitude and the question of liability
and the consequential claims arising out of it is complex. For the purpose of this paper, liability
and compensation regime would be studied under two heads-one under common law principles
and second the international liability and compensation regime.

A. Liability under Common Law Principles

Oil is the major energy source on which state economies run. In a spillage scenario when
oil lies wasted on top of the sea, the effects of accident are bound to be farfetched. First and
foremost there is loss of oil, which is in itself a prized commodity. Secondly, the oil industry and
industries dependent on it suffers loss too. There is an immediate loss of the source of the
pollution, i.e., the ship or tanker or an offshore instillation which met an accident and caused the
spill. Also there is an immediate injury to the natural resource economic valuation of which is a
daunting task in itself and beyond the scope of the present paper.51 Beaches are destroyed which
straight away affects the tourism industry. Owners of shoreline hotels, resorts, recreational areas,
and other tourist-based businesses suffer economic losses. In case of a small island state whose
economy is run on tourism, an oil spill could devastate the entire economic structure of the state.
Fishing industry is again directly affected as fisheries are destroyed. Livelihood of fisherman is
destroyed, and consequently there is loss of export and revenue. Owners and charterers of ships
unable to sail across the area of the spill, as well as owners of cargo delayed by the obstacle, may

51
Some authors have tried to evaluate the economic loss incurred to the natural resource. See Christine M.
Augusyniak, “Economic Valuation of Services Provided by Natural Resources: Putting a Price on the ‘Priceless’,”
45 Baylor L. Rev. 389 (1993).
incur losses.52 Marine flora and fauna of course suffers. In case of accidents involved in offshore
installations there can be injury to life as well.53
Victims of oil spill are thus multiple in number and varied in there degree of effect on
them. Costs involved in cleanups are massive. The million dollar question then arises as to who
is to bear the costs and to what extent the cargo owners, carrier be made liable? In view of the
fact that multiple parties are involved in the whole array of transaction involving oil transport it
becomes imperative to analyze the liability of insurer and the other parties involved in the chain
of transaction. What is the extent of liability to be incurred-strict or absolute? What in case of
negligence?
In some cases, it would not be difficult to show that the stranding or the collision which
caused the casualty which in turn gave rise to the spillage was brought about by a negligence for
which one or more ship-owners were liable. A spill might be caused or brought about negligent
failure in duty by a member of crew or by poor construction or inadequate maintenance which
could be accounted negligence on the part of the owner.54 At the same time there might be cases
where accident cannot be directly attributed to negligence.55 Theoretically speaking, the tort of
nuisance, strict liability (Ryland v. Fletcher)56 or trespass can be applied to an escape of oil and
impose liability without proof or fault.57 It is submitted here that applying the rule in Ryland v.
Fletcher would be difficult in case of oil escaping from oil tankers as the rule is based on non
natural use of land, collection of dangerous substance and its consequent escape whereas oil
tankers are specifically designed to carry the subject in question i.e., oil. Tort of nuisance can be
said to be having a more potential application especially in its public nuisance variety. 58 In order
for a public nuisance to exist, there must be proof that the activity substantially interferes with
the common rights of the public at large.59 Trespass requires some element of direct interference

52
Recently as a consequence to the Mumbai spill, exporters from Uttar Pradesh’s Moradabad district incurred heavy
losses following the suspension of movement of ships to and from the ports of Mumbai and Nhava Shava. See
“Mumbai Coast Oil Spill Stops Ship movement; Moradabad Exporters Incur Losses” ANI, August,14, 2010
available at http://www.dailyindia.com/show/391758.php.
53
As seen in the case of BP Oil spill, wherein 11 workers were killed when the explosion caused the blow out.
54
Robert P. Grime, Shipping Law, 218 (Sweet and Maxwell London 1st ed/1978).
55
Cases where crude oil discharged to save the vessel, or a vessel might catch fire as the result of the act of some
malicious third party for whom no one identifiable is responsible.
56
(1868), L.R. 3 H.L. 330.
57
Supra note 54 at 218.
58
Ibid
59
A public nuisance “is an offense against the State and is subject to abatement or prosecution on application of the
proper governmental agency. See Michael L. Rustad Thomas F. Lambert Jr. & Thomas H. Koenig,
with land, goods or person, or interference brought about by some fault on the part of the
defendant. A trespass claim is more suitable for plaintiffs who can prove that oil washed up on
their beach.60
A thing worth noting here is that in case of negligence, consequential loss cannot be
recovered in ordinary court proceedings. The tort of negligence is primarily concerned with
damage that is physical damage caused to a person or property. No doubt oil spills cause
physical damage but the range of claimants may vary from those whose interests are affected
directly. Pollution causes loss to those who have an economic stake in the unpolluted nature of
the sea and the shore-those who earn their living from tourism or from fishing.61 Most
importantly the greatest loss is suffered by the state or to say national government agency which
spends large sums of money in cleaning up costs.62
It thus becomes apparently very clear that it is not pragmatic to apply ordinary rules of
common law for the determination of the costs and consequence of oil spillage. One important
reason for non reliance on common law principles is that in case of a transaction of oil there are
multiple parties involved. For example in case of an accident involving a ship/vessel there is the
owner of the cargo, owner of the ship, party who has chartered the ship for voyage, the ship
manufacturer, the insurer or party responsible for the maintenance of the ship. Also a ship can be
registered in one state and could be flying under the flag of convenience of some other state. An
oil tanker can be owned by one company and could be chartered by another company. In case of
an offshore installation, the oil platform could be owned by one corporation and could be
licensed to another company for drilling oil.
Therefore it is quite possible that if liability is left for common law to be determined that
in case of a disaster parties involved would be inhibited from taking necessary and swift action

“Reconceptualizing State AG Parens Patriae as Crimtorts” Research Paper 10-43, Suffolk University Law School
available at http://ssrn.com/abstract=1673529.
60
Bruce B Weyhrauch, “Oil Spill Litigation: Private Party Lawsuits and Limitations”, 27 Land & Water L. Rev. 370
(1992).
61
Supra note 54 at 220.
62
Every oil spill is different with its own unique set of conditions and the cost of clean up varies considerably from
one incident to another, depending on a number of interrelated factors. There cannot be an average cost of clean up
therefore. The type of oil, the location of the spill and the characteristics of the affected area are generally the most
important technical factors that help in determining the costs. Also, the quality of the contingency plan and of the
management and control of the actual response operations are crucial. See http://www.itopf.com/spill-
compensation/cost-of-spills/ for details on costs of oil spill.
because of the general uncertainty as to who is to be held responsible.63 At this juncture, it would
be apt to cite the example of vessel Erika64 which went down the Bay of Biscay in December
1999. After eight year litigation, on 16 January 2008 the Criminal Court of Paris rendered the
judgment and extended criminal and civil liability for oil pollution beyond the traditionally liable
ship owner to include the vessel’s classification society and her oil company charterer. The court
found culpable conduct by each of these maritime safety-chain entities and found that this
conduct caused or contributed to the oil pollution. It was for the first time that apart from the ship
owner and insurer the liability was extended to the classification society and charterer alike. The
judgment can be said to be ground breaking in the sense that it signals giving a stern warning to
ship owners, managers, classification societies, and oil companies alike: adhere to safe shipping
practices or face criminal charges and potentially limitless civil liability for endangering
seafarers and causing harm to the environment.65
Apart from the issues of standing and cause of action, question arises as to the recovering
damages for the injury to, destruction of, or loss of natural resources not subject to property
rights. Assessing damages to injury to natural resources is a complex issue as it is difficult to
evaluate market value of the same. Some methods of assessing damages are on the basis of
economic valuation techniques or the cost of restoration matter.66 It is interesting to see the
approach of U.S in case of the Amoco Cadiz oil spill. In response to the spill, claims were
submitted by the French state and local governments for damage to un-owned natural resources
damage to whom were estimated to be at 4.8million US dollar.67 The claim was an “attempt to
evaluate the species killed in the intertidal zone by the oil spill and to claim damages in
accordance with that value determination.68 The claims were rejected by the U.S court69 because
the resources claimed to be damaged were ‘subject to the principle of res nullius and is not

63
Supra note 54 at 220.
64
See supra note 27.
65
Vincent J. Foley& Christopher R. Nolant, “The Erika Judgment- Environmental Liability and Places of Refuge:A
Sea Change in Civil and Criminal Responsibility that the Maritime Community Must Heed”, 33 Tul. Mar. L.J. 41
(2009).
66
Edward H.P. brans, Liability for Damage to Public Natural Resource Standing Damage and Damage Assessment,
(Kluwer Law International 2001) available at www.dundee.ac.uk/cepmlp/journal/html/vol10/article10-1.pdf.
67
“Assessing the Social costs of Oil Spills: The Amoco Cadiz case Study” National Ocean Service, U.S Dept of
Commerce, (1983) available at http://www.archive.org/details/ecologicalstudyo00noaa.
68
In re Oil Spill Amoco Cadiz, 1998 U.S. Dist. Lexis 16832 29.
69
The case was decided on the basis of French law.
compensable for lack of standing of any person or entity to claim thereof.’ 70 The court concluded
that ‘neither the state nor the communes has standing to assert claims for damage to the
ecosystem.’71
In incidents of damage to natural resources, collective interests are primarily infringed.
Such damage is difficult t recover under tort law because it is traditionally focused on individual
material interests and no as such personal interests are said to be infringed and so no one has
standing to sue. However, in existence of special laws or doctrines, standing and cause of action
to claim compensation for such damage can be specifically provided to government entities.72
It was due to the difficulties in extending principles of tort law liability in case of damage
to un-owned natural resources, some states enacted special statutes and treaties and protocols
directed at harmonizing national rules on civil liability for damage caused by potentially
dangerous activities, such as the transportation of oil as cargo by tankers.

B. International Liability and Compensation Regime

As we have discussed earlier in the paper that international conventions with respect to
oil pollution can be distinguished between, on the one hand, measures aiming at prevention ex
ante and on the other hand measures aiming at compensation ex post. The prevention of marine
pollution is subject inter alia to the OILPOL and MARPOL Conventions. The issue of civil
liability and compensation for oil pollution is mainly regulated by international conventions
developed within the framework of the IMO by the CLC and Fund Convention. Apart from the
IMO governed convention, the major tanker owners of the world agreed to a voluntary scheme
on liability-TOVALOP73which was supplemented in 1971 by CRISTAL,74 an agreement
between cargo owners, the oil companies to create fund to support the costs of cleaning up which
arises after oil spills.
i. Voluntary Liability Regime
TOVALOP and CRISTAL together formed a voluntary scheme to settle the question of
liability and financial cover of the costs oil spillage. The main effect of TOVALOP was to
70
Supra note 68. Ibid.
71
Id at 30.
72
Supra note 66.
73
Tanker owners’ Voluntary agreement concerning Liability for Oil Pollution signed on 7 th January, 1969 by B.P
Tanker Company Ltd., Esso Transport Co. Ltd., Gulf Oil Corporation, Mobil Oil Corporation, Shell International
Petroleum Company Ltd., Standard Oil co. of California and Texaco Inc.
74
Contract Regarding an interim Supplement of Tanker Liability for Oil Pollution.
impose upon tanker owners which are a party to it, an obligation to remove a spillage of oil or to
reimburse government for its costs in removing the spill. There was no liability in case the owner
took all reasonable care to avoid the spill. The aim of TOVALOP was not to cover claims for
damage caused by spill but the costs incurred by the owners or by a government of taking action
to remove it or threat of it. Removal means reasonable measures for preventing or minimizing
damage by pollution, which itself is defined as including only physical contamination and
excluding fire, explosion, consequential and ecological damage.75 TOVALOP was administered
by Tankers Owners pollution Federation. TOVALOP imposed limited liability.76 CRISTAL was
simply a method of establishing a fund of money, provided by the oil companies, as cargo
owners, which can supplement the liabilities imposed on tanker owners by TOVALOP or by the
CLC. Unlike TOVALOP, parties to CRISTAL were not the tanker owners, but the various oil
companies “engaged in the production, refining, marketing, storing, trading or terminaling of oil,
or those who receive oil in bulk for its own consumption. CRISTAL was limited in its
application to spills from tankers that are at that time carrying oil in bulk. Ballast runs were not
covered. In February 1997, both the voluntary agreements expired and were not renewed keeping
in view the introduction of the new international civil liability regime.

ii. Civil Liability Regime

Given the difficulties in establishing the direct liability of states in relation to
environmental damage under the state responsibility or liability regime, an alternative system has
been developed based on the civil liability regime, these regimes recognize the competence of
national courts , either in the state where the damage was caused or in the state of nationality of
the polluter, to decide cases regarding the liability of the actual parties causing damage outside
the state in which they are based. Such decisions thus become enforceable in other states parties
to the agreement. Most important features of civil liability regimes are- strict liability of the
operator, limitation of this liability at a certain ceiling, i.e, channeling of liability, and mandatory
insurance or other form of financial security to cover the liability of the operator.
The 1969 and 1992 CLC govern the liability of ship owners for oil pollution damage. The
Conventions lay down the principle of strict liability for ship owners and create a system of

75
Supra note 54 at 22.
76
TOVALOP’s compensation scheme was keyed to the tonnage of the vessel: $160.00 per ton, with a maximum
amount of compensation available of $16.8million for a vessel of 105,000gross tons.
compulsory liability insurance. The 1971 and 1992 Fund Conventions establish a system
providing additional compensation to victims when compensation under the respective CLC is
inadequate. A third tier of compensation in the form of a Supplementary Fund was established on
March 3, 2005, by means of a protocol adopted in 2003 (Supplementary Fund Protocol). The
1971 Fund Convention, the 1992 Fund Convention, and the Supplementary Fund Protocol each
establish an intergovernmental organization, the 1971 Fund, the 1992 Fund, and the
Supplementary Fund, respectively, with their headquarters in London. Collectively, these
organizations are referred to as the IOPC Funds.
The 1992 Conventions place liability for an oil discharge on the registered owner of the
ship from which the oil originated.77 Ship owners are strictly liable for pollution damage and are
obliged to carry liability insurance for this purpose.78 A ship owner is exempt from liability only
if he proves that the damage- (a) resulted from an act of war, hostilities, civil war, insurrection or
a natural phenomenon of an exceptional, inevitable and irresistible character, or (b) was wholly
caused by an act or omission done with intent to cause damage by a third party, or (c) was
wholly caused by the negligence or other wrongful act [by public authorities] for the
maintenance of lights or other navigational aids.79 Ship owners are normally entitled to limit
their liability to an amount calculated on the basis of the tonnage of the ship.
The amount to which ship-owners can limit liability was effectively increased by 50%,
from November 1, 2003, and now ranges from 4.51 million SDR (US$7.0 million) for small
ships up to 5000 GT to 89.77 million SDR (US$140 million) for large tankers. However, ship-
owners are deprived of the right to limit their liability if the pollution damage results from the
ship owner’s personal act or omission, “committed with the intent to cause such damage, or
recklessly and with knowledge that such damage would probably result”.80 Claims for pollution
damage may, under the Convention, be brought directly against the insurer. 81 Claims for
pollution damage under the 1992 CLC can be made only against the registered owner of the ship
concerned. This does not preclude victims from claiming compensation outside the Convention
from persons other than the owner. However, the Convention prohibits claims against the
servants or agents of the owner, the members of the crew, the pilot, any other person performing

77
Article III.
78
Article VII.
79
Article III.2.
80
Article V.2.
81
Article VII.
services for the ship, any charterer (including a bareboat charterer), manager or operator of the
ship, or any person performing salvage operations or taking preventive measures. This
prohibition does not apply if the pollution damage resulted from the personal act or omission of
the person concerned, “committed with the intent to cause such damage, or recklessly and with
knowledge that such damage would probably result.”82
The compensation payable from the 1992 Fund for a single incident is limited to an
aggregate amount which, as of November 1, 2003, totaled 203 million SDR (US$317 million),
including the sum actually paid by the ship owner (or the insurer) under the 1992 Civil Liability
Convention.83
V. Oil Spills in India

India has a vast coastline which is susceptible to pollution by a number of marine perils
especially by maritime oil spill accidents which affect sea flora and fauna and the lives of people
living in coastal areas earning their bread and butter from the sea. In the wake of recent Mumbai
oil spill, it is to be seen whether Indian law is appropriate enough to meet the challenges of
claims arisen by such an incident.
Oil spills are not uncommon on Indian coasts. Some of them go unnoticed in the media
because of lesser degree of damage caused to the environment.84 In 2010 itself, apart from the
heavily publicized MV Chitra, there was an oil spill incident reported near Gopalpur in Orissa
when approximately eight tons of oil escaped from vessel MV Malavika.85 In 2009, two
maritime accidents rang alarm bells of possible oil spills in Mangalore 86 and Paradip.87

82
Article III.4 (a-f).
83
Article 4 (4) of the Fund Convention, 1992.
84
Since 1982 till November 2010, there have been approximately seventy minor and major oil spills of different
types across the Indian waters. Some of which have not even been assessed as to the quantity, type and impact of the
same. For details of the number of spills across Indian coastal waters see “Safety of Offshore Installations” 11(2)
Blue Waters Newsletter on Marine Environment Security 26 (2010).
85
On April 12, 2010 at 1600hrs the barge Sneh IV whilst casting off made contact with MV Malvika in way of fuel
oil tank No 4 Starboard, near Gopalpur in Orissa, rupturing ship’s hull resulting in spillage of fuel oil from the said
tank. See ibid.
86
MV Asian Forest, with 2007 registration, had sailed out from New Mangalore Port with 13,600 MT of iron ore
fines to Zhavgjiagang in China at around 09.30hrs on July 17, 2009. The vessel, which started sinking due to a
heavy list on July 18, was grounded completely to about 27 meter depth, six nautical miles away from New
Mangalore Port on July 19. The ship was carrying 360 tonnes of oil and thus sparked a threat of a possible oil spill.
However, the ship was salvaged by the coast guard ship SANKALP and there was no oil spillage. See
http://www.deccanherald.com/content/43896/asian-forest-salvage-operations-begin.html for details.
87
The Mongolian vessel, Black Rose, sank off Paradip port on September 9 while transporting iron ore to China.
The sunken vessel had about 924 tonnes of furnace oil and 48 tonnes of diesel for running its diesel engines. See
However, because of swift action undertaken by the concerned agencies in mitigating the oil
pollution threats and quick clean-up action there were no environmental disasters of high
magnitude. In November 2009, the Fourteenth National Oil Spill Disaster Contingency Plan
(NOS-DCP) and Preparedness Meeting88 stressed on the need to review preparedness and
response capabilities, with a view to prepare all agencies to respond to any contingency which
may arise out at sea. Also, in the wake of mystery oil spill affecting large tracts of Gujarat and
Maharashtra coast,89 an urgent requirement of setting up a modern laboratory for undertaking oil
finger printing was expressed.
The spill in May 2010 highlighted the hazards of the offshore oil exploration and
production and posed an important question as to the preparedness of the state in case if an
accident of the magnitude of BP occurs in Indian waters. Are we prepared to tackle the menace
which is a byproduct of technological advancement and development? The Fifteenth National
Oil Spill Disaster Contingency Plan (NOS-DCP)90 which was held in the shadow of BP disaster,
deliberated upon establishing Tier-I91 facilities in major ports, establishment of oil spill response
organization for tackling large oil spills, preparation of contingency plan by the coastal states for
oil pollution, legislative efforts for NOSDCP, establishment of coastal bio-shield, ocean
monitoring through satellites, port reception facilities, utilization of oil cess fund, etc.92

“Oil spill fuels eco-dissaster fears in Paradip - The Times of India”, available at
http://timesofindia.indiatimes.com/city/bhubaneswar/OilspillfuelsecodissasterfearsinParadip/articleshow/5039176.c
ms#ixzz16QN5bZSI.
88
The Fourteenth National Oil Spill Disaster Contingency Plan (NOS-DCP) and Preparedness Meeting was held at
Vigyan Bhavan, New Delhi on November 17, 2009. Vice Admiral Anil Chopra, AVSM, Director General Indian
Coast Guard, the Chairman NOSDCP steered the meeting. A total of 62 delegates from various Govt. Departments,
Ports and Oil Companies attended the meeting.
89
An oil spill crept across an area of about 100 km on the south Gujarat coast from August 3, 2009. The spill left a
disturbing trail from Ubhrath to Vapi. See “Mystery Oil Spill Strangling South Gujarat,” available at
http://www.dnaindia.com/india/report_mystery-oil-spill-strangling-south-gujarat_1280616.
90
The Fifteenth National Oil Spill Disaster Contingency Plan (NOS-DCP) and Preparedness meeting was held at
KDM Institute of Petroleum & Exploration, ONGC, Dehradun on June 18, 2010. Vice Admiral Anil Chopra,
AVSM, Chairman NOSDCP chaired the meeting. A total of 48 delegates from various Government Departments,
Ports and Oil Companies attended the meeting.
91
IMO has a three tired response concept classification, where in Tier 1 provides for Arrangements by the
Individual ports and oil handling facilities, to deal effectively with small operational spills. i.e., up to 700 Tons. Tier
two provides for the pooling of government or privately owned resources at a local level to respond incident which
may exceed, either in size, complexity or due to its remote location. Tier 3 provides for arrangements for a
combined national or international response, to a major oil spill, that cannot be dealt with effectively under the tier I
arrangements. Cooperative arrangements have been established between groups of oil companies for responding to
such events.
92
The Fifteenth National Oil Spill Disaster Contingency Plan (NOS-DCP) and Preparedness Meeting’s details
available at http://www.indiancoastguard.nic.in/.
 Before analyzing the liability regime in place in India for oil pollution we shall first
analyze the regime in place for tackling with the menace of oil spill.

A. Response to Oil Spills

After the adoption of the OPRC convention by the IMO in 1990 with final Act and ten
resolutions and promulgation of the convention in 1995, India became one of the few countries
that readily accepted the convention. Immediately, India started working on its provisions for
compliance, and promulgated its national contingency plan on oil spill response. The Indian
Coast Guard93 is the national authority under the National Oil Spill Disaster Contingency Plan
(NOSDCP) for coordination of response to oil spills in Indian waters.
The maritime zones of India are divided into three regions: West, East, and Andaman &
Nicobar. These regions are further divided into 11 districts. The regional commanders are
responsible for combating oil spills in their respective areas of responsibility under the Regional
Oil Spill Disaster Contingency Plans (ROS-DCP). There are three-response centers - one in each
region –with qualified response personnel and well-stocked inventory of response equipment. Oil
companies, ports, and oil platforms are to formulate their own local contingency plans and
should be able respond to oils spills within their designated areas. The Coast Guard handles oil
spills directly in the rest of the maritime zones. There are various resource agencies under the
NOS-DCP, with which the Coast Guard co-ordinate in case of oil spill.
The NOS-DCP prepared by India contains information regarding oil pollution reporting
procedures. It also contains actions to be taken by various parties on receipt of oil pollution
reports. Limited research in the field of oil spill management is carried out in India in national
laboratories. The Indian Coast Guard after the promulgation of the NOS-DCP, is conducting
various training programs for oil industry, ports, and other agencies on oil spill response free of
cost. These training programs are on the lines of the IMO pollution response training program
level 1 and 2.
Regional Contingency Plan sponsored by the UNEP for regional and bilateral agreement
for South Asia, under the UN Clean Seas Program is under finalization. The countries that will

93
The Coast Guard is the national agency for ensuring marine environment security in India. It involves protection
and preservation of the environment and prevention and control of pollution. Coast Guard Service was crystallized
in India by passing the Coast Guard Act in the Parliament on 18 August, 1978 which was brought into force on
August 19, 1978.
be covered by bilateral agreement are Bangladesh, India, Maldives, Pakistan, and Sri Lanka. This
Plan envisages mutual cross border assistance and movement of equipment and personnel to
respond to oil spills in the seas across the region.94

B. Liability Regime
The sources of the law of liability for maritime accidents in India are: international
custom, treaty law based on international conventions, decisions of the Indian courts and those of
foreign countries as recognized by the Indian courts. Maritime activities are governed by a host
of heterogeneous laws and the law relating to liability for maritime accidents has been codified
by the Merchant Shipping Act, 1958.95 The basic structure visualized in this Act is similar to the
statutes of many Commonwealth countries with certain essential modifications to suit the Indian
conditions.
The MSA applies to every Indian ship, wherever it is, and every foreign ship while it is at
a port or place in India or within the territorial waters of India or any marine areas adjacent
thereto over which India has exclusive jurisdiction in regard to control of marine pollution.96 It
does not apply to warships or ships owned or operated by a state for non-commercial purposes.
The MSA by virtue of Parts IX,97 X98, XA,99 XB,100 X C101 & XI A102 provides for a liability and
insurance regime. Part IX provides for all the rules that have to be taken care of concerning the
safety of a ship in a marine adventure including life saving appliances,103 radio requirements,104
fire appliances,105 signaling appliances,106 safety certificates107 and seaworthiness.108 Section 334

94
See “Implementation of OPRC Convention In India–A Report”, annex one available at
http://www.indiancoastguard.nic.in/.
95
Hereinafter MSA or the Act.
96
Section 352G.
97
Part IX deals with provisions related to Safety.
98
Part X deals with Collisions, accidents at sea and liability.
99
Part XA deals with the Limitation of Liability.
100
Part XB deals with the Civil Liability for Oil Pollution Damage. It was amended by the Merchant Shipping
(Amendment) Act, 2002.
101
Part XC deals with the International Compensation Fund. It was introduced by the Amendment Act, 2002 to deal
with the requirements of the international oil pollution compensation fund.
102
Part XIA deals with the Prevention and Containment of Pollution of the Sea by Oil.
103
Section 288.
104
Section 291 to 296.
105
Section 289 and 290.
106
Section 297.
107
Section 299 to 309A.
108
Section 335 casts an obligation on the owner to use all reasonable means to ensure seaworthiness of such a ship
for the voyage at the time the voyage commences and to keep her in a sea worthy state during the voyage.
prohibits an unworthy ship to be sent into the sea thereby endangering life of any person and
makes the master of the ship who knowingly takes such a ship to sea liable unless he proves that
such a voyage was reasonable and justifiable under the circumstances.109 The issue to be
examined here is- do these provisions make our coastline safer and empower us towards dealing
with the consequence arising out of marine oil pollution arising from maritime accidents?

i. Liability in Case of Pollution from Ships

Part X of the Act fixes liability in proportion to fault of parties in case of collision and
maritime accidents.110 In case, if consequent to an accident, the owner is made to pay damages
exceeding the proportion of his fault, then the owner may by way of contribution recover the
amount of the excess from owners of other ships.111 The inter play of section 286112 and 352 I (2)
(b)113 of the Act is to be kept in mind while examining liability in incidents of oil spill by ships.
The owner may limit his liability in respect of any oil pollution damage arising from any
one or more incidents114, as may be prescribed. The Supreme Court of India in World Tanker
Corporation v SNP Shipping Services Pvt. Ltd.115 pointed out that the whole purpose of
limitation of liability is to protect an owner against large claims far exceeding the value of the
ship and cargo, which can be made against him all over the world in case his ship meets an
accident causing damage to cargo, to another vessel or loss of personal life or personal injury.
Section 352 I (3)116, (4)117 and (6)118 insist on the mental element or knowledge for the
purpose of fixing liability which gives rise to complex issues in cases involving collision and

109
Section 334(2).
110
Section 345 provides for division of loss in case of collision whenever by the fault of two or more ships damage
is caused to one or more of them or to the cargo or to any property on board, the liability to make good the damage
or loss shall be in proportion to the degree in which each ship was at fault. In cases where it is not possible to
establish different degree of fault, liability shall be apportioned equally.
111
Section 347.
112
Section 286 proceeds to create the liability regime whereby, if any damage to person or property arises from the
non observance by any ship of any of the collision regulations, the damage shall be deemed to have been occasioned
by the willful default of the person in charge of the ship.
113
Section 352 I (2) (b) stipulates that no liability for pollution damage shall attach to the owner if he proves that
pollution damage was wholly caused by an act or omission done with the intent to cause such damage by any other
person.
114
Section 352H(a).
115
AIR 1998 SC 2330.
116
Section 352 I(3) reads-“where with respect to any incident, the owner proves that the pollution damage resulted,
either wholly or partially , from an act or omission done, with intent to cause such damage, by the person who
suffered damage, or from the negligence of that person, the owner shall be exonerated wholly or, as the case may
be, partially from the liability to that person.”
consequent oil pollution, in view of the strict liability regime under section 286. In addition to
352 I, 352 J which provides for the limitation of liability of the owner by virtue of 352J (2)
precludes the owner from limiting liability in case of negligence.119
Any owner desiring to avail himself of the benefit of limitation of liability must make
application to the High Court for the constitution of a limitation fund. Such fund may be
constituted either by depositing the sum with the High Court or by furnishing a bank guarantee
or such other security as, in the opinion of the High Court is satisfactory. 120 The fund is the
beneficiary of any right of subrogation arising from payments of damage, which any claimant
has against any other person.121 The High Court consolidates all claims against the fund
including those claims which arise by reason of subrogation against other interests.122
All ships carrying 2,000 tons or more oil in bulk as cargo are required to supply a
certificate confirming liability insurance.123 Any certificate issued outside India by a competent
authority is accepted at any port or place in India.124 Without such certificate, the ship is not
permitted to enter or leave any Indian port or place in the territorial sea of India.
Section 352W provides that where any person suffering pollution damage has been
unable to obtain full and adequate compensation for damage under the terms of the Liability
Convention on any grounds specified in the Fund Convention, the Fund shall be liable for
pollution damage in accordance with the provisions of the Fund Convention. The Fund will pay

117
Section 352 I(4)- “When any incident involving two or more ships occurs and pollution damage results there
from, the owners of all the ships concerned, unless exonerated under sub-section (3), shall be jointly and severally
liable for such damage which is not reasonably separable.”
118
Section 352 I (6) reads-“ Without prejudice to any right of recourse of the owner against third parties, no claim
for compensation for pollution damage may be made against- (a) the servants or agents of the owner or the members
of the crew; (b) the pilot or any other person who, without being a member of the crew, renders services for the
ship; (c) any charterer (howsoever described, including a bare-boat charterer), manager or operator of the ship; (d)
any person performing salvage operations with the consent of the owner or on the instructions of a competent public
authority; (e) any person taking preventive measures; (f) all servants or agents of persons mentioned in clauses (c),
(d) and (e), unless the incident causing such damage occurred as a result of their personal act or omission
committed or made with the intent to cause such damage, or recklessly and with knowledge that such damage would
probably result.”
119
Section 352J reads- “Limitation of liability. - (1) The owner shall be entitled to limit his liability under this Part,
in respect of any one or more incident, as may be prescribed. (2) The owner shall not be entitled to limit his liability
if it is proved that the incident causing pollution damage occurred as a result of his personal act or omission
committed or made with the intent to cause such damage, or recklessly and with knowledge that such damage would
probably result.”
120
Section 352 K.
121
See Section 352 I.
122
Section 352 M.
123
Section 352 N (1).
124
Section 352 O.
out to any claimant who has suffered damage on the grounds specified in Article 4 of the Fund
Convention.125 The claims must be made within three years of the date on which the claim first
arose, and no later than six years from the date of the incident which caused the damage.126 Any
action for a claim against the Fund for compensation must be brought before the High Court. The
Fund has the right to intervene as a party in any legal proceedings instituted in the High Court
against the owner or his guarantor.127 On payment of compensation for damage, the Fund or
Public Authority of India acquires by the right of subrogation all the rights against the owner or
his guarantor.128
Section 356 K empowers the central government to take measures for preventing or
containing oil or noxious liquid substance pollution. Thus, in case of the august Mumbai oil spill,
section 286 and 352(I), (W) and (J) are to be kept in mind while fixing liability. One important
point here is that section 352I of the Act imposes strict liability on all ship owners, irrespective
of their nationality or flag, in respect of cases of oil pollution damage.
It is stressed again here that liability is attributed to the owner i.e. only the owner can be
held liable under the MSA. No other person, such as the master and crew, operator or salvor, can
be held liable, except where such person causes damage willfully or recklessly. 129 A wide range
of persons130 are generally exempted from liability. These exempted persons are of the kind who
might be expected to be involved with the vessel when an incident involving an oil spill, or any
threat or danger arises. There is nothing in the MSA to prevent a claim in negligence from being
made against a third party other than those exempted persons.

ii. Liability for Pollution from Tanks of Vessels

Tarring of beaches has almost become an annual event across the western coast of India.
Tarring, as we have seen in earlier part of this paper, is a consequence of operational discharge
of bunker oil from ships or tankers. Liability in such a case is covered under the International

125
The grounds specified in article 4(1) of the Fund Convention are-(1) Where no liability arose under the CLC; (2)
Where the ship owner was incapable of meeting his CLC obligations or where his insurance covers, and or financial
security were themselves inadequate; (3) Where the value of damage exceeded the vessel owner's liability under the
CLC.
126
Section 352Y.
127
Section 352X.
128
Section 352Z.
129
See supra note 119.
130
Ibid.
Convention on Civil Liability for Bunker Oil Pollution Damage (BUNKER Convention), 2001.
The convention was adopted to ensure that adequate, prompt and effective compensation is
available to persons who suffer damage caused by spills of oil, when carried as a fuel in ships
bunkers. It applies to damage caused on the territory, including the territorial sea, and in
Exclusive Economic Zones (EEZ) of state parties. The convention provides a free standing
instrument covering pollution damage only.
The convention like the CLC requires the registered ship owners to maintain compulsory
insurance cover. The convention also provides for the requirement of direct action which allows
a claim for compensation for pollution damage to be brought directly against the insurer.
However, India is not a party to the convention. In absence of signing of the convention, it is
only the general tortuous liability and the polluter pays principle along with the MSA which can
be invoked to fix liability. However, the principle problem in such cases is not the fixing of
liability but the tracking down of the culprit. What happens is in practice is, vessels wash off
their ballast tanks at night near the coast. It is the tracking of the rogue vessel which is a
headache for the purpose of fixing liability.
As far as cleaning up is concerned, under MARPOL, to which India is a party, port trusts
and the director-general shipping have certain obligations, including taking measures to prevent
oil spills, having disaster management plans in place and keeping equipment for cleaning oil
spills. The Indian Coast Guard, under the NOSDCP is assigned the task of monitoring coastal
pollution across the Indian coast.

iii. Liability in Case of Pollution from Offshore Installations

It has to be seen here that in case of any incident of grave magnitude like the BP Oil
Spill,131 is the existing Indian law adequate to deal with the situation. The thing that is worth
noting here is that, it is the part XI A of the Merchant Shipping Act which is applicable to off-

131
After the BP oil spill, BP assumed responsibility for the initial clean up and mitigation efforts. Later on the U.S.
military announced it was joining the cleanup operation. The U.S. government established a “unified command”
structure to coordinate the response to the spill. The stated purpose of the unified command is to link the
organizations responding to the incident and to provide a forum for those organizations to make “consensus
decisions.” The Deepwater Horizon Unified Command include BP, Transocean, and the following federal agencies:
Minerals Management Service, NOAA, the EPA, Homeland Security, the Coast Guard, the Department of the
Interior, the Department of State and the Department of Defense.
shore installations.132 Proviso to section 356K provides in explicit terms that provisions of part
XB shall not apply to measures taken in respect of any offshore installation which is not a ship
under the Act except that in the event of pollution damage caused by any such offshore
installation the person who is liable for the damage may claim exoneration from any liability, if
he proves that such damage –a)resulted from any act of war, hostilities, civil war, insurrection or
a natural phenomenon of an exceptional, inevitable and irresistible character; or b) was wholly
caused by an act or omission done with the intent to cause that damage by any other person; or c)
was wholly caused by the negligence or other wrongful act of any Government or other authority
responsible for the maintenance of lights or other navigational aids in exercise of its functions in
that behalf. Also, section 352 E(2)(d)specifically provides that this part133 shall not be applicable
to the floating platforms constructed for the purpose of exploring or exploiting the natural
resources of the sea bed or the subsoil thereof unless the central government notifies otherwise.
Part XIA basically provides for the prevention and containment of pollution of the sea by
Oil and sections 356 (J), (K),(L) and (M) contains provisions for the containment of accidental
pollution whereas 356(O) empowers the Central Government to make rules for carrying purpose
of the Part. By virtue of section 356 (J) (1), the central government on its satisfaction that oil or
noxious liquid substance is escaping or likely to escape from tanker or ship other than tanker or
an offshore installation and is causing or threatening to cause pollution of any parts of the coasts
or coastal waters, may for the purpose of minimizing pollution or preventing the pollution to be
caused may require by notice either one of the concerned parties134 involved in the or all of them
to take such action in relation to the ship, tanker or installation as may be specified in the notice.
Any such notice may require the persons on whom it is served to –a) take action for preventing
the escape of oil; b) action for removal of oil or noxious liquid substances; c) action for removal
of the tanker, ship other than the tanker, mobile offshore installations or offshore installation; d)

132
By virtue of Section 356A(1), which makes the part applicable to -(a) oil tankers of one hundred and fifty tons
gross or more, other ships of four hundred tons gross or more and off-shore installations; and (b) incidents of
marine casualty or acts relating to such casualty occurring with grave and imminent danger to Indian coast line or
related interests from pollution or threat of pollution in the sea by deliberate, negligent or accidental release of oil,
ballast water, noxious liquid and other harmful substances into sea including such incidents occurring on the high
seas. However, this Part shall not apply to any war ships or other ships owned or operated by the Government and
used for the time being on Government non-commercial service [356 A (2)].
133
Part XA.
134
Here the parties could be- i) the owner, agent, master or charterer of the tanker; ii) the owner, agent, master or
charterer of the ship other than a tanker; iii) the owner, agent, master or charterer or operator of a mobile offshore
installation; iv) the owner, operator, lessee or licensee of off-shore installation of any other type.
action for removal of oil slicks on the surface of the sea; e) action to disperse the oil slicks on the
sea surface[356(J)(2)]. In case of grave emergency or threat of the same, the central government
may proceed to take such measures as it may deem necessary[356(J)(4)].
Section 356 K empowers the central government to take measures for preventing or
containing oil pollution in case the person(s) served notice failed to comply with the actions to be
undertaken as specified in the notice. Subject to part XB, any expenditure or liability, that has
been incurred by the central government by reason of noncompliance by persons notified under
356 K(1), shall be a debt due to the central government by the person(s) on whom the notice was
served and may be recovered from all or any them and shall be charge upon all or any tanker,
ship other than a tanker, mobile off shore installation or offshore installation of any other type
owned by that person(s) which may be detained by the central government until the amount is
paid.135 This essentially implies that the primary liability of preventing and containing the oil
spill is on the owner, agent, operator and not the state. State would ensure that all necessary steps
are being taken to contain or prevent the spill by the specified persons and in case they don’t,
government would step in to their shoes for the purpose of preventing or containing for which it
can reimburse the costs later on from the parties that were primarily responsible for preventing
and containing the spill.

VI. Conclusion and Suggestions

Oil spill has devastating effects on marine flora and fauna. A spill of a dramatic
magnitude, as Exxon Valdez or the recent BP oil spill, can possibly deaden the marine
environment affecting the lives of the people in more than expected ways. In an incident like BP
there is danger of loss of life, there is of course damage to marine flora and fauna, fisheries are
destroyed robbing those dependent on them for their livelihood; there is loss of business and
working days as water is rendered un-navigable causing diversion of sea routes and tourism
industry is essentially affected. All this can lead to depression both mental as well as economic
to persons who are dependent upon sea as the source of their livelihood.
Because of the nature of marine pollution as being such that international cooperation
becomes imperative for the purpose of containing it, an international regime comprising of

135
Section 356 K (2).
various conventions was developed. Since Torrey Canyon to BP every single incident of oil spill
has highlighted the importance of an effective international regime to help contain the disastrous
effects of oil spill, preparing the states in advance with national contingency plans in case of an
accident and last but not the least fixing the liability and channeling the same. Time and again,
there has been criticism against the limitation of liability especially in case spectacular oil spills.
It is not suggested here that the international compensation regime established by the Civil
Liability and Fund Conventions is in perfect. However, it would be fair to say that this regime
has functioned reasonably well in most cases over the years, and it is one of the most successful
compensation schemes in existence.
The history of oil pollution liability has, however, shown that the conventions have been
quite reactive and with every incident of graver implications have successfully amended
themselves to raise them to match up to the requirements of greater oil spills. It is particularly
important that the great majority of all compensation claims have been settled amicably as a
result of negotiations. The international regime is a good example of an international solution to
a global problem, facilitating international cooperation regarding compensation for damage
caused by tanker oil spills and environmental protection.
There have been efforts on the part of the international arena to strengthen the liability
regime; however, sadly, not much is done in evaluating the costs of harm dome done to the
ecological environment. It is to be kept in mind that every oil spill is a unique case in itself and
there is no means of calculating an average cost of oil spill as cost of damage by every spill
would depend on multiple factors. Delimiting the liability might sound attractive to ears but
practically the strict liability principle the way it is being in force in the international arena is
working sufficiently the only drawback being the non-consideration of ecological damage while
evaluating damages.
Keeping in view the long term effects on the ecological environment and people
dependent on the same, international legal rules concerning the marine based oil pollution must
therefore be able to take into account not only the extent of the damage caused, but also the
cause of the damage. This means that not only traditional damage to property and personal
injury, but also damage to the environment per se should be taken into account.
India owing to is vast coastline is vulnerable to oil spills and a spill of the magnitude of
Exxon Valdez or BP would be devastating for the economy. It wouldn’t only affect the people
living on coastal areas but the whole of economy as we are basically dependent on sea for
carriage of goods. In a spill scenario, along with the export industry, tourism industry and fishing
industry would also suffer immense losses. The big question that remains to be answered is that
are we prepared for the worst case scenario or are we waiting for a disaster to occur so that we
can work on how it could have been avoided?
India follows the civil liability principle for oil pollution damage. The Merchant Shipping
Act by virtue of Part XB and XC incorporates the provisions of CLC and Fund Convention
holding the owner liable for oil pollution damage and limiting the liability for the same while
constituting the limitation fund. It is to be seen here that does the Merchant Shipping Act
translates the spirit of International conventions in itself or is it deficient in its application when
dealing with incidents of oil pollution.
The first major lacunae that can be said to be present in the Merchant Shipping Act is the
non-mentioning of the liability caps. Section 352 merely says that “the owner shall be entitled to
limit his liability under this Part, in respect of any one or more incident, as may be prescribed.”
Unlike the CLC which by virtue of article V provides for the formula for calculating limitation of
liability. The provisions for compulsory insurance, financial guarantee and rights of
compensation by subrogation have been imbibed from CLC reasonably well into the MSA. But
the thing that has to be taken into consideration here is that if doing this much is sufficient
enough for the purpose of securing our coast.
As far as liability of owner is concerned both CLC and MSA hold the owner liable for
“any pollution damage caused by oil which has escaped or been discharged from the ship as a
result of the incident.”136 This provision can be interpreted to include immediate damage caused
to marine flora and fauna but cannot be stretched to include in its ambit the damage caused to the
natural resources. Nor claims could be made by people dependent on the coast for compensation
for loss of business. There is no criminal liability regime for punishing the liable party for oil
pollution under the scheme of MSA. However, oil pollution can be said to be causing public
nuisance and so under the Indian Penal Code, a person can be held guilty for causing public
nuisance. Section 268 of the IPC would give any affected person standing in case of “injury,
obstruction, danger or annoyance” caused to any “persons who may have occasion to use any
public right.” Section 278 holds the person responsible for vitiating the atmosphere so as to

136
Section 352-I of MSA and article III of CLC.
“make it noxious to the health of persons in general dwelling or carrying on business in the
neighborhood or passing along a public way”. However the problem in applying the provision
in case of oil pollution is the penalty that is prescribed which is a trivial sum up to 500 Rupees.
Another problem with the statutory regime dealing with oil pollution in India is that it
doesn’t differentiate between the accidental and operational discharge of oil in the sea and in the
absence of accession to the Bunker convention, incidents like Goa tarring of beaches would be
covered under the merchant shipping act only. It is high time that India signs the Bunker
convention.
Both MSA as well as CLC makes the liability of the owner join and several however it
does not include in its ambit persons that might be involved in the accident closely like the
charterer, the crew and the master of the ship and as well as the port authorities who are
responsible for coordinating signals. In order to prevent accidents at sea the liability regime of
the country needs to be strengthened by imposing criminal liability on the owner as well allied
persons who are closely associated with the spill. This can be done either by enacting a special
law with stricter penalties on the lines of the Civil Nuclear Liability Bill, 2010 or by adding a
separate part to the current MSA imposing heavy fines for negligence and non proper
maintenance of ships and offshore installations.
The coastguard is responsible for the protection of the coastal environment and much
would depend on their competence as to how they respond to any devastating emergency. For
that it should be made sure that they are properly trained and are well equipped to handle
situations like BP. Presently, the coastguards are deliberating to establish a Teir-1 system and
exhaustive oil spill response mechanism. The efforts of coastguard should be prioritized by a
statutory backing and proper funding.
Protection of seas by oil pollution is of immense importance and all measures should be
taken to prevent and protect our coastlines. We should be guarded before hand that a tragedy like
Exxon Valdez or BP does not occur in our waters and God forbid even if it does, we should be
well prepared in advance to tackle it. India, is today a leader among the nations of the world. It
occupies a commanding position in the Indian Ocean. It must provide the lead to other Asian and
African countries by providing tougher laws in the matter of protection of the environment.
Specially, in matters of dangers resulting from oil spills, the developing countries will stand to
lose very heavily. To overcome this, the policy of “prevention is always better than cure” has to
 be followed. For prevention of an environment catastrophe there is an urgent need of new laws
backed by international agreements as has been suggested above.

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