Måns Jacobsson Former Director, International Oil Pollution Compensation Funds

The French Court of Cassation and the Erika

Some civil liability issuesNaples, 3 October 2013

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Claims under the international compensation regime

• Compensation claims submitted under the international compensation regime• 1992 Civil Liability Convention, CLC (the shipowner/insurer liable)• 1992 Fund Convention (compensation payable by the 1992 Fund)

• Most of these claims settled out of court

• Some claims pursued in civil and commercial courts

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Criminal proceedings in France

• Criminal proceedings in Criminal Court of first instance in Paris

• A number of parties joined the criminal proceedings, claiming compensation

• After appeals, the Court of Cassation held the following persons criminally liable

• the representative of the registered shipowner • the president of the management company • the classification society (RINA)• Total SA

• The Court of Cassation, agreeing with the lower courts, held the same persons civilly liable for the pollution damage, jointly and severally

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Civil liabilities to be discussed

• Two civil liability issues will be discussed• Channelling of liability• Compensation for environmental damage

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Channelling of liability

• The civil liability under the 1992 CLC channelled to the registered owner

• No compensation claims may be brought against the owner outside the CLC

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Channelling of liability

No compensation claims, under the CLC or otherwise, may be brought against

• the servants or agents of the shipowner

• the pilot or any person who, without being a member of the crew, performs services for the ship

• any charterer (including a bareboat charterer), manager or operator of the ship

• salvors or persons taking preventive measures

unless the pollution damage resulted from the personal act or mission, committed with the intent to cause pollution damage, or recklessly and with knowledge that such damage would probably result.

• The Court of Cassation held that the channelling provisions in principle covered

• the representative of the registered owner– as agent of the shipowner

• the president of the management company– as agent of the operator

• Total SA– as charterer

• The Court’s position not beyond discussion• The charter party had been entered into by a subsidiary company

Channelling of liability

• The Court of Cassation also held that the channelling provisions in principle covered

• the classification society RINA– as any other person who, without being a member of the crew, performs services for

the ship• The correctness of the Court’s position can be questioned

Channelling of liability

• But in the Erika case none of these parties entitled to benefit from channelling protection

• because guilty of recklessness as defined in the 1992 CLC

• Representative of the shipowner and the president of the management company: lack of proper maintenance leading to general corrosion of the ship

• RINA: imprudence in renewing the Erika’s classification certificate on the basis of an inspection that fell below the standards of the profession

• Total SA: imprudence in carrying out its vetting procedures

• The Court thus considered that this recklessness was the personal act or omission of the individual or of the alter ego of the company

Channelling of liability

• Test for breaking the right of limitation of liability the same

• Concern in the shipping and insurance industries

Limitation of liability

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Environmental damage under international regime

Definition of “pollution damage”:

loss or damage caused outside the ship by contamination ---------

provided that compensation for impairment of the environment other than loss of profit from such impairment shall be limited to costs of reasonable measures of reinstatement actually undertaken or to be undertaken.

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Environmental damage under international regime

• Admissible claims under the 1992 Conventions • loss of profit resulting from damage to the environment• costs of reasonable measures to reinstate the contaminated environment

• No compensation for non-economic environmental damage

• No compensation based on an abstract quantification of damage using theoretical models

• No punitive damages

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Environmental damage accepted by Court of Cassation

• Court of Cassation awarded compensation• to

– local and regional communities– individual environment protection organisations

• for– ecological damage– loss of image,– moral damage – damage to reputation

• Sufficient for the pollution to touch the territory of such authority or organisation for it becoming entitled to compensation for all direct and indirect damage

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Breach of the 1992 Civil Liability Convention?

• The Court of Cassation awarded compensation for pure ecological damage

• The compensated damage • was not documented• no proof of any damage in addition to that already covered by other types of claim• damage could not be quantified except by using a theoretical model

• The judgement was however • not against shipowner/insurer (1992 Fund not party to the proceedings) • but against four persons other than the registered owner

• Their liability based on French domestic law, not on the 1992 CLC

• Is the judgement against the spirit of the 1992 Conventions?

• Is there a risk of the judgement creating a parallel compensation regime?

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Claims for environmental damage under the the 1992 Conventions

• Will the French Courts accept claims for pure environmental damage if actions brought under the 1992 Conventions• against shipowner/insurer• 1992 Fund?

• The States parties have • emphasized the importance of uniform application of the 1992 Conventions• insisted that national courts should take into account the decisions by Fund governing

bodies as regards the interpretation of the Conventions

• A treaty ratified by France becomes an integral part of French law

• Such a treaty has higher rank than normal domestic legislation

• If the French courts were to accept claims for pure environmental damage in such cases this would be a clear breach of the Conventions

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Possible future developments

• During a revision exercise 2001-2005 very little support for expanding the definition of pollution damage

• Will the 1992 Conventions be revised so as to allow compensation for non-economic damage resulting from pollution of the environment

• e.g. in the form of violation of collective interest?