Tortious Liability of Oil Companies over Spillage and Water Pollution

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Tortious Liability of Oil Companies over Spillage and Water Pollution

Submitted by: Komal Singh & Sonakshi Katyal

ABSTRACT

Petroleum or crude oil is one of the most important substances in the modern industrial society which is used as a raw material for manufacturing as well as it serves as a final product i.e. fuel in industries for generating electricity. However due to the extraction and transportation of this highly productive material, the ecosystem has to face a heavy impact directly as well as indirectly. One of the major impacts due to globalisation is oil spillage. Oil pollution is a sensitive topic which has gained importance in recent times due to many instances of oil spillage which have caused devastating impact on the environment as well as economy. The following paper examines the tortious liability of oil companies in relation with the oil spillage in water bodies, the essay majorly focus on the liability as well as conventions and trust funds made worldwide and in the Indian subcontinent for the prevention, cure and reduction of oil spills and distribution of its liability. The essay advances knowledge about oil spills, brings into lime light its causes and consequences as well as helps the reader to understand the aftermath of this disastrous calamity as an act of negligence by various institutions also the rules implemented so that the burden of damages is not heavily imposed any particular institution.

INTRODUCTION

Oil, an essential commodity both as a raw material as well as a final source of consumption plays a veryvitalrole in our daily lives and is a source of economic growth. For instance, the Gulf Countries are the wealthiest of the nations in the world due to rich economy and the abundance of oil resource. Because of oil’s physical and chemical nature, sea is the most convenient medium of transportation.[1] A rapid development in the field of globalisation has bought its own handful of problems, the problem in our field of discussion can be explained with the help of following two illustrations – A) an offshore drilling oilrig explodes few miles away from the coastline B) a merchant vessel collides with a ship carrying oil cargo, both these are the examples of maritime accidents with a common outcome i.e. oil spills.

Oil Spills refers to the release of hydrocarbon liquid petroleum especially into the marine bodies which is highly visible due to the fact that oil does not dissolve in water and thespill forms a thick layer on the top of the ocean crust,contaminating the ocean water, natural resources and adversely affecting the marine life. Some incidents of major oil spill which have threatened the world are the Gulf War Spill, Deep water Horizon, Atlantic Impress, and in the Indian Coastal Frontier were the oil spills which took place in the year 2010 that are the MV CHITRA also the MV MALVIKA which took place in Orissa with a loss of 8 tons of oil.[2]

CAUSES OF OIL SPILL

It may be due to releases of crude oil from tankers, offshore platforms, drilling rigs, spills of refined petroleum products and their by-products, or the spill of any oily refuse or waste oil, etc. the causes are broadly classified into:

  1. OPERATIONAL DISCHARGES OF CRUDE OIL BY TANKERS/SHIPS

 This problem occurs when the tankers have unloaded the cargo and even after that some proportion of oil is left in the joist of the tanker and has to be cleaned in order to avoid explosion. Initially it was done with water and the remains were disposed of in the sea.

  • ACCIDENTAL DISCHARGES

 Accidental spillage of oil might occur during the operational discharge of oil i.e. while loading or discharging oil cargo, bunkering, and lightening, ballasting, also due to accidents such as grounding and ship to ship collisions. The marine bodies have experienced many accidental and operational oil spills throughout the world from the 1967 Torrey Cannon disaster to the recent sinking of Chitra in 2010 in the Arabian sea shaking the human wit from time to time. [3]

CONSEQUENCES OF MARITIME SPILLAGE

It is very understandable that a calamity such big will have an impact on many things not only directly but also indirectly, herein we will dig into some of the impacts of oil spill.

  1. ENVIRONMENTAL CONSEQUENCES

The impact on the Aquatic Environment-There is often concern about the effect of oilonfish, plankton, benthic invertebrates, birds, marine mammals, marine plants and habitats as it directly damages the health of these living species. We can understand these impacts by categorising it into long term and short-term effects. The short-term effects include respiratory problems, nausea and migraine. The long-term effect of the same includes the disruption of growth or decreased assimilation of food, cancer, skin diseases as well as hormonal changes along with destructive food chain.

The impact on the Flora and Fauna- The oil as we all know does not blend with water but floats on the surface, the oil forms a layer above water, blocking the sunlight and therefore hampering the photosynthesis process hence destructing the ecosystem. The oil penetrates into the plumage structure of the birds. It adversely affects their flight abilities. The oil covers the feathers of the birds causing kidney damage and altered liver functions.[4]

  • ECONOMIC CONSEQUENCES

One of the major impacts of oil spill that is, the impact on the economy. Not only does the oil spill negatively affects the tourism and the other services related to sea and beaches but also the fisheries, Maricultural and horticulture as sea water becomes poisonous and contaminatedand huge amount of money is needed for the cleaning of such disasters. Therefore, the economy is heavily impacted along with other fields of growth. Human health being of the plaintiff’s as the means of their livelihood as well as heath is heavily affected.[5]

TORTIOUS LIABILITY OF OIL COMPANIES

Tort is a civil wrong, it refers to the liability of a person for tort committed or breach of the performance of their duty towards others. Tortious liability implies the responsibility of an act taken over by the person responsible or by any other person, authority or institution on his behalf. The common problem faced by the industrial societies is the environment degradation and compensating the victims of environmental harm, therefore a question arises here of a tort law for the protection of the environment. In this essay we would be discussing the liability of oil companies for the tortious act of negligence during the accident of oil spillage.

INDIAN PERSPECTIVE

India has seen a plethora of legislations covering various aspects of the environment to ensure its conservation; however, these legislations have not been a strong weapon to protect the same. The Supreme Court of India assigns the right to have a pollution free environment under the umbrella head of article 21 of the Constitution defining the right to life and liberty, however there are certain loopholes in the Indian Environmental Laws.The remedies of modern Indian environmental tort have their roots in the common law principles of negligence, nuisance, strict liability, trespass etc.

The principle of tort concerning the matter in hand is negligence, Negligence is another specific tort on which a common law action to prevent environmental pollution can be instituted.[6] It can be defined as the failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation. The presumption inherent in the law of negligence is that the defendant owes a duty of care to the whole world while doing his business or conducting his own affairs to ensure that he exercised the standard of care of a reasonably prudent man to ensure that he does not hurt or injure others.[7]

By the medium of this essay, let us generate the relationship between oil spills and tort. Oil spills can cause damage to marine ecosystem. The task of the plaintiff in case of fishes is to establish some possessory rights over the beings in order to satisfy the element of tort of negligence.Such right of the plaintiff establishes a locus standi for negligence on part of the defendant. After the establishment of locus standi the next big task is the establishment of relationship between the omission and the damage , this is often a problem since the defendant might take the defence that the damage caused is not the result of spillage from his facility but as a result of the failure of cleaning of oil and preventing it from reaching the plaintiff’s property.

In the case of ataubi&ors v. Shell Petroleum Development Co the plaintiff claimed that the defendants caused crude oil, gas and chemicals from their facilities to escape from a pipeline under their control thereby destroying their farmlands and fishes in the lakes.  The Court held that the plaintiffs failed to prove that the defendants were negligent and the matter was dismissed[8]

In order to understand the liability under Indian regime for maritime accidents the laws have been codified under Merchant Shipping Act, 1958.This Act applies to all the Indian ships wherever they are and also the foreign ships while they are in the Indian territorial waters however it does not apply to warships as well as non-commercial ships of any particular state. The merchant’s act by the means of the following parts IX, X, XA, XB, XC, XI A provides the rules for liability as well as insurance of the ships. The Supreme Court of India in World Tanker Corporation v SNP Shipping Services Pvt. Ltd. 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 life or injury.[9] All ships carrying 2000 tons or more oil in bulk are required to submit a certificate confirming liability insurance. Any certificate issued by a competent authority outside India is also accepted, however any ship carrying out the transportation without such certificate is not permitted to leave or enter the Indian port.

India faces oil spillage since it imports large quantities of oil from outside. Part XI of the Merchants Shipping Act is one of the most important part of the act as it deals with international convention and the oil spillage and maritime pollution as well as liability of the oil companies, some of the parts are as follows:

  1. Section 356 A- Defines the application of prevention and containment of pollution of the sea by the oil.
  2. Section 356 B- Describes the definition of the pollution of the sea by the oil. This section defines every term related to the cause of pollution of the sea by the vessels carrying oil cargo.
  3. Section 356 C- Describes the issue of pollution prevention certificate which is issued so that no tanker or ship proceeds to sea, issued by the central government to be called an international oil prevention certificate.
  4. Section 356 D- Describes the issue of certificates for foreign ships in India and Indian shipsin foreign countries which means without a certificate a ship cannot enter any other country.
  5. Section 356 E-Describes the requirement for construction and equipment in ships to prevent pollution which means that proper steps should be taken towards the prevention of pollution by whatever necessary means of construction.

We can conclude the Indian prospective of liability regime by stating that India has very strict laws in relation to the prevention, cure as well as avoidance of any hazardous activities towards its territorial waters. India has signed various conventions in the united nations as well as with others nations with which India shares its territorial waters in order to prevent any such disastrous mis happenings which might have huge impact on the physical, economical as well as natural habitat and surroundings.

INTERNATIONAL PERSPECTIVE

There are various conventions, treaties as well as acts that have been made up and collectively ratified by almost all the nations in order to safeguard the environment as well as world heath and economy, as the increase in trade and its mobility leads to hazardous calamities at the global level. The essay will now focus onto some of the major global conventions, acts and treaties concerning the subject matter.

ENVIRONMENT PROTECTION ACT (EPA)

One of the top priorities of the Environment Protection Act is the prevention, preparedness as well as response towards any oil spill. The EPA is of the leading federal agencies which are responsive towards the oil spills in the inland waters and the US Coast Guard is the responsive agency for the oil spills in the coastal and deep waters. The EPA’S oil spill prevention program includes two branches of regulations which together help in prevention and regulation of oil spills. These two branches are Spill Prevention, Control and Countermeasure (SPCC) as well as Facility Response Plan (FRP) rules.

  • SPCC – This regulation requires the facilities to create spill prevention, control and regulation as well as countermeasure plans as well as establishes methods and equipment requirements for the same.
  • FRP – The facility response plan requires all the facilities to submita responsive action plan towards the worst-case scenarios of oil spills.it demonstrates the preparedness of the facilities towards any disasters.[10]

OIL POLLUTION ACT, 1990 (OPA)

 This legislation includes many clauses, one of which states that any vessel after the date of 22 of march 1989, which has caused an oil spill of 1 million gallons or more in any marine area shall be prohibited from operating in Prince William Sound. The Act has streamlined and strengthened EPA’s ability to prevent and respond to catastrophic oil spills.[11] The OPA ordered the oil storage vessels as well as large tankers to submit a prior plan to the federal government detailing their response towards the displacement of large discharges. One of the sub branches of the Oil Pollution Act, 1990 is the Oil Spill Liability Trust Fund.

OIL SPILL LIABILITY TRUST FUND

The OPA provides that the owner of the facility from which the oil is discharged shall be liable for the containment, clean up and the damages responsible by the oil spill, however in a scenario where the party is unknown or where the party refuses to pay then the finances from the fund can be used to pay for the damages caused.

INTERNATIONAL CONVENTIONS

The major objectives which result in the formation of international conventions for the prevention of pollution from ships are, 1) complete elimination of pollution of international waters by oil spills , 2) minimising the risk of accidental pollution by oil spills with the help of off shore facilities 3) complete elimination of sea pollution by operational discharges like tank washing 4) to keep a check on the disposal of sewage and other dumping off shore by the ships All these are the major objectives due to which it became important to make these conventions.In order to fulfil these objectives many conventions have been made at the global front.

VOLUNTARY LIABILTY REGIME

One such voluntary regime was set up by a collaboration amongst TOVALOP and CRYSTAL to settle the Question of liability and financial cover of oil spills. The main task of TOVALOP was to impose an obligation upon tanker owners for the cleaning of oil spills or to reimburse the government with the cost of clean-ups, however no such obligation was imposed if the owner had taken responsible care towards the prevention of oil spills. CRISTAL only included the funds that were raised by oil companies for oil spillage however TOVALOP included the organisation of the tanker owners. [12]

With the help of these two voluntary fund-raising organisations, the problem of liability of oil spills has been solved to some extent but apart from being solved, the burden of damages from oil spill does not anymore affect only one particular oil company heavily but is divided amongst tanker owners as well and oil companies. These regimes are a positive solution towards such problems of heavy cost impositions due to oil spills.

___________________________________________________________________________


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

[2] Mohit Kaushik , 11 Major Oil Spills Of The Maritime World, Marine Insight ( February 15,2019)www.marineinsight.com/environment/11-major-oil-spills-of-the-maritime-world/

[3] Ibid at 1

[4] Huynh Ngoc Phuong Thao, To What Extent Oil Cleaning Bacteria Can Help in cleaning oil spills,https://s3.amazonaws.com/academia.edu.documents/31353488/RP_Oil_Spills.docx

[5] Supra at note 3

[6] M Tony Mathew, L Priyaadharshini, Tortious Liability for Environ mental Harm in India, International Journal for Pure and Applied Science, Volume 120 No. 5 2018 463-475, IISN:1314-3395

[7]The Limits of Tort of Negligence in Readdressing Oil Spill Damage in Nigeria, NAUJILI 2014

[8] Suit No. UCH/48/73 of 12th November, 1974 article 7

[9] AIR 1998 SC 2330.

[10]Oil spills preparedness and prevention regulations, United States Environment Protection Agency https://www.epa.gov/oil-spills-prevention-and-preparedness-regulations

[11] Oil Pollution Act, United States Environment Protection Agency, 33 U.S.C. §2701 et seq. (1990)https://www.epa.gov/laws-regulations/summary-oil-pollution-act

[12] Indian Liability Regime supra note1

1 Comment

  • Randhir Singh June 28, 2019Reply

    Excellent read.

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