Losses at sea

Coastal pollution is back in the public eye thanks to the latest oil spill in the Bohai Gulf. Xia Jun looks at three maritime lawsuits, and what they tell us about environmental litigation in China.

Editor’s note: this summer’s oil spill in the Bohai Sea has once again brought the issue of marine pollution to public attention. Calls for litigation over these incidents are increasing. At a reporters’ salon held by Chinese NGO Green Earth Volunteers on July 13, Xia Jun, a lawyer who has long worked on maritime pollution cases, used three case studies to illustrate the troubled journey of this area of law in China. This is an edited transcript of his presentation.

Tasman Sea

This case is famous for being the first in China in which the maritime authorities used the courts to claim compensation for environmental damage at sea. (It is also included in chinadialogue’s list of the most influential environmental lawsuits of the decade, “Eight cases that mattered”.)

On November 23, 2002, the Maltese-registered Tasman Sea, laden with crude oil, collided with Shunkai No. 1, a Chinese vessel, 23 nautical miles east of the Tianjin Dagu Anchorage, north China, triggering an oil spill. That spill polluted the sea off the port of Tianjin and part of the bay near the city of Tangshan.

With authorisation from the State Oceanic Administration, Tianjin Oceanic Bureau brought a lawsuit in the Tianjin Maritime Court against the owners of the Tasman Sea, Infinity Shipping, and its insurers, the London Protection and Indemnity Club, seeking compensation for damage to the marine environment caused by the spill.

On December 30, 2004, Tianjin Marine Court ordered the two defendants
jointly to pay almost 10 million yuan (US$1.5 million) in compensation to Tianjin Oceanic Bureau (7.5 million yuan for loss of marine environmental capacity and 2.5 million yuan for the costs of investigation, monitoring, evaluation and research into biological restoration); over 15 million yuan (US$2.3 million) to Tianjin Fisheries and Harbours Office for losses to fishery resources; and over 17 million yuan (US$2.6 million) to 1,490 fishermen impacted by the spill. In total, compensation ordered to be paid out reached 42.9 million yuan (US$6.7 million).   

However, the defendants immediately appealed to Tianjin Higher People’s Court. And seven years later, following an appeal and a hearing at the Supreme People’s Court, Tianjin Oceanic Bureau received a settlement of just 3 million yuan (US$466,000). What the compensation was for was not specified, and even costs incurred were not recovered. Other plaintiffs also saw their compensation levels greatly reduced, and the defendants ultimately paid out about 21.2 million yuan (US$3.3 million), less than half the original sum.

In the end, the damages awarded for the Tasman Sea incident were less than hoped for. There were several reasons for this: China lacked the means to evaluate and establish losses to the marine environment; its basic environmental monitoring ability was primitive; and there were no experimental environmental restoration projects to use as a basis for establishing benchmark costs. As a result, the evidence presented was inadequate. Compensation orders were made for losses to environmental capacity, but not for other losses to marine ecology.

Although, in financial terms, the Tasman Sea case was no victory, it was nonetheless a landmark lawsuit which cleared a path for improvements to the system. It made the maritime authorities aware of the possibilities of claiming damages through the courts, laid a foundation for judicial and administrative bodies to better handles such cases and provided essential experience for public interest environmental compensation lawsuits.

The case prompted the publication, in 2007, of the “Guidelines for Evaluation of Environmental Losses Due to Maritime Oil Spills”. It also set a precedent for finding within the scope of damages owed by a responsible party: losses to environmental capacity, losses to maritime ecological functions, cost of restoration of maritime sediment, cost of restoration of tidal shoals, cost of restoration of phytoplankton, cost of restoration of nekton, biological management research costs and monitoring and environmental costs.

The Jinsheng collision

On May 12, 2007, two more vessels – the Jinsheng, registered in Saint Vincent & the Grenadines, and the Korean Golden Rose – collided, again resulting in an oil spill. Shandong Oceanic and Fisheries Office sued the owners of the Jinsheng, Jinsheng Shipping, for losses sustained as a result of damage to fishery resources and maritime ecology, and for investigation and monitoring costs.

Qingdao Maritime Court accepted the findings presented by the State Oceanic Administration’s North China Sea Monitoring Centre and the Ministry of Agriculture’s Yellow Sea and Bohai Sea Fisheries Environmental Monitoring Centre, which put maritime environmental losses at almost 9 million yuan (US$1.4 million) and losses to natural fisheries at 7.2 million yuan (US$1.1 million). On this basis, the court found Jinsheng Shipping liable to pay compensation. 

With the necessary resources, technical evidence and support of authoritative bodies, and in particular the experience gained in the Tasman Sea case, this lawsuit proceeded relatively smoothly and counts as a victory for maritime environmental compensation in China.

2006 Bohai spill

On February 22, 2006, China’s maritime authorities found a large area of floating oil during a patrol of the Bohai Sea. Shandong province promptly took steps to ascertain losses to the fishing industry caused by the pollution, with local government inviting authoritative technical departments to carry out monitoring and evaluation and also providing active support for seeking damages through litigation. Therefore, compensation was won with relative ease. The neighbouring province of Hebei was less aware of the possibilities of litigation and, as a result, lost out.

From March, the crude oil gradually spread from the mouth of the Luan River to Caofeidian, an economic development zone built on reclaimed land in Bohai Bai, creating havoc. Farmed shellfish died off, resulting in widespread losses. After repeated requests from shellfish farmers, Bohai Sea Fisheries Environmental Monitoring Centre eventually carried out tests and produced a report. The report found that six farms in Yueting county alone suffered losses of 30.7 million yuan (US$4.8 milion), while the impact on farms not to request tests was never quantified. The area of ocean polluted by the spill was later calculated to be 300 square kilometres.

In early 2007, the State Oceanic Administration and the State Environmental Protection Agency (the predecessor of the Ministry of Environmental Protection) each made statements blaming the crude oil pollution on “oil tanker accidents and theft of oil from offshore oil fields”. In July 2007, Dongying Intermediate People’s Court handed down heavy sentences – including the death penalty – to those convicted of stealing oil. However, only limited and vague confirmation of the scope of the oil spill and the losses it caused was given.

After the verdicts in the oil theft case were announced, the six shellfish farmers from Hebei province sued China Shipping Development Company and its tanker subsidiary; oil company Sinopec and its Shengli Oil Field subsidiary; and the Tianjin branch of another oil giant, China National Offshore Oil Corporation (CNOOC), in Tianjin Maritime Court. The court made huge efforts in the process of hearing the case, including obtaining confidential materials such as oil fingerprinting reports from the state oceanic and maritime authorities’ investigations into the pollution incident. In the end, it was established that the oil had come from the Shengli Oil Field.

The court’s final report also stated that the Shengli Oil Field Company had failed to take effective measures to prevent the leak and to make reports in accordance with regulations when the leak was discovered – and should therefore be subject to administrative punishment. Taking a range of complex factors into account, the State Oceanic Administration ultimately decided not to fine the firm.

Due to unclear and difficult application of the law, inadequacies with the evidence presented by the plaintiffs and the imbalance of power between the shellfish farmers and the oil firms, the case was resolved through mediation. On November 18, 2010, an agreement was reached, finally bringing the long process of litigation to an end. The four defendants representing the oil field and the oil tanker, while not admitting liability for the oil pollution, made payments of 40% of the assessed losses to the plaintiffs. At the same time, the plaintiffs cancelled their lawsuit against CNOOC’s Tianjin branch.

In Shandong, the Qingdao Maritime Court had, slightly earlier in 2010, issued its judgement in a case brought by Dongying fishermen against the Shengli Oil Field. It ruled that the oil field was not liable for the damages but, in accordance with principles of “harmonious judicature”, ordered it to pay compensation equivalent to 70% of the fishermen’s losses, a total of over 20 million yuan (US$3.1 million). A case brought by the Dongying Oceans and Fisheries Bureau over damages to fishery resources was given only symbolic support. Nobody sued for damages to marine ecology caused by the oil spill. The oil field company appealed, and Shandong Higher People’s Court resolved the case through mediation.

All claims in a case brought by Shandong Yantai Fisheries Association on behalf of local fishermen were rejected by Qingdao Maritime Court in the summer of 2009.

What next?

The rule of environmental law in China is making progress – and the situation is already better this year than it was last year. Even so, both government and civil resources for seeking damages are inadequate, law enforcement is weak and success is only seen in straightforward cases. These issues still need to be resolved.

China should be able to deal with the impact of oil slicks more effectively than it did during the 2006 Bohai spill, or the 2010 Dalian leak. Administrative and judicial procedures should be combined. But the government still habitually uses administrative measures to deal with pollution incidents, sacrificing the interests of the weak and the environment. There is still work to be done, by both the authorities and the Chinese people.

Xia Jun is a Beijing-based environmental lawyer. 

Homepage image from Greenpeace shows the impact of the Dalian oil spill.