Liability Arising From An Oil Spillage Vis-A-Vis Maritime Insurance And Environmental Law Perspective

Author:Mr Aftab Ahmad Khan
Profession:Surridge & Beecheno

NOTE: This paper was to be read by the author at the Environment Law Committee Session, 2003 of the Inter-Pacific Bar Association (IPBA) Convention that was held in New Delhi, India in February, 2003. Unfortunately, due to Visa restrictions imposed by the Indian Government upon Pakistani nationals, and despite the efforts made by the IPBA Secretariat in this behalf, the author was unable to attend the same.


The Chairperson has been very kind to invite me to speak at this Joint Session on a hypothetical case of an oil tanker having capsized in our harbor leaking more than 500 tons of crude oil causing environmental damage. The Captain and crew of the ship having been rescued failed to bring the logbook unabling the authorities to determine the tanker status before the accident. The Port Authority claimed the tanker was un-seaworthy but the ship owner denied the same. The ship owner also does not have sufficient insurance cover for the losses arising therefrom. In the scenario arising from the capsizing of the oil tanker and the resultant damage, I am required to comment on:

What is the extent of civil liability of the ship owner?

What duties and powers do the relevant Port Authority have?

What insurance cover would the shipowner, the port authority and the affected businesses be expected to have, and what issues arise in respect of each cover?

What are the liabilities of (i) the shipowner and (ii) the cargo owner for the clean up costs and the damage to the environment?

Are there any other interested groups which have to be considered in such a scenario?

Laws and Conventions Dealing with the Situation

The laws and conventions governing such a situation in Pakistan are Pakistan Merchant Shipping Ordinance, 2001 (hereinafter referred to as "the Shipping Ordinance"), The Pakistan Environmental Protection Act, 1997, (hereinafter referred to as "the Act, 1997"), The Ports Act, 1908, The Pakistan Insurance Ordinance, 2000, The Karachi Ports Trusts Act, 1886 (hereinafter referred to as "the KPT Act") the UN International Maritime Convention on Arrest of Ships, 1999 (hereinafter referred to as "the Convention, 1999"), and provisions of International Convention for the Prevention of Pollution from Ships 1973 - MARPOL 73/78 (hereinafter referred to as "the Convention, 1973") which have been adopted by the Merchant Shipping Ordinance 2001.

My views to the questions seriatim are:

What is the extent of civil liability of the ship owner?

Under Article III(1) of the Schedule to the Carriage of Goods by Ship Act, 1925, it is the responsibility of the Carrier to make the ship seaworthy. Section 90 of the Karachi Port Trust Act, 1886 imposes penalty not exceeding Rs.10 Million in case of contravention by the person (ship owner) due to discharge of solid or liquidate waste, oily noxious, hazardous substances or any other substances. In addition, the ship owner is also liable to charges for cleaning the Port and removal of the pollutant therefrom.

Under Section 417 of the Shipping Ordinance, when a ship has sustained or caused any accident or has received any material damage, the owner or the master is required, within 24 hours after the happening of the accident or damage, to transmit to the Federal Government or the nearest principal officer of the Port Authority, report of the accident or damage and of the probable costs thereof stating the name of the ship, her official principal, if any, port of the registry, and the place where she is. In the event of failure, the master of the ship is liable to a fine, which may extend to Rs.5,000/-.

Section 523 of the Shipping Ordinance makes the owner of the ship liable for any damage caused by the ship to water ways or related water areas, unless the owner can prove that the damage resulted from force majeure or negligence or actions of the Port Authority.

Section 555 of the Shipping Ordinance while adopting the provisions of MARPOL Convention, 1978 provides, if oil or oily mixture or harmful substance is discharged, the master or owner of the ship shall be liable to fine which shall not be less than US$50,000, but may extend to one million US Dollars and in case of continuing contravention or failure, then an additional fine may be imposed, which may extend to US$10,000 for every day after the first day during which such contravention or failure continues.

Section 560 of the Shipping Ordinance requires each oil tanker of 150 gross tons or above to maintain an oil record book in the form and manner, the nature of the entries and the time and circumstances of such entries to be made, the custody and disposal thereof and other related matters, as may be prescribed having regard to the provisions of the Convention of 1973. Any failure on the part of the master of the oil tanker to maintain the oil record book or destruction or mutilation thereof or any entry therein shall constitute an offence and the master of the oil tanker shall be liable to a fine extending up to...

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