Erika

France, 12 December 1999

Report updated 9 January 2009

What has happened?

On 12 December 1999 the Erika broke in two off the coast of Brittany, France, whilst carrying approximately 30 000 tonnes of heavy fuel oil. Some 19 800 tonnes were spilled. The sunken bow section contained 6 400 tonnes of cargo and the stern a further 4 700 tonnes.

Operations to pump the remaining oil to the surface were carried out during the period June - September 2000.

Clean-up operations took place along some 400 kilometres of polluted coastline and over 250 000 tonnes of oily waste was collected from the shoreline.

The compensation system: who is paying?

Compensation is available to any individual, business, private organisation or public body who has suffered pollution damage as a result of the Erika incident. Compensation is payable under the 1992 Civil Liability and Fund Conventions as enacted into French law.

Approximately €12.8 million (£12.2 million) compensation is available from the shipowner's liability insurer, the Steamship Mutual P&I Club. Additional compensation of approximately €172 million (£164.5 million) is available from the International Oil Pollution Compensation Fund 1992 (1992 Fund). In other words, a total of €185 million (£177 million) is available.

Compensation is payable for expenses actually incurred and for loss or damage actually suffered as a result of the oil pollution. All claims must be properly supported by documentation.

 Erika Claims Handling Office

The Steamship Mutual and the 1992 Fund established a Claims Handling Office in Lorient to serve as a focal point for the claimants and the technical experts engaged to examine the claims for compensation.

Some 50 experts have been involved in the examination of the claims relating to clean-up, fishing, mariculture and tourism.

The Claims Handling Office was closed on 31 July 2004, although the office manager continues to deal with outstanding issues from his office in Lorient.

The contact details are:

58 Avenue de la Perrière
56100 Lorient
France
Tel: 00 33 (0) 2 97 37 67 10
E-mail: Merri.Jacquemin@wanadoo.fr

As at 24 September 2008, 7 130 claims for compensation, other than those made by the French Government and Total SA, had been submitted for a total of €211 million (£201. 8 million) . By that date 99.7% of these claims had been assessed. Some 1 014 claims, totalling €31.8 million (£30.4 million) , had been rejected.

Payments of compensation had been made in respect of 5 934 claims for a total of €129.7 million (£102.79 million), out of which Steamship Mutual had paid €12.8 million (£10.2 million) and the 1992 Fund €116.9 million (£92.5 million).

Legal proceedings

Legal actions against the shipowner, his insurer and the 1992 Fund have been taken by 796 claimants. The courts have rendered 140 judgements and 37 actions involving 46 claimants remain pending totalling €25.5 million (£24.4 million) excluding the claims by Total SA.

Criminal proceedings

In its judgement, delivered in January 2008, the Criminal Court held the following four parties criminally liable: the representative of the shipowner (Tevere Shipping), the president of the management company (Panship Management and Services Srl), the classification society (RINA) and Total SA. The representative of the shipowner and the president of the management company were sentenced to pay a fine of €75 000 (£59 400) each. RINA and Total SA were sentenced to pay a fine of €375 000 (£296 700) each. All the other accused parties were acquitted.

Regarding civil liabilities, the judgement made the four parties jointly and severally liable for the damage caused by the incident and awarded claimants in the proceedings economic losses, damage to the image of several regions and municipalities, moral damages and damages to the environment. The Court assessed the total damages in the amount of €192.8 million (£184.4 million) , including €153.9 million (£147.2 million) for the French State.

At the June 2008 session the French delegation informed the Committee that the French State had reached an agreement with Total SA, whereby Total SA had paid, in full and final settlement, the French State €153.9 million (£121.8 million), ie the amount awarded by the Criminal Court, which took into account the compensation amounts already received from the 1992 Fund. That delegation also stated that, as a result of this payment, the French State had withdrawn all its civil actions, including those against the Fund.

The four parties held criminally liable and a number of civil parties have appealed against the judgement.

Court judgements in respect of claims against the 1992 Fund

The French Courts have issued some 150 judgements in respect for claims for compensation brought against the 1992 Fund.

The majority of the judgements rendered by the French Courts related to issues of admissibility. The judgements were in general very favourable for the Fund, since the Courts in most cases where the Fund had rejected claims as not admissible concurred with the Fund's position. In some cases the Courts applied the Fund's admissibility criteria, in other cases the Courts did not apply them but took them into account, and in some cases the Courts stated that the Fund's criteria were not binding and that the admissibility should be decided by the application of French law but reached the same results as the Fund on its rejection of the claims by applying the requirement that there must be a link of causation between the event and the damage. The Court of Appeal in Rennes in two judgements stated that the 1992 Fund's criteria for admissibility were not binding on the national courts, but could serve as a reference ("une référence d'ordre indicatif") for the national judge. A few judgements related to issues of quantum. Where the Courts did not agree with the Fund's assessments, the Fund did not appeal unless the amounts awarded by the Court were significantly different or appeared arbitrary.

Detailed information on the judgements can be found in the documents presented to the Executive Committee at the following sessions:

Legal proceedings by the Commune de Mesquer against Total

A legal action has been brought by the Commune de Mesquer against Total before the French Courts, where it has argued that the cargo on board the Erika was in fact a waste under European law. The French Supreme Court has referred three questions to the European Court of Justice (ECJ) for an opinion, namely:

• Whether the fuel oil transported as cargo on board the Erika was in fact a waste under European law.
• Whether a cargo of fuel oil that accidentally escaped from a ship would, once it had been mixed with seawater and sediments, become a waste under European law.
• If the cargo on board the Erika was not a waste but became a waste after accidentally escaping from the ship, should the companies of the Total group be considered responsible for the waste under European law even though the cargo was being transported by a third party?

In the Director's view it is unlikely that the ECJ would find that the cargo on board the Erika was not persistent oil and that therefore the Court's opinion was not likely to have an effect on the applicability of the 1992 Civil Liability and Fund Conventions.

The legal opinion delivered by Advocate-General Kokott of the European Court of Justice stated, inter alia, that heavy fuel oil must be treated as a waste when it was discharged as a result of an incident and became mixed with water and sediments, but that, in her opinion, this provision of European law was compatible with the provisions of the 1992 Civil Liability and Fund Conventions.

Judgement by the European Court of Justice

The European Court of Justice delivered its judgement on 24 June 2008. The Director, with the help of the 1992 Fund's French lawyer, has studied the judgement and a summary of the same is provided in the paragraphs below.

1) Reply to the first question

On the first question of whether the fuel oil transported as cargo on board the Erika was in fact a waste under European law, the ECJ initially pointed out that Directive 75/442 on waste(Directive 75/442/EEC of 15 July 1975 on waste, as amended by Commission Decision 96/350/EC of 24 May 1996.) defines as 'waste' any substance or any object which falls within the categories set out in Annex I of the Directive and which is discarded or intended to be discarded by the holder or which the holder has the obligation to discard. The ECJ endeavoured to give the term 'discard' an interpretation which takes account of the objective of the Directive, namely an elevated level of protection of human health and the environment. However, the heavy fuel oil sold as a combustible fuel in the Erika case is a substance which is residual, as obtained at the end of the oil refining process, but which is likely to be exploited commercially under advantageous economic conditions and to be actually used as combustible fuel without requiring preliminary operation or transformation. Its holder thus does not seek to discard it. The Court concludes therefore that this substance does not constitute a waste within the meaning of the directive.

2) Reply to the second question

On the second question, whether a cargo of fuel oil that accidentally escaped from a ship would, once it had been mixed with seawater and sediments, become a waste under European law, the ECJ initially pointed out that Annex I of the Directive on waste proposes lists of substances or objects that may be considered as waste, but that this has only an indicative character, the qualification as waste resulting above all from the behaviour of the holder and the meaning of the term 'discard' in article 1(a) of that Directive. Proceeding in the same way as for the first question, the Court then analysed, in the case of the Erika, the behaviour of the holder, to note that hydrocarbons having been spilled into the sea following a shipwreck and subsequently having become mixed with water and sediments, were the origin of the pollution of the territorial waters and the coasts of a Member State and that these substances do not constitute a reusable product without undergoing previous transformation. The Court thus concluded that the holder of these substances did not intend to produce them and that it is thus 'discarded', albeit involuntarily, at the time of their transport, so that they must be considered as waste within the meaning of the Directive.

3) Reply to the third question

The Court's answer to the third question, namely whether, in the event of the sinking of an oil tanker, the producer of the heavy fuel oil spilled at sea and/or the seller of the fuel and charterer of the ship carrying the fuel may be required to bear the cost of disposing of the waste thus generated, even though the substance spilled at sea was transported by a third party, in this case a carrier by sea, is summarised in the following paragraphs.

The ECJ recalled that the European Community is not bound by the 1992 Civil Liability and Fund Conventions. On the one hand, the Community did not adhere to those Conventions and, on the other hand, it could not be regarded as having taken the place of its Member States, if only because not all of them are party to these Conventions, or as being indirectly bound by those Conventions as a result of Article 235 of the United Nations Convention on the Law of the Sea (UNCLOS). The Court also pointed out that Directive 75/442 on waste does not contain a provision like Article 4(2) of Directive 2004/35 on Environmental Liability, which expressly states that that Directive is not to apply to an incident or activity in respect of which liability or compensation falls within the scope of any of a number of international conventions listed in Annex IV to that Directive, which mentions the 1992 Civil Liability Convention and the 1992 Fund Convention.

The ECJ also recalled that the Directive on waste provides that certain categories of people, in fact the 'former holders' or the 'producer of the generating product', can, in accordance with the polluter pays principle, be held liable for the cost of the waste disposal, because of their contribution to the generation of that waste and to the risk that results from it. In this respect, in accordance with European law, the Member States, while retaining the freedom to choose the form and the means of implementation of the Directive, are bound as to the result to be achieved by the Directive in terms of financial liability for the cost of disposing of waste. They are therefore obliged to ensure that their national law allows that cost to be allocated either to the previous holders or to the producer of the product from which the waste came.

The ECJ then ruled as follows:

The national court may regard the seller of those hydrocarbons and charterer of the ship carrying them as a producer of that waste within the meaning of Article 1(b) of Directive 75/442, as amended by Decision 96/350, and thereby as a 'previous holder' for the purposes of applying the first part of the second indent of Article 15 of that directive, if that court, in the light of the elements which it alone is in a position to assess, reaches the conclusion that that seller-charterer contributed to the risk that the pollution caused by the shipwreck would occur, in particular if he failed to take measures to prevent such an incident, such as measures concerning the choice of ship.

In addition, the ECJ stated that Article 15 of the Directive on waste does not preclude the Member States from laying down, pursuant to their relevant international commitments such as the 1992 Civil Liability and Fund Conventions, that the shipowner and the charterer can be liable for the damage caused by the discharge of hydrocarbons at sea only up to maximum amounts depending on the tonnage of the vessel and/or in particular circumstances linked to their negligent conduct. That provision also does not preclude a compensation fund such as the IOPC Funds, with resources limited to a maximum amount for each incident, from assuming liability, pursuant to those international commitments, in place of the 'holders' within the meaning of the Directive on waste, for the cost of disposal of the waste resulting from hydrocarbons accidentally spilled at sea.

However, the ECJ continued by stating that:

If it happens that the cost of disposing of the waste produced by an accidental spillage of hydrocarbons at sea is not borne by the International Oil Pollution Compensation Fund, or cannot be borne because the ceiling for compensation for that accident has been reached, and that, in accordance with the limitations and/or exemptions of liability laid down, the national law of a Member State, including the law derived from international agreements, prevents that cost from being borne by the shipowner and/or the charterer, even though they are to be regarded as ‘holders’ within the meaning of Article 1(c) of Directive 75/442, as amended by Decision 96/350, such a national law will then, in order to ensure that Article 15 of that directive is correctly transposed, have to make provision for that cost to be borne by the producer of the product from which the waste thus spread came. In accordance with the ‘polluter pays’ principle, however, such a producer cannot be liable to bear that cost unless he has contributed by his conduct to the risk that the pollution caused by the shipwreck will occur.

Director's considerations

The Director has studied the judgement by the European Court of Justice and discussed it with the 1992 Fund's French lawyer. On that basis, the Director considers that, although it might be too early to reach a conclusion on the possible consequences that the judgement by the European Court of Justice could have for the 1992 Civil Liability and Fund Conventions, it seems that the judgement has taken into account all the relevant international commitments of the EU Member States, including the 1992 Civil Liability and Fund Conventions and it would therefore appear that the judgement does not affect the applicability of these conventions.

Recourse actions

The 1992 Fund has taken legal action, for the purposes of protecting the right of recovering the amounts paid by it in compensation, against the parties who may be found liable as a result of the incident, namely against the owner and the manager of the Erika, their liability insurer, the charterers and the classification societies which had inspected the Erika. The Fund will pursue or withdraw the actions against the various parties (or against some of them) in the light of the outcome of the criminal proceedings brought before the French Courts.