An oil spill involving a Portuguese-flagged vessel, Arteaga, within the territorial seas of China resulted in a dispute over compensation for marine pollution damages. Chinese law applied to the dispute pursuant to art 146 of the General Principles of Civil Law of the PRC. Articles 1.6, 4.3 and 7.8 of the International Convention on Civil Liability for Oil Pollution Damage 1992 (CLC 1992) are given effect in China by virtue of it being a contracting state.

Dalian Ocean and Fishery Bureau (the retrial applicant), unsatisfied with the civil judgment issued by the Liaoning High People’s Court regarding the compensation claim for marine pollution damages, filed an application for retrial against Ondimar Transportes Maritimos Ltda (first respondent) and P&I Club, Britannia Steam Ship Insurance Association Ltd (second respondent).

The appeal was based on five issues.

First, whether marine ecological loss fell within the definition of pollution damage in art 1 of the CLC 1992 for the retrial applicant to have a claim in compensation (compensation issue). Article 1.6 of the CLC 1992 provides 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. Accordingly, for there to be a claim in compensation, the retrial applicant had to show that there were measures of reinstatement that were undertaken or were to be undertaken.

Second, the quantity of spilled oil (quantity issue). The retrial applicant submitted that there was an error in facts in the original judgment as the court did not make a clear determination regarding the exact quantity of oil spillage. The retrial applicant further submitted that the original judgment was biased because it determined that the spilled area of the sea had actually been reinstated to its normal condition without any reinstatement measures being taken, when it should have accepted the conclusion of the appraisal report which was understood to conclude that the pollutants had diffused to tiny particulates (but which did not mean that the pollution did not exist).

Third, whether the second respondent should assume joint and several liability (joint liability issue). It was held in the original judgment that the retrial applicant did not have a legal basis for contending that the second respondent was jointly and severally liable for pollution damages.

Fourth, the legal nature of the payment of US$1 million to Liaoning Maritime Safety Administration (the MSA) (payment issue).

Fifth, whether the time limit for adjudication was a condition upon which a case should be retried (time limit issue).

Held: The application for retrial was to be dismissed.

The court held that the retrial applicant did not provide evidence to prove that any reasonable measures of reinstatement had been actually undertaken and costs thereof had been incurred.

The court considered the assessment conclusion drawn by the environmental monitoring centre which suggested that the seawater quality of the polluted area was no worse than the second class of seawater quality 25 days after the spillage accident which eventually reinstated to normal a few months later. The retrial applicant also did not provide any evidence to show why it was necessary to dispose of the polluted water in the disputed sea area. Accordingly, the evidence as to water quality proved that there was no requirement for any reasonable measures.

In addition, the retrial applicant’s claim for marine ecological loss was not recoverable because the loss did not fall within the scope of compensation under the CLC 1992 (art 4.3, CLC 1992).

On the quantity issue, the court stated that, while ordinarily the quantity of spillage provided the basis for the determination of compensation, the retrial applicant’s claim for marine ecological loss did not fall within the scope of compensation as provided for in the CLC 1992. That is why the original judgment made no determination on the quantity of the oil spillage as it would not affect the result of the judgment.

On the joint liability issue, the court affirmed the original judgment. Article 7.8 of the CLC 1992 provides that any claim for compensation for pollution damage may be brought directly against the insurer and not that the insurer shall be jointly liable for compensation. Accordingly, the victim can file a claim against the shipowner or the liability insurer or other person providing financial security for the owner's liability for compensation for oil pollution damages.

On the payment issue, the court held that the respondent’s payment of US$1 million to the MSA formed part of a salvage operation payment which had no relation to the claimed marine ecological loss.

On the time limit issue, the court decided that there was no legal basis for a retrial just because the time limit for a court hearing had been exceeded. As this case was a foreign-related dispute, it would not be subject to the relevant legal provision regarding the time limit for court hearings. Additionally, the issue of a time limit for a court hearing should not be a factor for consideration in deciding the granting of a retrial.