Archive for May, 2011

Japanese Maritime Law for Oil Pollution

By Yosuke Tanaka

  1. This is to summarize the Japanese law to be applied to the cases in which oil pollution is to occur by the accidents of vessels on the sea, and to introduce relating other matters, including the practices and some disputes among lawyers, academics and judgments in Japan relating to such areas of law.
  2. Summary of laws

    (1) CLC and FC

    (a) Firstly, Japan ratified the 92 CLC (International Convention on Civil Liability for Oil Pollution Damage, 1992) and the 92 FC (International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992), including the Protocol 2003 to the 92 FC to create the so-called “third tier”.

    (b) We had ratified the 69 CLC and the 71 FC and then enacted domestic legislation in 1975 to incorporate CLC and FC scheme into Japanese law, which are named as “Act on Liability for Ship Oil Pollution”.

    After ratification of the 92 CLC and FC, we amended the Act to incorporate the new scheme.

    (c) Under the current Act, the Owners of the tankers must bear the absolute liability for the damage caused by the spilt oil carried by their tankers and other parties relating the vessel does not owe the liability (“sole liability”).

    However, the Owners can limit their liability unless the damage is proved to have been caused by the “act or omission, committed with the intent to cause the loss, or recklessly and with knowledge that such loss would be probably result”.

    The victims can claim for the compensation against the PI Club with which the Owners of tankers is obliged to make insurance contract, and also against the International Compensation Fund for the damage amount over the limitation permitted to the Owners.

    (d) The limits of liability of the Owners under the current Japanese Act are as follows;

    Minimum liability for ships of 5,000 tons or less; 4.512 mil. SDR

    Liability per ton in addition to minimum liability; 631 SDR

    Maximum Liability; 89.7 mil. SDR

    The Owners have to set up the limitation fund to the court and it is distributed among the victims (“creditors”) by the trustee who is appointed by the court.

    (e) The victims can claim directly the International Oil Pollution Compensation Fund (“IOPC Fund”) for the amount which is exceeding from the limited amount of the Owners’ liability up to 750 mil SDR as the “third tier”.

    (2) Oil Pollution from Non-Tanker

    (a) As to the oil pollution caused by the bunker oil spilt from Non-tanker vessels, the Bunker Convention (International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001) has come to effect in November, 2008, which Japan has not ratified it yet.

    (b) However, we established the almost same rules as the Bunker Convention by amending the Act on Liability for Ship Oil Pollution, which amendment came into effect in March, 2005.

    The difference between the Bunker Convention and the Japanese Act is the latter requires the vessel with more than 100 tons to execute the insurance contract to ensure the cost for oil pollution, though the former requires it to the vessel with more than 1,000 tons.

    (c) Under the current Japanese Act, the Owners of the non-tanker vessel can limit their liability according to the general Limitation of Liability Procedure.

    As to the Limitation Procedure, Japan ratified the 76 LLMC (Convention on Limitation of Liability for Maritime Claims, 1976) and the Protocol, 1996.

    We enacted the domestic law named as “Act for Shipowners Limitation of Liability” in May, 1984 to incorporate the 76 LLMC scheme into Japanese law. After the 96 Protocol came into effect in May, 2004, the amended Act came into effect in August, 2006.

    (d) The limits of liability of the Owners under the current Japanese Act for general Limitation Procedure are as follows,

    In case of the property damage only;

    Minimum liability for ships of 2,000 tons or less; 1 mil. SDR

    Liability per ton in addition to minimum liability

    for ships of more than 2,000 up to 30,000 tons; 400 SDR

    for ships of more than 30,000 up to 70,000 tons; 300 SDR

    for ships of more than 70,000 tons; 200 SDR

    In case of personal injury/property damage;

    Minimum liability for ships of 2,000 tons or less; 3 mil. SDR

    Liability per ton in addition to minimum liability

    for ships of more than 2,000 up to 30,000 tons; 1,200 SDR

    for ships of more than 30,000 up to 70,000 tons; 900 SDR

    for ships of more than 70,000 tons; 600 SDR

    (e) The Owners whose caused pollution by their no-tanker vessels can limit their liability according to the above general Limitation Procedure unless the damage is proved to have been caused by the “act or omission, committed with the intent to cause the loss, or recklessly and with knowledge that such loss would be probably result”.

    However, the Owners of Non-tanker vessels may owe the liability together with other parties as the “joint and several liability”.

    We do not have the similar system of IOPC Fund for such bunker damage, so the victims of such damage cannot claim more than the limited amount.

    (3) MARPOL Convention

    (a) With respect to the measures to prevent the oil pollution or oil spills from the vessel, MARPOL Convention (International Convention for the Prevention of Pollution from Ships, 1973) and the Protocol, 1978 came into effect in October, 1983.

    Japan ratified it in June, 1983 and enacted relevant domestic law as “Act for Marine Pollution Prevention”.

    (b) Under the current Japanese Act, local government can issue the order to remove the wreck and take the preservation measures to prevent the marine pollution.

    (4) Other Conventions

    (a) With respect to the pollution by hazardous substances, the HNS Convention (International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea) was enacted.

    As to the rights of the coastal states to remove the left wreck, the Nairobi International Convention on the Removal of Wrecks 2007 was also enacted.

    (b) However, Japan does not have the intention to ratify those conventions.

  3. Related Matters

    (1) Practices in Japan

    (a) Japanese court does not have any special courts for maritime cases, so the Limitation Procedures for the 92 CLC and 96 LLMC are handled by the Bankruptcy Department in the District Court, which court is mainly assigned the first instance procedure in civil procedures.

    The reason why such departments are assigned such role is that the procedure to divide the limitation fund is similar to the procedures in bankruptcy procedure.

    In the same way as the bankruptcy procedure, a lawyer is appointed as the trustee to check the credits and distribute the fund among creditors. However, lawyers who do not have a lot experiences in Maritime law can be appointed and some delay may be caused in the procedure.

    (b) As to the setting-up the limitation fund, we usually put up the cash to the court.

    We can generally use the bank remittance system to pay some money to the court, however, the LLMC scheme requires us to fix the amount of SDR on the day one day before the application for Limitation Procedure, so it should be noted that the amount must reach the bank account of the court on the next day when we fix the amount of SDR.

    (2) Compulsory Entry to PI Club

    (a) As the result of the amendment of Act on Liability for Ship Oil Pollution in March, 2005 as described above, we established the new rule that all of vessels with more than 100 tons have to execute the PI insurance contract to ensure the cost for oil pollution and wreck removal before they enter Japanese territory. All of the vessels must have on board the certification for such contract, and some vessels can be checked at the Japanese port such certification by port authority.

    (b) This rule was affected from the facts that many wrecks were left without being salvaged and become dangerous subjects for pollution and navigation of other vessel. In order to reduce such danger, the government enacted the new rule for compulsory requirement for all of the vessels to enter any Japanese ports.

    (3) Disputed Problem

    (a) In the procedure for the Limitation Procedure, it is disputed whether the claim from the Japanese government to remove the wreck or take preventive measures to avoid expansion of spilt oils can be limited by the Limitation Procedure or not.

    (b) Some lawyers are in the opinion that such claims can be included into the “Limited Claims” as far as the words of the law permit it and it should not be considered whether it is claimed from the government or not.

    However, majority lawyers think that if the government claim, which is finally reimbursed by tax, can be limited by the procedure, the Owners who do not try to take measures, in which case the government managed to take measures in place of them, can obtain benefit more than the Owners who voluntarily take such measures, therefore, the claim from the government can not be limited and can be enforced against the owner outside of the Limitation Procedure.

    (4) Disastrous Experience

    (a) As to the claim from the government, it reminds us of our unforgettable experience of the accident of the tanker, “Nakhodka”. In the accident, the Russian tanker sank and broke into two parts in Japan Sea, and crude oil of more than 6,200 tons were spilt and more than 400 km in the Japanese coast were polluted.

    About 35,800 mil Yen were claimed from Japanese government, local governments, hotels groups in the coast, fishery groups and so on. The amount from the government was 17,000 mil Yen.

    (b) The plaintiffs filed the procedure in Tokyo District Court, and before setting up the Limitation Fund based on the 92 CLC, all of the parties agreed with the compromise settlement.

    After this disastrous events, Japan amended the requirement for the structure of tankers (e.g., double bottom plates) and practices of checking the tankers entering Japanese territory were amended severely.