Leading legal experts and environmentalists last week urged the Government to reconsider the decision taken by the Attorney General’s (AG) Department to file legal action in Singapore against the P&I Club, the insurer of the controversial Singaporean-flagged MV X-Press Pearl vessel, demanding approximately $ 6.4 billion as environmental damages caused to the marine environment when the ship caught fire and sank off Colombo on 20 May 2021.
The Sunday Morning learns that the AG’s Department has taken the decision to file legal action against the ship’s insurer in Singapore, in case the insurer failed to come to a settlement before the expiration of the prescriptive period of two years next month.
The AG’s Department had conveyed its opinion on the jurisdictional matter that had risen regarding the filing of legal action against the insurer of the controversial ship to Justice Minister Dr. Wijeyadasa Rajapakshe last week at a meeting held between the AG, department officials, and officials representing the Marine Environment Protection Authority (MEPA), as reported by The Sunday Morning quoting MEPA Chairman Asela Rekawa.
However, it was learnt that Justice Minister Rajapakshe was also of the view that legal action should be filed in Singapore. However, the MEPA legal team – including Ronald Perera, PC, Chandaka Jayasundera, PC, and Dr. Dan Malika Gunasekera, AAL – has expressed that the Sri Lankan court structure was very conducive for Sri Lanka to prove the matter. On the other hand, the AG and his legal team had been of the view that it would be easier to get the other party to court if Sri Lanka filed action in Singapore.
MEPA Chair Rekawa had said that the authority had to stand by the decision taken by the AG with the concurrence of the Cabinet to file legal action in Singapore.
Nevertheless, the decision was criticised by both local private legal experts as well as environmentalists who raised concerns over the legal proceedings and the court system in Singapore. They noted that the local court system and laws in the country favoured Sri Lanka unlike in Singapore, where the country would have to seek legal action based on international law.
Therefore, since there is a division of opinion on instituting legal action among legal experts, environmentalists have urged the Government to seek a third party opinion from a group of independent local or foreign legal experts before filing action in Singapore.
Local legal experts have opined that filing action in Singapore would be a costlier and more unfavourable affair for the Government of Sri Lanka.
A costly affair
According to these experts, if Sri Lanka goes ahead with the decision of the AG’s Department to file legal action in Singapore, the Government will have to pay at least $ 4.5 million in advance to the lawyers in Singapore, together with travelling, accommodation, and other expenses of Sri Lankan officials as well as the costs of taking all evidence and related material to support the case.
Raising concerns over the decision taken by the AG’s Department, maritime law expert Dr. Dan Malika Gunasekera told The Sunday Morning that the experts supported the filing of legal action against the ship’s insurer in Sri Lanka as the country’s law provided ample provisions to file actions accordingly.
“Singapore is a costly affair. Also, there are certain other international laws that will limit our claim. Why should we go to such a jurisdiction when our jurisdiction can provide better compensation packages?” he questioned.
“The AG’s Department wants to go to Singapore. We don’t know why. What they say is that generally, it is easy to serve notices on other parties. But the action actually can be enforced against the insurer. The insurer is not in Singapore. The insurer is in London, which is the P&I Club.
“If a judgement is obtained in our favour, we can always enforce our judgement in the UK because both the UK and Sri Lanka are parties to the Convention on Enforcement of Foreign Judgements,” Dr. Gunasekera explained, adding that a judgement given in Sri Lankan courts could be enforced against the P&I Club based in London.
“However, Singapore is not a party to that convention, so I don’t know on what basis they gave the opinion of going to Singapore,” Dr. Gunasekera added.
Highlighting the financial aspect of the case, he stressed: “We have to pay $ 4.5 million in advance to the lawyers in Singapore and also it is a hassle to take all the evidence and objects to Singapore. We have no idea how much we will have to spend for travel and accommodation allowances.”
Billions worth of damages
As ascertained by Sri Lankan experts, the total loss to $ 6.4 billion is only for environmental damages. According to MEPA, legal action will be instituted to claim compensation for the environmental damages.
Sri Lanka has so far received a total of $ 7.85 million from the ship’s insurer in three tranches. In July 2021, the country received the very first payment of $ 3.6 million and it received another $ 1.75 million in January this year. It then received $ 2.5 million this month.
Nevertheless, authorities have claimed that the total amount received so far is very low when compared to the interim damages claim of $ 40 million that was sought in June 2021.
MV X-Press Pearl was carrying 1,486 containers when it caught fire off Colombo on 20 May 2021.
Eighty-one of the containers were labelled hazardous and the cargo included 25 MT of nitric acid – a key ingredient in the production of explosives – at the time the ship caught fire. The ship was also carrying 400 containers of nurdles – the plastic pellets from which all manufactured plastic goods are made.
According to MEPA, the cargo inside the containers of the MV X-Press Pearl, as per the Sri Lanka Ports Authority (SLPA), included nitric acid, bunkering oil, caustic soda, sodium methoxide, cosmetic material, methanol, vinyl acid, and plastic.
Following the disaster, an expert panel consisting of marine ecology specialists from MEPA, National Aquatic Resources Research and Development Agency (NARA), National Building Research Organisation, and the Universities of Moratuwa, Colombo, Ruhuna, Kelaniya, and Sri Jayewardenepura, as well as selected specialists were appointed to conduct research on the marine impact arising from the MV X-Press Pearl disaster.
Demanding a third opinion
Meanwhile, when contacted by The Sunday Morning, Centre for Environmental Justice (CEJ) Executive Director Hemantha Withanage urged the Government to seek a third party opinion via a parliamentary process by bringing down a team of experts before filing action in Singapore.
“There are two opinions. The AG’s side is of the view that the matter should be filed in Singapore. Environmentalists, MEPA, and other legal experts such as Dr. Malika Gunasekera are asking for legal action to be filed in Sri Lanka. Therefore, there should be a third party opinion. That is the democratic way of handling issues,” he stressed.
Withanage said that the AG’s Department or the Government had not justified why action would be filed in Singapore.
“They say it cannot be revealed due to confidentiality, which raises questions as to why the matter is being filed in Singapore. The Government cannot file legal action when there are such questions. At a time when Parliament too is unaware of the matter and its nature and gravity, the President, with his Executive powers, should take the right decision,” he added.
Withanage stressed that there had been numerous irregularities on the part of the Government and related authorities and officials who had handled the matter, but that there was no time for debate as country neared the prescriptive period for instituting legal action, and that the right decision had to be taken to claim compensation for the environmental damage.
P&I clubs
A P&I club is an association composed of ship owners to support seafarers’ safety and wellbeing by providing the required necessities. It is a non-governmental, non-profitable, mutual, or cooperative association of marine insurance providers to its members, consisting of ship owners, operators, charterers, and seafarers under the member companies. A P&I club provides compensation in the form of insurance cover to seafarers.
Each P&I club sets a premium for an individual owner reflecting the risks against which he requires cover, his fleet’s gross tonnage, his fleet’s exposure to risk, and other factors including the likelihood of significant claims in the coming year, personal injury, illness, and death claims from the crew, passengers, etc., stowaways and its repatriation arrangement, cargo claims for damage or loss of the same, unrecoverable GA contributions, liability due to a collision, damage to fixed and floating objects (jetty, pier, marine animals, rig, fishery facility, etc.), liability under approved towage contracts, removal of wreck, salvage operations, civil liabilities imposed due to pollution or oil spill, and other fines.
The club is controlled by the committee of directors representing the ship-owning members. Large claims are examined by the directors at regular meetings before payment is made. It is managed by firms of insurance experts, maritime lawyers, and mariners and operates on a non-profit-making basis.
Member vessels may be subjected to random ship inspections concentrating on the management of the vessel. If failed, a more intensive condition survey by independent surveyors may be called by the club’s managers. An owner who fails to keep his vessel in the condition required by the club’s rules may be expelled from the club.
It also issues each member vessel with the ‘certificate of entry’ which should be kept by the master.