Sri Lanka Orders Ship Owner To Pay $1 Billion For Worst-Ever Marine Disaster

On July 24, Sri Lanka’s Supreme Court ordered the owners, operators, and agents of the container ship X-Press Pearl to pay $1 billion in compensation for causing what the court called the worst marine environmental disaster in the country’s history.

The court found the Singapore-registered vessel responsible for releasing hazardous chemicals and plastic pellets into the ocean after it caught fire and sank near Colombo in June 2021.

The ship had departed from Jebel Ali in the UAE and was denied entry at ports in Qatar and India due to a leaking nitric acid container before arriving in Sri Lanka.

The five-judge bench concluded that the ship’s master, operator, and local agent intentionally hid critical details about the nitric acid leak and other onboard dangers from the Harbor Master at the Port of Colombo to gain permission to dock.

Situation Update: Latest pictures of the “X-PRESS PEARL” vessel which is presently engulfed in flames. Footage was captured by the SLAF Bell 212 during the afternoon of 26 May 2021 pic.twitter.com/xKjYyumcz2

— Sri Lanka Air Force (@airforcelk) May 27, 2021

The court also ruled that the vessel owners failed to alert Sri Lankan authorities about the full extent of the problem, violating international law.

According to the court, X-Press Pearl was carrying 1,500 containers, including 81 labeled as dangerous cargo. When the vessel caught fire and sank, it released 25 tons of nitric acid, 70 billion plastic nurdles (small plastic pellets used to manufacture plastic items), and other harmful chemicals into the Indian Ocean.

The environmental impact was devastating. The court noted that 417 turtles, 48 dolphins, eight whales, and many fish species were found dead and washed ashore. Phytoplankton, vital for marine ecosystems, were also affected.

The pollution severely contaminated around 80 kilometers of coastline, and debris from the ship caused widespread beach pollution. The government had to impose a fishing ban for more than a year, leading to significant losses for thousands of fishermen and local communities.

Based on extensive scientific and legal assessments, the court set the compensation amount at $1 billion. The payment is to be made in three installments:

• $250 million by September 23
• $500 million within six months
• $250 million within one year

All the funds will be deposited in court-administered accounts and used for compensating affected communities and restoring the marine and coastal environment.

The companies named in the ruling include EOS Ro Pte. Ltd. (the ship’s registered owner) and other charterers, all based in Singapore. The local agent in Sri Lanka, Sea Consortium Lanka (Pvt.) Ltd., was also held accountable.

The court applied the “Polluter Pays Principle,” saying the ship’s owner, operators, and agent are legally and financially responsible for the pollution caused.

The 361-page verdict also criticised the Sri Lankan government’s role in the disaster. It said the Attorney General’s Department acted “arbitrarily, irrationally, and unilaterally” by choosing not to take criminal action under Sri Lanka’s environmental laws. Instead, the department filed a civil case against the vessel’s owners in the Singapore International Commercial Court, which the judges described as “unjust, irrational, and arbitrary.”

The court has now ordered Sri Lanka’s Criminal Investigation Department (CID) to launch a formal investigation into how the disaster was handled by government authorities. The CID must report back to the court within three months and check for signs of bribery or other wrongdoing involving ministries, departments, or officials, including the Attorney General’s Department.

Two new commissions have been established:

• A Compensation Commission, headed by the Chief Justice
• A Marine and Coastal Environmental Restoration Commission, to be formed by the Secretary of the Ministry of Environment

Both bodies must include independent experts to ensure transparency and accountability.

Earlier, Sri Lanka’s Marine Environment Protection Authority (MEPA) had estimated total damages from the disaster at $6.4 billion. Though the ship’s owners had already paid $7.85 million for initial clean-up and emergency relief, they also sought legal protection by securing a UK admiralty court ruling in July 2023, which limited their liability to £19 million (about $25 million). The Sri Lankan government has appealed this decision.

Reference: AP News, SCMP

Source: Maritime Shipping News