Articles
APPLICATION OF CLC 69 IN BRAZIL
Osvaldo Sammarco
Brazil ratified the International Convention on Civil Liability for Oil Pollution Damage (CLC 69) in 1977. However, the application of CLC 69 was only introduced into domestic legislation in 1979. Notwithstanding that, CLC 69 has never been applied by Brazilian courts, since damages for oil pollution at sea were not normally claimed from shipowners at that time. Only fines were levied, bearing no relation to the volume of oil spilled or to possible indemnities for damages caused to the environment and/or third parties.
Prior to the enactment of CLC 69, Brazil had no specific law regarding environmental protection. However, as a result of pressure from ecological movements, in August 1981 Brazil passed its first specific law aimed at protecting the environment and laid down rules concerning claims for damage to the environment in general. In 1985 Brazil passed further legislation in regard to civil liability for environmental damage. This established that the polluter would always be liable, regardless of fault (strict liability), without any provision for limitation of liability.
Following the enactment of these laws, environmental protection agencies on the basis of such domestic legislation also began to claim in court for cases of oil pollution at sea caused by oil carrying vessels, disregarding the existence of CLC 69. Based on these national laws, state courts have been in the habit of granting orders for arrest of vessels, which have only been released against bank guarantees for very large sums of money.
Environmental protection agencies have insisted on the application of the domestic legislation mentioned above, while shipowners have maintained that CLC 69 must apply to cases of oil spillage into the sea by oil spillage into the sea by oil carrying vessels. Application of CLC 69 is important particularly in order to establish limitation of liability on the part of shipowners.
Apart from the conflict between national laws and CLC 69, another jurisdictional conflict arose between the state courts and the federal courts. According to the Brazilian Constitution, the federal courts have jurisdiction over claims to which international conventions (as enacted in Brazil) are applicable. Based on that, federal judges accepted the jurisdiction of the federal courts in cases of pollution by ships. On the other hand, state judges ignored the application of CLC 69 and demanded that the state courts have jurisdiction, based on the domestic legislation.
The Brasilia Superior Court of Appeals has recently ruled on this jurisdictional conflict. The court decided that cases of pollution caused by vessels carrying persistent oil in bulk as cargo fall under the CLC 69 rules, and are therefore subject to the jurisdiction of the federal courts. The vessel in question was carrying crude oil.
The decision of the Brasilia Superior Court of Appeals is likely to be followed by state courts. In fact, after becoming aware of the decision, state judges in São Sebastião, home to a large oil terminal in state of São Paulo, have ordered the submission to federal courts of several claims for damages for oil pollution at sea.
This recent Superior Court of Appeals decision gives strong support to the possibility of limiting shipowners' liability in cases of pollution. In addition, under the CLC 69 regime shipowners may be exempt from liability when pollution damage is caused as result of: (a) an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irrestible character, or (b) was only caused by an act or omission done with intent to cause damage by a third party, or (c) was wholly caused by the negligence or the wrongful act of any Government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function. Such defences would not be available under domestic legislation.
Although the application of CLC 69 will result in considerable benefit to shipowners, various issues with regard to its application are still to be resolved. For instance, Brazil is not a party to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971 (IOPC Fund).
Great difficulty is also encountered in ascertaining and quantifying damage to the environment. Environmental agencies, in particular the one in the state of São Paulo, have propounded many theories and criteria for such assessment, some of which are fairly extreme. Criteria presented to date by biologists and ecologists tend to set very high amounts for the redressing of damages, which are considerably in excess of what could deemed to be reasonable. Ecologists do not disguise their intention to set very large sums as indemnities so as to punish the party responsible for the damage. Under CLC 69 rules it is arguable that damage to the environment can only be the basis of a claim where there is a quantified economic loss actually proven.
Considering that Brazil is not a party of IOPC Fund it is now important for shipowners trading in Brazil to insist that letters of guarantee from CLC 69 underwriters be accepted by the Brazilian federal courts, in order to release vessels from arrest or to avoid such arrests, doing away with the request for bank guarantees which had to be put up for the claims which are at present in court.
Some time may still elapse before the Brazilian courts in fact apply CLC 69 to a pollution incident, but I do hope that the judges will adopt a common sense approach and not be unduly swayed by environmental movements.
Gard News Magazine – issue 132, ps 8/9
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