Liability for Oil Pollution in Taiwan

August 2000

(Sea Venture Volume 19) (Updated June 2005)

Prior to 16^th July 1999, the old Taiwanese Maritime Code (''the old Code'') was ambiguous about shipowners' rights to limit their liability for oil pollution. Art.21.a of the old Code provided that ''The liability of a shipowner is limited to …… in respect of: 1. Indemnity for damage inflicted upon a third party by the master, crewmember, pilot or any other person in service of the ship due to performance of duty.'' Without a clear specification, it was arguable that such wording encompassed a variety of incidents including oil pollution. In fact, by relying on this article, many shipowners whose vessels ran aground off the coast of Taiwan spilling hundred tonnes of oil escaped from what would otherwise have been a business-threatening penalty in other countries.

In its limitation of liability provisions in Article 21, the old Code basically adopted the 1924 International Limitation Convention (1924 Convention) which stipulated that ''The liability of a shipowner is limited to the value of the ship, the freight and other accessories within the bounds of that particular voyage; the same rule applies in the event that the shipowner gives away his ship without putting up the value of the ship.'' Obviously, in this respect, the Code gives shipowners the chance to catch their breath after a major oil spillage: Once the catastrophic incident occurs, owners may just abandon their vessel and turn around. The duty to remove the wreck was another issue. In such a situation that the value of the grounded vessel is always insufficient to cover the expenses for cleaning up the pollution and the damage it may cause.

The new Taiwan Maritime Code (''the new Code'') came into force on 16^th July 1999. Under the new Code, the newly introduced tonnage limitation will supplement the shortfall if the sum calculated thereunder is higher than that calculated under the old Code. For instance, if a vessel is valued at US$100,000 and if her Gross Tonnage is 2,000, in the event of damage to property, the amount of tonnage limitation is calculated as 2,000 x 54 SDR = 108,000 SDR (approx. US$140,000).

However, Art. 22.4 (a new provision under the old Code, introduced by the new Code) now specifically excludes a shipowner's right to limit under Art.21 if the damage resulted from spillage of oil. Art. 22.4 reads '' The limitation of liability set down in the foregoing Article does not apply to …… Damage arising as a result of toxic chemical substances carried on ships or oil pollution.'' In these circumstances, the quantification of the shipowner's civil liability for oil pollution in Taiwan will now be governed by the provisions concerning torts under the Civil Code. Damage arising from oil pollution is naturally considered as civil wrong. In Article 184 of the Civil Code stipulates the liability of tortfeasor for breach of duty to care. In Articles 213, 214 & 215, the law provides for compensation either by restitution – putting the party who suffered the damage back to the ''pre-incident'' position – or by pecuniary indemnity if restitution is impracticable. Judging from the wording, it does not appear to be in doubt that an unlimited liability could be imposed on shipowners who cause damage. In short, if found liable in tort for oil pollution shipowners could be held liable to compensate for damage actually suffered and the profit that could reasonably have been expected therefrom. Shipowners should therefore continue to err on the side of caution to avoid any oil leakage whilst trading their vessels to and from the ports of Taiwan.

Finally, in addition to civil liability, shipowners will face administrative penalty in accordance with the Law of the Commercial Port. Art. 44 of the said Law imposes a fine of between NT$10,000 and NT$100,000 for oil pollution, subject to the discretion of the harbour authority. The Article provides ''When a nuclear vessel or a vessel carrying nuclear substances, dangerous materials or oil is in violation of the provisions set forth in Article 29, 30 and 33, she shall be punished in accordance with the Criminal Law if a crime is committed and her owners or captain shall be subject to a fine of between NT$10,000 and NT$100,000. If any damage is caused thereby, the shipowner is obliged to pay compensation. If the same commits the same violation again within one year, the punishment and fine shall be doubled.''

 

With thanks to John H.W. Chou of Taiwan Maritime Services Ltd, Taiwan, for preparing this article¹

Update - June 2005

Compulsory Insurance Requirements

¹This was published on the Steamship website in May 2000