KKO:2019:61 - Imposition of an oil discharge fine on a foreign vessel in transit through Finland’s exclusive economic zone

Issued after the preliminary ruling by the Court of the European Union (Bosphorus Queen Shipping Ltd Corp. v. Border Guard of Finland, C-15/17, EU:C:2018:557)

Background to the case and the question to be decided

A vessel registered in Panama, which had been in transit in the Finnish exclusive economic zone, had discharged at least about 900 litres of oil into the sea. The Border Guard had levied an oil discharge fine on the company that owned the vessel. The company's action for the annulment of this decision had been rejected first by the Maritime Court and then by the Court of Appeal.

Following an appeal by the company, the question before the Supreme Court was whether the oil spill had, within the meaning of Chapter 3, section 1(1) of the Act on the Protection of the Environment in Relation to Maritime Transport (referred to below as the Maritime Environmental Protection Act), caused major damage or the threat of major damage to the coastline of Finland, to related interests, or to any natural resources in the territorial sea or exclusive economic zone of Finland.

Provisions of law and international instruments to be applied

According to Chapter 3, section 1(1) of the Maritime Environmental Protection Act, violation of the prohibition on the discharge of oil or oily mixtures in Finland’s territorial waters or in Finland’s economic exclusion zone referred to in Chapter 2, section 1 of the Act shall be subject to a monetary penalty (oil discharge fine), unless the discharge is deemed minor in amount and impact. However, should a foreign ship in transit violate the discharge prohibition in Finland’s exclusive economic zone, an oil discharge fine shall be imposed only if the discharge causes considerable damage or risk of damage to Finland’s shoreline or to the interests pertaining thereto, or to the natural resources in Finland’s territorial sea or within Finland’s exclusive economic zone.

The requirement of ‘considerable damage or risk of damage’ in the case of a foreign vessel in transit is based on what is provided in the United Nations Convention on the Law of the Sea on the jurisdiction of the coastal State in its exclusive economic zone.

In accordance with Article 55 of the Convention on the Law of the Sea, the coastal State has the possibility to establish an economic zone between the territorial sea and the high seas.

Article 220 of the Convention on the Law of the Sea provides for the jurisdiction of the coastal State in its exclusive economic zone when a foreign vessel is in violation or suspected of being in violation of international rules on pollution. According to paragraphs 3 and 5 of this Article, taking legal action requires, among other things, clear evidence of a violation resulting in a substantial discharge causing or threatening to cause major damage to the coastline of the coastal State or to related interests or to the natural resources of its territorial sea or economic zone.

Finland is a party to the International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties (referred to below as the 1969 Intervention Convention). The term 'coastline or related interests' used in this convention and the term 'coastline and related interests' in the Convention on the Law of the Sea are identical in the English language versions of the Treaties.

Article 2 (4) of the 1969 Intervention Convention defines ‘coastal or related benefits’ to mean the interests of a coastal State directly affected or threatened by the maritime casualty, such as: (a) maritime coastal, port or estuarine activities, including fisheries activities, constituting an essential means of livelihood of the persons concerned; (b) tourist attractions of the area concerned; and (c) the health of the coastal population and the well-being of the area concerned, including conservation of living marine resources and of wildlife.

Request for a preliminary ruling and the judgment of the Court of the European Union on the interpretation of the Convention on the Law of the Seas

The Convention on the Law of the Sea has been signed and ratified by the European Union, and its provisions are therefore part of the Union's legal order. For this reason the Supreme Court submitted to the Court of Justice of the European Union a reference for a preliminary ruling on the interpretation of the Convention on the Law of the Sea, inter alia, on the interpretation of the terms ‘coastline and related interests’, ‘the resources of the territorial sea and the exclusive economic zone of a coastal State’, ‘threat’ and ‘threat of damage’ used in the Convention on the Law of the Sea and Directive 2005/35/EC on ship-source pollution (referred to below as Directive 2005/35), and on what factors are to be taken into account in the assessment of whether damage or the threat of damage is major, and how this assessment is to be made.

The Court of Justice of the European Union has replied to the request of the Supreme Court in its judgment in Bosphorus Queen Shipping Ltd Corp. v. Border Guard, C-15/17, EU: C: 2018: 557. The judgment contained for example the following rulings on the interpretation of the Convention on the Law of the Sea.

The expression ‘clear objective evidence’ covers not only the commission of a violation, but also evidence of the consequences of that violation (paragraph 1 of the operative part).

The expression ‘coastline or related interests’ in the Convention on the Law of the Sea and Directive 2005/35 must be interpreted as meaning that, in principle, it has the same meaning as the expression ‘coastline or related interests’ in the International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties, it being understood that Article 220(6) of the United Nations Convention on the Law of the Sea also applies to non-living resources of the territorial sea of the coastal State and to any resources in its exclusive economic zone (paragraph 2 of the operative part).

‘The resources of the territorial sea and the exclusive economic zone of a coastal State’ must be interpreted as covering both harvested species and also species associated with them and which are dependent on them, such as animal and plant species which feed on the harvested species (paragraph 3 of the operative part).

• the cumulative nature of the damage on several or all of those resources and related interests and the difference in sensitivity of the coastal State with regard to damage to its various resources and related interests;
• the foreseeable harmful consequences of discharge on those resources and related interests, not only on the basis of the available scientific data, but also with regard to the nature of the harmful substance(s) contained in the discharge concerned and the volume, direction, speed and the period of time over which the oil spill spreads (paragraph 5 of the operative part).

The specific geographical and ecological characteristics and sensitivity of the Baltic Sea area have an effect, although not automatically, on the assessment of the extent of the damage that that violation has caused to the resources and related interests of the coastal State (paragraph 6 of the operative part).

Assessment of the prerequisites for imposing an oil discharge fine

The Supreme Court held that the terms used in Chapter 3, section 1 (1) of the Maritime Environmental Protection Act were to be understood in the same way as the corresponding terms in Article 220 (6) of the Convention on the Law of the Sea. Thus, in the manner laid out in the judgment of the Court of the European Union, the legal interests protected by the provision shall be deemed to include not only the coastal interests defined in Article 2 of the Intervention Convention, but also the non-living natural resources of the Finnish territorial sea and any natural resources in its exclusive economic zone.

According to the evidence submitted in the case, the oil spill could have caused damage to birds, fish, benthic communities and plant and animal plankton along the coast and in the high seas. In addition, the oil spill, in spreading towards the shore, could have had an adverse effect on recreational use and could have been harmful to human health when enriched in the food chain. Thus, the oil spill could have caused damage to a number of legal interests referred to in Chapter 3, section 1, paragraph 1 of the Maritime Environmental Protection Act.

However, the mere possibility that damage could have been caused was not sufficient, and the provision required either substantial damage or at least the presence of the threat of such damage. In the absence of any concrete evidence in the case regarding actual damage, what was needed was an assessment of how major the threat was that the oil spill had caused in the circumstances of the case.

The oil spill had contained so-called persistent oil, which can cause serious damage to plant and animal species when in contact with them. The harmful effects of the oil spill could have been expected to extend to a relatively wide area and affect several different species. However, no evidence has been presented on the magnitude and duration of the expected effects, on the basis of which it could be deemed that the spill would have caused major damage or the threat of such damage to the natural resources in the exclusive economic zone. Furthermore, on the basis of the evidence before the court it had not been possible to establish that the oil could have spread to the Finnish coast to such an extent that it could have had a significant adverse impact on the marine environment or on recreational use of the coast.

Since it had not been demonstrated that the oil spill had caused major damage or the risk of major damage, within the meaning of Chapter 3, section 1(1) of the Marine Environmental Protection Act, the Supreme Court annulled the decision of the Border Guard to impose an oil discharge fine.