H G D Hoek
Hoek ten Katen, Rotterdam
​​​​​​​hoek@hoektenkaten.com

The owners of a vessel are allowed to limit the extent of their liability for damages in the case of an oil spill. If the spill concerns bunkers, the exact amount of the limitation fund depends on whether the vessel meets the definition of a 'ship' in the International Convention on Civil Liability for Oil Pollution Damage (the 'CLC 1992'). If it is a ship under the definition, the higher limitation amount of the CLC 1992 applies, set for oil tankers, and if not, the lower amount of the International Convention on Civil Liability for Bunker Oil Pollution Damage (the 'Bunkers Convention') applies.

Black swans

On a hot summer day in January 1697 Captain Willem de Vlamingh's frigate De Geelvink (The Greenfinch) dropped anchor in an estuary at the Unknown South Land. He sent a longboat up the river to explore, and to catch a South Lander. That part of the mission failed, but the longboat did return with an impossible catch: a couple of Australian black swans (cygnus atratus).

De Vlamingh named the river Swan River, as it is still known today, reminding contemporary Australians of the first sighting of black swans by Europeans, and the Dutch knack for non-poetic name-giving.

The sailors came from a part of the world where it was a certainty that all swans are white, as all Eurasian swans (cygnus olor) certainly are. In their culture something extraordinary, to the extent that it is impossible, would be labelled 'a black swan', yet there they were, real black swans, furiously alive in the longboat. None of the black swans were to survive the voyage to Batavia, but within months, their existence was brought to the attention of the scientists of the Royal Society.

The philosophy of science has been struggling for ages with, as it is currently known, the black swan problem. The deduction 'all swans are white' seems a workable premise, but it is impossible to state with certainty that all swans are white, as white swans themselves are insufficient evidence for the premise: the premise can only be falsified when a black swan is found. Until then, the premise is a theory waiting to be falsified. Falsification is the central element of the scientific method.

As maritime lawyers, we are far from this philosophical hair-splitting, as we know from experience that matters are rarely as black or white as philosophers – or clients – want us to believe. However, sometimes, a little philosophy of science comes in handy.

More black swans

On 19 June 2018, the chemical tanker Bow Jubail ruptured a tank as she scraped a jetty in a Rotterdam port basin near the oil refineries, aptly named 'Third Petroleum Port'. The knack for non-poetic names is still strong in Rotterdam.

A total of 217 tons of bunkers poured from the ruptured tank into the Third Petroleum Port, spread over the river and to other port basins (including, of course, the Second Petroleum Port). The black gold reduced everything in its way to black stickiness, including the many bevies of Eurasian swans. The depressing images of black swans were to dominate the national news for days.

A little over 500 were caught, scrubbed clean and returned to the river. Even more perished in the black stickiness, as did many other waterfowl.

In the world of men, a surveyor boarded the vessel and lawyers were instructed.

Limitation of liability

Lessons were learned from Torrey Canyon, so in the current day and age, there are international funds in place, established by international conventions, to pay for the clean-up after oil is spilled, whether carried as cargo in bulk, or bunkers. The total amount of claims against the owners of Bow Jubail and their insurers is currently nearing €100m.

The owner's lawyers' petitioned the Rotterdam Court for an order to limit their liability for damages, which is on its face an unopposable request, almost automatically granted. In this case however, the creditors opposed the limitation request, with the result that it was rejected and, to date, the owners and insurers (through direct action) are still fully exposed.

CLC 1992 or Bunkers Convention

There were two grounds for the rejection. Under Dutch law, owners are, in principle, entitled to limit their liability in accordance with the Convention on Limitation for Maritime Claims 1976 (the 'LLMC'), as modified by the 1996 Protocol.

The owners wanted the amount of the limitation fund set according to the Bunkers Convention 2001 rather than the CLC 1992. The Rotterdam Court and the Court of Appeal had to reject the request, as it was solely based on the application of the Bunkers Convention.

A limitation on the basis of the CLC 1992 would be in the best interest of all creditors. It calls for a slightly higher limitation amount than the Bunkers Convention, but better still, if the slightly higher fund is exhausted and not all claims are satisfied, the CLC 1992 would grant the creditors access to the international funds for the excess. It is almost certain that from these funds, all claims would be satisfied.

The first ground for the rejection of the limitation request was that Bow Jubail qualifies as a 'ship' under the CLC 1992. This leaves no room for the application of the Bunkers Convention. A ship is defined in the CLC 1992, where the final words of the definition, from 'unless', are at the nucleus of the matter. A ship is 'any sea-going vessel and seaborne craft of any type whatsoever constructed or adapted for the carriage of oil in bulk as cargo, provided that a ship capable of carrying oil and other cargo shall be regarded as a ship only when it is actually carrying oil in bulk as cargo and during any voyage following such carriage unless it is proved that it has no residue of such carriage of oil in bulk aboard'.

As a chemical tanker, Bow Jubail was capable of carrying oil and other cargo, and she certainly did so on her previous voyage. But what about the residue?

At the time of the incident, she was not actually carrying oil in bulk, as this cargo was delivered in Antwerp and Rotterdam before the incident, but it could not be proven that there was no residue aboard.

The second ground was that my partner's clients appointed a surveyor who was denied access to the vessel. He did not think much of it at the time, but it became valuable ammunition in court much later.

Evidently, the onus of proof for the absence of residue lies with the owners. They could not give sufficient evidence of this, and thus the road to the Bunkers Convention was blocked.

Absence of evidence does not equate to evidence of absence

This case exemplifies the black swan problem wonderfully. As it is impossible to prove a negative, owners would have had to approach the absence of residue as a most serious challenge to their reliance on the Bunkers Convention. How can one give convincing evidence of absence? Maybe easier than you think: by the most thoroughly conducted investigation possible. We can only state with certainty that all crows are black if we have counted all the crows (hence, the – poetic – band name); we then avail of evidence of the absence of the white ones.

It is the same in the real world: only after a most thorough investigation could an expert state with certainty that there was no residue of oil present.

There was at least one expert, appointed by the owners, who boarded the vessel immediately after the incident and stayed there for about a week. The owners presented his final report to the court as evidence of the absence of residue. The report consisted of an impressive library of documentation as cargo manifests, bills of lading, logs, gas certificates and cleaning certificates from Rotterdam and Antwerp, you name it.

My partner and I were not looking forward to digging through this, until, over a beer after work, while staring at the mountain of paper on the desk, it dawned on us. It was almost a eureka moment, but more a 'hey, that's funny' moment, which is at the root of most scientific breakthroughs anyway.

This is the question we asked: what is supposed to be the added value of all this paperwork, even if it would establish without a doubt that the tanks are clean? Who needs all these documents, when the only thing the expert had to do was to slip on some white gloves, descend into the suspected tanks, swipe the walls with the gloves and then put in writing: 'Nope, I did not find residues of oil. Gloves still white.' The expert was there for a week after all, what else was there to do? There is only so much black coffee one can drink in the galley. The expert's report should have consisted of two pages, at the most, had there been absence of residue, not the piles of binders on the desk.

With this in mind, we ground gleefully through the paperwork and highlighted any inconsistency we could find, applying the falsification method.

All in all, it was clear that the owners, thanks to a shaky survey report, could not refute the reasonable allegation that there just had to be residue present, given the absence of evidence (of the absence of residue) and in the light of the numerous inconsistencies in the report.

Decision of the Court of Appeal

The judgment was appealed and the hearing before the Court of Appeal was held on the morning of 19 June 2019, hours before my flight to Oslo for the IBA Maritime and Transport Law conference. Months later, the Court of Appeal decided to uphold the decision of the Court of Rotterdam.

The decision of the Court of Appeal is correct in itself, but there is an annoyingly irrelevant expansion in it. For some reason, the judgment notes that there are no internationally accepted standards for determining whether a ship is free of residue, for instance, by an independent or joint survey. This is true, but I would add that these standards are of course to be found in the lex fori, the law of the country where proceedings are held, and procedural laws tend to comply with the international standards of a fair trial. There are your internationally accepted standards. What else is needed?

The judgment goes as far as to suggest that consideration might be given to this when a new version of the CLC 1992 is to be discussed.

I find it difficult to appreciate this lecturing in a judgment. For both sides the facts are simple: either the owners can or cannot prove the absence of residue. If not, the vessel is 'a ship' under the CLC 1992, and if they can, it is a ship under the Bunker Convention. There is nothing broken here, so what is there to fix? I am seeing this in black and white, and I think that is a good thing in matters of the strict demarcation of categories.

One aspect of the philosophical black swan problem is that the absence of evidence does not equate the evidence of absence. In this case, the surveyor was in a position to collect first-hand evidence, yet he did not go after it. He did not count the crows. We need not change a convention to obviate the consequences of a methodically poorly executed survey and sloppy reporting.

Before the Supreme Court

Currently the case is before the Supreme Court. The Supreme Court has a limited role in that it is the custodian of legal uniformity and legal certainty, and it will work with the material aspects as they stand – the facts are not open to debate. The Court of Appeal was the last instance where the facts could be brought to light. For the Supreme Court, it is only about whether the law was applied correctly.

In a unique move, the international funds created by the CLC 1992 have requested the Supreme Court to be joined into legal proceedings between the creditors and owners, as they would like to have their say on the interpretation of the CLC 1992 as well, siding with the owners.

I cannot shake the impression that this complicating aspect was prompted by the scholarly (read: impractical) considerations in the decision of the Court of Appeal. Before they spent their good money on joining the case, too late anyway to make a difference on the factual matters, someone ought to have explained to the funds that it is a source of joy to fulfil the destiny for which one was created, which, in their case, is to pay for the clean-up, including the costs incurred by the volunteers who tried to save as many swans as they could. One should not fight one's reason for being.

Conclusion

This case is unique: it is difficult to imagine a better illustration of the effect of the final words of the definition of a ship in the CLC 1992. And the drafters of the CLC could not have foreseen that establishing the absence of residue could lead to a serious debate in three instances, leaving the owners and their insurers fully exposed for over three years to date, all because they went to court with a sloppy report.

Establishing presence is easy. Establishing absence takes a lot of work, but it can be done: the expert has to count the crows, until the very last one. The black swans could have been a reminder of the correct method to apply as they were drowning in the oil around Bow Jubail in the Third Petroleum Port of Rotterdam.