Mauritius oil spill: Who pays?

Dead dolphins. Wrecked reefs. Blackened beaches and sticky waters in a country where tourism and fishing fuel the economy.

Mauritius declared a "state of environmental emergency" on August 7 after Japanese-owned cargo ship MV Wakashio ran aground on a coral reef, leaking 1,000 tons of oil onto pristine coasts. The still-spreading fuel threatens sea life already imperiled by climate change and deepens wounds in a tourism industry hurting from the pandemic.

Now, as the extent of the pollution becomes clearer, people are asking: Who will pay for the damage?

"While the oil spill may spend weeks in the headlines, the oil is going to spend decades on the shoreline," said Carroll Muffett, president of US-based nonprofit Center for International Environmental Law (CIEL). "The impacts of these spills often dwarf the capacity of governments to respond and companies to pay."

The amount of oil to hit the Mauritius coast is a fraction of the worst disasters in history — 11 tankers in the last half-century have each spilt more than 100 times as much as the MV Wakashio — but it has an acute environmental impact because the ship crashed in areas of rich nature. The oil is leaking between a coral atoll and a marine park, near two internationally protected wetlands and a fishing reserve.

Teeming with biodiversity and beloved for its luxurious beaches, lagoons and mangroves, Mauritius, an East African country of 1.3 million people, attracted about as many visitors last year as it had citizens. Tourism provides jobs for an estimated 1 in 5 of its workers.

But the industry collapsed after the government cut the island off from the rest of the world to protect it from the coronavirus pandemic. For shuttered hotels and restaurants, an ecological disaster on top of that might now be too much to bear.

Fishers, too, will suffer the consequences for years to come, said Chitra Ramphul, a Japan-based marine ecologist from Mauritius who has dived in the Blue Bay, the marine park near the site of oil spill. "Everything is connected… It's really sad to see all this gone in just a few weeks."

Who will pay?

It's too early to say how much damage has been done — or how much money can be claimed back.

The Mauritian government is pressing for compensation from the ship's owners, Nagasaki Shipping, who told DW in an email statement that they "will respond in good faith to any damages in accordance with applicable law."

But different international conventions, far removed from the lives of ordinary Mauritians, could cap how much money they end up getting. It's unclear if the limits would be high enough to pay off the losses, according to separate analyses from UNCTAD, the UN's trade agency, and Clyde and Co, a UK-based law firm.

Under the 2001 Bunkers Convention — which limits liability to levels set out in the 1976 Convention on Limitation of Liability for Maritime Claims (LLMC) and its 1996 Protocol — compensation for pollution from a vessel the size of the MV Wakashio could be capped at about $65 million (€54 million), or even lower, at about $18 million.

This depends partly on how courts in Mauritius interpret the laws and the approach they take to claiming compensation. Mauritius and Japan have ratified different versions of the LLMC, which allows the shipowners to set different limits on liability, and Panama — where the ship is registered — has not ratified any version, and may apply national limits instead. The situation is made more complex because some types of claim may not be limited at all.

The bad news, for Mauritius, is that if the same oil had just come from a different type of ship, the amount of compensation could be several times greater.

Oil Tankers

Mauritius is party to the International Oil Pollution Compensation Funds (IOPC Funds), a legal framework that governs compensation for pollution from oil tankers. The pot is financed by oil companies who receive fuel that is shipped around the world.

Had the oil spilled from a dedicated tanker, rather than being the fuel of a regular cargo ship, the compensation could have been as much as $285 million. And that amount could have been nearly four times higher, at about $1.05 billion, if Mauritius had ratified a supplementary protocol to the fund in 2003.

"About 95% of oil pollution cases are not caused by dedicated oil tankers, but by [other ships like] larger bulk carriers," said Jan de Boer, a senior legal officer at the International Maritime Organization, the UN shipping agency. These cases "have nothing to do with the big oil companies" who pay into the IOPC Funds.

Small island states like Mauritius rely on oceans for income and some are close to global shipping lanes that make them particularly vulnerable to oil spills. But they are less well protected under international law than many richer countries.

Of the 32 nations party to the supplementary fund of the IOPC, there are no small islands, and almost none are in the global south. In the wake of the MV Wakashio oil spill, UNCTAD called on all countries to sign the most recent international shipping agreements so "vulnerable countries are protected" when similar incidents occur.

The IOPC has dealt with 154 oil spills since its creation in 1978 and has paid out $983 million. It currently has 11 open cases. The largest of these is an oil spill from 2016 that sent 110,000 liters of diesel and heavy oils into the fishing waters of the Heiltsuk, a First Nation community in Canada.

Because the vessel involved does not qualify as an oil tanker — though it had been transporting jet fuel and gasoline, it was not carrying oil as cargo when it crashed — the case will likely be dealt with under the Bunkers Convention without further involvement of the IOPC.

Will the money be enough?

For Mauritians still battling to clean up the oil, legal nuances that make little difference today could have outsized consequences for the island's future.

When disaster struck, residents frustrated by government inaction moved to limit the damage. Volunteers packed sugar cane leaves into plastic sheets to make improvised boons, and residents cut off their own hair to sew into tubes to stem the spread of the oil. Conservationists raced to save rare species.

But ecological shocks are still surfacing. On Wednesday more than a dozen dead dolphins washed up on Mauritian beaches. The fishing ministry has said it is too early to establish a link to the oil spill, but environmental groups have called for an investigation. 

Martin Hall, head of marine casualty at law firm Clyde and Co, wrote in his analysis that the possible compensation limit of $18m under the Bunkers Convention "seems hardly enough to cover the sort of losses that might now be envisaged from the impact of some 1,000 [tons] of heavy fuel oil on the pristine ecological environment of Mauritius."

Still, with the disaster not yet over, experts say it is impossible to predict how much money Mauritius will eventually be able to claim in compensation. What they do know is that the large IOPC funds will not play a role.

"The crisis is still ongoing and we don't know the losses," said Regina Asariotis, head of policy and legislation at UNCTAD, adding that the legal situation was complex. "It is conceivable that the losses exceed the limitation amounts that may be applicable."