SMALL DEVELOPING ISLAND NATIONS: THE NEED FOR INCREASED FINANCIAL PROTECTION FROM BUNKER OIL SPILL POLLUTION.

• Author: Garland, Michael

INTRODUCTION

Imagine that you are sitting in your car in the middle of a parking lot. Through no fault of your own, a truck, owned by a major corporation, crashes directly into you, causing $1 million worth of long-term damage. In the United States, tort law allows you to recover from this corporation based on the dollar amount of damages you incurred. (1) Imagine though, that because of the weight of the truck, and the contents of the truck's cargo, laws capped your financial recovery at $2,000, leaving you $998,000 in the red. How can a system like this ever truly protect you? This scenario represents the situation caused by the MV Wakashio when it was grounded off the coast of Mauritius, dumping 1,200 tons of bunker oil into the surrounding waters. (2) However, instead of incurring damages of $1 million, Mauritius could suffer over $10 billion in harm. Even after applying oil spill indemnification conventions, Mauritius will likely have to account for over $9.9 billion in damages. (3) The applicable indemnification conventions are inadequate to compensate for the damage to the country's coast, leaving this Small Island Developing State ("SIDS") to fend for itself. (4)

The current state of bunker oil spill conventions leaves SIDS without hope of recovering the actual damages they suffer from oil spills like the MV Wakashio. The International Maritime Organization ("IMO"), over the course of the last half century, has addressed this problem and created protections against oil-tankers that run aground and cause extensive pollution damage. (5) However, they have not extended the full breadth of this coverage to bunker oil spills that are, like the MV Wakashio, a product of non-oil tanker vessels which have grown substantially in size and usage and endanger the most vulnerable nations. (6)

The objective of this note is to advocate for a solution to provide adequate liability coverage through an extension of current oil spill conventions by expanding their coverage, or for the IMO to promulgate a new convention to protect SIDS. First, I offer an overview of the recent oil spill in Mauritius. Second, I provide a detailed explanation of the vulnerability of SIDS and why they need these new protections. Third, I discuss the current IMO conventions related to oil spill disasters. Last, I present potential policy options to amend the IMO conventions to improve the current indemnification protection available for nations harmed by these oil spills.

1. MV WAKASHIO GROUNDED OFF THE COAST OF MAURITIUS

   On July 25, 2020, the MV Wakashio grounded on the southeastern coast of Mauritius, (7) a small island nation of approximately 1.3 million inhabitants in the Indian Ocean. (8) Mauritius is smaller than Rhode Island and lies about 500 miles off the coast of Madagascar. (9) Twelve days after the crash, 1,200 tons of bunker oil from the ship began to seep into the reef lagoon surrounding the island nation, causing serious harm to plant and animal life on the island, local communities, and the nation's economy. (10) Fortunately, due to response efforts, over 3,300 tons of heavy fuel oil, also known as bunker oil, were removed from the ship before they spilled into the coastal waters. (11)

   The oil spill was in a "very sensitive zone" (12) that includes Blue Bay Marine Park, a popular tourist maritime attraction; (13) Ile aux Aigrettes, the last remaining portion of dry coastal forest around Mauritius; (14) and the Ramsar sites, which consist of three internationally protected wetlands. (15) Mauritius is known around the world for its beautiful beaches and surrounding waters, (16) as well as an abundance of aquatic and recreational outdoor activities, which bring tourists year-round. (17)

   In addition to the crash of the MV Wakashio, Mauritius is currently facing a second related oil spill disaster (18)--the bunker oil pipeline passing through the capital city of Mauritius and the storage tanks being used to store the recovered MV Wakashio bunker oil are leaking. (19) This leak is in an area adjacent to the Ramsar-protected Rare Bird Sanctuary and the full extent of the leak and long-term damages will not be known for many years to come. (20) This incident illustrates that oil spill disasters have consequences that stretch beyond the typical costs of clean-up efforts to recover the ship and prevent further spillage; there are also exponential impacts on the nation's economy and environment. (21)

   The nation of Mauritius relies heavily on tourism to drive its economy. (22) The GDP in 2020 was $11.3 billion, down from $14 billion in 2019. (23) Since 2005, when its GDP was just under $7 billion, Mauritius' GDP had been growing year-over-year. (24) Travel and tourism account for 23.9% (25) of the GDP, making these industries the nation's third-largest sector behind manufacturing and agriculture. (26) Additionally, another 10.5% of the GDP comes from the "Blue Economy," which is comprised of "coastal tourism, fishing, seafood processing and seaport activities." (27) Mauritius, and other similar nations, are highly dependent on the waters within their exclusive economic zone. (28)

2. SMALL ISLAND DEVELOPING STATES

   According to the UN, there are 58 Small Island Developing States, 38 of which are UN members. (29) Although there are no objective rules to determine what constitutes a Small Island Developing State, they are generally small in size and population, have limited resources, and are isolated from capital and commercial markets. (30) They are ecologically fragile and particularly vulnerable to external shocks. (31) In a 2012 working paper, the International Monetary Fund ranked the top 50 most vulnerable small nations. (32) Of the 38 SIDS that are UN members, 31 of them made the list, and occupied the first 10 spots for most vulnerable. (33)

   The concept of grouping and protecting these nations under the title "SIDS" is fairly modern, gaining initial acceptance in 1994, and further protection in 2005. (34) The United Nations Conference on Trade and Development was among the earliest UN entities to "recognize the particular challenges [faced by] small island developing States (SIDS)." (35) Since 2005, global powers have convened several times to discuss and implement hundreds of partnerships to aid SIDS in their development. (36) Although disasters caused by oil tanker spills have reduced drastically in the last decade, bunker oil spills continue to be a major risk for SIDS. (37)

   Given the continued growth in ship sizes, the amount of bunker oil being transported in vessels such as container ships, chemical carriers, general cargo ships and passenger cruise ships is increasing. Until the world has moved past the use of fossil fuels to power ships, bunker oil spills will remain a threat to the economic and ecological health of SIDS.

   The odds of another major bunker oil spill affecting a Small Island Developing State again may seem too remote to require a global call to action, especially since we are considering only vessels other than oil tankers and that SIDS, by nature, have a small and remote geographic footprint. However, these states are often located on high traffic shipping lanes, putting them in harm's way. (38) Also, many of these countries lack adequate technology to alert ships that are on a dangerous course and if a vessel does have a spill in the vicinity of a Small Island Developing State, the local government's safety protocols likely do not include the most effective oil spill management technologies. (39)

   Additionally, it is not only wayward or passing ships that are the cause of these spills. A similar incident occurred just over a year before the Mauritius oil spill. (40) On February 5, 2019, the MV Solomon Trader ran aground off the coast of the Solomon Islands, a Small Island Developing State in the South Pacific. (41) The MV Solomon Trader was loading minerals from a mine on the island before crashing into a nearby coral reef. (42) 88 tons of bunker oil were spread across the nation's "coastal waters, beaches and a sensitive coral reef system," all within just a few miles of a UNESCO world heritage site. (43) Some have speculated that the contamination was the Solomon Islands' worst man-made environmental disaster to date. (44) A common theme to these disasters in remote areas is the delay in response time from the ship owners, which increases the severity of the spills. (45) In this case, over a month passed before efforts to prevent further damage were underway. (46)

   Emergency aid efforts eventually began and, after two weeks, responders were able to prevent an additional 770 tons of bunker oil from being released into the waters. (47) Unfortunately, like many SIDS, the Solomon Islands had not yet ratified the necessary conventions that would have at least offered some level of guaranteed financial indemnity for this disaster. (48) Further, for a country that relies heavily on its coastal waters for food and drinking water, these types of disasters can present more than just an immediate economic impact, but a lasting societal and ecological impact as well. (49)

3. INTERNATIONAL MARITIME ORGANIZATION CONVENTIONS

   About half the world's oil is transported by sea. (50) In part to address potential disasters from these immense shipping efforts, the UN established the IMO, the legislative body that oversees the current oil pollution liability conventions. (51) The IMO "is the global standard-setting authority for the safety, security, and environmental performance of international shipping. Its main role is to create a regulatory framework for the shipping industry that is fair, effective, universally adopted and universally implemented." (52) The IMO's first major convention came in response to the 1967 Torrey Canyon disaster, (53) which resulted in roughly 110,000 tons of crude oil spilled into the English Channel. (54)

   1. 1969 CLC and 1971 Fund Convention

      The outcome of the efforts to provide...