Prestige

Spain, 13 November 2002

Report updated 9 January 2009

What has happened?

On 13 November 2002 the Bahamas registered tanker Prestige, laden with 77 000 tonnes of heavy fuel oil, broke in two off the coast of Galicia ( Spain) spilling an unknown but substantial quantity of its cargo. The bow section sank to a depth of 3 500 meters and the stern section to a depth of 3830 meters. They are estimated to contain 13 800 tonnes of cargo.

Due to the highly persistent nature of the Prestige’s cargo, released oil drifted for extended periods with winds and currents, travelling great distances. The west coast of Galicia was heavily contaminated and oil eventually moved into the Bay of Biscay, affecting the north coast of Spain and France.

A major offshore clean-up operation was carried out using vessels from Spain and nine other European countries including France and Portugal. The oil from the Prestige affected the Atlantic coast from Vigo in Spain to Brest in France, as well as causing intermittent and light contamination on the French and English coasts of the English Channel as far as the Dover Strait. Approximately 1 900 km of shoreline was affected in Spain and France. Around 141 000 tonnes of oily waste was collected in Spain and some 18 300 tonnes in France.

The Spanish Government concluded a contract with the oil company Repsol YPF to remove the remaining oil from the wreck of the Prestige. The work commenced in May 2004 and was finalised in September 2004 at a cost of some €109.2 million (£81.4 million).

No oil is reported to have come ashore in Portugal, but some clean-up operations at sea were carried out by the Portuguese authorities.

The compensation system: who is paying?

Compensation is available to any individual, business, private organisation or public body who has suffered pollution damage as a result of the Prestige incident. Compensation is payable under the 1992 Civil Liability and Fund Conventions which form part of Spanish, French and Portuguese law.

Compensation is payable for expenses actually incurred and for loss or damage actually suffered as a result of the oil pollution. All claims must be properly supported by documentation.

Approximately €22.8 million (£21.8 million) compensation is available from the shipowner's liability insurer (the London P&I Club). Additional compensation of up to approximately €148.7 million (£142.2 million) is available from the 1992 Fund. In other words, a total of €171.5 million (£164 million) is available.

Claims Offices

The London P&I Club and the 1992 Fund have established a Claims Office in La Coruña (Spain) to assist claimants who wish to make claims for compensation for pollution damage in Spain. Claimants are invited to contact the Prestige Claims Office by telephone or fax in order to obtain a claims form and further information on presenting claims.

The office is located at:

(c/o CGC y Asociados S.L.)
San Andrés, 56 - 2º A
15003 La Coruña
Spain
Telephone: 00 34 981 217207
Fax: 00 34 981 210538

The Director decided to close the Claims Handling Office in Bordeaux on 30 September 2006. The activities of that office are now carried out from Lorient by the person who managed the Erika Claims Handling Office.

The contact details are:

58 Avenue de la Perrière
56100 Lorient
France
Tel: 00 33 (0) 2 97 37 67 10
E-mail: Merri.Jacquemin@wanadoo.fr

Claims situation

Spain

With respect to Spain , as at 20 August 2008 the Claims Handling Office in La Coruña had received 844 claims totaling €1 018.8 million (£974.5 million). These include 14 claims from the Spanish Government totaling €968.5 million (£926.3 million) submitted during the period October 2003 – August 2008.

As at 20 August 2008, 753 (91.69%) of the claims other than those of the Spanish Government have been assessed for €3.9 million (£3.7 million). Interim payments totalling €521 501 (£416 000) have been made in respect of 169 of the assessed claims, mainly at 30% of the assessed amount. Of the remaining claims three are pending clarification, 174 are awaiting a response from the claimant, 52 are awaiting further documentation, 413 (totalling €29.2 million (£27.9 million)) have been rejected and 19 were withdrawn by the claimants.

France

As at 20 August 2008, 481 compensation claims totalling €109.6 million (£104.8 million) have been received by the Claims Office in Lorient , including a claim from the French Government for clean-up totalling €67.5 million (£64.6 million). The 1992 Fund and the London Club have provisionally assessed the claim at €31.2 million (£29.8 million). Further documentation has since been provided by the French Government. The Fund's experts are carrying out a detailed further assessment of the claim.

Of the 481 claims submitted to the Claims Handling Office, 92% had been assessed by 20 August 2008. Many of the remaining claims lack sufficient supporting documentation and such documentation has been requested from the claimants. Four hundred and forty six claims had been assessed for €49.8 million (£47.6 million) and interim payments totaling €5 million (£4 million) had been made at 30% of the assessed amounts in respect of 324 claims. The remaining claims await a response from the claimants or are being re-examined following the claimants' disagreement with the assessed amount. Fifty-four claims totalling €3.7 million (£3.5 million) had been rejected because the claimants had not demonstrated that a loss had been suffered due to the incident.

Portugal

In December 2003 the Portuguese Government submitted a claim for €3.3 million (£3.2 million) in respect of the costs incurred in clean up and preventive measures. On the basis of additional documentation submitted in February 2005 the Portuguese Government increased its claim by €1 million (£1 million). The claim was finally assessed at €2.2 million (£2.1 million). The Portuguese Government accepted this assessment. In August 2006 the 1992 Fund made a payment of €328 488 (£222 600), corresponding to 15% of the final assessment. This payment does not preclude a further payment to the Portuguese Government in the event that the Executive Committee were to increase the level of payments unconditionally.

Level of payments

The maximum amount available for compensation under the 1992 Civil Liability Convention and the 1992 Fund Convention in respect of the Prestige incident is €171.5 million (£164 million). The figures given in May 2003 by the Governments of the three States affected by the incident, Spain, France and Portugal, as to the damage caused indicated that the total amount of the damage could be as high as €1 050 million (£1 004.3 million). Under the 1992 Conventions, the Fund has to give all claimants equal treatment. The Executive Committee therefore decided in May 2003 that the 1992 Fund's payments should be for the time being limited to 15% of the loss or damage actually suffered by each individual claimant as assessed by the 1992 Fund's experts. The Committee reconsidered the payment level several times but decided, as late as in June 2005, that the level of 15% should be maintained.

The level of the 1992 Fund's payments has in the past generally been determined on the basis of the total amount of claims already presented and possible future claims against the Fund, and not on the basis of the Fund's assessment of the admissible amounts. When the level of payments was considered by the Executive Committee in October 2005 on the basis of the figures presented by the Governments of the three States affected by the incident, it was clear that the level of payments would probably have to be maintained at 15% for several years, unless a new approach were taken.

The Director suggested that an alternative way of determining the Fund's level of payments would be to base it on an estimate of the final amount of the admissible claims against the Fund, established either as a result of agreements with the claimants or by final judgements of a competent court, which was unlikely to be exceeded.

In view of the magnitude of the Prestige incident and the exceptional circumstances surrounding it, the Executive Committee agreed to the Director’s proposal to increase the level of payments from 15% to 30% of the actual losses suffered by claimants. The Committee also decided to apportion on a provisional basis the amount payable by the 1992 Fund, minus a reserve of 10%, amongst the three States affected by the incident. Both these decisions were subject to the provision of certain guarantees and undertakings by the States concerned so as to ensure that the Fund was protected against overpayment. In agreeing to the proposal, it was stressed that it should not be seen as a precedent for future incidents.

Payments to the Spanish Government and undertaking by the French Government

The first claim received from the Spanish Government in October 2003 for €384 million (£367 million) was assessed on an interim basis by the Director in December 2003 at €107 million (£102.3 million), and the 1992 Fund made a payment of €16 050 000 (£11.1 million), corresponding to 15% of the interim assessment. The Director also made a general assessment of the total of the admissible damage in Spain and concluded that the admissible damage would be at least €303 million (£289.8 million). On that basis, and as authorised by the Assembly, the Director made an additional payment of €41 505 000 (£28.5 million), corresponding to the difference between 15% of €383.7 million or €57 555 000 and 15% of the preliminarily assessed amount of the Government's claim, €16 050 000. That payment was made against the provision by the Spanish Government of a bank guarantee covering the above-mentioned difference (ie €41 505 000) from the Instituto de Credito Oficial, a Spanish bank with high standing in the financial market, and an undertaking by the Spanish Government to repay any amount of the payment decided by the Executive Committee or the Assembly.

The Portuguese Government subsequently informed the 1992 Fund that it would not provide any bank guarantee and would, as a consequence, only request payment of 15% of the assessed amount of its claim.

In January 2006 the French Government gave the required undertaking to accept, if necessary, a reduction in compensation in respect of its own claim. As for Spain, in March 2006, the Spanish Government gave the required undertaking and bank guarantee and as a consequence, a payment of €56 365 000 (£38.5 million) was made in March 2006. The Director also increased the level of payments to 30% of the established claims for damage in Spain and in France (except in respect of the French Government's claim), with effect from 5 April 2006. In August 2006 the 1992 Fund settled the claim of the Portuguese Government at €2.2 million (£1.5 million) and made a payment of €328 488 (£222 600), corresponding to 15% of the assessed amount.

As requested by the Spanish Government, the 1992 Fund retained €1 million in order to make payments at the level of 30% of the assessed amounts in respect of the individual claims that have been submitted to the Claims Handling Office in Spain. These payments will be made on behalf of the Spanish Government in compliance with its undertaking, and any amount left after paying all the above claimants will be returned to the Spanish Government. If the amount of €1 million were to be insufficient to pay all the claimants who had submitted claims to the Claims Handling Office, the Spanish Government has undertaken to make payments to these claimants up to 30% of the amount assessed by the London Club and the 1992 Fund.

Removal of the oil from the wreck

The claim for the removal of the oil from the wreck, initially for €109.2 million (£104.4 million), was reduced to €24.2 million (£23.1 million) to take account of European funding the Spanish Government had received following the incident. The Fund is examining the information provided and its bearing on the assessment of the claims by the Spanish Government.

At its February 2006 session the Executive Committee decided that some of the costs incurred in 2003 in respect of sealing the oil leaking from the wreck and various surveys and studies were admissible in principle, but that the claim for costs incurred in 2004 relating to the removal of oil from the wreck was inadmissible. In accordance with the Executive Committee's decision, an assessment is being carried out of the admissible costs of activities that had a bearing on the assessment of the pollution risk posed by the oil in the wreck, incurred by the Spanish Government in 2003 prior to the removal of the oil from the wreck.

Legal Proceedings

Spain

As of August 2008, some 3 790 claims have been lodged in the legal proceedings before the Criminal Court in Corcubión ( Spain ). Six hundred and thirty six of these claims involve persons who have submitted claims directly to the 1992 Fund through the Claims Handling Office in La Coruña. Details of the claims made in some of these court actions have been provided by the Court and are being examined by the experts engaged by the 1992 Fund. The Claims Handling Office has dealt with 102 of the claims submitted in court, out of which two have been settled and paid for an amount of €2 140 (£1 700).

One thousand nine hundred and sixty eight of these claims have been paid by the Spanish Government under the Royal Decrees (397 claims have been rejected) or by the 1992 Fund through the Claims Handling Office in La Coruña. A number of claimants who have been paid by the Spanish Government under the Royal Decrees have withdrawn their claims from the court proceedings. It is expected that more claimants will withdraw their court actions for the same reason.

The Spanish Government has taken legal action in the Criminal Court in Corcubión on its own behalf and on behalf of regional and local authorities as well as on behalf of 1 877 other claimants or groups of claimants. A number of other claimants have also taken legal actions and the Court is assessing whether these claimants are eligible to join the proceedings.

France

As regards France, the French Government and 233 other claimants have taken legal action against the shipowner, the London Club and the 1992 Fund in 16 courts in France requesting compensation totalling some €131 million (£125.3 million), including €67.7 million (£64.8 million) claimed by the Government .

The courts have granted the stay of proceedings in 29 legal actions in order to give the parties time to discuss the claims out of court. Four hundred and twelve French claimants, including various communes, have joined the legal proceedings in Corcubión, Spain.

Portugal

The Government took legal action in the Maritime Court in Lisbon against the shipowner, the London Club and the 1992 Fund claiming compensation for €4.3 million (£4.1 million). Following the settlement of the claim, the Portuguese State withdrew its action in December 2006.

United States

Claim and counterclaim

The Spanish State has taken legal action against American Bureau of Shipping (ABS) before the Federal Court of first instance in New York requesting compensation for all damage caused by the incident, estimated initially to exceed US$700 million (£455.7 million) and estimated later to exceed US$1 000 million (£651 million). The Spanish State has maintained, inter alia, that ABS had been negligent in the inspection of the Prestige and had failed to detect corrosion, permanent deformation, defective materials and fatigue in the vessel and had been negligent in granting classification.

ABS denied the allegation made by the Spanish State and in its turn took action against the State, arguing that if the State had suffered damage this was caused in whole or in part by its own negligence. ABS made a counterclaim and requested that the State should be ordered to indemnify ABS for any amount that ABS may be obliged to pay pursuant to any judgement against it in relation to the Prestige incident.

For details about the defence of sovereign immunity, the discovery of the criminal file in Corcubión and of financial records reference is made to document 92FUND/EXC.38/7, section 7.

Discovery of e-mail communications

The judge assigned to supervise discovery in the District Court case in New York, granted a motion by ABS to compel the Spanish State to produce certain electronic documents. As Spain did not, in the judge's view, fully comply, the judge imposed sanctions against Spain by awarding ABS its legal fees associated with the motion . Spain filed objections to the judge's rulings, requiring them to be reviewed by the District Court judge assigned to the case.   In August 2008 the District Court ju dge overruled Spain's objections and upheld the decisions of the judge assigned to supervise discovery.

ABS acting as an agent or servant of the shipowner

In August 2005 ABS submitted a request to the New York Court (District Court) for a summary judgement dismissing the Spanish State's action. ABS argued that it was an agent or servant of the shipowner or fell under the category of 'the pilot or any other person who, without being a member of the crew, performs services for the ship' and that, therefore, in accordance with Article III.4(a) and (b) of the 1992 Civil Liability Convention (1992 CLC) no claim for compensation for pollution damage could be made against it, unless the damage resulted from its personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result. ABS also maintained that under Article IX.1 of the 1992 CLC all actions for compensation, such as that pursued by the Spanish State in the New York Court, could only be brought in the courts of a Contracting State.  Since the United States was not a Contracting State to the 1992 CLC and the pollution damage had occurred in Spain, ABS argued that the United States Courts were not competent to hear the case.

The Spanish State opposed the request by ABS, arguing that a classification society could not be considered either an agent or servant of the shipowner or a person who performs services for the ship, within the meaning of Article III.4(a) and (b) of the 1992 CLC respectively. As regards Article III.4(b), Spain argued that 'any other person' only referred to a person similar to a pilot or a member of the crew in their relationship with the owner, who performs services of the kind performed by a pilot or a member of the crew of the ship and who is involved in the navigation or operation of the vessel on the incident voyage in question. In support of its argument, the Spanish State relied upon the ejusdem generis rule of construction, which provides that when a general word or phrase follows a list of specific persons or things, the general word or phrase shall be interpreted to include only persons or things of the same type as those listed.

In support of its motion, Spain submitted declarations from legal experts that had attended the 1969 and 1984 diplomatic conferences. Both experts' declarations take the position that classification societies were not intended to be covered by Article III.4(b). The Spanish State further argued that since the United States was not a signatory to the 1992 CLC, the jurisdictional provisions of Article IX.1 of the Convention were not binding on its courts.  

New York Court decision in January 2008

In January 2008 the New York Court accepted ABS's argument that ABS fell into the category of 'any other person who performs services for the ship' under Article III.4(b) of the 1992 CLC. The Court argued that the text of the treaty had to be interpreted in accordance with the ordinary meaning given to the terms of the treaty in their context and in light of its object and purpose. It further argued that the ejusdem generis rule of construction did not apply because it was only to be used where there was uncertainty as to the meaning of a particular clause in a statute.  The Court found no uncertainty or ambiguity in the wording of Article III.4(b) and, therefore, held it did not need to refer to ejusdem generis, negotiation history or other extrinsic sources. The Court further ruled that, under Article IX.1 of the 1992 CLC, Spain could only make claims against ABS in its own courts and it therefore granted ABS's motion for summary judgement, dismissing the Spanish State's claim.

Appeal

In its decision, the New York Court also denied all pending motions as now being non actionable, except for the pending motions over sanctions for Spain's failure to comply with the discovery requests relating to e-mails.

The Spanish State has appealed against the New York Court's decision. ABS has also filed an appeal against the Court's decision to dismiss its counterclaims for lack of jurisdiction. The Spanish State has also filed a motion with the Court of Appeal seeking to dismiss ABS's appeal.

In its appeal Spain argued that since the United States is not a party to the 1992 CLC, ABS as a United States national had no standing to assert rights under the 1992 CLC in a court of the United States, that the 1992 CLC could not deny jurisdiction to a federal court, and that Article IX.1 of the 1992 CLC applied only to claims under the 1992 CLC compensation regime and not to Spain's claims against ABS, which were governed by other law. The Spanish State has also argued that principles of treaty interpretation required consideration of the text, drafter's intent, judicial rulings from 1992 CLC Contracting States and other authorities, all of which showed that Article III.4(b) of the 1992 CLC did not provide immunity to classification societies such as ABS. The Spanish State has further argued that even if Article III.4(b) did apply to classification societies, its immunity did not cover the reckless conduct alleged against ABS.

ABS has opposed Spain's appeal and has cross-appealed, arguing that if Spain was allowed to pursue its claim against ABS in the United States. The counterclaims of ABS, which had been dismissed by the District Court as not logically related to Spain's claim, should be reinstated. The Spanish State has made a motion to the Court of Appeal to dismiss the cross-appeal of ABS but that motion was denied.

In its reply to the appeal by the Spanish State, ABS has argued that Article IX.1 of the 1992 CLC clearly stated that 'actions for compensation may only be brought in the courts of such Contracting State or States' and that the District Court chose not to execute its jurisdiction so as not to allow Spain to ignore its obligation under the 1992 CLC to seek compensation in the courts of Spain. ABS has further argued that there is no evidence of intentional or reckless conduct on its part leading to pollution.

The Spanish State has submitted a reply to ABS arguing that ABS's location in the United States and the presence of key witnesses and documents there, legitimised Spain's choice of forum and that since the United States had not ratified the 1992 CLC, its courts had no obligation to apply the 1992 CLC. In its reply Spain has also renewed its argument that Clause III(4) only applies to persons who provide services to the vessel on the 'incident voyage' and not to persons like ABS, who provided its services many months before, and has supported its argument relying upon the decision by the Criminal Court in Paris regarding the Erika incident

Recourse actions

The Governments of the Fund Member States have taken a policy decision that the Fund should, in respect of any oil pollution incident, endeavour to recover from third parties the amounts it has paid in compensation for pollution damage.

The Criminal Court in Corcubión in Spain is carrying out an investigation into the cause of the incident in the context of criminal proceedings. The Court is investigating the role of the master of the Prestige and of a civil servant who was involved in the decision not to allow the ship into a port of refuge in Spain. The Fund is closely following developments in the Court proceedings.

Spain has also taken legal action against the American Bureau of Shipping (ABS), the classification society of the Prestige, before a Court in New York. In October 2004, the Executive Committee therefore considered whether the Fund should also pursue recourse action against ABS, and if so, in which jurisdiction, namely the United States where ABS is incorporated or in Spain where the major part of the pollution damage occurred.

After having considered the implications and costs associated with legal action in the United States and Spain, the Executive Committee decided that the Fund should not take recourse action against ABS in the United States. It further decided to defer any decision on recourse action against ABS in Spain until further details surrounding the cause of the Prestige incident are available.