Liability and Compensation for Environmental Damage

In one line

International law has two liability systems, State responsibility for wrongful acts and civil liability channelled to an operator, and the second was written for oil and nuclear damage, works there, and has failed almost everywhere else.

The two systems, kept apart

State responsibility is the law examined in Module I. A State that breaches an international obligation, including the duty to prevent significant transboundary harm, commits an internationally wrongful act and owes reparation to the injured State. The claimant is a State, the defendant is a State, and the injury must be attributable.

Civil liability is different in every respect. The claimant is the injured person, the defendant is a private operator, the forum is a national court, and the obligation on the State party is only to enact the regime and let its courts apply it. A civil liability convention does not make a State liable. It tells a State what rule its own courts must apply.

Between them sits a third idea, liability for the injurious consequences of acts not prohibited by international law, which the International Law Commission worked on for decades. It produced articles on prevention in 2001 and, in 2006, draft principles on the allocation of loss in the case of transboundary harm arising out of hazardous activities. The principles are not a treaty. They recommend prompt and adequate compensation to victims, liability channelled to the operator without proof of fault, financial security, and supplementary State funding where the operator's resources are insufficient.

The standard architecture of a civil liability treaty

Every one of these conventions is built from the same seven parts, and knowing the parts is worth more than knowing any single treaty.

1. Scope. The activity, the damage and the geographical reach covered.
2. Channelling. Liability is placed on one identified person, the shipowner, the operator of the installation, the notifier or exporter, and claims against anyone else are barred. This gives the victim a certain defendant and gives the industry a single insurable risk.
3. Strict liability. No proof of fault, with narrow exceptions, usually armed conflict, an exceptional natural phenomenon, an act done with intent to cause damage by a third party, and the claimant's own fault.
4. Limitation of liability by amount, often by reference to the size of the ship or installation, with the limit lost in cases of intentional or reckless conduct.
5. Compulsory insurance or other financial security, with a direct right of action against the insurer, which is what makes the promise real.
6. A supplementary fund, financed by the industry or by States, to pay above the operator's limit.
7. Jurisdiction and enforcement, concentrating claims in the courts of the State where the damage occurred and requiring recognition of the judgment in other parties.