EU Environmental Liability Directive

The EU Environmental Liability Directive (ELD) was adopted in 2004 to establish a common framework for the prevention and remediation of environmental damage within EU Member States. But environmental damage resulting from shipping accidents was excluded from the ELD as shipping has its own, well-functioning regime for compensating such damage via the IMO liability and compensation Conventions. 

The European Commission has recently undertaken a review of the application of the ELD, with specific reference to the exceptions for international shipping. Initially, it was feared that the maritime exceptions might be under threat as one study associated with the review identified that the absence of liability for ‘pure environmental damage’ might override the reasons for retaining the exclusions. While the ELD does not define ‘pure environmental damage’, it is usually considered to mean damage to non-marketable or free resources of nature, such as seabirds. 

ICS, ECSA and the International Group of P&I Clubs strongly disagreed with this particular study, arguing that the IMO Conventions already provide reasonable compensation for ‘pure environmental damage’ and that the exclusions in the ELD applicable to shipping accidents should therefore be maintained. Moreover, if damage exceeds the shipowner’s limits of liability, compensation is further guaranteed by the International Oil Pollution Compensation Fund (IOPCF) whereas the ELD regime does not provide similar benefits. 

These arguments were accepted in the European Commission’s final report, published in April 2016, which concluded that the exceptions should be maintained for the time being. Although the Commission considered that the standards of remediation are lower in the IMO Conventions than under the ELD, its report states that the Conventions have a range of other advantages including their worldwide scope.

The Commission has proposed that it should explore whether its concerns regarding the standards of remediation could be addressed through non-legislative means – through working towards a common understanding of concepts at the IOPC Funds or in other fora composed of Parties to the Conventions. While the shipping industry does not share the concerns regarding the standards of remediation provided by the IMO Conventions, ICS agrees that this is the correct course to follow if the EU wishes to discuss the types of environmental damage covered by the Conventions. 

In its report on the ELD, the Commission also expressed concern about the slow uptake of the IMO HNS (liability) Convention and recommended that it should be considered for deletion from the list of exceptions contained in the Directive ‘unless clear evidence of the EU Member States’ joint commitment to conclude this international convention arises’. 

The slow ratification of the HNS Convention is a concern which is shared by ICS, particularly as the adoption of the 2010 Protocol was intended to overcome any impediments to ratification and governments should no longer have any reason to delay. A concerted effort is currently underway, under the auspices of IMO, to bring the HNS Convention into force. In Europe, ongoing discussions on a Council Decision authorising EU Member States to ratify the HNS Convention look set to come to a positive conclusion soon, and it is hoped that this will provide the impetus needed for EU governments to begin ratifying this important Convention. 

The Commission’s report is still under review by the European Parliament, and the Commission itself is due to present a multi-annual work programme on the implementation of the ELD in 2017. But for now it seems likely that the status quo for shipping will be maintained.

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