Republic of Malta v Democratic Republic of São Tomé and Príncipe

JurisdictionDerecho Internacional
CourtArbitration Tribunal (International)
Date05 September 2016

Arbitration Tribunal2

(Soons, President; Kateka and Treves, Members)

The Duzgit Integrity Arbitration 1

(Republic of Malta
Democratic Republic of São Tomé and Príncipe)

Arbitration — Jurisdiction — United Nations Convention on the Law of the Sea, 1982 — Part XV and Annex VII — Dispute Settlement Mechanism — Existence of a dispute — UNCLOS Article 288(1) — Extent of jurisdiction — Whether extending to allegations of breaches of human rights

Arbitration — Admissibility — United Nations Convention on the Law of the Sea, 1982 — Part XV and Annex VII — Standing of flag State to invoke responsibility of coastal State — UNCLOS Article 49(3) — Diplomatic protection — Exhaustion of local remedies — Whether applicant's claims being preponderantly for direct or indirect injury — Effect of settlement agreement between respondent and third party — Requirement to exchange views — UNCLOS Article 283

Arbitration — Applicable law — United Nations Convention on the Law of the Sea, 1982 — Part XV and Annex VII — Whether arbitration tribunal empowered to apply international human rights law — UNCLOS Article 293 — Requirement of reasonableness — Necessity and proportionality — UNCLOS Article 300 — Good faith — Abuse of rights

Damages — Compensation — Material damage for lost earnings, value of cargo, payment to secure release of vessel, vessel repairs, classification expenses, administrative expenses, reputational losses — Non-material damage for prosecution and detention of persons — Quantum of compensation deferred — Declaratory judgment — Finding of wrongful conduct — No formal apology required

Environment — Marine pollution — UNCLOS Article 225 — Risk to marine environment — Ship-to-ship transfer of oil

Sea — Archipelagic waters — UNCLOS Article 49(3) — Sovereignty of coastal State — Right of coastal State to enforce domestic law — Measures must be reasonable — Principles of necessity and proportionality apply

Sea — Arrest and detention of vessel — UNCLOS Article 94 — Right of flag State to notice of arrest and detention

Sea — Innocent passage — UNCLOS Article 25(1) — Right of coastal State to prevent non-innocent passage — Inapplicability to vessel not engaged in passage

Sea — Territorial sea — UNCLOS Articles 2(3) and 49(3) — Distinction between enforcement jurisdiction of coastal State in territorial sea and in archipelagic waters

Summary:3The facts:—On 22 October 2013, the Republic of Malta (“Malta”) commenced arbitration proceedings under Annex VII of the United Nations Convention on the Law of the Sea, 1982 (“UNCLOS”) against the Democratic Republic of São Tomé and Príncipe (“São Tomé”). The dispute concerned the lawfulness of an enforcement action taken by São Tomé against the M/T Duzgit Integrity, a Maltese-flagged vessel, including criminal and civil penalties imposed against the Master of the Duzgit Integrity and the confiscation and sale of the vessel's cargo.

On 14 March 2013, the Duzgit Integrity, a vessel owned by DS Tankers Limited, a Maltese company, was carrying approximately 1,654 metric tons of marine gas oil and approximately 8,852 metric tons of heavy fuel oil in the Gulf of Guinea. Stena Oil, the Swedish company that had chartered the vessel, owned the cargo. The Duzgit Integrity was headed to Las Palmas for its five-year certification survey. Along the way, it was scheduled to deliver the heavy fuel oil cargo to four vessels operating off the coast of Nigeria. Before that operation, the Duzgit Integrity was scheduled to transfer its marine gas oil cargo, as well as some equipment, to another vessel, the Marida Melissa, in the area of São Tomé. The Marida Melissa, a vessel registered in the Marshall Islands, was also chartered by Stena Oil.

The Duzgit Integrity and Marida Melissa originally planned to carry out the ship-to-ship transfer on 15 March 2013 at a point 25–30 miles to the northwest of São Tomé island, beyond the archipelagic waters of São Tomé. On 14 March 2013, the Master of the Duzgit Integrity observed a 1–2 metre swell during the voyage to the first meeting point and decided that conditions to the north-east of São Tomé island would be safer. The Duzgit Integrity arranged a new meeting point with the Marida Melissa and proceeded to that location, which was situated within the archipelagic waters of São Tomé. The Duzgit Integrity tried without success to contact São Tomé's authorities at that time.

At 5:16 am on 15 March 2013, the Duzgit Integrity contacted the Marida Melissa by radio to indicate its position. At 6:00 am São Tomé's coastguard directed a patrol boat to make contact with two vessels that had been detected on radar as having entered the territorial waters of São Tomé from different directions. At 7:05 am, the patrol boat approached the Duzgit Integrity, which was then located 6.5 nautical miles from the coast of São Tomé. The mastersergeant of the patrol boat and the Master of the Duzgit Integrity communicated via public VHF radio. The Master of the Duzgit Integrity indicated that the vessel was scheduled to meet the Marida Melissa “for some equipment transfer, hose and fender”. He further indicated that the operation would take place at the current location unless permission were withheld, in which case the vessels would proceed “offshore”. The master-sergeant of the patrol boat stated that his English was “not very good” and asked whether the Duzgit Integrity had authorization. The Master explained that the vessel was not going to enter any port on São Tomé and would only undertake the ship-to-ship transfer. The Master reiterated that the operation could “proceed offshore” if this posed a problem, but further stated that “[i]f you give permission I want to make operation here”. The master-sergeant replied, “OK, thank you, good morning, good job”, and the patrol boat departed. At 7:09 am, the Master of the Duzgit Integrity informed the Marida Melissa, which had not yet reached its location, that the patrol boat was heading to the Marida Melissa and that “I take permission for [ship-to-ship] operation here.”

At around 8:25 am, the Marida Melissa came alongside Duzgit Integrity. Before commencing the ship-to-ship transfer, the Master of the Duzgit Integrity tried without success to contact the São Tomé coastguard. The two vessels then began to prepare the operation and by 9 am were moored to one another. Meanwhile, the São Tomé coastguard determined that the vessels lacked authorization to undertake a ship-to-ship transfer and directed the coastguard patrol boat to pay a second visit to the Duzgit Integrity.

The coastguard patrol boat reached the Duzgit Integrity and Marida Melissa at about 9:20 am. The Master of the Duzgit Integrity was informed that the vessel lacked “authorization to stop” in the waters of São Tomé and the Masters of both vessels were asked to proceed to the coastguard depot. The Master of the Duzgit Integrity replied that no operation was under way, that the São Tomé coastguard had granted permission for the planned operation two hours earlier, and that the vessels could move offshore if permission were refused. Following further discussion, the Duzgit Integrity and Marida Melissa anchored near Ana Chaves Bay and the Masters went onshore.

Authorities from São Tomé interrogated the Masters at a coastguard facility. São Tomé asserted that the interrogation revealed that the vessels had not notified the authorities of São Tomé before entering into its archipelagic waters or obtained written authorization for the trans-shipment of cargo. The Masters were suspected of having committed or attempted to commit the crime of smuggling under Article 274 of the Criminal Code of São Tomé. São Tomé then instituted legal proceedings against the Duzgit Integrity and Marida Melissa and each vessel's Master.

On 16 March 2013, each vessel was fined 28,875 euros for failing to provide 24-hour advance notice of their arrival in São Tomé waters to the Port and Maritime Institute (IMAP) as required by local law. On 8 November 2013, funds provided by Stena Oil were used to pay the fines on a “without prejudice basis”.

On 27 March 2013, the Customs Directorate General imposed a penalty of 1.08 million euros. That amount was six times the value of the total cargo on board the Duzgit Integrity, although only a portion of the total cargo was intended for transfer to the Marida Melissa. In addition, the Civil Court of First Instance ordered the seizure of the vessels and the cargo. The order to pay the 1.08 million euros penalty was withdrawn when the separate owners of the two vessels reached settlements with São Tomé in October and November 2013.

On 29 March 2013, the Masters were found guilty of smuggling following a criminal trial and sentenced to three years' imprisonment. They were also ordered (jointly and severally with the charterer and the owners of the vessels) to pay an indemnification of approximately 5 million euros to São Tomé. The vessels and cargo were declared “lost in favour of São Tomé”. Neither the vessels' owners nor Stena Oil, the charterer, were parties to the proceedings or called to defend themselves.

On 23 April 2013, Malta asked the authorities in São Tomé to review the case to resolve the situation equitably. São Tomé indicated that it would await the decision of the Supreme Court, as the decision on criminal liability and indemnification was under appeal. On 20 June 2013, the Supreme Court dismissed that appeal and subsequently rejected further applications seeking clarification and nullity. On 9 July 2013, Stena Oil issued a press release accusing the Government of São Tomé of seeking to enrich itself “by confiscating assets from foreign businesses”. On 5 August 2013, the Supreme Court granted the request of São Tomé to confiscate and sell the cargo on board the Duzgit Integrity.

On 21 August 2013, São Tomé established a negotiation committee tasked with exploring a settlement agreement among the interested parties. Negotiations took place...

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