1.0 Introduction
In the Deepwater Horizon incident happened in the Gulf of Mexico on 20-04-2010, millions of oil barrels were spilled and left the well gushing due to the massive explosion on the platform. This accident had killed 11 workers and caused the large damage to the marine environment. It was reported that the oil spill from the Deepwater Horizon incident released millions of liters oil and natural gas and caused the pollution to the landscape and the shoreline.
This then leads to the numbers of legal claims filed by various parties. Numbers of litigation claims were made against the owner, Transocean Deepwater Drilling Inc., the oil company, i.e. BP Plc., the cementer, Halliburton Energy Services, Inc. as well the blow-out preventer, Cameron International Corporation. The claims were amongst other were seeking for the damages to the negligence, failed in safety systems, payment of financial losses, current and future loss of business.
Besides, after several settlements to the suit taken against the major companies, the US District Judge on September 2014 held that BP Inc. was guilty of gross negligence and wilful misconduct under Clean Water Act 1977, whereby the Court decided that BP Inc. has been reckless while conducting the oil and gas works and Transocean Deepwater Drilling Inc. as well as Halliburton Energy Services, Inc. were negligent. The percentage of the liabilities indicated by the Court were 67% of liability to BP Inc., 30% of liability to Transocean Deepwater Drilling Inc. and 3% of liability to Halliburton Energy Services, Inc. Further, in July 2015, BP Inc. has reached settlement with the Government of USA by agreed to pay the Government of USA for $18.7 billion and it is estimated that BP Inc. has spent for about $54 billion for the cost of cleaning on the environmental and economic damages.
Malaysia is one of the biggest actor in the oil and gas industry. There are many investors willing to invest in Malaysia’s oil and gas industry. These foreign investors are helping a lots and contributes to the economic growth in Malaysia. It was reported that in 2013, Malaysia’s oil reserves are the fifth largest in Asia-Pacific and Malaysia became the first ranking position in 2017 Best Country to Invest in oil and gas industry. Malaysia’s national oil and gas company, Petroliam Nasional Berhad (Petronas) holds an exclusive ownership right to all oil and gas exploration production projects in the country. Petronas is wholly owned by Government of Malaysia.
By looking to this Malaysia’s oil and gas industry and the situation of Deepwater Horizon incident, Malaysia may not run from facing the same, should the incident take place in Malaysia’s waters. There were few incidents of water spills in Malaysia’s waters. One of major oil spill happened in Malaysia’s water was the Nagasaki Spirit in 1992 where the container vessel collided with the tanker and cause a leakage and discharge 40,000 tons of crude oil into the sea.
On the surface, Malaysia is seen as the victim to oil pollution. Malaysia has been exposed to the oil tanker traffic and the risk of oil tanker accident. However, oil exploration and exploitation activities in the offshore areas, Malaysia is also a contributor to the oil pollution which exposing the marine environment to the pollution. The exploration and exploitation of petroleum will certainly affect the environment especially marine environment. Thus, the law related to the oil spill and oil pollution is important to Malaysia.
Anomaly, Malaysia does not have specific law itself for oil spill and/or oil pollution. There are few laws that to be looked upon and taken into consideration while dealing with the oil spills. This paper will focus on a few laws which have major provisions that related to oil spills and attempts to examine the effectiveness of the existing law.
2.0 Legal Framework Available (Malaysian Domestic Law)
In Malaysia, there is no specific law like several frameworks have been issued in order to protect Malaysia waters and to prevent severe harm due to oil spill. Most of the Malaysia legal framework is inherited from the English Legal System and most of UK laws were adopted. It includes Malaysia Maritime Law where its combination of international treaties and conventions with the local legislation.
(a) Merchant Shipping Act 1994
Merchant Shipping (Oil Pollution) Act 1994 is derived from the adaptation of Civil Liability Convention 1969 (CLC) and Fund Convention 1971 whereby Malaysia is one of the parties to the conventions. This act is the main civil liability statute in Malaysia. It gives effect to both conventions by prescribing civil liability in accordance with the international civil liability scheme for ship-source oil pollution. The main subject of this act is oil pollution originating from vessels. In order for a country to ratify the provision of ant convention, local law must be implemented. Most of the provisions in Merchant Shipping (Oil Pollution) Act 1994 complies with the CLC and the Fund Convention. The composition system is much more specific and applies the two-tier mechanism, based on the 1992 CLC and 1992 Fund Convention.
This Act defines pollution damage as in the conventions and impose strict liability to the owner of the ship within Malaysia’s territory and Exclusive Economic Zone. Section 6(2) of Merchant Shipping Act 1994 provides that the shipowners may be liable for any pollution caused by the ship within Malaysia and the liability is limited to the incident is due to their actual fault and privity. If compensation given by the shipowner is not adequate, the Claimant is entitle to claim from the International Oil Pollution Compensation Fund (IOPC) or the Fund. The Act acknowledges the legal personality of the Fund. IOPC is capable of assuming rights and obligations and of being a party in any legal proceedings before a court in Malaysia.
(b) Environmental Quality Act 1974
Environmental Quality Act 1974 (EQA) is the act that provides the protection for the environment within Malaysia. It is the most comprehensive law for the control over pollution. Although EQA does not directly connected to international convention on marine pollution, but EQA provides general provisions regarding the overall environment in Malaysia, which include the marine environment. EQA suggest license mechanism in order to control the environment.
Section 21 EQA empowers the Minister by regulation may specify the acceptable condition for the emission, discharge or deposit of environmentally hazardous substances, pollutants or wastes. Whereas, Section 27 EQA prohibits the discharge of spill of any oil or oil mixture without license into Malaysia waters which whoever finds liable to this can be fined not exceeding RM500,00 or imprisonment not more that 5 years. In certain condition, person who has been granted with the license may have certain exception. Similarly to Section 29 EQA where it prohibits discharge of environmentally hazardous substances, pollutants or wastes without license into the Malaysian waters.
In one of the oil spill case happened in Pasir Gudang Port in January 2017, owners of the two vessels have been ordered to pay security bond of RM1,000,000.00 each to the state government to ensure that the owners take responsibility to clean up the oil spill following the EQA.
However, EQA is limited to the Malaysia waters only. Malaysia waters is defined as the territorial waters of Malaysia as determined in accordance with the Emergency (Essential Powers) Ordinance, No. 7 1969. Thus, it means EQA only applicable within the territorial sea of Malaysia, which may extend up to 12 nautical miles from the baselines and it does not applicable to continental shelf and to the Exclusive Economic Zone which may extend to 200 nautical miles from the baseline.
(c) The Exclusive Economic Zone Act 1984
The Exclusive Economic Zone Act 1984 (EEZ Act) was devised based on United Nations Convention on the Law of the Sea 1982 (UNCLOS). EEZ Act cover the areas up to 200 nautical miles from the baselines and continental shelf of Malaysia. Basically, EEZ Act is an internationally accepted norms, for the regulation of activities in the exclusive economic zone and the continental shelf. EEZ Act provides the protection and preservation on marine environment from various deleterious activities and the right of exploration and exploitation of the seabed.
Section 9 of EEZ Act provides that Malaysia has the sovereign right to exploit her natural resources in the EEZ pursuant to her environmental policies and in accordance with its duty to protect and to preserve the marine environment.
In the aspect of oil and gas, there are two major offences in the EEZ Act which are the discharge or escape of oil or pollutant in the EEZ and failure to comply with directions in order to remove, disperse, destroy or mitigate damage by pollution. Section 10 of EEZ Act states that if any oil, mixture containing oil or pollutant is discharged or escaped into the EEZ from any vessel, land-based source, installation, device or aircraft, from or through the atmosphere or by dumping, it is an offence and the owner, master, occupier, or person in charge is liable to a fine not exceeding one million ringgit. The penalty provision in EEZ Act is based on the strict liability principle. Additional fine will be imposed to the party in the event they failed to report to the Director General of any oil spill as well as the ship or vessel escapes without furnishing the security. There is also provision for the charging of the expenses incurred for the clean-up operation due to the oil spill.
The EEZ Act also consists of the civil liability in order to protect the marine environment. Section 40 provides for a sort of ‘compensation system’ for pollution damage in the EEZ and on the Malaysia’s continental shelf. In the event of damage caused to any person or property in or on, or to any segment or element of the environment or related interests within, the EEZ or continental shelf, the owner and the master of the vessel, or the owner and the person in charge of the installation or device, as the case may be, from which pollution originated, are liable jointly and severally for such damage. The liability may extends to the payment of compensation for any damage caused to a person, vessel, facility, structure used in any activity, including fishing and related activities, in the EEZ or on the continental shelf. This provision is to protect the parties who are affected from the polluted water caused by another party. This is similar to the Deepwater Horizon case where various parties had filed a suit against the owner of the ship.
In furtherance to this, EEZ Act also provides the defence for the safety of the vessel. Under the EEZ Act, legislation was enacted in order to prevent accident. The need is to enforce them properly and to amend them, if need be, from time to time, to bring them in line with the changes made in international conventions.
Besides having a law and legislation to combat the worst incident of oil spill, Malaysia has also come with the National Oil Spill Contingency Plan (NOSCP). The NOSCP was formulated to control oil spill occurring within Malaysia waters. The NOSCP also aligns with the ASEAN Oil Spill Response Action Plan for regional co-operation to deal with adjacent oil spill in the Straits of Malacca and bordering Asean countries. The Department of Environment (DOE) is responsible for oil spill response and Marine Department of the Ministry of Transport will have a major operating role.
In the event of a major oil spill, coordination is carried out by the National Oil Spill Control Committee (NOSCC) which appointed by the Government of Malaysia. This is chaired by the Director General of the DOE and comprises representatives of various other Government agencies and the petroleum industry.
It involves the third-tier plan where it act based on the seriousness of the case. If the spill is small, a local contingency plan (Tier 1) is activated and the clean-up operations will be carried out by the operators of the relevant port, terminal or depot. The operation is monitored closely by the DOE. Should the spill extend to areas outside port limits or beyond local capability, Area Response (Tier 2) is put into place.
In addition to this, the Tier Three plan (Tier 3) is the ultimate plan to respond to a spill of catastrophic proportions. Normally this will consist of a plan drawn up by a government to protect the national interest. This is because it is only government who can draw upon massive resources (like the military) who would be required in the event of a catastrophic spill. Governments can also take control of the resources from the public and private sectors as well as legislating for emergency powers.
3.0 Recommendation
To overcome and prevent the spillage of oil in Malaysia water, it has to be looked into the details in order to deal with the marine environment issues. The area of the marine environment that needs special protection through action by the International Maritime because of its significance in recognised ecological, socio-economic or scientific attributes where such attributes may be vulnerable to damage by international shipping activities.
In order to minimize these impacts, preparedness and response are always required for any oil spill, including the monitoring, prevention, reduction, response, and remediation of oil pollution. The more preventive measure must be considered. Besides, the strict enforcement should be taken and consistent. Within a relevant period, preventive measures must be foreseeable to the incident of spill or discharge.
4.0 Conclusion
Malaysia is a party to the international marine environmental conventions and has ratified few of the conventions in order to regulates and apply in the national level. It is necessary to implement the law in order to monitor and prevent the oil spill or other accident which might affect the marine law. Somehow the incident could not be prevented although few measure or precaution has been taken out, nevertheless it is a duty and obligations to all the parties to minimize the damage.