Five years after the X-Press Pearl disaster, Sri Lanka’s pursuit of compensation may be creating a new legal problem of its own making.
Last year the Sri Lankan Supreme Court ordered an initial US$1 billion payment from the X-Press Pearl local agents and operators, with the open possibility of further additional compensation. But the issue is no longer be confined to Sri Lankan environmental and constitutional law.
Sri Lanka had already taken the legal dispute to Singapore.
Our Attorney General commenced proceedings in the Singapore International Commercial Court and, according to the Supreme Court judgment itself, entered into a Limitation of Jurisdiction Agreement under which claims relating to the environmental impact and associated losses were to be determined in Singapore.
Sri Lanka then changed course.
The Supreme Court criticised the decision to litigate in Singapore and imposed record domestic compensation in doing so, but that approach raised an obvious international question.
As one international lawyer familiar with the dispute put it:
“Sri Lanka has prepared the very pitch on which this case may now turn against it. It chose Singapore, agreed to the jurisdictional framework there, and quite separately granted Singapore investors clear international treaty protections. It cannot assume those commitments simply vanish because the domestic proceedings subsequently took a different legal course.”
The Sri Lanka–Singapore Free Trade Agreement provides Singapore investors with international investment protections, including minimum standards of treatment, due process protections and access, subject to procedural requirements, to international arbitration.
This opens the door to the prospect that the manner in which the billion-dollar liability was determined and enforced could potentially be examined outside Sri Lanka, creating a second evidential record. That could matter because the environmental evidence itself remains contested.
The Supreme Court recorded that the X-Press local agents and operators heavily criticised the compensation assessments provided by the Marine Environment Protection Agency, but the court itself did not hear directly conflicting evidence.
An international arbitration could create a new opportunity to do precisely that. Independent experts could revisit and examine causation, environmental valuation, marine ecology, fisheries impacts, plastic pollution and the extent to which claimed damage can reliably be distinguished from pre-existing environmental conditions.
International expert and marine scientist Dr Amelia Wenger’s independent review of the two MEPA reports has already seriously questioned aspects of methodology, extrapolation and baseline evidence while recognising that environmental harm occurred.
That distinction is important, the question is not whether X-Press Pearl incident caused environmental damage, the question is whether every claimed impact — and every dollar attributed to it — can withstand independent scientific scrutiny.
That issue becomes more important because Sri Lanka still appears to face significant limitations in its historic environmental baseline data. In over five years no convincing answer has been given to the question of whether there was a sufficiently comprehensive and comparable baseline capable of distinguishing X-Press Pearl impacts from existing pollution and later events.
Precisely the same problem resurfaced after the MSC ELSA 3 incident, with researchers again identifying limited baseline information when attempting to attribute impact to pollution.
At this very moment, MEPA is involved in granting a controversial approval for the deliberate discharge of nitrate-bearing material into Sri Lankan waters – potentially four times that of the nitrates reported in relation to the X-Press Pearl.
This gives rise to further and serious questions about previous similar Government approved discharges of nitrates or other chemicals available to the authorities since 2013. Yet no public record of this dumping activity exists or is available, and leaves the public blind as to what the nitrate levels were at the time of both the X-Press Pearl and Elsa incidents, and whether the Government themselves had contributed to any nitrates spike.
It goes without saying that the absence of transparent historic data makes precise attribution considerably more difficult, and that creates an uncomfortable contrast.
Sri Lanka is seeking record breaking compensation based on environmental impact whilst serious questions remain about whether the historic datasets necessary to make robust reliable assessments have ever been fully available.
None of this removes Sri Lanka’s right to protect its environment or seek compensation for proven harm and nor does a Supreme Court judgment automatically create an international treaty breach.
But the legal question has fundamentally changed. What happens next will no longer primarily concern what happened aboard the X-Press Pearl or the MSC3 Elsa, it will concern what happened afterwards.
It will concern how the impact was calculated, and with what baseline, how was causation properly established and why was a Singapore exclusive jurisdiction arrangement entered into?
And how can Sri Lanka seriously expect to be able to enforce a parallel billion-dollar domestic liability consistent with its international trade agreement commitments made to investors?
Five years on, those questions may prove more consequential than the accident itself.
Sri Lanka trusted and chose Singapore the first-time round, and it looks like international law may force them to return the dispute back there.
The post X-Press Pearl: Has Sri Lanka Created Its Own International Legal Problem? appeared first on LNW Lanka News Web.
