Malta v. São Tomé and Príncipe

At a glance

Parties

Republic of Malta v. Democratic Republic of São Tomé and Príncipe (the Duzgit Integrity Arbitration)

Case no.

PCA Case No. 2014-07

Forum and rules

Arbitration under Annex VII of UNCLOS, with the PCA as Registry; Rules of Procedure of 27 May 2014

Treaty

United Nations Convention on the Law of the Sea, 1982 (UNCLOS)

Tribunal

Professor Alfred H.A. Soons (President), Judge James L. Kateka, Professor Tullio Treves

Sector

Shipping; ship-to-ship oil transfer; law of the sea

Outcome

Award of 5 September 2016: by majority, São Tomé breached Article 49(3) UNCLOS through cumulatively disproportionate sanctions; all other claims were dismissed. Award on Reparation of 18 December 2019: by majority, compensation awarded. Judge Kateka dissented both times.

Amount

Claimed (updated): USD 14,247,058.58 plus interest. Awarded: USD 2,077,900.57 (loss of hire); USD 6,898,638.86 (cargo); USD 625,000.00 (settlement payment); EUR 108,170.01 (port agent); EUR 76,586.56 and GBP 54,860.40 (legal expenses); EUR 10,150.00 (classification); EUR 5,085.93 and GBP 87,914.90 (repairs); USD 175,000.00 (non-material damage to the Master and crew); EUR 82,500.00 (São Tomé's share of the costs of the final phase); and pre-award interest of USD 2,804,499.52, EUR 37,727.59 and GBP 34,734.16. Each party bore its own legal costs.

The dispute

The Duzgit Integrity is a chemical tanker flying the Maltese flag, owned by DS Tankers Limited (Malta) and chartered by Stena Oil (Sweden). On 15 March 2013 it entered São Tomé's archipelagic waters without prior authorisation, to transfer marine gas oil and equipment to the Marida Melissa, a tanker also chartered by Stena Oil. The Coast Guard detained both vessels. São Tomé then imposed an IMAP fine of EUR 28,875 and a customs fine of EUR 1.08 million. Its courts convicted the Master of smuggling, sentenced him to three years' imprisonment, ordered an indemnity of about EUR 5 million, and declared the vessel and cargo forfeited. The cargo was sold and discharged in October 2013. The vessel was released on 25 November 2013 under a settlement agreement with DS Tankers. Malta claimed breaches of UNCLOS Articles 2(3), 25(1), 49(3), 192, 194, 225 and 300. São Tomé objected to jurisdiction and admissibility (local remedies, specificity of the legal bases, the settlement agreement, Article 283) and defended its measures as lawful enforcement of its laws.

Key holdings

1. Jurisdiction upheld unanimously. The dispute concerns whether São Tomé acted within the limits of its enforcement jurisdiction under UNCLOS. The Tribunal may apply other rules of international law, such as the principle of reasonableness (necessity and proportionality), only to interpret the Convention. It cannot decide human rights breaches as such. Award ¶¶ 138, 207–210
2. The claims are admissible. Malta, as flag State, has standing for the whole ship as a unit. Its direct claims predominate, so local remedies did not need to be exhausted. DS Tankers' settlement agreement does not bind Malta. The exchange of views required by Article 283 was sufficient. Award ¶¶ 147–157, 180–182, 199–201
3. The initial detention and the IMAP fine were lawful: the Coast Guard's radio exchange was not an authorisation. But the customs fine of over EUR 1 million, the conviction and imprisonment of the Master, the EUR 5 million indemnity, the confiscation of the entire cargo and the prolonged detention were, taken together, disproportionate. This breached Article 49(3) (by majority). The Tribunal found it unnecessary to decide Article 300. Award ¶¶ 234–236, 255–262
4. The other claims failed. The Tribunal found no coercion in the settlement and no discrimination. Notifying Portugal was sufficient notice. No unreasonable risk to the marine environment under Article 225 was proven. Article 2(3) does not apply, because the events took place in archipelagic waters. Article 25 was not breached, because the ship was not in passage. The Award itself is sufficient satisfaction, so no apology was ordered. Award ¶¶ 265, 268, 277, 293, 300–301, 310, 332
5. The breach was a composite act. It began on 26 April 2013, when the customs appeal was rejected, and lasted until the vessel's release on 25 November 2013. Loss of hire is compensated from that date, plus six days spent finding a new charter. The time spent on repairs in Gibraltar was not caused by the detention. The confiscated cargo is valued at cost, with adjustments. Award on Reparation ¶¶ 85–88, 94, 107
6. The charterer's other damages and the travel expenses were rejected for lack of evidence. Repair costs were limited to items the detention caused or worsened. The settlement agreement does not reduce the compensation owed to Malta as flag State. There was no contributory fault. Moral damages were set at USD 50 per person per day for the Master and crew, plus USD 100 per day for the Master's prosecution. Award on Reparation ¶¶ 114, 148, 169–173, 185, 192, 197–199
7. Interest on material damages runs at the one-year government securities rate plus 3.4%, compounded annually. Interest on non-material damages runs at a fixed 2%. No penalty rate was applied. Judge Kateka dissented on the breach, on the composite-act analysis, on the charter party, on the effect of the settlement agreement, on contributory fault and on compound interest. Award on Reparation ¶¶ 208–212, 221; Kateka dissents

Procedural history

1. 15 March 2013São Tomé's Coast Guard detains the Duzgit Integrity in São Tomé's archipelagic waters.
2. 22 October 2013Malta files its Notification of Arbitration under Article 287 and Annex VII of UNCLOS.
3. 23 November 2013DS Tankers and São Tomé sign the settlement agreement. The vessel is released on 25 November 2013.
4. 13 March 2014The President of ITLOS appoints Professor Soons as President, completing the Tribunal (Judge Kateka was appointed on 27 December 2013).
5. 24 August 2015Procedural Order No. 2 rejects São Tomé's request for bifurcation.
6. 23–24 February 2016Hearing on jurisdiction, admissibility and merits at the Peace Palace in The Hague.
7. 5 September 2016Award: jurisdiction upheld and breach of Article 49(3) found; Judge Kateka dissents.
8. 27 June 2017São Tomé's counsel withdraw after failed settlement talks. São Tomé takes no further part in the proceedings.
9. 18 September 2018The Tribunal appoints Peer van Oosterhout as its expert marine surveyor.
10. 18 December 2019Award on Reparation: compensation, costs and interest awarded; Judge Kateka dissents.

Tribunal, counsel and experts

Decided by

• Alfred H.A. Soons President — appointed by the appointing authority (Appointed by the President of ITLOS)
• James Kateka Co-arbitrator — appointed by the appointing authority (Appointed by the President of ITLOS; dissented in 2016 and 2019)
• Tullio Treves Co-arbitrator — appointed by the claimant

For the claimant

King & Wood Mallesons

For the respondent

Government of São Tomé and Príncipe · Clifford Chance · Posser da Costa & Sociedade de Advogados, RL

Experts

Peer van Oosterhout (tribunal)

Run a conflict check on these names →

Keywords

• Duzgit Integrity
• UNCLOS Annex VII
• archipelagic waters
• Article 49(3)
• ship-to-ship transfer
• vessel detention
• proportionality
• reasonableness
• Article 300
• abuse of rights
• ship as a unit
• exhaustion of local remedies
• settlement agreement
• composite act
• moral damages
• compound interest
• contributory fault
• flag State

Summary generated with AI from the published documents — refer to the award for the authoritative text.