Prestige

Spain, 13 November 2002

Report updated 1 September 2010

What has happened?

On 13 November 2002 the Bahamas registered tanker Prestige (42 820 GT), carrying 76 972 tonnes of heavy fuel oil, began listing and leaking oil while some 30 kilometres off Cabo Finisterre (Galicia, Spain). On 19 November, whilst under tow away from the coast, the vessel broke in two and sank some 260 kilometres west of Vigo (Spain), the bow section to a depth of 3 500 metres and the stern section to a depth of 3 830 metres. The break-up and sinking released an estimated 63 000 tonnes of cargo. Over the following weeks oil continued to leak from the wreck at a declining rate. It was subsequently estimated by the Spanish Government that approximately 13 800 tonnes of cargo remained in the wreck.

Due to the highly persistent nature of the Prestige’s cargo, released oil drifted for extended periods with winds and currents, travelling great distances. The west coast of Galicia was heavily contaminated and oil eventually moved into the Bay of Biscay, affecting the north coast of Spain and France.

A major offshore clean-up operation was carried out using vessels from Spain and nine other European countries including France and Portugal. The oil from the Prestige affected the Atlantic coast from Vigo in Spain to Brest in France, as well as causing intermittent and light contamination on the French and English coasts of the English Channel as far as the Dover Strait. Approximately 1 900 km of shoreline was affected in Spain and France. Around 141 000 tonnes of oily waste was collected in Spain and some 18 300 tonnes in France.

The Spanish Government concluded a contract with the oil company Repsol YPF to remove the remaining oil from the wreck of the Prestige. The work commenced in May 2004 and was finalised in September 2004 at a cost of some €109.2 million (£81.4 million).

No oil is reported to have come ashore in Portugal, but some clean-up operations at sea were carried out by the Portuguese authorities.

The compensation system: who is paying?

Compensation is available to any individual, business, private organisation or public body who has suffered pollution damage as a result of the Prestige incident. Compensation is payable under the 1992 Civil Liability and Fund Conventions which form part of Spanish, French and Portuguese law.

Compensation is payable for expenses actually incurred and for loss or damage actually suffered as a result of the oil pollution. All claims must be properly supported by documentation.

Approximately €22.8 million (£19 million) compensation is available from the shipowner's liability insurer (the London P&I Club). Additional compensation of up to approximately €148.7 million (£123.6 million) is available from the 1992 Fund. In other words, a total of €171.5 million (£142.6 million) is available.

Claims Offices

The London P&I Club and the 1992 Fund have established a Claims Office in La Coruña (Spain) to assist claimants who wish to make claims for compensation for pollution damage in Spain. Claimants are invited to contact the Prestige Claims Office by telephone or fax in order to obtain a claims form and further information on presenting claims.

The office is located at:

(c/o CGC y Asociados S.L.)
San Andrés, 56 - 2º A
15003 La Coruña
Spain
Telephone: 00 34 981 217207
Fax: 00 34 981 210538

The Director decided to close the Claims Handling Office in Bordeaux on 30 September 2006. The activities of that office are now carried out from Lorient by the person who managed the Erika Claims Handling Office.

The contact details are:

58 Avenue de la Perrière
56100 Lorient
France
Tel: 00 33 (0) 2 97 37 67 10
E-mail: Merri.Jacquemin@wanadoo.fr

Claims situation

Spain

With respect to Spain , as at 2 September 2009 the Claims Handling Office in La Coruña had received 844 claims totalling €1 018.8 million (£847.1 million). These include 14 claims from the Spanish Government totalling €968.5 million (£805.3 million) submitted during the period October 2003 – August 2008.

As at 2 September 2009, 794 (95.66%) of the claims other than those of the Spanish Government had been assessed for €3.9 million (£3.2 million). Interim payments totalling €527 327 (£461 991) had been made in respect of 173 of the assessed claims, mainly at 30% of the assessed amount. Of the remaining claims 3 are pending clarification, 166 are awaiting a response from the claimant, 21 are awaiting further documentation, 412 (totalling €29.8 million) have been rejected and 19 have been withdrawn by the claimants.

France

As at 2 September 2009, 482 claims totalling €109.7 million had been received by the Claims Handling Office in Lorient , including a claim from the French Government for clean-up totalling €67.5 million (£81.2 million).

Of the 482 claims submitted to the Claims Handling Office, 94% had been assessed by 2 September 2009. Four hundred and fifty four claims had been assessed for €50 million and interim payments totalling €5.3 million had been made at 30% of the assessed amounts in respect of 346 claims. The remaining claims await a response from the claimants or are being re-examined following the claimants' disagreement with the assessed amount. Fifty-six claims totalling €3.8 million had been rejected because the claimants had not demonstrated that a loss had been suffered due to the incident.

In May 2004 the French Government submitted claims for €67.5 million in relation to the costs incurred for clean up and preventive measures. The 1992 Fund and the London Club made a provisional assessment of the claims at €31.2 million. After the analysis of further documentation submitted by the French Government, the claims have been reassessed at €38.5 million. A letter has been sent to the Government explaining the assessment. The amount claimed by the French Government includes VAT, and as in the claim by the Spanish Government, this amount has been deducted from the claim. Part of the difference between the claimed and assessed amounts lies in the lack of sufficient supporting documentation for some items of the claim. Therefore it is possible that the assessed amount could increase if the French Government were to submit the required information. Other parts of the claim have been rejected for being not admissible according to the Fund's criteria.

A further 61 claims, totalling €10.5 million, have been submitted by local authorities for costs of clean-up operations. Fifty-four of these claims have been assessed at €4.6 million. Interim payments totalling €1.2 million (£1.1 million) have been made in respect of 41 claims at 30% of the assessed amounts.

One hundred and twenty-six claims have been submitted by oyster farmers totalling €2.3 million for losses allegedly suffered as a result of market resistance due to the pollution. The experts engaged by the London Club and the 1992 Fund have examined these claims and 120 of them, totalling €2.4 million, have been assessed at €468 231. Payments totalling €131 955 have been made in respect of 90 of these claims at 30% of the assessed amounts.

The Claims Handling Office has received 195 tourism-related claims totalling €25.2 million. One hundred and eighty-five of these claims have been assessed at a total of €13.2 million and interim payments totalling €3.7 million have been made at 30% of the assessed amounts in respect of 149 claims.

Portugal

In December 2003 the Portuguese Government submitted a claim for €3.3 million (£2.7 million) in respect of the costs incurred in clean up and preventive measures. On the basis of additional documentation submitted in February 2005 the Portuguese Government increased its claim by €1 million (£83 149). The claim was finally assessed at €2.2 million (£1.8 million). The Portuguese Government accepted this assessment. In August 2006 the 1992 Fund made a payment of €328 488 (£222 600), corresponding to 15% of the final assessment. This payment does not preclude a further payment to the Portuguese Government in the event that the Executive Committee were to increase the level of payments unconditionally.

Level of payments

The maximum amount available for compensation under the 1992 Civil Liability Convention and the 1992 Fund Convention in respect of the Prestige incident is €171.5 million (£142.6 million). The figures given in May 2003 by the Governments of the three States affected by the incident, Spain, France and Portugal, as to the damage caused indicated that the total amount of the damage could be as high as €1 050 million (£873.1 million). Under the 1992 Conventions, the Fund has to give all claimants equal treatment. The Executive Committee therefore decided in May 2003 that the 1992 Fund's payments should be for the time being limited to 15% of the loss or damage actually suffered by each individual claimant as assessed by the 1992 Fund's experts. The Committee reconsidered the payment level several times but decided, as late as in June 2005, that the level of 15% should be maintained.

The level of the 1992 Fund's payments has in the past generally been determined on the basis of the total amount of claims already presented and possible future claims against the Fund, and not on the basis of the Fund's assessment of the admissible amounts. When the level of payments was considered by the Executive Committee in October 2005 on the basis of the figures presented by the Governments of the three States affected by the incident, it was clear that the level of payments would probably have to be maintained at 15% for several years, unless a new approach were taken.

The Director suggested that an alternative way of determining the Fund's level of payments would be to base it on an estimate of the final amount of the admissible claims against the Fund, established either as a result of agreements with the claimants or by final judgements of a competent court, which was unlikely to be exceeded.

In view of the magnitude of the Prestige incident and the exceptional circumstances surrounding it, the Executive Committee agreed to the Director’s proposal to increase the level of payments from 15% to 30% of the actual losses suffered by claimants. The Committee also decided to apportion on a provisional basis the amount payable by the 1992 Fund, minus a reserve of 10%, amongst the three States affected by the incident. Both these decisions were subject to the provision of certain guarantees and undertakings by the States concerned so as to ensure that the Fund was protected against overpayment. In agreeing to the proposal, it was stressed that it should not be seen as a precedent for future incidents.

Payments to the Spanish Government and undertaking by the French Government

The first claim received from the Spanish Government in October 2003 for €384 million (£367 million) was assessed on an interim basis by the Director in December 2003 at €107 million (£102.3 million), and the 1992 Fund made a payment of €16 050 000 (£11.1 million), corresponding to 15% of the interim assessment. The Director also made a general assessment of the total of the admissible damage in Spain and concluded that the admissible damage would be at least €303 million (£289.8 million). On that basis, and as authorised by the Assembly, the Director made an additional payment of €41 505 000 (£28.5 million), corresponding to the difference between 15% of €383.7 million or €57 555 000 and 15% of the preliminarily assessed amount of the Government's claim, €16 050 000. That payment was made against the provision by the Spanish Government of a bank guarantee covering the above-mentioned difference (ie €41 505 000) from the Instituto de Credito Oficial, a Spanish bank with high standing in the financial market, and an undertaking by the Spanish Government to repay any amount of the payment decided by the Executive Committee or the Assembly.

The Portuguese Government subsequently informed the 1992 Fund that it would not provide any bank guarantee and would, as a consequence, only request payment of 15% of the assessed amount of its claim.

In January 2006 the French Government gave the required undertaking to accept, if necessary, a reduction in compensation in respect of its own claim. As for Spain, in March 2006, the Spanish Government gave the required undertaking and bank guarantee and as a consequence, a payment of €56 365 000 (£38.5 million) was made in March 2006. The Director also increased the level of payments to 30% of the established claims for damage in Spain and in France (except in respect of the French Government's claim), with effect from 5 April 2006. In August 2006 the 1992 Fund settled the claim of the Portuguese Government at €2.2 million (£1.5 million) and made a payment of €328 488 (£222 600), corresponding to 15% of the assessed amount.

As requested by the Spanish Government, the 1992 Fund retained €1 million in order to make payments at the level of 30% of the assessed amounts in respect of the individual claims that have been submitted to the Claims Handling Office in Spain. These payments will be made on behalf of the Spanish Government in compliance with its undertaking, and any amount left after paying all the above claimants will be returned to the Spanish Government. If the amount of €1 million were to be insufficient to pay all the claimants who had submitted claims to the Claims Handling Office, the Spanish Government has undertaken to make payments to these claimants up to 30% of the amount assessed by the London Club and the 1992 Fund.

Removal of the oil from the wreck

The claim for the removal of the oil from the wreck, initially for €109.2 million (£90.8 million), was reduced to €24.2 million (£20.1 million) to take account of European funding the Spanish Government had received following the incident. The Fund is examining the information provided and its bearing on the assessment of the claims by the Spanish Government.

At its February 2006 session the Executive Committee decided that some of the costs incurred in 2003 in respect of sealing the oil leaking from the wreck and various surveys and studies were admissible in principle, but that the claim for costs incurred in 2004 relating to the removal of oil from the wreck was inadmissible. In accordance with the Executive Committee's decision, an assessment is being carried out of the admissible costs of activities that had a bearing on the assessment of the pollution risk posed by the oil in the wreck, incurred by the Spanish Government in 2003 prior to the removal of the oil from the wreck.

Legal Proceedings

Spain

Some 4 010 claims have been lodged in the legal proceedings before the Criminal Court in Corcubión (Spain). Six hundred and twelve of these claims involve persons who have submitted claims directly to the 1992 Fund through the Claims Handling Office in La Coruña. Details of the claims made in some of these court actions have been provided by the Court and are being examined by the experts engaged by the 1992 Fund. The Claims Handling Office has examined documentation relating to 382 of the claims submitted in court, out of which three have been settled and paid for a total amount of €24 267.

One thousand nine hundred and ninety four of these claims have been paid by the Spanish Government under the Royal Decree or by the 1992 Fund through the Claims Handling Office in La Coruña. A number of claimants who have been paid by the Spanish Government under the Royal Decrees have withdrawn their claims from the court proceedings. It is expected that more claimants will withdraw their court actions for the same reason.

The Spanish Government has itself taken legal action in the Criminal Court in Corcubión as well as on behalf of regional and local authorities and 1 867 other claimants or groups of claimants. A number of other claimants have also taken legal action and the Court is considering whether these claimants are eligible to join the proceedings.

France

Two hundred and thirty two claimants, including the French Government, brought legal actions against the shipowner, the London Club and the 1992 Fund in 16 courts in France, requesting compensation totalling some €111 million, including €67.7 million claimed by the Government.

Thirty-nine of these claimants have withdrawn their actions, therefore the actions by 193 claimants remain pending in court for compensation claims amounting to a total of €92.6 million. The courts have granted a stay of proceedings in 28 legal actions, either in order to give the parties time to discuss their claims out of court, or until the outcome of the criminal proceedings in Corcubión is known. One judgment was rendered in late May 2009 by the Civil Court in Saint Nazaire. Some one hundred and forty French claimants, including various communes, have joined the legal proceedings in Corcubión, Spain.

Portugal

The Government took legal action in the Maritime Court in Lisbon against the shipowner, the London Club and the 1992 Fund claiming compensation for €4.3 million (£3.6 million). Following the settlement of the claim, the Portuguese State withdrew its action in December 2006.

United States

Claim and counterclaim

The Spanish State has taken legal action against American Bureau of Shipping (ABS) before the Federal Court of First Instance in New York requesting compensation for all damage caused by the incident, estimated initially to exceed US$700 million (£462.1 million) and estimated later to exceed US$1 000 million (£660.2 million). The Spanish State has maintained, inter alia, that ABS had been negligent in the inspection of the Prestige and had failed to detect corrosion, permanent deformation, defective materials and fatigue in the vessel and had been negligent in granting classification.

ABS denied the allegation made by the Spanish State and in its turn took action against the State, arguing that if the State had suffered damage this was caused in whole or in part by its own negligence. ABS made a counterclaim and requested that the State should be ordered to indemnify ABS for any amount that ABS may be obliged to pay pursuant to any judgement against it in relation to the Prestige incident. For details about the defence of sovereign immunity, the discovery of the criminal file in Corcubión, of financial records and of e-mail communications, reference is made to Annual Report 2007, pages 101 to 104 and Annual Report 2008, pages 103 to 107.

ABS's defence that it acted as 'the pilot or any other person, (…), who performs services for the ship'

For details about ABS's request for a summary judgement and the opposition by the Spanish State, reference is made to Annual Report 2008, pages 104 and 105.

In January 2008 the New York Court accepted ABS's argument that ABS fell into the category of 'any other person who performs services for the ship' under Article III.4(b) of the 1992 Civil Liability Convention (CLC). The Court argued that the text of the treaty had to be interpreted in accordance with the ordinary meaning given to the terms of the treaty in their context and in light of its object and purpose. It further argued that the ejusdem generis rule of construction did not apply because it was only to be used where there was uncertainty as to the meaning of a particular clause in a statute. The Court found no uncertainty or ambiguity in the wording of Article III.4(b) and, therefore, held it did not need to refer to ejusdem generis, negotiation history or other extrinsic sources. The Court further ruled that, under Article IX.1 of the 1992 CLC, Spain could only make claims against ABS in its own courts and it therefore granted ABS's motion for summary judgement, dismissing the Spanish State's claim.

In its decision, the New York Court also denied all pending motions as now being non actionable, except for the pending motions over sanctions for Spain's failure to comply with the discovery requests relating to e-mails.

The Spanish State appealed against the New York Court's decision. ABS has also filed an appeal against the Court's decision to dismiss its counterclaims for lack of jurisdiction. The Spanish State also filed a motion with the Court of Appeal seeking to dismiss ABS's appeal. For details about the appeal by the Spanish State, its request that the Fund present an amicus curiae brief and ABS's counter appeal, reference is made to Annual Report 2008, pages 104 to 105.

The Court of Appeal rendered its decision in June 2009, reversing both the dismissal of Spain's case and the dismissal of ABS's counterclaims, which the District Court had held did not fall under an exception to the Foreign Sovereign Immunities Act (FSIA).

With respect to Spain's claim, the Court of Appeal held that the 1992 CLC cannot divest a U.S. federal court of subject matter jurisdiction. However, in sending the case to the District Court, the Court of Appeal stated that the District Court may still exercise its discretion to decline jurisdiction based on forum non conveniens or principles of international comity. The Court of Appeal decision made the point that ABS' willingness to fully submit to jurisdiction in Spain was a relevant factor in any decision to decline jurisdiction. The Court of Appeal also points out that the District Court should consider the equities in declining jurisdiction at this advanced stage in the litigation process. If the District Court decided to retain jurisdiction, then the Court of Appeal has instructed it to conduct a conflict of laws analysis to determine which law should govern this case.

ABS' original counterclaim was dismissed based on the U.S. FSIA. The District Court held that ABS' counterclaim did not arise from the same transaction as Spain's claim and, therefore, did not fall under the FSIA exception permitting counterclaims against a foreign sovereign if they arose out of the same transaction as the sovereign's original claim. Holding that ABS's counterclaims did arise out of issues of duty and causation which were 'similar, if not identical' to the issues raised by Spain's claim, the Court of Appeals reinstated the original counterclaims by ABS. The case has now been sent to the District Court Judge for further consideration.