Egypt: Pollution Incidents and Consequent Claims
Africa Focus
Hany MaamoonSenior Counsel,Transport & Insurance
Pollution has been one of the most dreaded accusations by Ships’ operators and P&I Clubs for many years, because of the harsh penalties and consequences involved, especially when the adverse parties are usually sovereign entities.
Marine pollution is a significant environmental issue especially in Egypt due to the country's economic reliance on its coastline for tourism and fishing. In recent years, the country has taken steps to address this issue of marine pollution and enforce penalties on individuals and organisations that contribute to the problem.
In this article, we address the issue of pollution in Egypt. Pollution which is deemed by ship owners to be one of the most serious accusations due to the criminal charges it can attract. In addition, such incidents can give rise to large claims from multiple entities, including but not limited to:
The port authorities
The Suez Canal Authority
The Egyptian Environmental Affairs Agency (“EEAA”)
The Egyptian Naval Forces
The Suez Canal Economic Zone (“SCEZ”).
To address this problem, the government implemented several laws and regulations to prevent marine pollution and impose penalties on violators. The EEAA is the body responsible for monitoring and enforcing these regulations, which includes The Egyptian Law on the Protection of the Environment, No. 4 of 1994 (the “Environmental Law”).
The Environmental Law outlines regulations for the prevention of marine pollution, including the discharge of pollutants into the sea. It outlines penalties for violations of environmental laws, including fines and imprisonment. Pursuant to this law, ships of any nationality are forbidden from discharging oil or oily mixtures in the territorial sea or the exclusive economic zone of Egypt. The law also stipulates that the ship or any person responsible for the ship is responsible for notifying the administrative authorities of any oil spill with a description of the incident, the type of oil or pollutant involved, and the measures taken to stop or reduce the spill. The administrative authorities need to notify the EEAA the incident promptly. This applies as well to pollution by harmful substances and black water.
The law empowers the relevant administrative authority to detain any ship which fails to pay the levied fines and compensation. Such detention is lifted when the due payments are made, or an unconditional financial guarantee is accepted by the administrative authority.
On some occasions the EEAA has confused discharge of oily mixtures with black water and levied a fine.
Applicable penalties for unlawful discharging or disposing of:
oil
oily mixtures
harmful
polluting substances
garbage
In the:
territorial sea
the exclusive economic zone
Or in case of:
violation
failing to use safe procedures that prevent damage to the marine environment
failing to comply with the required treatment of the discharged waste and polluting substances discharged
The above will be fined in the sum of:
not less than EGP 300,000 and
not more than EGP 1,000,000.00, and
in case of recidivism, the penalty shall be both imprisonment and fine and
in all eventualities the violator has to resolve the effects of the pollution within the predetermined deadline deemed appropriate by the authority.
According to the Environmental Law, failure to take precautions to avoid pollution can result in a fine between EGP70,000 – 300,000. The fine could be doubled in the case of multiple offences, or potential imprisonment with potential with a further fine of EGP 300,000-500,000.
In all cases, the offender shall be required to remedy the damage within a time frame determined by the authorities, failing which the authorities may proceed with the removal at the expense of the offender. The highest penalty for pollution is imprisonment and/or a fine of EGP 1,000,000 - 5,000,000, which is aimed at compensating the cost of environmental damage-reversal and other claims.
However, Article 54 of the Environmental Law lists several exemptions from the penalties outlined above, namely pollution resulting from:
Securing the safety of a ship or the lives of those on board.
Discharge resulting from damage to a ship or its equipment, provided such damage was not caused by the master or the person in charge, to disable or destroy the ship or as a result of negligence. In all cases, the master of the ship or the person in charge thereof must have all necessary precautions to prevent or reduce the effects of pollution and must have immediately notified the authority.
A sudden break in the pipeline carrying oil or oily mixtures during the operating, drilling, exploring or testing of oil wells, without any negligence in supervising or maintaining the pipelines, provided sufficient precautions to supervise the operation of the pipeline and immediate measures to control the pollution and its sources have been taken.
The above exemptions are without prejudice to the right of the authority to recover the costs of removing the effects of pollution from the party responsible and to claim damages for losses incurred and injuries sustained resulting from such pollution.
“Article 54 in our opinion is one of the significant articles the carrier may lean on in defending some of the pollution claims, especially in the case of incidents escalated to legal actions, and in our opinion could have been used by the Owners of the Ever Given in refuting the allegations of discharging polluted ballast waters in the waters of the Canal which were raised by the Fishermen Society.”
One of the significant articles in practice is Article 79 of the Environmental Law, which permits the master or other person under investigation for pollution, to leave the port against acceptable security not less than the minimum fine applicable to the violation, pending resolution of the investigation. This provision applies without prejudice to the International Convention on Civil Liability for Oil Pollution signed in Brussels in 1969.
That being said, it is possible to negotiate a settlement with the relevant port authority, the SCA or administrative party concerned, before the matter is referred to the EEAA, to allow the vessel to depart immediately.
In our experience of defending shipowners and charterers in pollution claims throughout the years, we have observed an emerging trend by the authorities to limit the ability of owners and charterers to defend pollution claims. A few examples of this are expounded below.
Historically, the authorities used to collect samples from both the polluted seawater and the vessel’s tanks in order to identify the source of pollution. Recently however, the authorities have only collected samples of the polluted water located in the vessel’s vicinity to build their case and seek compensation correlating to the nature of the pollutant.
Shipowners and charterers should be mindful of this practice and appoint experienced lawyers to approach the appropriate authority to demand proper sampling from the vessel too. This often leads to more consistent and accurate outcomes and will enable owners to file for recovery of overpayments to the EEAA or the port authorities.
Additionally, the EEAA used to obtain arrest orders against the vessels they accused of pollution. As is usually the case in jurisdictions across the world, an arrested vessel can be released against a suitable guarantee and a defense, objection or grievance can be filed in the local court. However, for the past couple of years, the EEAA has opted to only send a formal request to the concerned port authority requesting them to detain the vessel pending further notice. Consequently, the vessel owners have no commercial or legal alternative but to negotiate with the EEAA from a weak position, or to achieve a quick release they must adhere to their full demands.
In other instances, owners have been met with unexpected allegations by the port authority for trivial pollution incidents, leading to requests for immediate settlement of fines to allow the vessel to sail. Often, we advise that a pragmatic approach is taken and a quick negotiation seeking a reduction is conducted to settle the fine and release the vessel.
As described above, in many cases owners will find themselves bound to settle pollution claims from government bodies to release their vessels from detention. In the past, owners employed a practice whereby a written protest to settling a claim was made by embedding it into the content of a covering letter. That cover letter was appended to the cheque for the claim amount and handed to the authority. The authority’s acknowledgment stamp on a copy of the cover letter was sufficient to allow owners to initiate recovery actions in the courts. That practice has since been extinguished by additional due diligence and authorities routinely refuse to sign covering letters containing reservations.
Where owners feel that they are under economic duress or undue pressure to settle fines, in some circumstances it may be appropriate to file a police report or compile evidence of pressure applied by authorities to settle.
Additionally, it is usual for the port authority’s or the SCA's participation in the claims attributed to pollution was confined to the pollution fighting costs and/or the damages suffered by the port authority as a result of the alleged pollution. Additionally, claims for the environmental compensation were always issued by the EEAA. However, recently the SCEZ has been issuing claims for environmental damages as well. However, this is challengeable because, in our opinion, there is no legal basis for SCEZ to advance environmental claims.
Finally, understanding the locally landscape is vital when an owner’s vessel is under arrest. Advice may differ depending on the parties or entities involved. In some situations, we have advised clients to resist settling immediately in order to achieve better reductions on the claims made. This may involve leaving the vessel under arrest for a few days. In other situations, negotiating may be uneconomical and paying the fine immediately is deemed the best outcome.
The Egyptian government's efforts to enforce environmental regulations and impose penalties on offenders are an important step in protecting the country's marine ecosystems and the livelihoods of those who depend on them. However, for owners, navigating pollution claims is becoming increasingly challenging and stressful in a complex claims landscape. Owners and charterers should seek legal advice at the earliest opportunity once a pollution risk is identified in order to ensure their interests are properly protected.
For further information, please contact Hany Maamoon.
Published in August 2023
