The lengthy judicial proceedings in the French courts arising out of the sinking and massive oil spill from the tanker ERIKA off the coast of Brittany in December 1999, gave rise to numerous questions regarding the interaction between the international oil pollution liability conventions as incorporated into French law and other French legislation which claimants argued should apply. As a result legislation has been passed by France since the ERIKA judgements in an attempt to codify the Erika jurisprudence.

France has recently adopted a new law on compensation for environmental damage (Loi n° 2016-1087 du 8 août 2016 pour la reconquête de la biodiversité, de la nature et des paysages). The new law aims to introduce liability and compensation for "pure environmental damage", or "ecological damage" into the French Civil Code.

The law imposes liability on persons whose actions result in damage to the environment to repair the damage, or if the harm is irreparable, to pay financial compensation to the State or an organisation appointed by the State and devoted to environmental protection, for example an environmental NGO.

However this law may erode the Convention regime (Civil Liability Convention, Bunker Convention) and may create extra burdens on the shipping industry.

Pure environmental damage

Civil liability arising from oil pollution in France is governed by article L5122-25 et seq. of the Code of Transports, articles 544 and 1382 of the Civil Code, article L160-1 of the Environmental Code, the EU Directive 2004/35/EC of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage, the 1992 Civil Liability Convention (1992 CLC), the 1992 Fund Convention, the Supplementary Fund Protocol of 2003, the 2001 Bunker Convention and IMO-related resolutions.

Environmental damages caused by maritime oil pollution are not covered by the EU Directive 2004/35/EC. Until the "Erika" case there was no right to claim pure environmental loss under French law.

Following the "Erika" case in which the French Supreme Court rendered a decision on 25 September 2012 establishing the principle of environmental responsibility, it was perceived to be necessary to include such a right in the national law and the principle of polluter pays was included in the Environmental Code by the law of 1st August 2008. However, this regime has its limits specifically as it envisages only damages caused to the environment by the activity of an operator as defined under the Environmental Code and it expressly excludes other persons who could be liable. Moreover the law concerns only damages caused before 30 April 2007 or where the activity that gave rise to the losses has ceased since 2007.

In early 2016, a draft bill regarding environmental damage was proposed by the French Ministry of Justice and the French Ministry of Environment. Despite opposition raised by the Armateurs de France, the bill was passed by Parliament in May and published in August 2016 to become law. The new law, known as 'Chapter III of the French Civil Code concerning compensation for environmental damage', came into effect from 10 August 2016.

Article 1246 of the Civil Code states "

any person who causes environmental damage will be held liable".

Environmental damage is described in a very wide sense. It may arise from a significant damage to the elements or functions of ecosystems, or to the collective benefits drawn by human beings from the environment (Art. 1247). This means that the environment as an entity in itself may be considered as a claimant by the French legal system - it is not necessary that any individual suffers damage resulting from the harm.

During the parliamentary debate, an initial proposal referred to the compensation of "abnormal" damages, which aimed to distinguish the specific regime of compensation for pure environmental damage from the recognized general regime of compensation for damages caused by things under a person's control (Article 1384 of the Civil Code). However, the term "abnormal" was not eventually adopted, as the legislator preferred the less restrictive and directly derived wording from the "Erika" judgment i.e. the notion of "non-negligible". The Court in the "Erika" case decided that not all ecological harm is repairable. Impairment of ecosystems or "collective human benefits of the environment" must be "not insignificant", and must be a serious harm to the natural environment, especially to the air, atmosphere, water, land, landscape, natural sites, biodiversity, and interaction between these elements. The new law following the decision in the "Erika"stipulates that expenses incurred to prevent the imminent occurrence of any damage, to prevent its aggravation or to reduce its consequences can be compensated.

Claimants

A claim for compensation for environmental damage can be brought by any person with capacity and interest to sue, such as the State, the French Agency for Biodiversity, local authorities and groupings within an affected territory, as well as public institutions and certified associations. (art 1248). However the law limits the right to claim to those associations which have been established for at least 5 years at the time the claim is made. The new law does not apply to damages arising from events which occurred before 1 October 2016, unless the claim was submitted before this date.

Compensation

Compensation will consist of repairing/restoring the affected natural environment "in kind" or to its natural state (art. 1249). If restoration is impossible or insufficient, the judge can order the responsible person to pay damages to the claimant for him to take useful measures to restore the damaged environment, or failing this, to the State (art. 1249). Article 1249 further provides that the assessment of damages shall take into account, where appropriate, compensation measures already taken, particularly measures imposed under the Environment Code. The evaluation of the damage would be done proportionally to its impact on the environment and damage would be evaluated on a case-by-case basis by the competent Court.

Under article L.160-1 et seq. of the Environmental Code, in cases of environmental damage, the liable entities can be ordered to take necessary prevention or remedial measures and can be subject to administrative proceedings initiated by the competent prefect of the concerned area.

An action for compensation for environmental damage can be brought within 10 years from the date the claimant first becomes aware or should have known of the environmental damage (art. 2226-1).

Liability is strictly based, irrespective of any fault. The law does not provide for a limitation on liability, contrary to the international conventions adopted by France (CLC, Bunkers, LLMC).

Implications of the new law

The new legislation is of great concern to the international shipping industry as the new law may undermine the benefits of the international conventions to which France is a party.

Despite intensive lobbying by the French shipping industry, there is no exclusion in the new law for the maritime industry. As there is no limit on liability in the new law, it is not clear if ship owners will be allowed to limit liability in accordance with the International convention on Limitation of Liability for Maritime Claims (LLMC), to which France is a party, in the event of a maritime accident resulting in environmental damage in France.

France is party to the CLC and the Bunkers Conventions. Both Conventions expressly provide, "No claim for compensation for pollution damage shall be made against the ship owner otherwise than in accordance with this Convention." The key question is whether the damage envisaged by the new law is a "pollution damage" within the meaning of the Conventions.

"Pollution damage" under the CLC 1992 and the Bunkers Convention 2001 is defined as follows:

(a) loss or damage caused outside the ship by contamination resulting from the escape or discharge of bunker oil from the ship, wherever such escape or discharge may occur, provided that compensation for impairment of the environment other than loss of profit from such impairment shall be limited to costs of reasonable measures of reinstatement actually undertaken or to be undertaken; and

(b) the costs of preventive measures and further loss or damage caused by preventive measures."

Conclusion

From ship owners' point of view as well as from that of claimants, the Conventions have proven to be a successful regime which provides effective and speedy compensation for pollution damage. France, a strong supporter of the Conventions, has adopted a domestic law which is to be tested with regards to its scope of application. It remains to be seen how the new law will apply to maritime incidents which should be governed by international conventions.

About the teamThis update was produced by the Club's Legal team and aims to share the legal expertise within the Club with our Members.A significant proportion of the expertise in the Managers' offices around the world consists of lawyers who can advise Members on general P&I related legal, contractual and documentary issues. These lawyers participate in a virtual team, writing on topical and relevant legal issues under the leadership of our Legal Director, Dr Chao Wu. If you have any enquiries regarding this update please contact Chao Wu (chao.wu@thomasmiller.com or +44 20 7204 2157).