Environmental damage compensation in China following ship-source oil spills (2018)

Ann Zhang

Paper presented at INTERSPILL 2018, Excel, London, 13-15 March 2018

As the world's largest net crude oil importer, largest exporter and second largest importer, China relies on shipping to sustain a major part of its trade and economy. The volumes of oil cargo and bunker fuel transported at sea, together with the numbers of ships in Chinese waters, present a risk of spills from collisions, groundings etc. Measures put in place by the international shipping community, through the IMO, as well as by the Chinese authorities have addressed this risk in part and China has experienced few oil spills from ship in recent years.

 Recognising the risk, China has ratified a number of international conventions relating to pollution liability arising from such incidents, i.e. 2001 Bunker Convention and 1992 Civil Liability Convention. Application of the 1992 Fund Convention is limited to the Hong Kong Special Administrative Region, and China established a separate domestic fund in 2012, the China Oil Pollution Compensation (COPC) Fund, which aims to provide additional compensation for pollution damage caused by a ship-source spill in the rest of China.

In addition, China has developed national legislation on ship-source pollution, response, and compensation. More recently, considerable changes have been made to strengthen environmental legislation and enhance the technical protocols used to assess impacts and to implement restoration. 

This paper introduces the types of environmental damage claims typically presented following a substantial oil spill in China, and the basis for these damage claims. By discussing how these claims were quantified and eventually settled, this paper aims to illustrate how environmental damage has been interpreted in China, and how the concept has evolved over the years. This paper highlights a number of recent changes in legislation which can be expected to lead future discussion on environmental damage compensation into uncharted waters.

Categories: Compensation, Papers