LexisNexis

Starboard: Shipping law and the protection of coral reefs

Tuesday 14 June 2022

Jenwei Loh, with assistance by Arina Rashid and Kavitha Ganesan

Dentons Rodyk, Singapore

   

Introduction

The Singapore High Court in The ‘Sevilla Knutsen’ [2022] SGHC 20 decided for the first time on damages to be awarded for damage by a vessel to coral reefs. The crux of the dispute related to the parties’ significant divergence on the appropriate level of damages to which the plaintiffs were entitled - they sought damages of US$6.57m while the defendants contended it should be no more than US$500,000. The court granted a final sum of US$829,650.80 in damages and made several observations on discharging the burden of proof for damages.  

Brief facts of the case

In The ‘Sevilla Knutsen’, the liquefied natural gas carrier Sevilla Knutsen (‘Vessel’), while in the course of her ocean passage, struck the west-facing leeward side of the reef of Eauripik (the ‘Reef’), an island in the territory of the Federated States of Micronesia (FSM), at several locations, causing damage of ten distinct scars to the Reef.

The traditional leaders of Eauripik, as representatives of its people (‘Plaintiffs’), arrested the Vessel in Singapore and brought an admiralty action in rem against the owner of the Vessel (‘Defendant’) seeking compensation as a result of the damage caused to the Reef. 

It was accepted by the parties that:

  1. the law of FSM governs the Plaintiffs’ claim in tort;
  2. under FSM law, the Plaintiffs as the traditional chiefs of Eauripik possess the requisite standing to bring this action against the Defendant in their representative capacities on behalf of the people of Eauripik;
  3. FSM law recognises a cause of action for damages in tort arising from negligent damage to a reef; and
  4. the people of Eauripik are entitled to sue based on a shared traditional and collective ownership right to use, and benefit from, the marine coral reef’s natural resources.

The parties subsequently entered into an agreement under Order 70, Rule 34 of the Rules of Court (ROC) to settle liability, to which the Defendant admitted 100% liability. However, in terms of the assessment of damages, both parties heavily disputed the extent of the damage to the Reef. The Plaintiffs claimed a total of 5,478.46m2 had been damaged by the Vessel and ascribed a multiplier value of US$1,200 per m2. The Defendant claimed that only 742m2 had been damaged and the appropriate multiplier should be US$251.85 per m2.

Hence, the issue before the High Court concerned a claim on reference pursuant to Order 70, Rules 40 and 41 of the ROC to assess damages due to the Plaintiffs.

The High Court’s decision

The High Court noted that under FSM law, it is for the parties to prove the area for which damages should be awarded. The principles of proof are similar to the principles under Singapore law that it is for the plaintiff claiming damages to prove his damage – the fact of damage and the quantum of loss. The court adopts a flexible approach with regard to the proof of damage. Where specific evidence is obtainable, the court naturally expects to have it. Where it is not, the court must do the best it can to assess the Plaintiff’s loss.

In coming to a decision on the extent of damages caused to the Reef, the High Court noted that the Plaintiffs solely relied on its expert’s oral evidence. The High Court opined that the Plaintiffs should have done a further and more comprehensive survey (or even joint survey with the Defendant’s expert) with the appropriate equipment so that the Plaintiffs could establish, with reasonable accuracy and objectivity, the area of damage to the Reef. The costs of organising such an expedition alone would not be sufficient to justify a lowering of the legal and evidential burden of proof. In this regard, the Plaintiffs also did not provide any evidence that such costs would have been prohibitive and/or that they were unable to afford it. Hence, the Court would expect such evidence to be produced before it, especially where it pertains to evidence of actual physical damage to property. Ultimately, the Court was left to guess the accuracy and probative value of the Plaintiff’s expert evidence based on sketchy and disparate objective evidence.

In the premises, the Plaintiffs failed to discharge its burden of proof for the quantum of damages it sought and the Court found on evidence that the area of damage to the Reef was 1,056.88m2. In relation to the estimate of the value of the damaged Reef under FSM law, the Court arrived at a value of US$785 per m2 after careful consideration of FSM case precedents and the parties’ respective valuation experts.

Starboard’s observations

The risk of damage to the marine ecosystem due to ship collisions has only increased in recent years with the density and volume of vessels in open waters. Prior to The ‘Sevilla Knutsen’, there have been several first instance FSM Supreme Court decisions that dealt with similar incidents caused by both commercial and non-commercial vessels, leading to reef damage and oil pollution damage. Interestingly, the FSM Court has also ruled on submissions based on a loss of cultural damage, and note that for such damage to be recognised it must at least translate to an economic loss. Economic implications aside, it is clear that stronger safeguards need to be put in place to minimise damage to reefs and to those who have the right to rely on or depend on the reef’s resources. 

Although the judgment does not expressly set out the basis on which the Plaintiffs invoked the Singapore Court’s admiralty jurisdiction, Starboard readers who may be interested should note that section 3(1)(d) and section 4(4) of the High Court (Admiralty Jurisdiction) Act (2020 Revised Edition) grants the Singapore High Court the jurisdiction to hear and determine any claims for damage done by a ship in relation to all ships and all claims wheresoever arising, and this would include damage to coral reefs.

The decision from the Singapore High Court brings confidence to interested parties that the country’s courts are capable of determining complex marine issues beyond its shores. Should claimants wish to have their disputes heard in Singapore, they should seek professional legal advice where necessary to ensure that they will be in a position to adequately discharge their burden of proof before the Singapore Court.

Dentons Rodyk thanks and acknowledges associates Arina Rashid and Kavitha Ganesan for their contributions to this article.