Comments on Coastal and Flag State Jurisdiction in the M/T “San Padre Pio” Dispute

The M/T “San Padre Pio” dispute between Switzerland and Nigeria arose following the interception and arrest by the Nigerian navy of the M/T “San Padre Pio” – a Swiss flagged tanker – while this was engaged in one of several Ship-to-Ship (STS) transfers of gasoil in the vicinity of the Odudu Oil Field within Nigeria’s Exclusive Economic Zone (EEZ).  Although the facts are not entirely clear at this stage, it appears that the M/T “San Padre Pio” transferred gasoil not directly to the Odudu Terminal (for which the gasoil was ultimately intended) but to other transport vessels by way of STS transfers.  These other transport vessels then transported the fuel a short distance to the Odudu Oil Field where they made direct transfers to installations located therein.  Switzerland contends that the “San Padre Pio” was supplying gasoil to Anosyke, the Nigerian company with which it had a supply contract.  The Odudu Oil Field is operated by Total.

Following a request for provisional measures submitted by Switzerland to the International Tribunal for the Law of the Sea (ITLOS) under Article 290(5) of the Law of the Sea Convention (LOSC), on 6 July 2019 ITLOS ordered Nigeria to release the M/T “San Padre Pio”, its cargo, Master and three officers (Order, para 146).  This provisional measures order was insightfully examined by Yurika Ishii here.  The purpose of this post is to examine Swiss and Nigerian arguments about coastal and flag State jurisdiction in anticipation of the Annex VII arbitral tribunal’s decision on the substance of the dispute.  The forthcoming analysis will be undertaken in view of the facts as presently known and in light of the most relevant Law of the Sea Convention (LOSC) provisions. 

In his Separate Opinion, Judge ad hoc Murphy considers that it is “difficult to assess whether the situation [in the “San Padre Pio” dispute] is best approached as simply a STS transfer, which normally is understood as a transfer of cargo between two seagoing vessels, or is best approached as offshore bunkering, which normally is understood as the replenishment by one vessel of a second vessel’s fuel bunkers with fuel intended for the operation of the second vessel’s engines”.  Since the M/T “San Padre Pio” never provided gasoil directly to the oil field installations or to vessels for use as bunker fuel in their own propulsion, this post will consider the type of activities which the M/T “San Padre Pio” was engaged in as STS transfers, not as bunkering operations.

Nigerian Law

Nigeria has explained that, under Nigerian law, vessels wishing to engage in offshore bunkering must obtain a “Navy Certificate” which makes bunkering contingent on a number of conditions, including that bunkering must be conducted between sunrise and sunset, must not involve the transfer of illegally refined crude oil products, and must be conducted in the presence of a naval Officer-in-Charge.  Nigeria further requires that vessels engaged in the offshore bunkering of petroleum products secure a permit from the Department of Petroleum (“DPR Permit”) and a Ship Clearance Certificate from the Nigeria Maritime Administration and Safety Agency (“NIMASA Certificate”).  When intercepted by the Nigerian navy, the “Padre Pio” failed to produce the DPR Permit and the NIMASA Certificate and was allegedly in breach of some of the conditions set out in the Navy Certificate (including the condition that bunkering operations must be conducted between sunrise and sunset and the condition that a naval officer-in-charge must be present to supervise the taking of quality control samples). 

Article 58

Switzerland argues that “Nigeria has violated Switzerland’s right to freedom of navigation and other internationally lawful uses of the sea related to this freedom in the EEZ under article 58 of UNCLOS”.  It contends that “[t]he essential idea embodied in the principle of freedom of navigation is that of non-interference with the freedom of movement of the vessel in question” and that, in the M/V “Norstar” case, the Tribunal “added… the possibility of carrying out bunkering activities provided they are not connected with fishing” (Order, paras. 80-83).

In the M/V “Norstar” case (see Collins and Honniball) ITLOS decided that “the bunkering of leisure boats carried out by the M/V “Norstar” on the high seas falls within the freedom of navigation under article 87 of the Convention” (M/V “Norstar” Judgment, para. 219).  In its argumentation, Switzerland seeks to extrapolate ITLOS’ reasoning in the M/V “Norstar” case to the factual situation that arises in the “San Padre Pio” dispute.  It may however be difficult for it to do so successfully for two reasons.  First, the M/V “Norstar” case was concerned with bunkering activities on the high seas rather than in the EEZ.  The relevant LOSC provision was therefore Article 87, not Article 58.  Secondly, the M/V “Norstar” was bunkering leisure boats on the high seas – an activity that is altogether distinct from the STS cargo transfer type of operation which the “San Padre Pio” was engaged in at the time of its arrest. 

Article 58 provides that: “[i]n the exclusive economic zone, all States… enjoy, subject to the relevant provisions of this Convention, the freedoms referred to in article 87 of navigation and overflight… and other internationally lawful uses of the sea related to these freedoms, such as those associated with the operation of ships… and compatible with the other provisions of this Convention”.  ITLOS’ reasoning in the “Norstar” case can be extended by arguing that the EEZ bunkering of vessels in transit should be regarded as an internationally lawful use of the sea related to the freedom of navigation under Article 58.  Unlike bunkering, however, STS cargo transfers do not facilitate the recipient vessel’s navigation and it is therefore not entirely appropriate to classify them as freedom of navigation activities or as internationally lawful uses of the sea related to the freedom of navigation under Article 58.

Articles 56(1)(a), 208 and 214

In response to Switzerland’s arguments Nigeria contends that it had “the sovereign right and obligation under Articles 56(1)(a), 208 and 214 of the Convention to exercise its enforcement jurisdiction over the bunkering incident in question” (Statement in Response, para. 3.9).  Starting with Article 56(1)(a), Nigeria argues that this provision provides coastal States with sovereign rights to exploit, conserve and manage the natural resources of the EEZ.  In its view, Article 56(1)(a) applies to both living and non-living resources and, consequently, the costal State’s competence – including its right to take enforcement measures – extends to the management of non-living resources in the EEZ.

Notably, in the M/V “Virginia G” case, ITLOS found that “the regulation by a coastal State of bunkering of foreign vessels fishing in its [EEZ] is among those measures which the coastal State may take in its [EEZ] to conserve and manage living resources under article 56 of the Convention read together with article 62, paragraph 4” (“Virginia G” judgment, para. 217).  This conclusion was reached because ITLOS was able to establish a direct connection between the bunkering of fishing vessels and the Coastal State’s right to conserve and manage living resources: “the bunkering of foreign vessels fishing in the [EEZ]… enables them to continue their activities without interruption at sea” (“Virginia G” judgment, para. 215).  In the “San Padre Pio” dispute, only an indirect link exists between the gasoil transferred by the M/T “San Padre Pio” and the functioning of the Odudu Terminal, which is subject to Nigeria’s Article 56 sovereign rights.  The “San Padre Pio” transferred the gasoil to transport vessels – not directly to the oil field installations – and its contract of supply was with a company (Anosyke) distinct from that which manages the Odudu Terminal (Total).  Additionally, the domestic legislation which Nigeria cites as a basis for its action against the “San Padre Pio” is not confined to the bunkering of oil installations but appears to deal with offshore bunkering and STS transfers in general.  Accordingly, even if Article 56(1)(a) is ultimately considered as an adequate basis for Nigeria’s action against the “San Padre Pio”, valid questions can still be raised about the compatibility of Nigeria’s legislation on offshore bunkering with the LOSC, especially in light of the conclusion reached in the recent M/V “Norstar” judgment in relation to bunkering on the high seas (M/V “Norstar” Judgment, para. 219).

In addition to Article 56(1)(a), Nigeria cites Articles 208 and 214 of the LOSC as a possible independent basis for its enforcement action against the M/V “Padre Pio”.  In this regard, Switzerland compellingly argues that Articles 208 and 214 (which deal with the adoption and enforcement of laws about pollution from seabed activities) are not applicable to the facts of the “Padre Pio” dispute and that “even if they were… Nigeria would not have fulfilled its obligations as laid down in article 220, paragraphs 3, 6 and 7, article 221, paragraph 1, article 230 and article 231” (Order, para. 88).

Article 59 

Elsewhere I have argued in detail that, unlike offshore bunkering, STS transfers in the EEZ should be classified not under Articles 56 or 58 but under Article 59 as an activity in relation to which the LOSC does not attribute rights or jurisdiction to the coastal State or to other States.  Judge Kittichaisaree notes the potential relevance of Article 59 in his Declaration but considers that, since neither Switzerland nor Nigeria resorted to this provision in the proceedings before ITLOS, the tribunal confined itself to the provisions addressed by the respective parties.

According to Article 59, “where [the LOSC] does not attribute rights or jurisdiction to the coastal State or to other States within the exclusive economic zone, and a conflict arises between the interests of the coastal State and any other State or States, the conflict should be resolved on the basis of equity and in the light of all the relevant circumstances, taking into account the respective importance of the interests involved to the parties as well as to the international community as a whole”.  Article 59 does not provide straightforward answers.  It prescribes a formula according to which conflicts that fall under its scope ought to be resolved, with the ultimate aim of reaching an equitable solution.  This leaves plenty of discretion to judges and arbitrators.  In his commentary on this LOSC provision, in fact, Proelss notes that “the concept of equity expressly referred to by Art. 59… is often used for the very sake of making it possible to infuse elements of reasonableness and ‘individualized justice’, and to adapt the applicable law to the specific circumstances of the case”.    

Article 59 requires an assessment of the interests of the parties as well as of the international community.  In the “San Padre Pio” dispute, the interests of Switzerland include an interest in the unhindered navigation and operation of the “San Padre Pio”, an interest in exercising jurisdiction over the Swiss-registered vessel, as well as an economic interest in relation to taxes paid by the vessel’s Swiss management company.  The interests of Nigeria include an interest in protecting the marine environment adjacent to its coast, an interest in taking action against the theft and illicit distribution of Nigerian crude oil, and an interest in securing the good functioning of oil field equipment.  The international community, in turn, has an interest in marine environment protection as well as an interest in the expedient conduct of international trade, which could be hampered by overzealous coastal State regulation of STS transfers.

The relative importance of marine environment protection in relation to the other interests at play arguably increases as the amount of environmental risk increases (Responsibilities in the Area Opinion, para. 117).  It is therefore important to ascertain the nature of the environmental risk posed by the “San Padre Pio”.  Nigeria argues that “bunker spills are even more environmentally harmful than crude oil spills as the attributes of fuel oil make its clean-up especially challenging”.  Considering that the “San Padre Pio” was transferring gasoil, Nigeria’s reference to “bunker spills” is arguably too generic.  Panama has previously argued that gasoil is a clean and volatile product which has not caused relevant marine environmental problems (“Virginia G” judgment, para. 182).  Additionally, according to the International Tanker Owners Pollution Federation, unlike heavy fuel oils, “spills of refined products… may evaporate completely within a few hours”. 

Article 59 also requires account to be taken of all relevant circumstances.  This includes relevant international law and State practice.  Chapter 8 of Annex I of the International Convention for the Prevention of Pollution by Ships (MARPOL) is the only source of international legally binding rules on the prevention of pollution during STS transfers of oil cargo between oil tankers at sea.  MARPOL Annex I Chapter 8 (to which both Nigeria and Switzerland are subscribed) inter alia requires any oil tanker planning to be involved in a STS operation within the EEZ of a MARPOL State party to notify that State not less than 48 hours in advance of the scheduled STS operation.  Although it is beyond the scope of this post to analyse relevant State practice in full, it is evident that there is no consensus among States that MARPOL Annex I Chapter 8 constitutes the maximum acceptable level of regulation.  As I note here, Belgium has in fact had stricter rules in place than those defined in MARPOL Annex I Chapter 8 for some years.  Other States (including West African ones) have also moved to regulate STS transfers in their EEZs.  It is interesting that such domestic regulations in relation to EEZ bunkering and STS transfers have remained largely unopposed.  State Practice, however, is not widespread or consistent enough to establish a clear precedent. 

Further facts and clarifications may emerge in the course of the upcoming Annex VII arbitration, and it is difficult to predict what conclusions, if any, the tribunal may reach under Article 59.  Given the absence of a direct link to freedom of navigation, it is quite possible that the Annex VII tribunal will have a greater tolerance for coastal State regulation of STS transfers than ITLOS has shown for coastal State regulation of bunkering operations in the EEZ.  This is not to say that coastal State regulation of STS transfers should be blindly accepted.  On the one hand, the tribunal may consider as significant the contested allegation that, on several occasions, the “San Padre Pio” switched off its Automatic Identification System (AIS), as well as the alleged fact that, in breach of its Navy Certificate, the “San Padre Pio” failed to give notification of the STS operations which it planned to engage in.  On the other hand, the tribunal may consider Nigeria’s decision to arrest and to continue to detain the Swiss-flagged vessel as a step too far. 

Conclusion

It is hoped that the Annex VII arbitral tribunal’s decision will shed some light on the extent of coastal State jurisdiction in relation to offshore STS transfers in the EEZ.  If previous decisions such as ITLOS’ “Viginia G” judgment are anything to go by, however, the tribunal can be expected to confine itself to the immediate circumstances of the “Padre Pio” case.  Additionally, should the parties refrain from resorting to Article 59 in their argumentation, it is doubtful whether this important but as yet unutilised provision of the LOSC will be explored by the tribunal.