PCA Case Nº 2014-07 IN THE MATTER OF THE DUZGIT INTEGRITY ARBITRATION

104 Pages·2016·1.11 MB·English

by  Rita Teixeira

PCA Case Nº 2014-07

IN THE MATTER OF THE DUZGIT INTEGRITY ARBITRATION

- before -

AN ARBITRAL TRIBUNAL CONSTITUTED UNDER ANNEX VII
OF THE 1982 UNITED NATIONS CONVENTION ON THE LAW OF THE SEA

- between -

THE REPUBLIC OF MALTA
- and -
THE DEMOCRATIC REPUBLIC OF SÃO TOMÉ AND PRÍNCIPE

__________________________________________________________
AWARD
________________________________________________________

ARBITRAL TRIBUNAL:
Professor Alfred H.A. Soons (President)
Judge James L. Kateka
Professor Tullio Treves

REGISTRY:
The Permanent Court of Arbitration

5 September 2016
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TABLE OF CONTENTS

I. INTRODUCTION ............................................................................................................................ 1
A. THE PARTIES ................................................................................................................. 1
B. THE DISPUTE ................................................................................................................. 2
II. PROCEDURAL HISTORY ............................................................................................................. 2
III. FACTUAL OVERVIEW ................................................................................................................. 6
A. MARITIME CONTEXT .................................................................................................. 6
1. Duzgit Integrity’s owner, charterer, and ship registry ....................................... 6
2. São Tomé and Príncipe’s geographic location and maritime limits .................. 7
3. Ship-to-ship transfers along the west-African shipping route ........................... 8
B. EVENTS BEFORE 15 MARCH 2013: DUZGIT INTEGRITY’S SCHEDULED
OPERATION .................................................................................................................... 9
C. EVENTS ON 15 MARCH 2013: VESSEL DETENTION ........................................... 10
1. First visit by the São Tomé and Príncipe’s Coast Guard ................................. 11
2. Second visit by the São Tomé and Príncipe’s Coast Guard and vessel
detention ................................................................................................................ 14
D. EVENTS AFTER 15 MARCH 2013: INSTITUTION OF JUDICIAL
PROCEEDINGS AND IMPOSITION OF PENALTIES ............................................ 17
1. Port and Maritime Institute administrative penalty ......................................... 17
2. Customs Directorate General administrative fine ............................................ 18
3. Criminal proceedings against the Masters ......................................................... 19
E. EFFORTS TO REACH A SOLUTION ........................................................................ 22
1. Settlement discussions in the summer of 2013 ................................................... 22
2. Pardon of Masters ................................................................................................ 24
F. DISCHARGE OF OIL CARGO FROM DUZGIT INTEGRITY .............................. 24
G. SETTLEMENT AGREEMENT AND RELEASE OF DUZGIT INTEGRITY ........ 27
IV. PARTIES’ REQUESTS FOR RELIEF .......................................................................................... 29
V. JURISDICTION AND ADMISSIBILITY ..................................................................................... 31
A. JURISDICTION RATIONE MATERIAE ................................................................... 31
i. Respondent’s position ........................................................................ 32
ii. Applicant’s position ........................................................................... 33
iii. Decision of the Tribunal .................................................................... 35
B. ADMISSIBILITY OF CLAIMS .................................................................................... 36
1. Exhaustion of local remedies under Article 295 of the Convention ................. 36
i. Respondent’s position ........................................................................ 36
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ii. Applicant’s position ........................................................................... 37
iii. Decision of the Tribunal .................................................................... 38
2. Specificity of legal bases....................................................................................... 40
i. Respondent’s position ........................................................................ 40
ii. Applicant’s position ........................................................................... 41
iii. Decision of the Tribunal .................................................................... 42
3. Effect of the Settlement Agreement .................................................................... 42
i. Respondent’s position ........................................................................ 42
ii. Applicant’s position ........................................................................... 44
iii. Decision of the Tribunal .................................................................... 46
4. Exchange of views under Article 283 of the Convention .................................. 47
i. Respondent’s position ........................................................................ 47
ii. Applicant’s position ........................................................................... 48
iii. Decision of the Tribunal .................................................................... 50
VI. APPLICABLE LAW ...................................................................................................................... 52
i. Applicant’s Position .......................................................................... 52
ii. Respondent’s Position ....................................................................... 53
iii. Decision of the Tribunal .................................................................... 53
VII. MERITS ......................................................................................................................................... 55
A. ARTICLE 300 ................................................................................................................. 55
i. Applicant’s Position .......................................................................... 55
ii. Respondent’s Position ....................................................................... 56
iii. Decision of the Tribunal .................................................................... 56
B. ALLEGED VIOLATION OF ARTICLE 49(3) OF THE CONVENTION IN
CONNECTION WITH A VIOLATION OF ARTICLE 300 ...................................... 57
1. Whether explicit authorisation was given during the Coast Guard’s first
visit......................................................................................................................... 58
i. Applicant’s position ........................................................................... 58
ii. Respondent’s position ........................................................................ 59
iii. Decision of the Tribunal .................................................................... 62
2. Whether the penalties imposed by São Tomé were disproportionate ............. 63
(a) The IMAP fines .......................................................................................... 63
i. Applicant’s position ........................................................................... 63
ii. Respondent’s position ........................................................................ 64
(b) The customs fine ......................................................................................... 65
i. Applicant’s position ........................................................................... 65
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ii. Respondent’s position ........................................................................ 65
(c) The detention of the Master and the outcome of the criminal
proceedings ................................................................................................. 66
i. Applicant’s position ........................................................................... 66
ii. Respondent’s Position ....................................................................... 68
(d) Decision of the Tribunal ............................................................................ 69
3. Whether other conduct by São Tomé was unlawful ......................................... 71
(a) Whether the settlement negotiations with regard to the release of Duzgit
Integrity exhibited coercion on the part of São Tomé ............................ 71
i. Applicant’s position ........................................................................... 71
ii. Respondent’s position ........................................................................ 71
iii. Decision of the Tribunal .................................................................... 72
(b) São Tomé’s conduct in respect of Malta as the flag State-whether the
alleged lack of notification constituted a breach ..................................... 72
i. Applicant’s position ........................................................................... 72
ii. Respondent’s position ........................................................................ 72
iii. Decision of the Tribunal .................................................................... 72
(c) Alleged differing treatment of other vessels ............................................ 73
i. Applicant’s position ........................................................................... 73
ii. Respondent’s position ........................................................................ 74
iii. Decision of the Tribunal .................................................................... 75
C. ALLEGED VIOLATION OF ARTICLES 192, 194 AND 225 OF THE
CONVENTION IN CONNECTION WITH A VIOLATION OF ARTICLE 300 ..... 75
i. Applicant’s position ........................................................................... 76
ii. Respondent’s position ........................................................................ 78
iii. Decision of the Tribunal .................................................................... 80
D. ALLEGED VIOLATION OF ARTICLES 2(3) AND 25 OF THE CONVENTION . 82
(a) Alleged breach of Article 2(3) of the Convention .................................... 82
i. Applicant’s position ........................................................................... 83
ii. Respondent’s position ........................................................................ 83
iii. Decision of the Tribunal .................................................................... 84
(b) Alleged breach of Article 25(1) of the Convention .................................. 84
i. Applicant’s Position .......................................................................... 84
ii. Respondent’s position ........................................................................ 85
iii. Decision of the Tribunal .................................................................... 86
VIII. REPARATION ........................................................................................................................... 86
i. Applicant’s position ........................................................................... 86
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ii. Respondent’s Position ....................................................................... 90
iii. Decision of the Tribunal .................................................................... 92
IX. COSTS ........................................................................................................................................... 94
X. DECISION ..................................................................................................................................... 95

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GLOSSARY OF DEFINED TERMS

AFE Applicant Factual Exhibit
ALE Applicant Legal Exhibit
APE Applicant Photographic Exhibit
ARSIWA Draft Articles on the Responsibility of States for Internationally
Wrongful Acts, International Law Commission, 2001
AWS Applicant Witness Statement
Bifurcation Request São Tomé’s request that the Tribunal rules on the question of
jurisdiction and the admissibility of the claims as separate from the
merits
Convention United Nations Convention on the Law of the Sea, 1982
ECHR European Court of Human Rights
HFO Heavy Fuel Oil
ICJ International Court of Justice
ILC International Law Commission
IMAP Port and Maritime Institute
ITLOS International Tribunal for the Law of the Sea
MARPOL International Convention for the Prevention of Pollution from
Ships, 1973
MGO Marine Gas Oil
MT Metric ton, equal to one thousand kilograms
Notification Notification of Arbitration
Criminal Code Código Penal
PCIJ Permanent Court of International Justice
Post-Hearing Submissions Comments submitted by each Party in response to the information
submitted by the other Party in response to the Tribunal’s
question(s) of 23 February 2016
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Registry or PCA Permanent Court of Arbitration
Radar Screen-Shot Malta’s radar screen-shot accompanying the audio-recording
played during the hearing on jurisdiction, admissibility, and merits
Reply to Post-Hearing Reply to comments submitted by each Party in response to the
Submissions information submitted by the other Party in response to the
Tribunal’s question(s) of 23 February 2016
RFE Respondent Factual Exhibit
RLE Respondent Legal Exhibit
RWS Respondent Witness Statement
Settlement Agreement Settlement Agreement signed between the Government of São
Tomé and Príncipe and DS Tankers, 23 November 2013
SOLAS International Convention for the Safety of Life at Sea, 1974
STCW International Convention on Standards of Training, Certification
and Watchkeeping for Seafarers, 1978
STS Ship-to-Ship
VDR Voyage Data Recorder
VHF Very High Frequency
Malta’s written statement attaching 16 photographs in response to
Written Statement the questions posed by the Tribunal on 23 February 2016

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DRAMATIS PERSONAE

Anuket Emerald M/T Anuket Emerald, a vessel chartered by Monjasa PTE Ltd
Coast Guard São Tomé Coast Guard
Committee Negotiation Committee established on 21 August 2013 between the
Government of São Tomé, DS Tankers, and Stena Oil
DS Tankers DS Tankers Limited, a Maltese company and the owner of Duzgit
Integrity
Directorate Customs Directorate General
Duzgit Integrity M/T Duzgit Integrity, a chemical tanker registered in Malta, owned
by DS Tankers, and chartered by Stena Oil
Energizer M/T Energizer, a vessel owned by Monjasa
IMAP Port and Maritime Institute
Lefkoniko Lefkoniko, a vessel registered under the Maltese flag
Malta The Republic of Malta
Marida Melissa M/T Marida Melissa, a fuel oil tanker, registered in the Marshall
Islands and chartered by Stena Oil
Monjasa Monjasa PTE Ltd
Parties The Republic of Malta and The Democratic Republic of São Tomé
and Príncipe
São Tomé The Democratic Republic of São Tomé and Príncipe
Stena Oil Stena Oil, a Swedish company that charted and operated Duzgit
Integrity and Marida Melissa
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I. INTRODUCTION
A. THE PARTIES
1. The Applicant in the present arbitration is the Republic of Malta (“Malta”).
2. The Applicant is represented in these proceedings by:
Mr. Ramón García-Gallardo, Agent and Counsel
Mr. Alexander Mizzi, Co-Agent and Co-Counsel
Mr. Alejandro Camacho, Co-Counsel
King & Wood Mallesons LLP
Square de Meeüs 1
Brussels B-1000, Belgium
3. The Respondent in the present arbitration is the Democratic Republic of São Tomé and Príncipe
(“São Tomé”).
4. The Respondent is represented in these proceedings by:
H.E. Manuel Salvador dos Ramos, Minister of Foreign Affairs and Communities, Agent
Avenida 12 de Julho
101 São Tomé
Democratic Republic of São Tomé and Príncipe

H.E. Américo Afonso Lima Viegas, Chargé d’Affaires a.i., Co-Agent
Embassy of the Democratic Republic of São Tomé and Príncipe in Brussels
Avenue Tervurenlaan 175
Brussels B-1150, Belgium

Ms. Juliette Luycks, Co-Agent and Counsel
Mr. Ruud Niesink, Co-Agent and Counsel
Clifford Chance LLP
Droogbak 1a
1013 GE Amsterdam, The Netherlands

Mr. Guilherme Posser da Costa, Government Legal Counsel
Posser da Costa & Sociedade de Advogados, RL
Av. Kwame N’Krumah
São Tomé
Democratic Republic of São Tomé and Príncipe
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B. THE DISPUTE
5. The present arbitration results from the Parties’ disagreement as to the lawfulness of São Tomé’s
conduct in respect of Duzgit Integrity1— a Maltese flagged vessel —, its Master, crew, owner
and charterer.
II. PROCEDURAL HISTORY
6. Malta and São Tomé are parties to the United Nations Convention on the Law of the Sea
(“Convention”).2
7. On 22 October 2013, Malta filed a Notification of Arbitration (“Notification”) pursuant to
Article 287 and Article 1 of Annex VII to the Convention with regard to a dispute concerning
the vessel Duzgit Integrity.
8. In its Notification, Malta appointed Professor Tullio Treves as a member of the Tribunal in
accordance with Article 3(b) of Annex VII to the Convention.
9. On the basis of the Parties’ agreement that the procedure for the constitution of an arbitral
tribunal composed of three arbitrators is governed by the provisions of Annex VII of the
Convention and that Article 3 of Annex VII applies mutatis mutandis, the President of the
International Tribunal for the Law of the Sea (“ITLOS”), in consultation with the Parties,
appointed Judge James L. Kateka on 27 December 2013 as member of the Tribunal, and
Professor Alfred H.A. Soons on 13 March 2014 as President of the Tribunal.
10. The Parties agreed to appoint the International Bureau of the Permanent Court of Arbitration as
the Registry in the arbitration (“Registry”).
11. Following the constitution of the Tribunal, Terms of Appointment dated 22 May 2014 were
signed by the Parties, the President on behalf of the Tribunal, and the Registry.
12. On 27 May 2014, after consultation of the parties, the Tribunal issued Procedural Order No. 1
in which it adopted Rules of Procedure and a provisional Procedural Timetable for the
arbitration.

1 The official name of the vessel is M/T Düzgit Integrity. In this Award it shall be referred to as Duzgit Integrity,
in keeping with how the Parties have referred to it throughout these proceedings.
2 São Tomé and Príncipe ratified the Convention on 3 November 1987. Malta ratified the Convention on 20 May
1993.