MarIus

6.4.1 General

UNCLOS, as was noted in section 4.6, includes its general safeguards in Part XII, section 7, which call for monetary penalties to be imposed in most cases, but does not address the level of these penalties. (1) See also p. 2 of the dissenting opinion of ITLOS Judge Anderson in the Monte Confurco Case (ITLOS Case No. 6, 2000), relating to the prompt release of a fishing vessel and the reasonableness of the requested security: “The Convention does not limit the size of fines, although it does exclude generally imprisonment for fisheries offences. It is for the legislators and the courts of States Parties to lay down fines for illegal fishing. Where there is persistent non-observance of the law, deterrent fines serve a legitimate purpose.” See also para. 7 of his dissenting opinion in the Volga Case (Case No. 11, 2002). Certain general principles of international law, including the requirement of non-discrimination, and proportionality, suggest that that there cannot be a difference between the sanctions on the basis of nationality of ships and that the sanction should not exceed what is reasonably required to achieve its aim.

MARPOL article 4(4) requires that penalties “shall be adequate in severity to discourage violations of the present Convention and shall be equally severe irrespective of where the violations occur.” In an IMO guide for states parties implementing the provision it has been considered "reasonable to provide for a range with a minimum and maximum level, with the exact amount of the fine being dependent on the severity of the offence.”(2)MARPOL – How to do it, IMO, 2013, para. 4.7.

EU laws relating to criminal sanctions are similarly general in their wording,(3) Article 5 of Directive 2008/99 provides: "Member States shall take the necessary measures to ensure that the offences referred to in articles 3 and 4 are punishable by effective, proportionate and dissuasive criminal penalties." See also article 8 of directive 2005/35 as amended. but article 11(2) of the Sulphur Directive is somewhat more concrete:

The penalties determined must be effective, proportionate and dissuasive and may include fines calculated in such a way as to ensure that the fines at least deprive those responsible of the economic benefits derived from their infringement and that those fines gradually increase for repeated infringements.

It is hence at least implicit in all instruments that the sanctions, in order to achieve their aims, should deprive the perpetrators of the economic benefit of non-compliance and even go beyond that in order to meet the requirement of dissuasiveness or discouraging violations. In view of the very important economic benefits of non-compliance with the sulphur in fuel requirements, it is clear that the sanction will have to be of a significant magnitude to meet those objectives.

Yet, the question remains as to how these fees should be calculated; on the basis of what criteria, for what period of time and at what amount. These issues will be addressed in turn below.

6.4.2 What criteria?

A straightforward and quick procedure for the imposition of the sanction requires a penalty system which is easy for the authorities to calculate and use. Similarly, the principle of legality calls for clear, transparent and predictable rules for the benefit of ship operators who may be subjected to such sanctions.(4) See also 'Guide on Article 7 of the European Convention on Human Rights: No punishment without law: the principle that only the law can define a crime and prescribe a penalty', Council of Europe, 2016, available at http://www.echr.coe.int/Documents/Guide_Art_7_ENG.pdf, in particular at pp. 10-14.

In the Finnish oil discharge fee, these considerations have been met through a system in which the level of the fee is established on the basis of two parameters alone: the size of the ship and the size of the spill. A pre-made table which calculates the fees for various scenarios is annexed to the 2009 Act for an easy reference for both the authorities and ship operators.

In the case of air emissions, however, neither of these criteria seem relevant. The size of the ship is not determining the economic benefits of non-compliance, and it is difficult to speak in terms of an individual ‘spill’ or ‘discharge’ in case of air emissions, where the rationale of non-compliance is based on a continuous violation that stretches over a longer period of time.

Rather it would seem that the benefit of non-compliance is exclusively linked to the ship’s fuel consumption. This is what determines how much is to be gained by using non-compliant rather than compliant fuel, irrespective of the size of the ship or any operational considerations. For enforcement purposes, this parameter may not always be easy to identify, however. The fuel record books filled in by the crew may not be sufficiently reliable for this purpose and there is currently no other international requirement for ships to have a fuel flow meter on board to register the consumption.(5) But see Regulation 2015/757 on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, referred to at note 144 below, in particular article 9 thereof, and the new regulation 22A is to MARPOL Annex VI adopted in October 2016. A somewhat less accurate, but more easily identifiable, indication of a ship’s fuel consumption is the size of its engines.

Another element that should be taken into account when establishing the level of the sanction is the severity of the violation. It is a significant difference, both economically and from the point of view of the environment, if the violation consists of using a fuel oil with only marginally higher sulphur content than the required 0.1%, or a heavy fuel oil with, say, 3,5%. Finally, the Directive specifically suggests that repeated offences should be subject to more severe penalties.

6.4.3 What period?

Unlike discharges of oil or chemicals at sea, a violation of MARPOL’s air emission and fuel standard requirements typically extends over a longer period of time. It is only through a continuous violation that the economic benefits of non-compliance can be realised. Yet, with the exception of ships that only have non-compliant fuel on board, it is usually difficult to establish for how long a ship has infringed the rules. In view of this uncertainty, a certain period of time needs to be determined on which the basis of the economic benefits is to be calculated. The solution needs, on the one hand, to be effective and discourage non-compliance. This means that the economic benefit cannot be limited to the period for which the non-compliance is technically proven. On the other hand, the system needs to meet proportionality requirements. It is not clear, for example, if a randomly chosen entity of time, such as a certain number of days for which non-compliance is presumed, (6)An example of this is found in the Finnish law relating to sanctions for failing to comply with road fuel tax requirements, where the fees are based on a daily charge which depends on the type of vehicle, coupled with a maximum number of 20 days for each identified violation. See section 8 of the Fuel Fee Act (1280/2003) and www.trafi.fi/tieliikenne/verotus/polttoainemaksu/yleista_polttoainemaksusta would meet this requirement , as the link to the actual violation may be too weak and as the solution also involves risks of multiple sanctions (in different states) for the same violation.

While there is no obvious solution to this question, one proposal which seeks to balance the different considerations involved could be to limit the economic benefit calculation to the voyage preceding the ship’s entry to the port in question. It is true that this solution, at least in theory, would promote making artificial stops in a nearby port or anchorage before entering the port, but this risk could be reduced by measuring the time in larger entities, such as for example 24 hours.(7) An example of a penalty calculation scheme on this basis is provided in the annex to the CompMon study referred to in the first footnote.

6.4.4 What amount?

In order to be effective, the level of the sanction needs to be of a magnitude which makes an economic impact for the liable person. The significant benefits involved with non-compliance(8) See example in note 4 above. accordingly call for penalties of quite considerable amounts. Not even matching the penalty with the economic gains (for the chosen period) would amount to effective dissuasion. The text of the Sulphur Directive’s article 11(2) accordingly refers to fines which “ at least deprive those responsible of the economic benefits derived from their infringement”. (9) The wording chosen in this part of the sentence suggests that the this is not a strict obligation of member states, but MARPOL article 4(4) creates a clear obligation for states to ensure that the penalties "shall be adequate in severity to discourage violations of the present Convention". There is no guidance as to what coefficient could be applied on top of economic benefits for achieving the required dissuasive effect. Presumably this matter is at least in part linked to the general state of the enforcement system and, thus, the likelihood of being caught: if the enforcement system is well developed and the risk of being fined big, a lower coefficient will suffice for the deterrent effect and vice versa . That consideration would favour a higher coefficient, at least in the early period of enforcement where at-sea monitoring techniques and international cooperation have not yet fully developed.

In addition, article 11(2) of the Sulphur Directive suggests that fines would “gradually increase for repeated infringements”. Here again, a factor is needed and precedents are probably best looked for in comparable national laws.(10) For example, section 10 of the Finnish Fuel Fee Act, referred to above in note 97 refers to a coefficient of 1.5 in case the non-compliance is repeated and a coefficient of 2 if it is particularly grave. Repeated infringements could, and arguably should, also trigger other types of sanctions, including administrative measures available under PSC.(11) See section 7 below. The level of the fines, if pre-calculated in advance in a matrix, needs to be updated from time to time to actually reflect the difference in price between compliant and non-compliant fuels.