Menu
EU v. IMO: Whose emissions legislation will prevail?

News / / EU v. IMO: Whose emissions legislation will prevail?

Manzi and another v. Capitaneria di Porto di Genova Case C-537/11

As the EU and IMO emissions regulation legislation looks set to diverge even further, one owner fights back in the European Court of Justice, arguing that EU member states who are party to the IMO’s MARPOL Annex VI could not impose inconsistent EU requirements upon vessels flagged in other MARPOL Annex VI states.

The 1997 Protocol to the International Convention for the Prevention of Pollution from Ships, signed in London on 2 November 1973, as supplemented by the Protocol of 17 February 1978 (MARPOL 73/78), included a new Annex VI Rule 14(1), providing that the sulphur content in marine fuels must not exceed 4.5% by mass. Annex VI entered into force on 19 May 2005. However, EU legislation enacted in the same year required Member States to ensure that passenger ships operating on “regular services” to or from any EU port used fuel with a maximum sulphur content of 1.5% (Article 4a(4) of Council Directive 1999/32/EC of 26 April 1999, as amended by Directive 2005/33/EC of 6 July 2005 (Directive 1999/32)).

The expression “regular services” was defined as meaning:
“A series of passenger ship crossings operated so as to serve traffic between the same two or more ports, or a series of voyages from and to the same port without intermediate cause, either:
i.    According to a published timetable, or
ii.    With crossings so regular or frequent that they constitute a recognisable schedule.”

The Incident

In July 2008, a cruise ship flying the Panamanian flag was found to be using marine fuels with a sulphur content in excess of 1.5% by the Capitaneria di Porto di Genova while in the Port of Genoa. An administrative penalty was issued against the Captain of the vessel jointly and severally with Compagnia Naviera Orchestra, the Owner of the vessel, by the Capitaneria di Porto di Genova for infringement of the Italian legislation giving effect to EU Directive 1999/32. 

The Captain and the Compagnia Naviera Orchestra (the applicants) brought an appeal against that Order in the Italian Courts, arguing that:

  • Cruise ships did not operate “regular services” within the meaning of Articles 4a(4) and 2(3g) of Directive 1999/32, and accordingly did not fall within the scope of the Directive;
  • There was a discrepancy between Article 4a(4) of the EU Directive and Annex VI to MARPOL 73/78 as regards the maximum amount of sulphur contained in marine fuels; and
  • A ship flying the flag of a State party to MARPOL 73/78 was authorised to use a fuel with a sulphur content of less than 4.5% by mass where it was in the port of another State party to MARPOL 73/78.  

The Italian Court referred various questions to the European Court of Justice (“ECJ”) for a preliminary ruling, the issues for decision being:

  1. Whether the term “regular services” applied to cruise ships;
  2. Whether the 1.5% sulphur limit in Article 4a(4) was invalid on the basis that it contravened the principle of cooperation in good faith as between the EU and its Member States, in that it required Member States which had agreed to and ratified Annex VI to MARPOL 73/78 to act in breach of the obligations entered into towards the other States which were party to MARPOL 73/78; and
  3. Whether, in light of the general principle of international law requiring international agreements to be implemented and interpreted in good faith, Article 4a(4) of Directive 1999/32 was to be interpreted as meaning that the sulphur limit of 1.5% in marine fuels did not apply to ships flying the flag of a non-EU State which was party to MARPOL 73/78 where such ships were in the port of an EU State which was itself a party to MARPOL 73/78.  

The ECJ decision

The ECJ held as follows:

  1. Directive 1999/32 applied to cruise ships. A series of crossings for the purpose of tourism was to be regarded as traffic within the meaning of Article 2(3g). The list of ports contained in the itinerary for a normal cruise would necessarily consist of at least two ports which could not be avoided, i.e. the port of departure and the port of arrival. The transport was thus made between “the same two or more ports” even where the transport ended at the port of departure.  
  2. The validity of Article 4a(4) of Directive 1999/32 could not be determined in the light of Annex VI to MARPOL 73/78 since the EU was not a contracting party to MARPOL 73/78, and was not bound by it.
  3. It was not for the Court to rule on the impact of Annex VI to MARPOL 73/78 on the scope of Article 4a(4) of Directive 1999/32. Article 4a(4) did not make any reference to Annex VI. The ECJ had accepted in a previous case that even where the EU was not itself bound by an international agreement, the fact that all its member states are contracting parties to it is liable to have consequences for the interpretation of EU law, in particular those provisions which fell within the field of application of the original agreement (R (International Association of Independent Tanker Owners (Intertanko) and Others v. Secretary of State for Transport C - 308/06). However, the Intertanko case was concerned in part with a conflict between EU legislation and  MARPOL 73/78 by which all EU member states were bound. There were three EU member states (all landlocked) who were not contracting parties bound by the 1997 Protocol giving effect to Annex VI. The ECJ held that to interpret the provisions of EU law in the light of an obligation imposed by an international agreement which did not bind all the EU member states would amount to extending the scope of that obligation to those member states which were not contracting parties to such an agreement. Therefore, the Court was not required to interpret Article 4a(4) of Directive 1999/32 in the light of Annex VI.

Comment

In the light of this ECJ ruling, the owners of vessels flying flags of countries outside of the EU must ensure compliance with the requirements set out in Article 4a(4) of Directive 1999/32. Compliance with the lesser requirements of Annex VI of MARPOL 73/78 will not provide a defence in the event that EU port authorities choose to prosecute in relation to excessive sulphur in marine fuels.  

Given this decision, owners also need to be aware that outside ECAs, where more stringent restrictions apply, from January 2020 EU Regulations will limit the sulphur content of fuel used in all EU waters to a maximum of 0.5%. Whilst Annex VI of MARPOL imposes a similar requirement, the latter is subject to the outcome of a fuel availability review in 2018. The EU has given a clear indication that the restriction will apply in EU waters regardless of the outcome of that fuel availability review. 

Fionna Gavin

Fionna Gavin Partner

Related sectors:

Related news & insights

News / Ince celebrates one year since Scotland office opening

23-11-2022 / Insurance, Maritime, Real Estate

We are pleased to be celebrating one year since opening our first Scottish office in the city of Glasgow.  Stefanie Johnston, dual-qualified Partner and Head of Scotland, has worked tirelessly over the last year to develop our offering through the opening of an Ince office in what is arguably an established Scottish market. Starting from the ground up, Stefanie and her team have successfully gained an admirable reputation in the region and further afield in the maritime, insurance, real estate and regulatory sectors. 

Ince celebrates one year since Scotland office opening

News / Shipping E-brief November 2022

17-11-2022 / Maritime

The Shipping E-Brief is a publication providing you with key information on legal decisions and developments in shipping and related business areas.

Shipping E-brief November 2022

News / Appeals from arbitration: is reform required?

15-11-2022 / Maritime

In September 2022, the UK Law Commission published a consultation paper with provisional recommendations for updating the Arbitration Act 1996 (the Act 1996). Amongst other things, the Law Commission considered whether any changes need to be made to: (i) s.67 of the Act 1996, which deals with jurisdictional challenges to arbitral awards; and (ii) s.69 of the Act 1996, which deals with appeals on points of law.

Appeals from arbitration: is reform required?

News / Owners not in breach of charter and entitled to claim demurrage

09-11-2022 / Maritime

CM P-MAX III Limited v. Petroleos Del Norte SA (MT Stena Primorsk) [2022] EWHC 2147 (Comm) This recent laytime and demurrage dispute demonstrates that an owner can legitimately refuse orders where such orders may jeopardise the safety of a vessel.

Owners not in breach of charter and entitled to claim demurrage

News / Court of Appeal finds owner should have accepted non-contractual performance

09-11-2022 / Maritime

Mur Shipping BV v. RTI Ltd [2022] EWCA Civ 1406 A majority of the Court of Appeal has held that the Owner under a contract of affreightment (COA) should have accepted payment of freight in Euros, rather than the US dollars provided for in the COA. Its refusal to do so meant that the Owner could not rely on the force majeure clause in the COA, in circumstances where US sanctions might have restricted US dollar transfers from or on behalf of the Charterer.

Court of Appeal finds owner should have accepted non-contractual performance

News / “Due” means due!

03-11-2022 / Maritime

Ceto Shipping Corporation v. Savory Inc (Victor 1) [2022] EWHC 2636 (Comm) The Court in this case had to construe a purchase option clause in a bareboat charter. Specifically, it considered whether the fact that the charterer had not fulfilled certain payment obligations under the charter because it was disputing them in good faith meant that the owner was not obliged to transfer title to the vessel at the end of the charter period.

“Due” means due!