Reed Smith Client Alert

Key takeaways

  • The Supreme Court of Sri Lanka found the owner, operator, and local agent of the MV X-Press Pearl jointly and severally liable for environmental and economic damage caused by the fire that destroyed and ultimately sank the vessel.
  • The defendants were ordered to make an initial payment of US$1 billion as compensation for direct environmental harm and consequential economic, livelihood  and financial losses, payable within one year.
  • The MV X-Press Pearl marine pollution case evidences the continuing evolution of environmental accountability, setting the bar for due diligence, transparency, and risk management in the broader context of international maritime law and addressing jurisdiction for harm within national territory.

Summary of the Court’s key findings

The Supreme Court of Sri Lanka’s decision in the MV X-Press Pearl marine pollution case was issued on 24 July, more than three years after the disaster occurred. The Court was convened to consider multiple issues, including principles of corporate accountability, state responsibility, and the application of the Polluter Pays Principle in environmental governance and jurisdiction. Read the decision.

The Singapore-flagged container ship, which was carrying 1,486 containers (81 of which contained hazardous chemicals), caught fire off the coast of Colombo after its requests to offload a leaking container of nitric acid were denied at previous ports. The fire consumed the vessel, which ultimately sank after two weeks, releasing an estimated 75 billion tiny plastic pellets, called ‘nurdles’, causing what has been described as the world’s worst marine plastic spill. A mixture of toxic chemicals was also released into Sri Lankan waters.

A detailed assessment of the catastrophic events and the extent of environmental harm – including the contamination and death of significant fish and marine mammal species – resulting from the sinking of the vessel led to the Court’s unequivocal attribution of liability.

The Court focused on the conduct of the owners, operators, and local agents of the MV X-Press Pearl (the X-Press Pearl Group). It found that they had intentionally suppressed and withheld critical information from Sri Lankan authorities, preventing an effective and timely response to the crisis. The Court concluded that the mismanagement and lack of transparency by the X-Press Pearl Group were the primary causes of the environmental catastrophe.