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.
The X-Press Pearl Group were held jointly and severally liable for the environmental and economic damage caused by the disaster. The Court ordered an initial payment of US$1 billion in compensation, reserving the right to order further payments as the full extent of the harm is independently verified.
Payment is to be made in up to four instalments within one year from the date of the judgment, with the first instalment (not less than US$250 million) due within two months, and a further minimum of US$500 million due within six months. The funds are to be paid to the Secretary to the Treasury, who will hold them in trust in a dedicated account – named the “MV X-Press Pearl Compensation and Environment Restoration and Protection Fund” – to be allocated for environmental restoration, reimbursement of clean-up and administrative costs, and compensation to affected parties, including fishers.
Shortcomings on the part of state actors were identified, particularly the absence of an immediate disaster management plan and delays in issuing decisive directives. However, the Court ultimately found that the Harbour Master and the Director General of Merchant Shipping had acted with due diligence within the constraints of the information provided to them, and in accordance with the applicable law.
Polluter Pays Principle and absolute liability
At the heart of the judgment lies the application of the Polluter Pays Principle, which is entrenched in Sri Lanka’s constitutional and statutory framework and recognised as a norm of international environmental law. The Court further clarified that the Polluter Pays Principle is not limited to civil or statutory liability but extends to sui generis public law liability, encompassing both state and non-state actors.
Crucially, the Court adopted a standard of absolute liability for hazardous activities – that is, enterprises engaged in inherently dangerous activities, such as the carriage of hazardous cargo by sea – “owe an absolute and non-delegable duty” to ensure that no harm results from their operations.
The primacy of domestic legal remedies over international litigation was also the subject of extensive consideration. The Court reasoned that jurisdictional competence and national interest, as well as the enforceability of orders, procedural familiarity, and public trust, justified intervention at the domestic court level – in this case, Sri Lanka where the harm occurred, rather than Singapore, which was the vessel’s flag state.
Environmental and economic impacts
The environmental impact of the disaster is described by the Court as “immeasurable, unfathomable and infinite”, with the release of billions of plastic nurdles, hazardous chemicals, and bunker oil causing widespread and ongoing contamination of Sri Lanka’s western coastline, destroying marine life and severely disrupting Sri Lanka’s marine biodiversity.
The economic consequences included a year-long fishing ban along the affected coastline, impacting the livelihoods of thousands of people, as well as losses to the fishing and tourism sectors. The Court recognised the right of affected communities to compensation, prioritising the most vulnerable victims in the distribution of reparations.
Enforcement mechanisms and compensation
In addition to the US$1 billion compensation order, an “MV X-Press Pearl Compensation Commission” must be established to independently assess and quantify the full extent of harm, losses, and restoration costs. Based on this, there may be further compensation ordered.
The Court directed the Attorney General to expedite criminal investigations and consider prosecutions against all offenders, including both corporate and individual actors. The Attorney General is also directed to report to the Supreme Court every three months on the investigations and prosecutorial action taken to give effect to the Court’s orders.
Implications for maritime law and state accountability
The Supreme Court’s judgment elevates environmental protection within the hierarchy of legal and policy priorities. By holding transnational corporate actors absolutely liable for environmental harm, the Court sought to send a message that environmental crimes will not go unchecked, regardless of the complexity of international shipping operations or the influence of “powerful commercial interests”.
The decision also underscores the importance of state accountability. While primary liability rests with the polluter, the Court was clear that the state has a constitutional duty to protect, preserve, and improve the environment. The judgment, which describes the decision-making process of the Attorney General of Sri Lanka as “opaque, irrational, and lacking in good faith”, directs the Attorney General to undertake a comprehensive review of domestic laws to ensure alignment with international norms and address gaps in emergency preparedness and response.
The challenges of transboundary environmental harm, the limitations of existing maritime conventions, and the enforceability of domestic judgments against foreign polluters make this an important decision on liability for marine environmental pollution.
Client Alert 2025-206
