Hopes low for any Bohai payout

PUBLISHED : Tuesday, 26 July, 2011, 12:00am
UPDATED : Tuesday, 26 July, 2011, 12:00am


Mainland legal experts say it is highly unlikely that fish farmers and others affected by recent oil spills in the Bohai Sea will receive suitable, if any, compensation for the damage caused by marine pollution.

The pursuit of compensation, either by the victims themselves or by grass-roots rights groups acting on their behalf, looks likely to be hampered by legal restrictions and a lack of sincerity from the oil giants involved, they say.

In addition, the government's lack of motivation to help victims and the judiciary's lack of independence may deal the fatal blow to any hopes of crafting a compensation package comparable to that provided after the BP oil spill in the Gulf of Mexico last year. BP agreed to set up a US$20 billion disaster fund for damage claims, amid public pressure and the US government's intervention.

An area of more than 4,200 square kilometres - four times the size of Hong Kong - in the Bohai Sea was polluted by oil that leaked last month from offshore rigs owned by China National Offshore Oil Corp and its US operator, ConocoPhillips. It was China's largest offshore oilfield.

Although the full extent of the environmental damage has yet to be analysed, the first traces of the oil washed up on beaches in Hebei and Liaoning last week, prompting growing calls for payouts.

Earlier, fish farmers in Changdao, Shandong, had voiced optimism about taking polluters to court and receiving compensation, citing public pressure on a cover-up attempt that had forced CNOOC and ConocoPhillips to apologise. The public was not notified of the oil leaks until nearly one month after the first spill occurred on June 4, despite both firms and the State Oceanic Administration being aware of the disaster.

The maximum penalty for marine pollution is 200,000 yuan (HK$241,000). But the SOA said it could demand much higher compensation on behalf of the nation once an assessment of ecological damages was complete.

Xia Jun , a lawyer familiar with marine pollution cases, said it remained to be seen if the marine environmental watchdog or other government agencies were bold enough to proceed with litigation against the oil giants, given the sensitivity and complexity of the scandal. 'The biggest obstacle lies in the government's mindset that values stability over all else, including its citizens' interests and the environment.'

Analysts said the SOA's impartiality as a government watchdog acting in the public interests was also in doubt after its apparent attempts to put all the blame on ConocoPhillips while exonerating CNOOC, a state-owned offshore oil monopoly.

Xia expressed concerns that the SOA might lack adequate motivation to go after ConocoPhillips or even CNOOC in a lawsuit that might not stand a good chance of legal success. According to mainland legal experts, several high-profile oil spill cases in the past decade often ended with out-of-court settlements at a fraction of the compensation claims. These were barely enough to cover direct economic losses of fisheries, let alone to repair ecological damage.

Securing pollution evidence and calculating damage to the marine environment have often proved the most difficult and contentious issues in the litigation process, and can take several years.

In a landmark suit over a Bohai Sea spill caused by Maltese oil tanker Tasman Sea in 2002, a maritime court in Tianjin issued the mainland's first ruling on ecological pollution. But the defendant challenged the ruling, which supported claims of more than 42 million yuan by hundreds of fishermen and marine authorities. The Supreme People's Court intervened and compelled victims to accept much lower payments in order to end the seven-year legal fight.

Nevertheless, the case highlighted the importance of marine authorities pursuing legal solutions to ecological damage on behalf of the country, Professor Wang Canfa from the China University of Political Science and Law in Beijing said.

'But in reality, it can be pretty hard to take oil giants such as CNOOC to court, because we don't know if those companies will try to influence the government,' he said. 'Given the existing restraints of the system and law, we are unlikely to see any breakthrough [this time].'

Despite pledges about the rule of law, the government was still accustomed to using its unbridled administrative power rather than legal means to deal with emergencies, analysts said. 'We may already have some good laws, but they do not count when they can't be implemented, especially if they are unable to help tackle tough cases,' Xia said.

The PetroChina spill in Dalian last year is a good case in point. Hundreds of fish farmers suffered total losses estimated at up to 90 million yuan a year, but they were intimidated by the local authorities into not taking the company to court or petitioning the central government.

Lawyer Wang Zhenyu , who helps pollution victims seek compensation, said the case set a bad precedent. 'It is silly for the government to draw fire by protecting the polluter and escalating a pollution incident into a crisis,' he said.