UNCLOS’ PROTECTION OF THE MARINEENVIRONMENT IN TRANSBOUNDARY OIL SPILL

POLLUTION: CASE STUDY OF MONTARAOILSPILL

Nabila Nadiansyah11/314209/HK/18750

International Law of the SeaUniversitas Gadjah Mada

2015

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UNCLOS’ PROTECTION OF THE MARINE ENVIRONMENT INTRANSBOUNDARY OIL SPILL POLLUTION: CASE STUDY OF MONTARA

OILSPILL Nabila Nadiansyah

International Law of the Sea, Universitas Gadjah Mada

I. INTRODUCTION

In 21 August 2009, an uncontrolled release of

hydrocarbons occurred at the Montara Wellhead Platform

of the West Atlas mobile drilling unit under the

Montara Development Project owned and operated by

PTTEP Australiasia Pty Ltd (‘PTTEPAA’), an Australian

subsidiary of a Thai company PTT Exploration and

Production Public Company Limited (PTTEP). Oil were

discharged from the well between 1,000-1,500 barrels

per day.1 The leak continued for 74 days before an

intervention were successful in its fifth attempt by

pumping mud in to shut the well. In total an estimate

of 30,000 barrels of oil were spilled and oil sheen

affected an observable total surface area of 90,000

square kilometers.2 Although small in comparison with

the Gulf of Mexico spill that discharged up to 70,000

barrels of oil daily, the Montara oil spill is the

biggest oil spill in Australian history and the first1 Hart, P. (2015). The Oil Drum | Montara Oil Spill: "A failure of sensible oilfield practice". [online] Theoildrum.com. Available at: http://www.theoildrum.com/node/7193 [Accessed 20 Jun. 2015].2 Dewi, S. (2012). Probe on Montara oil spill urgent: Experts. The Jakarta Post, [online] p.4. Available at: http://www.thejakartapost.com/news/2012/07/27/probe-montara-oil-spill-urgent-experts.html [Accessed 19 Jun. 2015].

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transboundary oil spill that had ever affected

Indonesian territory.

After various reports of coastal communities in Nusa

Tenggara Timor (NTT) on degradation of marine

resources, Indonesia claimed that it deserved

compensation and reparations for the damage caused by

the discharged oil from the Montara well. Due to

failures after efforts to both the negotiations with

PTTEPAA and diplomatic routes with the Australian

government, recently Indonesia released that they are

preparing to bring a class-action lawsuit over the

dispute for compensation and reparations to the NTT

communities. Until now it is unclear whether the claim

will be brought against the Australian government or

the PTTEPAA, and what means are going to be used to

bring the claim. A trnsboundary oil spill deriving

from offshore drilling activities are rare and

regulations are still sparse. Keeping in mind the

dependence of the society to oil, it is important to

be able to understand how the existing international

laws and regulations will apply in disputes like this.

The United Nations Convention on Law of the Sea or

also known as the UNCLOS3, sets out the general

framework for all marine and maritime activities,

including specific provisions on the marine

environment protection from pollution. Both of

Australia and Indonesia are parties to the Convention;

3 1982 United Nations Convention on the Law of the Sea, adopted 10 December 1982 [entered into force 16 November 1994]

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therefore the UNCLOS, amongst others, govern over

marine disputes between the two countries. This paper

aims to explore the UNCLOS’ environmental protection

clause in its applications to the Montara oil spill by

assessing Australia’s conduct in the case and its

obligation as a state party of the UNCLOS, and explore

whether the Convention provides means for Indonesia to

seek for compensation of damages from the spill. The

UNCLOS could not apply directly to legal entities nor

it regulates on States obligation against legal

entities, therefore claims made by Indonesia based on

the UNCLOS will not be directed to PTTEPAA, as

initially desired, but Australia. This paper is a

humble attempt to understand how the UNCLOS’

protection of marine environment is applied in a

dispute of transboundary oil pollution in terms of

conduct prescribed in the UNCLOS for its State party,

in this case Australia, and how does compensation of

pollution regulated under the Convention.

II. LEGAL RESEARCH QUESTIONS

Having said that, the paper is developed based on

these research questions:

1. Did Australia breach its obligations under the

UNCLOS for its conducts in the Montara oil spill?

2. Could Indonesia claim for compensation under the

UNCLOS for the damages to its marine environment

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from the transboundary oil pollution of the

Montara oil spill?

III.THE MONTARA OIL SPILL CASE a) Chronology of the Blowout

The Montara oil spill occurred after a blowout of

the H1 well of the Montara wellhead platform in

August 2009. It is crucial to note that the Montara

oil spill were not an inevitable accident but,

according to the inquiry report, a disaster awaiting

to happen due to “failures of sensible oilfield

practice”.4 From the inquiry report it was clear that

PTTEPAA has neglected alarming symptoms and failed

to comply with minimum standards applied on oilfield

practices, eventually leading to the blowout to

occur.

Firstly the installation of the cement casing shoe

of the well were problematic. The PTTEPPA failed to

pressure test 95/8” cement casing shoe in accordance

to its own Well Construction Standards, This failure

inevitably led to the casing shoe of the well to be

compromised as it has substantially over-displaced

by fluid, resulting to a “wet shoe”.5 Despite the

Daily Drilling Report has communicated this problem,

4 Montara Commission of Inquiry, (2010). Report of the Montara Commission of Inquiry. [online] Canberra: Montara Commission of Inquiry, p.6. Available at:http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/Montara-Report.pdf [Accessed 17 May 2015].5 Hart, P. (2015). The Oil Drum | Montara Oil Spill: "A failure of sensible oilfield practice". [online] Theoildrum.com. Available at: http://www.theoildrum.com/node/7193 [Accessed 20 Jun. 2015].

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the senior PTTEPAA personnel did not seem to see

this as an alarming condition and no remedies were

sought. The inquiry report further contends not only

there is an absence of evaluation on the

installations were sought but also the problem were

not complicated nor unsolvable with well known

potential remedies that are not costly.6 This shows

neglect of the PTTEPAA in their failure to

demonstrate a sensible oilfield practice.

The second error made by PTTEPAA leading to the

blowout is the fact that the 133/8” PCCC (Pressure

Containing Anti-Corrosion Caps) had never been

installed. The absence of PCCC had resulted to

corrosions of the threads of the 133/8” casing. This

then led to the removal of the 9 5/8” casing shoe.7

Ultimately, according to PTTEPAA’s operational

forecast, at this point the H1 Well is exposed to

the air without any secondary well control barrier

in place for 4 to 5 days, with sole reliance on an

untested primary barrier of the cemented 95/8” casing

show that had been the subject of significant

problems during its installations.8 The Blowout in

the H1 Montara Well occurred 15 hours later.

6 Montara Commission of Inquiry, (2010). Report of the Montara Commission of Inquiry. [online] Canberra: Montara Commission of Inquiry, p.6. Available at:http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/Montara-Report.pdf [Accessed 17 May 2015].7 Ibid, p. 78 Ibid, p. 9.

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b) Response Chronology

As most oil spill response, the discharged oil

were managed through three main ways: application of

boom, spraying dispersants and skim surface oil.9

According to the Report released by the Australian

government, the Australian Maritime Safety Authority

(AMSA) began applying dispersant to “accelerate

natural evaporation and weathering of the oil”.10

Dispersant are chemical products that are applied

onto spilled oil to enhance dispersion process and

cause the formation of smaller droplets that are

less likely to resurface from the upper water

column.11 Although Dispersants are increasingly

common to be used in oil spills in the past years

and over 184,000 liters was used in the Montara

spill, its nature is proven to be problematic under

the UNCLOS. This subject would be further discussed

later in the paper.

In comparison to the use of dispersants, skimming

oil from the surface of the sea is inevitably a

safer method to clean up oil discharge.12 The

containment operations in the Montara oil spill used

9Australian Government Department of Resources, Energy and Tourism, (2010). Fact Sheet 3 : Montara Incident and Response. Canberra: Montara InquiryResponse, pp.1-2.10 Australian Government Department of Resources, Energy and Tourism,(2009). West Atlas - Minister Ferguson Inspect Response to Oil Spill. Canberra:Australian Petroleum News.11 Ramseur, J. (2010). Deepwater Horizon Oil Spill: the Fate of the Oil.Washington: DIANE Publisher, pp.9-10.12 Fingas, M. and Charles, J. (2001). The basics of oil spill cleanup. Boca Raton, Fla.: Lewis Publishers.

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boom and skimmer vessels to remove the oil. Even

with what is announced to be a successful

operations, skimming oil from the surface never

could reach a vast percentage of a spill. In the

Montara oil spill, a reported amount of

approximately 493,000 liters of oil were contained.13

This is not more than a tenth of the aggregate

amount of oil released to the sea from the spill.

Furthermore, in terms of marine environment

protection, another response done by the Australian

Government is in conjunction with the operator of

the Montara Wellhead Platform. PTTEPAA developed and

implemented a PTTEPAA funded long term environmental

monitoring plan. The plan were developed to ensure

the monitoring and research is conducted on the

spill’s effects to the marine environment.14. In

their report the Montara Commission of Inquiry finds

the Plan to be unacceptable as it placed the

national authority in a position where they are

unable to conduct monitoring prior the acceptance of

PTEPAA.15 This highlights a major gap in the

application of environmental legislation in the13 Montara Commission of Inquiry, (2010). Report of the Montara Commission ofInquiry. [online] Canberra: Montara Commission of Inquiry, p.6. Available at:http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/Montara-Report.pdf [Accessed 17 May 2015].14Ibid. 15 Montara Commission of Inquiry, (2010). Report of the MontaraCommission of Inquiry. [online] Canberra: Montara Commission ofInquiry, p.6. Availableat:http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/Montara-Report.pdf [Accessed 17 May 2015].

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Commonwealth waters and contends that the full

impact of the marine environment is unlikely to be

fully established.16

c) Bilateral Agreements on Jurisdictions in the Timor

Sea

The living and non-living resources of the Timor

Sea are governed by a patchwork of rights as a

result from Indonesia and Australia’s various

negotiations of the area. Among the various numbers

of agreements, the first agreements between the

countries were created to govern seabed boundaries.17

Subsequently more arrangements were concluded

producing other forms of treaties, such as the

Treaty on the establishment of Exclusive Economic

Zones (EEZ) boundaries known as the 1997 EEZ

Treaty18, and the special arrangements on fisheries

allowing permission for Indonesian traditional

16 Lyonns, Y. (2015). Transboundary Pollution from OffshoreActivities : A Study of the Montara Offshore Oil Spill. In: S.Jayakumar and T. Koh, ed., Transboundary Pollution : Evolving Issues ofInternational Law and Policy, 1st ed. Massachusetts: Edward EldgarPublishing, p.183.17 Agreement between the Government of the Commonwealth of Australiaand the Government if the Republic of Indonesia Establishing CertainSeabed Boundaries, concluded in 18 May 1971 (entered into force 9November 1983); Agreement between the Government of the Commonwealthof Australia and the Government if the Republic of IndonesiaEstablishing certain sea-bed boundaries in the area of the Timor andArafura seas, supplementary to the Agreement of 18 May 1971,concluded in 9 October 1973 (entered into force 8 November 1983).18 Treaty between the Government of Australia and the Government ofRepublic of Indonesia Establishing Exclusive Economic Zone Boundaryand Certain Seabed Boundaries, signed 14 March.

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fisherman entry to Australian EEZ.19 Furthermore

Australia has also concluded a treaty with East

Timor in 2002 in regards to the Timor Sea.20

From the many conclusions of treaties between

Indonesia and Australia, it is apparent that the

Timor Sea consists of a complicated establishment of

rights between the two countries in the governance

of resources of the Timor Sea. In some cases, in the

overlapping jurisdiction between the two countries,

each agreed to take rights over different resources.

Australia chose to sovereign rights over the seabed

resources in areas where there are overlapping

jurisdiction with Indonesia, while Indonesia agreed

to sovereign rights over the resources of the water

column above the seabed. Despite these complicated

division of sovereign rights between the two

countries over the Timor Sea, yet the satellite

imagery has clearly shown that the oil has expanded

past these questions of jurisdiction as it has

reached areas where Indonesia has sovereign rights

over both the sea bed and water column.

19 Memorandum of Understanding between the Government of Australiaand the Government of the Republic of Indonesia regarding theOperations of Indonesian Traditional Fisherman in the Areas of theAustralia Exclusive Fishing Zone and Continental Shelf, signed 7November 1974, accessed 10 June 2015 athttp://press.anu.edu/apem/boats/mobile_devices/apb.html 20 Timor Sea Treaty between the Governemnt of East Timor and theGovernment of Australia, signed 20 May 2002 (entered into force 2April 2003).

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IV. UNCLOS’ PRINCIPLES IN THE MARINE ENVIRONMENTPROTECTION AND AUSTRALIA’S OBLIGATION IN THE MONTARAOIL SPILL

Generally, the UNCLOS have governed both rights and

obligations under exploitation of resources through

offshore activities. Although UNCLOS recognizes the

general sovereign right of States to legally exploit

their marine resources, yet it limits such right with

an obligation to protect and preserves marine

environment.21 This puts the general obligation to

protect and preserves marine environment laid out in

Article 192 of the UNCLOS to have a higher standing

over the sovereign rights of states for its natural

resources. As economical interest in exploitation of

resources often clashes with the interest of

environment, the UNCLOS clarifies its position on which

interest shall prevail under the debate.

This position extends to the Convention’s position

in respect to State’s obligations in regards to

pollution of the marine environment. Article 194 of

UNCLOS asserts a general obligation for States to

“take, individually or jointly as appropriate, all

measures consistent with this Convention that are

necessary to prevent, reduce and control pollution of

the marine environment from any source”. Initially, the

general obligation “to prevent, reduce and control”

were vague but were then defined by the International

Court of Justice (ICJ) as an obligation of due21 Article 193 of UNCLOS

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diligence.22 The Advisory Opinion on Seabed Dispute

Chamber of the International Tribunal for the Law of

the Sea (ITLOS) on Responsibilities and Obligations of

States Sponsoring Persons and Entities with Respect to

Activities in the Area (‘Advisory Opinion on Seabed

Activities’) further strengthen and develop the due

diligence notion outlined by the ICJ.23 In the notion of

due diligence, the Advisory Opinion on Seabed

Activities clarifies ‘due diligence’ not as an

obligation to achieve but as a variable concept to

deploy adequate means, to exercise best possible effort

and do the outmost to obtain the result.24 It is

undeniable that in every oil spill there will always be

a certain degree of damage to the marine environment,

however under the UNCLOS a State’s obligation is

assessed in whether there are best efforts by the State

dedicated to preventing, minimizing or managing the

damage.

In prevention, the UNCLOS asserts the importance of

preventive measures and contingency planning in the

context of offshore installations and devices used in

exploration or exploitation of the natural resources of

the seabed and subsoil.25 A collective development of

contingency plans to prevent pollutions and combating22 Pulp Mills on the River Uruguay (Argentina v. Uruguay) [2010](International Court of Justice (ICJ)).23 International Tribunal for Law of the Sea, (2015). Responsibilities andObligations of States Sponsoring Persons and Entities with respect to Activities in the Area,Advisory Opinion, para 117. 24 Ibid, para. 11025 Article 199 of UNCLOS.

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pollutions impacts to the environment were also

repeatedly prescribed under the UNCLOS.26 Australia is

a State Party to both the 1990 International Convention

on Oil Pollution, Preparedness, Response and

Cooperation,27 and the 2000 Protocol on Preparedness,

Response and Cooperation to Pollution Incidents by

Hazardous and Noxious Substances (HNS).28 In order to

fulfill their commitments under these instruments,

Australia had developed their National Plan to Combat

Pollution of the Sea by Oil and other Noxious and

Hazardous Substances (‘National Plan’).29 The National

Plan is a national integrated government and industry

organizational framework that aims to enable effective

preparedness and response to marine pollution

incidents. Australia has demonstrated participation in

a collective effort to develop a response mechanism to

oil pollution through the aforementioned international

instruments, which then were developed into the

domestic law as its National Plan. The UNCLOS sets the

obligation for States to “jointly develop and promote

26 Article 199, Article 208 (4) and (5), and Article 197 UNCLOS. 27 1990 International Convention on Oil Pollution, Preparedness,Response and Cooperation, Adopted on 30 November 1990 (entered intoforce 13 May 1995).28 2000 Protocol on Preparedness, Response and Cooperation toPollution Incidents by Hazardous and Noxious Substances (HNS),Adopted on 14 March 2000 (entered into force 14 June 2007). 29 NATIONAL PLAN: Australia’s National Plan to Combat Pollution ofthe Sea by Oil and Other Noxious and Hazardous Substances. (2007).1st ed. [ebook] Canberra: Australian Government. Available at:https://www.amsa.gov.au/forms-and-publications/environment/publications/NP-Reports/documents/Nationalplan_2007_Overview.pdf [Accessed 19Jun. 2015].

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contingency plans for responding to pollution incidents

in the marine environment”.30 Under this definition then

Australia has sufficiently demonstrated a fulfillment

of the obligation under Article 199 of the UNCLOS.

Another obligation under prevention is in regards

to conducting environmental assessment. States has the

obligation under the UNCLOS to assess the potential

effects of planned activities on the marine

environment, if there are reasonable grounds for the

State to believe such activities may cause substantial

pollution or significant changes to the marine

environment.31 The report of the assessment shall be

published and be made available to all States.32

Currently there are little certainty whether a

preliminary assessment were conducted by Australia for

the plans of the H1 well. There is, however, little

need to analyze Australia’s fulfillment to the

obligation of preliminary research under Article 206 of

UNCLOS as it relies entirely on discretion of the State

concern. Firstly, the reference to “reasonable ground”

and “as far as practicable” introduces elements of

discretion to the State concerned. In other words,

State has the power to judge whether an activity is

worth to be assessed, and the extent of it being

assessed.33 Secondly, the Article sets a high threshold

30 Article 199 UNCLOS 31 Article 206 UNCLOS32 Article 205 UNCLOS 33 Lyonns, Y. (2015). Transboundary Pollution from OffshoreActivities : A Study of the Montara Offshore Oil Spill. In: S.

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by outlining that the assessed activity potentially

causes substantial or significant damage to the marine

environment.34 Due to the characteristic of the Article

itself, there will not be a need to analyze preliminary

methods of research as its fulfillment relies heavily

on the State’s discretion.

In addition, prevention under the UNCLOS also

includes the obligation of Coastal States of the

offshore activities to adopt laws and regulation in

order to prevent, reduce and control pollution from

seabed activities,35 where such regulations to not to be

less effective than international rules, standards and

recommended practices and procedures.36 In regards to

Australia’s obligation to develop their domestic laws

and regulations in regards to offshore oil seabed

activities,37 shortcomings were not only observable in

the Montara oil spill but it was also one of incident’s

main triggers.

In their report, the Inquiry Commission has formally

contends that even though the primary responsibility to

maintain well integrity lies on PTTEPAA, yet the

Inquiry also finds the Northern Territory Department of

Resource’s (‘NT DoR’) regulatory regime was completely

Jayakumar and T. Koh, ed., Transboundary Pollution : Evolving Issues ofInternational Law and Policy, 1st ed. Massachusetts: Edward EldgarPublishing, p.162.34 The MOX Plant Case (Ireland v. United Kingdom) [2001] Case No. 10(International Tribunal for Law of the Sea).35 Article 208 UNCLOS36 Article 208 UNCLOS37 Article 208 UNCLOS

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inadequate.38 When PTTEPAA submitted an application to

suspend the H1 Well use of PCCCs in substitute of a

cement plug, it received preliminary approval within 30

minutes.39 This decision is dangerously deficient, as

according to its manufacturers PCCCs were not intended

to be used as barriers against blowout.40 This error

then contributed to the leak of H1 Well leading to the

spill. The error of the NT DoR in this respect is

merely a symptom of the fault under the Australian

government’s regulations for petroleum offshore

activities. The Inquiry Commission report expressed the

fact that the Australian government has less guidelines

and/or minimum standards in matters of offshore well

integrity issues than most States.41 The Commission

contends that the regulation did not succeed in

outlining a minimum requirement to ensure well safety

nor it has established an adequate reporting mechanism

in well operations and safety to the government.

Despite the clear deficiencies under Australia’s

regulations on well integrity maintenance, Australia is

not in breach of its obligations under the UNCLOS.

Under Article 208 of the UNCLOS, coastal states are

expected to implement nationally a minimum standard

38 Montara Commission of Inquiry, (2010). Report of the Montara Commission ofInquiry. [online] Canberra: Montara Commission of Inquiry, p.6.Available at:http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/Montara-Report.pdf [Accessed 17 May 2015].39 Ibid, p. 16. 40 Ibid, p. 16. 41 Ibid, p. 17

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defined by internationally accepted rules, practices

and procedures vis-à-vis a development of appropriate

domestic law. The implementation is, however,

problematic. UNCLOS did not clarify on what constitutes

as an internationally accepted rules or procedures. It

is unclear on whether that entails a minimum number of

state ratifications or whether the ratification of

state in question is relevant at all.42 In the strictest

interpretation, it pertains the international

instruments under the International Maritime

Organization (IMO) framework. Under the IMO, currently

there are no standards in regards to oil pollution

prevention through well maintenance regulations.

Consequentially, Australia is not in breach of the

UNCLOS despite their futile adoption of an effective

national rules and regulation to prevent such incident

to have occurred.

The first obligations outlined under the UNCLOS

concerning response is the obligation for States to

notify other States it believes likely to be affected

by an imminent danger to its marine environment by

pollution.43 In this Article however the UNCLOS did not

mention that such pollution shall be within the

responsibility of the notifying states, it is merely

mentioned any states aware of an imminent threat to42 Lyons, Y. (2011). Offshore oil and gas in the SCS and the protection of the marineenvironment. 1st ed. [ebook] Singapore: Center International Law, NUS.Available at:http://cil.nus.edu.sg/wp/wp-content/uploads/2010/10/OG_SCS_CIL-Part206oct2011-1.pdf [Accessed 18 Jun. 2015].43 Article 198 UNCLOS

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another State’s marine environment from pollution has

to notify the threatened State. Again, this

demonstrated how the UNCLOS imposes a collective

obligation for States to be able to conserve the marine

environment beyond their jurisdiction. After the Spill

occurred, Australia had notified Indonesia on the

imminent threat of the oil spill from Montara well by

officially communicating that sheens of oil were

reaching Indonesia’s EEZ on September 2009.44 After the

notification, Indonesia sent one of its officials to

observe first-hand Australia’s response to the spill

and conduct a meeting between the Ministers of

Environment of the two States. 45 Although the product

of the meeting and visit is unclear, Australia has met

its international obligation under Article 198 of the

UNCLOS.

In terms of response to pollution from the seabed

offshore activities, the UNCLOS mainly outlined two

main actions to be taken by States, to reduce and

control pollution in accordance to Article 194 of the

UNCLOS. In addition to the objective of response laid

out in Article 194 of the UNCLOS, the best effort under

the due diligence elucidation of the Article by the ICJ

and the ITLOS applies in the matter of how response is

conducted. In the response of the Montara Oil Spill, as

44 Indonesia.embassy.gov.au, (2009). Indonesia: Montara Oil Spill -Australian Embassy. [online] Available at:http://indonesia.embassy.gov.au/jakt/mr09_086.html [Accessed 21 May2015].45 Ibid.

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aforementioned, Australia responded through application

of boom containment, vessel skimming and spraying of

dispersants. In a strict sense, Australia were able to

restrict movements of the oil through application of

boom,46 and reduce the oil pollution by 493,000 liters

through vessel skimmers.47 Essentially, other than the

three methods sought in this case, there are three

other methods to clean oil spills: in situ burning,

separation and decontamination.48 Skimming and use of

boom are the two most conventional methods often used

in similar circumstances. Although there are other

methods of cleaning oil available, without further

research it is impossible to determine whether the

methods used are the most effective in relations to the

water conditions, weather and nature of the oil. Until

such research are concluded, it is fair to determine

that there are satisfactory response efforts taken of

the Montara oil spill by the Australian government.

Unlike the two aforementioned methods of response to

cleaning the dispersed oil, the use of dispersant is

less straightforward under the UNCLOS. In response

efforts, the UNCLOS also regulates that efforts used to

not be in contradiction with the Convention.49 Unlike46 Montara Commission of Inquiry, (2010). Report of the Montara Commission ofInquiry. [online] Canberra: Montara Commission of Inquiry, p.6.Available at:http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/Montara-Report.pdf [Accessed 17 May 2015].47 Ibid.48 Fingas, M. and Charles, J. (2001). The basics of oil spill cleanup. BocaRaton, Fla.: Lewis Publishers.49 Article 194 (4) UNCLOS.

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the two other methods, use of dispersants is

controversial as it deemed to be in contradiction to

Article 195 and Article 196 of the UNCLOS. As

aforesaid, dispersants is a chemical surfactant spill-

treating agents that promote the formation of small

droplets of oil that “disperse” from the water surface

to the water column.50 After a dispersant is applied, a

coffee-colored flume will appear as a sign that oil has

been successfully dispersed. Due to this nature of

dispersants, it is deem that dispersants do not reduce

pollution but merely transforms the pollution from oil

slick to flume, and transfers the damage from the water

surface to the water columns. Having said that, the

nature of dispersant is believed to be against the

prohibition on transfer of pollution’s damage from one

area to another or transform from one type to another.51

Although dispersants are less toxic today than it

was initially used in the late 1990s, yet it is

accepted that use of dispersant remains a trade-off

between toxicity to aquatic life with shoreline

environments and birds species.52 Due to its toxicity,

the nature of dispersant is in conflicting to the

obligation laid under Article 196 (1) of the UNCLOS,

which asserts States to not use technologies that may

cause significant and harmful changes to the

50 Fingas, M. and Charles, J. (2001). The basics of oil spill cleanup. BocaRaton, Fla.: Lewis Publishers.51 Article 195 UNCLOS 52 Fingas, M. and Charles, J. (2001). The basics of oil spillcleanup. Boca Raton, Fla.: Lewis Publishers. P. 132

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environment. Yet unlike the duty under Article 195 of

the UNCLOS, the obligation under Article 196 of the

UNCLOS mentions that the Article’s application

precludes the efforts of prevention, reduction and

control of pollution of the marine environment.53 In

other words, if the potentially damaging technology is

used to achieve obligation under Article 194 of the

UNCLOS then it is admissible. Some scholars have argued

the same applies to the contradiction with Article 195

of the UNCLOS by stating that the use of dispersant

shall be deemed admissible if it yields more

environmental benefit than harm.54

In the Montara oil spill, the Australian government

has published a press release formally declaring that

the 184,000 liters dispersant used underwent carefully

considerations and yields net environmental benefit.55

Net environmental benefit is when there are more

benefits obtained by applying the method than if the

method were not applied at all.56 To asses this, the

toxicity level of the dispersant applied is paramount.

A standard to measure toxicity for a product is its

53 Article 196 (2) UNCLOS54 Grant Wilson, Deepwater Horizon and the Law of the Sea: Was theCure Worse than the Disease?, 41 B.C. Envtl. Aff. L. Rev. 63 (2014),http://lawdigitalcommons.bc.edu/ealr/vol41/iss1/355Australian Maritime Safety Authority, (n.d.). Fact Sheet 5: Use ofDispersant. [online] Available at:http://www.industry.gov.au/AboutUs/CorporatePublications/MontaraInquiryResponse/Documents/FS_5%20_USE-OF-DISPERSANTS.pdf [Accessed 5 Jun.2015].56 IMO/UNEP Guidance Manual on the Assessment and Restoration ofEnvironmental Damage Following Marine Oil Spills. (2009). IMOPublishing, p.44.

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acute toxicity (i.e. short term dose considered on a

short-time period) to a standard species such as the

rainbow trout. This is one of the most common used

methods of testing amongst various others. A

substance’s “lethal concentration to 50% of a test

population” (LC50) is usually given in milligram per

liter (mg/L).57 The smaller the LC50 number, the more

toxic the dispersant. Although neither the method of

testing nor the exact LC50 number were disclosed,

according to the press release, the dispersant used had

scored “low toxicity” level from the toxicity test

applied and are all less toxic than the untreated oil

slick. Unless proven otherwise, based on statements of

the Australian government, it shall be concluded that

there is a net environmental benefit in the use of

dispersant in the Montara oil spill for the marine

environment of Australia.

V. RIGHTS OF INDONESIA IN THE MONTARA OIL SPILLS UNDER THE

UNCLOS

a. Case with Indonesia Timor

In relation to Indonesia, it is important to note

that the most of the dispersed oil is situated

approximately 134 nm from the Indonesian coastlines.58

The closest oil patch is observed 54 nm east of Roti57 Fingas, M. and Charles, J. (2001). The basics of oil spillcleanup. Boca Raton, Fla.: Lewis Publishers. P. 133. 58 Indonesia.embassy.gov.au, (2009). Indonesia: Montara Oil Spill -Australian Embassy. [online] Available at:http://indonesia.embassy.gov.au/jakt/mr09_086.html [Accessed 21 May2015].

22

Island. To respond to these oil slick patches, two

response Australian vessels were permitted entrance

to the Indonesian EEZ to conduct containment and

recovery operations using the application of a boom

and vessel skimmer on patches that were observable by

the aircraft.59 Australia later contends that

according to the Australian Maritime Safety Authority

(AMSA), the oil patches observable in Indonesia’s EEZ

poses no potential marine nor coastline environmental

threat.60 This fact is however contested, as after the

spill, reports indicates that coastal communities in

the Nusa Tenggara Timor of Indonesia have observed

degradation in their marine environments. Despite

Australia’s acknowledgement of the satellite imagery

of patches of oil crossing into Indonesia’s EEZ in 1

September 2009, Australia claims it to be “unlikely”

that any oil were to reach the Indonesian coastal

waters.61

For the alleged damage suffered from the Montara

oil spill, the Government of Indonesia claims US$2.4

billion in compensation to be paid by the PTTEPAA.62

This amount is derived from the claim that the Oil

Spill has reduced marine resources in forms of

59 Ibid.60 Ibid.61 Ibid. 62PTTEP, Montara Lessons Learned [online] available at:http://www.pttep.com/inc/download.aspx?files=./download/DocumentSSHE_ReportFile_24804.MONTARA%20Lessons%20Learned.pdf [Accessed on 9Jan. 2015].

23

oysters, seaweed stocks and fishes.63 This not only

causes a decrease in the income of the fishermen but

also an increase in the national fish prices, which

affects the whole population.64 Australia claimed to

have tested dead fishes and found no oil

contamination, however agreed to conduct further

testing.65 Until today, no further testing has yet

made public. In addition to the decrease to marine

resources, the communities of the coast of Nusa

Tenggara Timor have also experience skin diseases

which is suspected to also caused by the murky waters

from the dispersed oil flume from the Montara oil

spill.66 Unfortunately, negotiations efforts for

compensation and reparations conducted by the

Indonesian government with the PTTEPAA have been

unsuccessful.67 PTTEPAA position is that to date there

63 Poke, E. (2010). East Nusa Tenggara Fishermen Fear for FutureAfter Oil Spill. Jakarta Globe. [online] Available at:http://thejakartaglobe.beritasatu.com/archive/east-nusa-tenggara-fishermen-fear-for-future-after-oil-spill/ [Accessed 13 Apr. 2015].64 Lyonns, Y. (2015). Transboundary Pollution from OffshoreActivities : A Study of the Montara Offshore Oil Spill. In: S.Jayakumar and T. Koh, ed., Transboundary Pollution : Evolving Issues ofInternational Law and Policy, 1st ed. Massachusetts: Edward EldgarPublishing, p.162.65 Indonesia.embassy.gov.au, (2009). Indonesia: Montara Oil Spill - Australian Embassy. [online] Available at: http://indonesia.embassy.gov.au/jakt/mr09_086.html [Accessed 21 May 2015].66 James, F. (2014). Montara oil spill: Fishermen's lawyer calls forinvestigation into reports of skin disease. ABC News. [online]Available at: http://www.abc.net.au/news/2014-08-21/montara-oil-spill/5685842 [Accessed 11 Mar. 2015].67 Roberts, G. (2014). Montara oil spill: Indonesia requestsAustralia's cooperation on resolving dispute over impact on coastalcommunities. ABC News. [online] Available at:http://www.abc.net.au/news/2014-09-29/indonesia-pleads-for-

24

are no verified, valid scientific evidence presented

to them in support of the claims made by Indonesia,

therefore PTTEPAA does not believe it has any

obligations to bring negotiations forward.

Due to the failure, Indonesia sent a formal letter

to the Australian Government to ask for assistance in

relation to dealing with the oil spill effects by

aiding negotiations with the PTTEPAA.68 Australia’s

position to the claim seems to be similar to PTTEPAA.

Australia’s Foreign Minister contends that Australia

could not do much in aiding the negotiations.

Although further recommendations were actually made

by the Australian government on alternatives for

Indonesia’s claim, under Australian Law Indonesian

victims have the onus of proving their losses in

order to justify any awards of compensatory damage.69

Due to the two failures, several parties are

preparing a class action lawsuit to get compensation

and reparation to the communities in Nusa Tenggara

Timor. Although questions surrounding whether the

damages experienced by Indonesia has a causal link

with the Montara oil spill is paramount in the

dispute, this question will not be discussed. This

australias-cooperation-on-montara-oil-spill/5777840 [Accessed 8 Jun.2015].68 Ibid. 69 Lyonns, Y. (2015). Transboundary Pollution from Offshore Activities : A Study of the Montara Offshore Oil Spill. In: S. Jayakumar and T. Koh, ed., Transboundary Pollution : Evolving Issues of International Law and Policy, 1st ed. Massachusetts: Edward Eldgar Publishing, p.162.

25

section will merely explore whether it is possible

under the UNCLOS for Indonesia to seek claim over

compensation and reparation over the alleged damages

caused by the Montara oil spill.

b. Legality of the Conduct of Australia to Indonesia in

the Montara Oil Spill

The UNCLOS asserts the obligation for States in

ensuring marine pollution under its jurisdiction to

not affect other State’s territory. UNCLOS outlines

the obligation for States to ensure “that activities

under their jurisdiction or control are so conducted

as to not to cause damage by pollution to other States

and their environment”, and “pollution arising from

incidents or activities under their jurisdiction or

control does not spread beyond the areas where they

exercise sovereign rights”. 70 This notion is an

extension of the core rule of international

transboundary pollution often referred as the Trail

Smelter principal, which contends that a state has the

responsibility for environmental damage extending

beyond its territorial limits.71 The principal is

further supported in the Corfu Channel case where the

ICJ incorporate the general principle of limited

territorial sovereignty, stating that it is “every

State’s obligation no to allow knowingly its territory

70 Article 194 (2) UNCLOS71 Trail Smelter Arbitration (United States v. Canada) [1941] (International Arbitral Awards).

26

to be used for acts contrary to the rights of other

States.”72 The Corfu Channel principle provides a more

authoritative statement of the principle previously

enunciated by the Trail Smelter arbitration to ensure

that States do not use territorial justification over

damages cause in other State’s territory.

In the Montara oil spill, the Australian Government

has breached the obligation under Article 194 (2) of

UNCLOS to the extent that the pollution had crossed to

the territory of another State. Obligation under

Article 194 (2) of the UNCLOS is not limited to the

movement of the pollution but it also primarily

obliges that States to not cause damage of pollution

beyond area under their jurisdiction. It is important

to note that the ‘due diligence’ elucidation of

‘prevent, reduce and control’ does not apply under

this obligation as it is not included in the wording

of Article 194 (2) of UNCLOS. Having said that,

despite clean up efforts done by Australia on

September 2009 were conducted in the best efforts, the

obligations is breached purely from the fact that

pollution crosses its territory and causes damage to

the affected State’s environment.

From the use of dispersant, it shall be deemed that

the government of Australia has in fact failed in

ensuring the oil pollution to not cause damage to the

environment of Indonesia and therefore is in breach of

72 Corfu Channel (United Kingdom of Great Britain and Northern Ireland v. Albania) [1948](International Court of Justice).

27

Article 194 (2) of the UNCLOS. As mentioned,

dispersant’s toxicity and effectiveness highly depends

on the surroundings of where it is used. The fact that

the dispersant used is not toxic and effective in the

Australian waters does not guarantee that it would be

the same for Indonesia’s marine environment where some

of the flume will inevitably reach. From the lesson

learned of the Deepwater Horizon oil spill, it is

realized that dispersants’ potential damage to a

marine environment is not yet fully understood and has

sparked wide concerns, specifically in respect to

several topics such as the endocrine disruptor

components of dispersants.73 This is why the IMO is

currently reviewing their Dispersant Guideline to

accommodate these newfound dangers. Despite the

threats on the use of dispersants to the marine

environment, Australia failed to neither consider the

impact of the dispersant used to Indonesia nor

communicate its decision to the government of

Indonesia.74 This demonstrates that the Australian

government has failed to assume its obligation under

Article 194 (2) of the UNCLOS in ensuring conducts of

73 Grant Wilson, Deepwater Horizon and the Law of the Sea: Was the Cure Worse than the Disease?, 41 B.C. Envtl. Aff. L. Rev. 63 (2014), http://lawdigitalcommons.bc.edu/ealr/vol41/iss1/374 Lyonns, Y. (2015). Transboundary Pollution from Offshore Activities : A Study of the Montara Offshore Oil Spill. In: S. Jayakumar and T. Koh, ed., Transboundary Pollution : Evolving Issues of International Law and Policy, 1st ed. Massachusetts: Edward Eldgar Publishing, p.162.

28

the state to not cause damage to other State’s

environment and thus, breached its obligations.

c. Could Indonesia claim for reparation/compensation on

the damage of the oil spill under the UNCLOS?

Even though the amount is disputed, all parties have

acknowledged that oil pollution resulting from the

Montara oil spill has reached the territories of

Indonesia’s Timor. Australia claimed only 2% of oil

reached Indonesia’s waters, while an analysis of

satellite imagery predicted 20% of oil is in

Indonesia’s waters.75 Due to the lack of research,

there is no definite amount of how much oil has passed

to Indonesian waters. As one of the consequence of the

use of dispersant is that it render the oil, which is

transferred to the water column, less visible or even

invisible on the satellite imagery that only catches

surface oil.76 Satellite imagery could not be solely

relied upon to assess the extent of the how far the

oil spill have affected Indonesian side of boundary.

Accordingly, water sampling and further more in depth

research is required to assess the extent of how far

the oil pollution have affected Indonesia.

75 Albers, J. (2014). Responsibility and Liability in the Context of TransboundaryMovements of Hazardous Wastes by Sea. Berlin, Heidelberg: Springer BerlinHeidelberg.76 Lyonns, Y. (2015). Transboundary Pollution from Offshore Activities : A Study of the Montara Offshore Oil Spill. In: S. Jayakumar and T. Koh, ed., Transboundary Pollution : Evolving Issues of International Law and Policy, 1st ed. Massachusetts: Edward Eldgar Publishing, p.180.

29

The lack of research conducted to review the damage

is one of the faced hurdles within the initial dispute

between Indonesia and Australia in the Montara oil

spill. The government of Australia claimed that

despite the formal letter sent by the Indonesian

Ministry of Environment to ask for assistance in

dealing with the crisis in Timor from the spill,

research could not be conducted as no permits were yet

to be issued by the Indonesian government.77 On the

other hand, the PTTEPAA refused to negotiate further

on compensation if no concrete effect of the spill is

established.78 In the UNCLOS, developing States such as

Indonesia is given a distinctive right to have

technical assistance for its efforts to protect its

marine environments including in preventing, reduction

and control of marine pollution.79 This is a right

under the UNCLOS that Indonesia could utilize in order

to get assistance to conduct research on the effect of

the Spill in Indonesia Timor, either from Australia or

from other willing UNCLOS state parties.

Although liability and compensation on pollution of

the marine environment is regulated under the UNCLOS,

yet its application is still problematic in the

present case. Article 235 (1) restates the general

principle of international law according to which

States are responsible for the fulfillment of their

77 Ibid, p.182.78 Ibid,p.183. 79 Article 202 UNCLOS

30

international obligation and, in case of non-

compliance, are liable in accordance to international

law. Although the Article upheld the obligation of

protection to the marine environment, it does not

provide any substantive rules of State Responsibility

but rather restating available legal consequences,

including of financial obligations, under customary

international law without containing any legal

rationale on its own.80 The same applies to paragraph 2

and 3 of Article 235 of the UNCLOS. Under Paragraph 2,

in connection with Article 229 of the Convention,

incorporates a “civil liability approach” where States

are obliged to ensure that recourse is available in

accordance with either civil liability conventions or

the domestic law.81 The same applies to Paragraph 3,

which specifies the obligation of States to implement

and further develop the international law relating to

State responsibility and liability to safeguard the

payment of adequate compensation. In summary, Article

235 of the UNCLOS does not provide a substantive rule

of State responsibility in which Indonesia could

solely rely their claims on yet it acknowledges that

there is State responsibility in terms of damage to

the marine environment.

Unfortunately, in UNCLOS there are no further rules

on state responsibilities where Indonesia could solely80 Nandan, S., Lodge, M. and Rosenne, S. (2002). United Nations Convention on the Law of the Sea, 1982. Hague: Martinus Nijhoff, p. 412.81 Mensah, T., Ndiaye, T., Wolfrum, R. and Kojima, C. (2007). Law of thesea, environmental law, and settlement of disputes. Leiden: Martinus Nijhoff.

31

base their compensation claims on in the case of

transboundary oil pollution. Another rule establishing

State responsibility in complying with the Convention

lies on Article 139 (2) of the UNCLOS, this however

applies exclusively on activities in the Area, which

is not relevant for the present considerations of the

case. Further, Article 232 of the UNCLOS also concerns

liability of States to the protection of the marine

environment in respect to, however, unlawful

enforcement measures that is not also the present

concern. Lastly, Article 262 of the UNCLOS discussed

responsibility and liability of States yet in the

context of marine scientific research, which also does

not apply in this case. In summary, it could be said

that the UNCLOS does not provide explicit rules of

State responsibility that are relevant to the

determination of liabilities of State with regards to

damages of transboundary oil pollution allegedly

suffered by Indonesia from the Montara oil spill.

VI. CONCLUSION

In regards to the conduct of Australia in the

Montara oil spill against the UNCLOS, it could be

observed that Australia did not breached the UNCLOS in

its prevention nor response efforts in the spill.

Although Australia’s conducts were not always ideal

nor sufficient technically yet they were able to

constantly adhere to the lenient obligations standards

32

of the UNCLOS within their territory. The same could

not be said, however, in regards to Australia’s breach

to Article 194 (2) of the UNCLOS in regards to have

let the pollution passed through other State’s

territory and cause alleged damage. Nevertheless, in

general, the findings are still lacking in field

research to able to conclusively determine whether

response methods were conducted in accordance with the

UNCLOS provisions.

From the analysis, it is clear that UNCLOS’ general

phrasings created difficulties in its applications due

to its nature as a framework convention. Although this

trait is expected for a framework convention, yet in

some cases it gave too much discretion to the State or

too elusive for it to be effective. As the UNCLOS

places marine environmental protection above state’s

sovereign rights to resources, its lenient standards

may be counterproductive for marine environment

protection. Furthermore, the analysis has also shown

that there is a need for more international

regulations on response to oil spills from offshore

activities especially on matters that are lethal to

preservations to the marine ecosystems such as the use

of dispersants in oil cleaning effort. This is

currently developed by the IMO.

In relations to Indonesia’s claim for compensation

under the UNCLOS, it is possible for Indonesia to

claim for compensation and reparation from Australia

33

as a state party. Even though the UNCLOS acknowledges

that there is State responsibility in damages of the

marine environment and financial restitution could be

sought, the UNCLOS does not contain a substantive rule

to regulate it. Having said that, Indonesia could

claim on reparation and compensation due to alleged

damages of oil pollution from the Montara oil spill

however the determination of State responsibility of

the claim will be in accordance with the applicable

international law, as it is not provided under the

UNCLOS.

34

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