New Zealand Yearbook of International Law
2005 saw the 28th Antarctic Treaty Consultative Meeting (ATCM) take a significant step towards completing rules for the protection of the Antarctic environment. After more than a decade of negotiations, the 28th ATCM (held in Stockholm from 6-17 June 2005) adopted an agreement establishing rules for liability and compensation for environmental accidents in Antarctica.
The adoption of the Liability Annex fulfils a longstanding obligation on parties to the Protocol on Environmental Protection to the Antarctic Treaty (the Protocol), including New Zealand, to conclude an annex to the Protocol to set out legal liability for damage to the Antarctic environment. It fulfils the early recognition by the parties to the Protocol that rules relating to liability and compensation would be an important element in an effective Antarctic environmental protection regime.
Negotiations on the Liability Annex began in 1992, following a decision by the 17th ATCM to establish a Group of Legal Experts on Liability to “undertake to elaborate rules and procedures relating to liability as called for under Article 16 of the Protocol”. The Group of Legal Experts presented its report to the 22nd ATCM in 1998, which decided that the further negotiation of an annex or annexes on liability be undertaken by a Working Group of the ATCM. That Working Group, chaired from 1999 by Don MacKay of New Zealand, met regularly through to the conclusion of the negotiations last year.
The extended length of the negotiations reflected three complicating factors: the general complexity of negotiating international liability regimes that are capable of being implemented in a range of domestic legal systems; the particular issues surrounding territory in Antarctica, which created sensitive issues in respect of jurisdiction; and a fundamental difference of views between States as to the appropriate extent of liability in the Antarctic context.
The latter factor proved to be the dominating feature of the negotiation. On the one hand, a group of likeminded States anxious to secure the broadest possible protection of the Antarctic environment argued for a broad ranging liability regime, extending to all activities in Antarctica, and including liability for the “costs” of irreparable damage to the environment (such as for example, if a pristine lake were to be polluted by an oil or chemical spill). On the other, many States, lead primarily by the United States, argued that such a regime would be impracticable and had the potential to deter legitimate activities such as scientific research. These States sought a more limited regime confining liability to the failure to take appropriate response action in respect of environmental accidents.
The 1998 report of the Group of Legal Experts reflects that fundamental divergence of views. Despite the task given to it, the Group was unable to agree on a single draft text, and in fact did little more than attach two competing drafts for consideration by the ATCM; one entitled the “Chair’s Eighth Offering” and the other a 1996 proposal from the United States.
In 1999, the new Chair of the Working Group sought to find common ground between the two positions based on a “step-by-step” approach. Under this approach, the negotiating countries agreed to take as a starting point a narrower regime dealing with liability to take response action, to broaden that out as far as consensus would allow, and then to provide for any remaining issues to be dealt with in a separate Annex to be negotiated in the future. This approach sought to focus the negotiations on the practical situations which liability needed to cover (most incidents causing damage to the environment are small oil spills) so as to avoid dealing with issues in the legal abstract.
The Annex as adopted reflects that “step-by-step” approach. Liability under the Annex is built around the key concepts of “environmental emergency” and “response action” rather than “damage to the environment” per se.
The term ‘environmental emergency’ is defined in the Annex as “any accidental event… that results in, or imminently threatens to result in, any significant and harmful impact on the Antarctic environment” (article 2(b)). The concept of “accidental event” accordingly excludes the foreseen environmental consequences of activities conducted under the environmental impact assessment procedures of the Protocol – such as the anticipated cumulative environmental impacts of a scientific research station.
“Response action” is defined in the Annex as “reasonable measures…to avoid, minimise or contain the impact of [an] environmental emergency, which to that end may include clean-up in appropriate circumstances” (article 2(f)). The inclusion of clean up has the potential to extend the concept of response action beyond steps to simply contain the environmental impact, to steps to remedy it.
Building on those concepts, the Liability Annex imposes three key obligations on operators carrying out activities in Antarctica, with a view to minimising both the risk and potential impact of any environmental emergency. Operators are required to take preventative measures to reduce the risk of environmental emergencies (article 3), to establish contingency plans to deal with harmful incidents should they occur (article 4), and to take prompt and effective response action when environmental emergencies arise from their activities (article 5).
If an operator defaults and fails to take prompt and effective response action, then it becomes liable for the costs of the action it should have taken (article 6). Such liability is strict and does not require proof that the operator was negligent or otherwise at fault in causing the environmental emergency, although it is subject to a number of standard exemptions (set out in article 8, such as in cases where the environmental emergency was caused by an act necessary to protect human life). In the situation where another party steps in and takes response action itself, the operator may be sued directly for the costs incurred by that party. Even in the situation where no party steps in to take response action, the operator is liable for the costs of the action that should have been taken. Such costs can be collected by the relevant government, and will be paid into a special fund, to be used to reimburse parties in the event that compensation cannot be collected from an operator (if, for instance, it is not possible for the operator that caused the environmental emergency to be identified). In order to ensure that an operator will be able to meet its liability, all operators are required to maintain adequate insurance, although a government may choose to self-insure in respect of its own national Antarctic programme (article 11).
The extent of liability is therefore tied to the costs of response action, rather than the “costs” of the damage caused by an environmental emergency. If the incident were such that response action could not be taken (e.g. in a case of irreparable damage, such as a chemical spill into a pristine lake), an operator would not therefore be subject to a financial liability under the Annex. The linkage between liability and the costs of response action reflects the concern expressed by many States during the negotiations that the “costs” of damage to the environment could not reasonably be quantified, particularly given the relatively pristine and vulnerable nature of the Antarctic environment.
Further reflecting the concern of many countries in the negotiations that liability needed to be limited if it was to be practicable and effective, the Annex imposes maximum limits on the amount of compensation that may be claimed from an operator (article 9). In the case of an environmental emergency arising from a ship, the limit is set at US$1.5 million dollars for a ship of 2,000 ton, increasing by a sliding scale with each additional ton. In all other cases, the limit is set at US$4.5 million. These limits reflect the “worst case scenario” figures identified in an expert report prepared for the negotiations. The limits for ships also take account of the limits established in existing international liability regimes for ship owners (such as the Convention on the Limitation of Liability for Maritime Claims), and thereby the availability of insurance under the existing market. In order to enable the limits to be adjusted to take account of inflation, the Annex allows for these figures to be amended by the ATCM through a special fast-track amendment procedure.
Like all internationally negotiated instruments, the text of the Annex represents a compromise. In several ways it falls short of the comprehensive regime originally sought by many of the countries participating in the negotiation. Significantly, it does not create liability for the “costs” of irreparable environmental damage. Although all governmental and non-governmental scientific, tourist, and logistics activities are covered by the Annex, it does not extend to fishing vessels – one of the primary non-governmental activities carried out in Antarctic waters.
Consistent with the “step-by-step” approach, these remaining issues have been set aside for consideration in the future. Alongside the Annex, the ATCM adopted a formal decision providing that, within five years of the adoption of the Annex, the ATCM would take a decision on the establishment of a time-frame for the resumption of negotiations “to elaborate future rules and procedures as may be necessary” relating to liability. The adoption of this decision was a key element of the final package for those countries that had originally pushed for a wider regime, who see it as an opportunity to reinvigorate negotiations for a more comprehensive regime at the conclusion of the review period.
The ultimate test of the effectiveness of the Annex will of course be its implementation, and this will be no easy task. The Annex requires the approval of all Antarctic Treaty Consultative Parties before it will enter into force. Once the Annex has entered into force, those Parties to the Protocol that are not Consultative Parties will also need to separately approve the Annex before it enters into force for those States. For most countries, including New Zealand it is likely that legislation will be required to implement the Annex, together with procedures and guidelines for assessing environmental emergencies. Some aspects of the Annex will pose a particular challenge to domestic implementers, such as the creation of a mechanism to enable governments to collect the costs of response action that should have been taken but was not and then to pay those costs into the special compensation fund (article 7(3)). Initial indications are that it will take most States several years to develop and pass the necessary implementing legislation. It is therefore likely that it will be several years before Consultative Parties will be in a position to approve the Annex and to bring it into force, although it is hopeful that States will try to bring the Annex into force in a meaningful time before the five-year review period has elapsed.
Like any liability regime, however, much of the value of the Annex rests in its ability to create an incentive to prevent environmental accidents from occurring as much as to provide for compensation after the event. The obligations contained in the Annex regarding contingency planning and preventative measures should themselves play a significant role in further protecting the Antarctic environment. In that regard, the Annex will have served its purpose, even if its liability and compensation elements are never resorted to.
[∗] Senior Legal Adviser, New Zealand Ministry of Foreign Affairs and Trade. The views expressed in this article are the author’s own, and not those of the Ministry or the New Zealand Government. For an earlier version of this article, see Elana Geddis, ‘Protecting the Antarctic Environment: Liability for Environmental Emergencies in Antarctica’ (2005) .3(13) Resource Management Journal 28.
 Protocol on Environmental Protection to the Antarctic Treaty: Liability Arising from Environmental Emergencies (the Liability Annex), Annex VI. The text of the Annex is available online at: <www.ats.org.ar> (last accessed on 11 April 2006).
 Protocol on Environmental Protection to the Antarctic Treaty, art 16, provides: “Consistent with the objectives of this Protocol for the comprehensive protection of the Antarctic environment and dependent and associated ecosystems, the Parties undertake to elaborate rules and procedures relating to liability for damage arising from activities taking place in the Antarctic Treaty area and covered by this Protocol. Those rules and procedures shall be included in one or more Annexes to be adopted in accordance with Article 9(2)”.
 XVII ATCM Final Report (1992), paras 37-40.
 Antarctic Treaty Secretariat, XXII ATCM Decision 3 (1998), available online at: <www.ats.org.ar> (last accessed on 11 April 2006).
4 Set out in the Protocol on Environmental Protection to the Antarctic Treaty, art 8 and Annex I.
 Article 9(5)(c) of the Annex states that “a ship’s tonnage shall be the gross tonnage calculated in accordance with the tonnage measurement rules contained in Annex I of the International Convention on Tonnage Measurement of Ships, 1969”.
 Committee of Antarctic National Programmes, ‘An Assessment of Environmental Emergencies Arising from Activities in Antarctica’, XXIII ATCM Working Paper 16 (1999).
 See also the comments on this point in Joanna Mossop, ‘Environmental Emergencies in Antarctica’ (2005) New Zealand Law Journal 330.
 Antarctic Treaty Secretariat, XXVII ATCM Decision 1 (2005), online at: <www.ats.org.ar> (last accessed on 11 April 2006).
 Protocol on Environmental Protection to the Antarctic Treaty, art 9(3); Antarctic Treaty, art IX, opened for signature 1 December 1959, 402 UNTS 71 (entered into force 23 June 1961).
 Protocol on Environmental Protection to the Antarctic Treaty, art 9(4).