King & Wood Mallesons has represented the Republic of Malta in its successful reparation claim in front of the Permanent Court of Arbitration in The Hague following a long running dispute with the Democratic Republic of São Tomé and Príncipe.
The dispute concerns a disagreement as to the lawfulness of São Tomé’s conduct in respect of the M/T Duzgit Integrity (the “Duzgit Integrity”), a Maltese flagged vessel. She attempted to undertake a ship-to-ship cargo transfer in São Tomé’s archipelagic waters, and the subsequent measures which included: the detention of the vessel and its master; the imprisonment of the master and a EUR 5,000,000 fine against (jointly) the master, owner and charterer of the vessel; the confiscation of the vessel and its cargo (worth EUR 9,000,000); a EUR 28,875 fine levied by São Tomé’s Port and Maritime Institute; and a customs fine of more than EUR 1,000,000 levied by São Tomé’s Customs Directorate General.
Definitive and with no possibility of appeal
On 5 September 2016, Malta won the first phase of the arbitration, where the Tribunal found Sao Tome e Principe to have infringed UNCLOS, thus entitling Malta to proceed to quantify and claim damages.
The Tribunal found that it had jurisdiction over the dispute and that, while the initial detention of the vessel fell within the lawful exercise by São Tomé of its law enforcement jurisdiction, the other penalties imposed by São Tomé could not be regarded as proportional to the original offence or the interest of ensuring respect for São Tomé’s sovereignty. Accordingly, the Tribunal held that the cumulative effect of the sanctions imposed by São Tomé was incompatible with Article 49 of the Convention and that Malta was entitled to claim reparation in a further phase of the proceedings.
The damages claim was brought for the disproportionate penalties imposed on the vessel's owner, charterer and crew over an 8-month period in 2013.
Following the issuance of the Tribunal’s 5 September 2016 Award, the proceedings were temporarily suspended while the Parties pursued settlement negotiations, which were ultimately unsuccessful.
The claim for reparation was heard before an arbitral tribunal constituted under Annex VII of the 1982 United Nations Convention of the Law of the Sea (UNCLOS).
On the 18th of December 2019, the Tribunal awarded close to USD 14 million in damages. The award is definitive and enforceable with no possibility of appeal.
Commenting on the successful outcome, lead KWM Partner Ramón García-Gallardo said: “We are delighted with the Tribunal’s decision in favour of our client and agreed with our position that there was no evidence of contributory fault.”
King & Wood Mallesons has a strong track record in State to State arbitration in international law of the sea matters. This specialised area combines international law principles on state responsibility and States’ rights arising from the United Nations Convention on the Law of the Sea (UNCLOS).
The firm regularly acts in contentious cases before the International Tribunal for the Law of the Sea (ITLOS) and before international arbitration panels, set up under UNCLOS rules and has represented several governments in law of the sea cases which were settled amicably. KWM has acted, among others, in landmark cases such as in The Camouco, The Monte Confurco or The Juno Trader. KWM has advised and/or represented the governments (and all interest related of a ship such as shipowners, charterers, cargo owners and crew members) of Canada, Seychelles, Panama, Indonesia, Guinea-Bissau, Malta, The Marshall Islands and Ivory Coast.