The Bosphorus Queen, registered in Panama, discharged around 900 litres of oil into the sea while in transit through the Finnish exclusive economic zone (EEZ). The oil spill took place on the outer edge of the Finnish EEZ, about 25-30 kms from the Finnish coast. The oil spill did not lead to any control measures by the authorities. No oil was found on the shore, and no concrete damage was found as a result of the oil spill.

After the vessel returned to the Finnish EEZ on 23 July 2011, the Finnish Border Guard issued a decision pursuant to Ch 3, s 6 of the Maritime Environmental Protection Act (the Act) to detain the vessel and require security. The decision stipulated that the continuation of the vessel's voyage was conditional on its owner, Bosphorus Queen Shipping Ltd Corp (the company), providing the Border Guard with a financial guarantee of EUR 17,112 in order to meet any obligation to pay an oil spill fine. The security was lodged on 25 July 2011, after which the Border Guard released the vessel. On 16 September 2011, the Border Guard imposed an oil spill fine of EUR 17,112 on the company. In its decision, the Border Guard considered that the vessel had violated the prohibition of oil discharges pursuant to Ch 2, s 1 of the Act by discharging oil into the sea. According to the Border Guard, the discharge had caused significant damage or danger to the Finnish coastline or related benefits or to the natural resources of the Finnish territorial sea or EEZ referred to in Ch 3, s 1(1) of the Act.

The company applied to the Helsinki Maritime Court for annulment of the decision on the ground that the spill had not caused significant damage or danger. The Maritime Court ruled that there was a risk of significant damage from the oil spill and dismissed the application. The company appealed to the Helsinki Court of Appeal. The Court of Appeal upheld the judgment of the Maritime Court. The company appealed again to the Supreme Court.

Held: Appeal allowed. The decision of the Court of Appeal and the decision of the Border Guard on 16 September 2011 are annulled. The company is exempted from the oil spill fine imposed upon it. The decision made by the Border Guard on 23 July 2011 regarding the provision of security expires.

Under Ch 3, s 1(1) of the Act, a penalty (oil discharge fine) is imposed for violating the prohibition on discharging oil or oily mixtures referred to in Ch 2, s 1 of the Act in territorial waters or the Finnish EEZ, unless the discharge is considered insignificant. However, an oil discharge fine is imposed on a foreign ship in transit for violating the discharge ban in the Finnish EEZ only if the discharge causes major damage or threat of major damage to the Finnish coastline or related benefits or to the natural resources of the Finnish territorial sea or EEZ. Under Ch 3, s 12(2) of the Act, the Border Guard must prove the necessary facts for imposing an oil spill file. The condition relating to a foreign ship in transit for major damage or threat of major damage of discharge is based on the jurisdiction of the coastal State over its EEZ under the United Nations Convention on the Law of the Sea (UNCLOS).

UNCLOS was implemented in Finland by Law 524/1996 and Decree 525/1996. Under art 55 of the Convention, the coastal State has the option of establishing an EEZ between the territorial sea and the high seas. Under the Convention, the coastal State has certain rights in its EEZ, such as the exclusive right to exploit living and non-living resources and the related obligation to protect living resources and the marine environment (art 56). Under art 58, vessels of other States enjoy, in the EEZ, the freedom of navigation corresponding to the high seas provided for in art 87 of the Convention.

Article 220.3 provides for the jurisdiction of the coastal State in its exclusive economic zone where a foreign State's vessel has violated or is suspected of violating international pollution rules:

Where there are clear grounds for believing that a vessel navigating in the exclusive economic zone or the territorial sea of a State has, in the exclusive economic zone, committed a violation of applicable international rules and standards for the prevention, reduction and control of pollution from vessels or laws and regulations of that State conforming and giving effect to such rules and standards, that State may require the vessel to give information regarding its identity and port of registry, its last and its next port of call and other relevant information required to establish whether a violation has occurred.

Articles 220.5 and 220.6 provide:

5. Where there are clear grounds for believing that a vessel navigating in the exclusive economic zone or the territorial sea of a State has, in the exclusive economic zone, committed a violation referred to in paragraph 3 resulting in a substantial discharge causing or threatening significant pollution of the marine environment, that State may undertake physical inspection of the vessel for matters relating to the violation if the vessel has refused to give information or if the information supplied by the vessel is manifestly at variance with the evident factual situation and if the circumstances of the case justify such inspection.

6. Where there is clear objective evidence that a vessel navigating in the exclusive economic zone or the territorial sea of a State has, in the exclusive economic zone, committed a violation referred to in paragraph 3 resulting in a discharge causing major damage or threat of major damage to the coastline or related interests of the coastal State, or to any resources of its territorial sea or exclusive economic zone, that State may, subject to section 7, provided that the evidence so warrants, institute proceedings, including detention of the vessel, in accordance with its laws.

On 12 December 2016, the Supreme Court decided to refer a question to the European Court of Justice for a preliminary ruling on the interpretation of UNCLOS. The Court of Justice responded in its judgment of 11 July 2018 in Bosphorus Queen Shipping Ltd Corp v Border Guard, C-15/17, EU:C:2018:557 (CMI180). The judgment stated, among other things:

1. Article 220(6) of the United Nations Convention on the Law of the Sea, signed at Montego Bay on 10 December 1982, and Article 7(2) of Directive 2005/35/EC of the European Parliament and of the Council of 7 September 2005 on ship-source pollution and on the introduction of penalties, including criminal penalties, for pollution offences, as amended by Directive 2009/123/EC of the European Parliament and of the Council of 21 October 2009, must be interpreted as meaning that the expression 'clear objective evidence' within the meaning of those provisions covers not only the commission of a violation, but also evidence of the consequences of that violation.

2. The expression 'coastline or related interests' in Article 220(6) of the United Nations Convention on the Law of the Sea and Article 7(2) of Directive 2005/35, as amended by Directive 2009/123, must be interpreted as meaning that, in principle, it has the same meaning as the expression 'coastline or related interests' in Article I(1) and Article II(4) of the International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties, concluded at Brussels on 29 November 1969, it being understood that Article 220(6) of the United Nations Convention on the Law of the Sea also applied to non-living resources of the territorial sea of the coastal State and to any resources in its exclusive economic zone.

3. Article 220(6) of the United Nations Convention on the Law of the Sea and Article 7(2) of Directive 2005/35, as amended by Directive 2009/123, must be interpreted as meaning that the resources of the territorial sea and the exclusive economic zone of a coastal State, within the meaning of those provisions, cover both harvested species and also species associated with them and which are dependent on them, such as animal and plant species which feed on the harvested species.

4. It is unnecessary, in principle, to take account of the concept of 'significant pollution' referred to in Article 220(5) of the United Nations Convention on the Law of the Sea when applying Article 220(6) of that convention and Article 7(2) of Directive 2005/35, as amended by Directive 2009/123, and, in particular, when assessing the consequences of a violation, such as those defined in those provisions.

5. In order to assess the consequences of a violation, as defined in Article 220(6) of the United Nations Convention on the Law of the Sea and Article 7(2) of Directive 2005/35, as amended by Directive 2009/123, all the evidence to establish that damage has been caused or that there is a threat of damage to the resources and related interests of the coastal State and to evaluate the extent of the damage caused or threatened to those resources or related interests, taking account inter alia of ...

- the foreseeable harmful consequences of discharge on those resources and related interests, not only on the basis of the available scientific data, but also with regard to the nature of the harmful substance(s) contained in the discharge concerned and the volume, direction, speed and the period of time over which the oil spill spreads.

6. The specific geographical and ecological characteristics and sensitivity of the Baltic Sea area have an effect on the conditions of applicability of Article 220(6) of the United Nations Convention on the Law of the Sea and Article 7(2) of the Directive 2005/35, as amended by Directive 2009/123, as regards the definition and classification of the violation and, although not automatically, on the assessment of the extent of the damage that that violation has caused to the resources and related interests of the coastal State.

The Supreme Court finds that the condition relating to major damage or threat of major damage has been included in Ch 3, s 1(1) of the Act on the basis of UNCLOS. The Court therefore considers that the terms used in the provision should be given the same meaning as the corresponding terms in art 220.6 of UNCLOS.

It has been established that the discharge of approximately 900 litres contained so-called persistent oils, which are harmful to various marine organisms. It has also been determined that the oil spread on the high seas near the outer border of the Finnish EEZ over an area 37 kms long and 10 m wide. After this, the oil partly evaporated, partly mixed with water and partly sank to the bottom. However, no further explanation or even an assessment has been made of the extent of the oil mixed or submerged in the water, nor of the direction and rate at which the oil spread after the incident.

The discharge took place on the high seas, where the oil may have had adverse effects on offshore flora and fauna in the Finnish EEZ, as mentioned in the statement issued by the Finnish Environment Institute on 26 July 2011. Given the scale of the oil spill and the spread of the oil, these adverse effects could be expected to extend over a relatively wide area and to a number of different species. However, no explanation has been provided as to the intensity and duration of the expected effects which would lead to the conclusion that the discharge would have caused significant damage or threat to the natural resources of the EEZ. The evidence adduced does not suggest that the oil could have spread to the Finnish coast to such an extent that it could have had significant adverse effects on coastal seabirds or other marine environments or coastal recreational uses. On the basis of the above, the oil spill has not been shown to have caused significant damage or danger to the Finnish coastline or related benefits or to the natural resources of the Finnish territorial sea or economic zone within the meaning of Ch 3, s 1(1) of the Act. The decision of the Border Guard to impose an oil spill charge must therefore be annulled.