On 10 September 2017, the Greek flagged tanker AZII (Agia Zoni II) sank while anchored at Piraeus. The vessel was carrying 2,200 mt of fuel oil and 370 mt of gas oil. Some 500 mt of oil leaked. After the incident, the vessel's insurer submitted a declaration of limitation of liability in accordance with art 5 of the CLC 1992, and a limitation fund was constituted.

In 2020, the Greek State initiated civil proceedings against the IOPC Fund without first submitting its claims to the limitation fund. The Greek State claimed that the Navy participated in maritime pollution control and prevention works and the cleaning of the coasts of the affected areas around and on the wreck, and asked the Court to order the IOPC Fund to pay it EUR 212,014.40 for its expenses.

The Multimember Court of First Instance of Piraeus, Maritime Division, decided that after the constitution of the limitation fund the Greek State had no right to initiate any claim against the shipowner for the pollution, and the fact that it chose not to participate in the collective compensation proceedings against the limitation fund did not constitute a legal basis for the relevant civil action. The Greek State appealed to the Three Member Court of Appeal of Piraeus. The Greek State argued:

1. The provisions of arts 5, 5.1, 5.3, 5.11, 6.1, and 6.2 of the CLC 1992 were misinterpreted and misapplied by the Court. The submission of claims and their acceptance from the limitation fund is an option and not an obligation of the claimant. Otherwise the latter, as the injured party, would be deprived of the right to pursue its claims by bringing an action against the IOPC Fund. In particular, the establishment of a limitation fund constitutes an impediment to the exercise of any right against other assets of the shipowner (art 6 of the CLC 1992), but this limitation applies only in the context of enforcement, without prejudice to the claimant's right to bring an action before a competent Court for the recognition of its claims.

2. The Court also misinterpreted and misapplied arts 2.1.a, 2.1.b, 4.1.a, 4.1.b, and 4.1.c of the Fund Convention 1992, requiring more conditions for the triggering of the liability of the IOPC Fund than those that were actually required.

3. The Court incorrectly applied the law when it dismissed the action as inadmissible, due to its vagueness concerning the basis on which the defendant was liable under tort provisions.

Held: The appeal is dismissed.

The Court of Appeal reviewed the CLC 1992, the Fund Convention 1971, the Fund Convention 1992, and the LLMC 1996, and concluded the following.

Greece ratified the CLC 1969 by Law 314/1976, and after the ratification of the Protocols of 1976, 1984, and 1992, it became the CLC 1992, which is an integral part of Greek law, having the status of an international Convention under art 28.1 of the Constitution. The provisions of the CLC 1992 were supplemented by the Fund Convention, which Greece ratified by Law 1638/1986. The Court of Appeal reviewed arts 2.1.a, 2.1.b, 5.1, 5.1.a, and 5.1.b of the Fund Convention 1971. Subsequently, this Fund Convention 1971 was amended by the Protocols of 1976 and 1992, which were ratified by Presidential Decree 270/1995 (Fund Convention 1992) (See Supreme Court in Plenary Decision 23/2006 (CMI335)). Articles 3 and 5 [sic: art 7] of the 1992 Protocol annulled arts 2.b and 5 of the Fund Convention 1971 respectively. Subsequently, in the year 2003, the Protocol to the 1992 CLC was adopted, establishing a Supplementary Fund (Supplementary Fund Protocol). Art 3 of the CLC 1992 established a strict system of objective liability for parties causing marine pollution, and established an obligation to make reparation for damage irrespective of fault.

The concept of 'pollution damage' includes the costs of preventive measures. Preventive measures are all those reasonable measures taken by any person after a pollution incident to prevent or reduce the damage caused by that pollution (arts 1.6 and 1.7 the CLC 1992). Consequently, costs of preventive measures and subsequent pollution damage also include those incurred by a private professional to clean up the sea. Such a party has a claim under the CLC 1992 against the shipowner who caused the pollution for the payment of those costs, whether that party carried out the clean-up on the advice of the competent port authority or concluded an agreement with the shipowner. The Convention does not attempt to draw any distinction.

Furthermore, from arts 4, 4.1.a, 4.1.b, 4.1.c, 7.1, 7.2, 7.3, 7.4, 7.5, and 7.6 of the Fund Convention 1992, it follows that the liability of the IOPC Fund to compensate parties who have suffered damage as a result of pollution, although not expressly provided for in the text of the relevant Convention, is considered secondary to the primary liability of the shipowner. Thus, the Fund is required, among other things, to cover the costs of restoration of environmental damage if the shipowner is unable to do so under the CLC 1992 regime (arts 2.1.a and 4.1.b of the Fund Convention 1992). The defendant's liability to pay compensation is of a supplementary and secondary nature. This is supported by common experience and logic regarding art 4 of the Fund Convention 1992. It is necessary to first determine compensation under CLC 1992, and then to decide whether the IOPC Fund is additionally liable to pay compensation under the provisions of art 4 of the Fund Convention 1992 (the most common of these cases falling under art 4.1.c, where the total pollution damage exceeds the limitation of the shipowner's liability).

If the Greek State were permitted to bring an action directly against the IOPC Fund without a claim having been brought against the shipowner, or without a claim having been included in the collective limitation fund procedure, the application of these two Conventions would become practically impossible. The CLC 1992 and the Fund Convention 1992 establish a two-tier liability system based on the objective but limited liability of the shipowner and a fund, which provides supplementary compensation to the victims of the damage which could not be fully compensated by the shipowner.

The purpose of the CLC 1992 is to establish strict liability for the obligation to pay compensation for marine pollution damage caused by oil spilled from ships. In the event of injured parties not being fully compensated, the balance of the compensation will be paid by the IOPC Fund, on the basis of the provisions of the Fund Convention 1992, financed by companies importing oil. Therefore, there is no case for a restrictive interpretation of the CLC 1992.

According to art 1.2 of the Fund Convention 1992, 'Ship', 'Pollution Damage', and 'Preventive Measures' have the same meaning as in art 1 of the CLC 1992. Therefore, for the application of both Conventions, there is an identity between these concepts. Based on art 4 of the Fund Convention 1992, additional compensation is payable from the IOPC Fund, since the claimants did not receive full compensation under the CLC 1992.

Compensation must be paid for the costs of taking reasonable measures of pollution clean-up and other measures to prevent or minimise pollution damage in a Contracting State, wherever such measures are taken. Thus, where action is taken on the high seas or in the territorial waters of a State which is not a Contracting Party to these Conventions for the purpose of preventing or minimising pollution damage within the territorial waters or EEZ of a Contracting State, the costs of taking such action qualify in principle for compensation. The costs of taking preventive measures are recoverable even if no oil spill occurs, provided that there was a serious and imminent threat of pollution damage. A party therefore has a claim under the CLC 1992 against a shipowner who caused the pollution and, subject to the conditions of the Fund Convention 1992, against the IOPC Fund for the payment of those costs (Three Member Court of Appeal of Piraeus Decision 401/2022 (CMI2317)).

Article 6 of the CLC 1992 deals with enforcement. Once a limitation fund is established, injured parties will be satisfied from this fund, which constitutes a distinct property group for the sole purpose of satisfying claims. The phrase 'having a claim for pollution damage' obviously refers to a judicially-settled claim and not simply to a claim that has been asserted, otherwise the prohibition on exercising rights against other assets of the shipowner would be meaningless. Therefore, the term 'damage' in art 4.1.c of the Fund Convention 1992 means the liquidated loss that will have been adjudicated in accordance with the provisions of the CLC 1992 in accordance with the final claim distribution list. This will determine the total amount of the loss, as well as the amount of the loss in excess of the limitation fund. Therefore, the limitation fund must first be exhausted. Only then will it be known whether the defendant has incurred a liability to pay.

Since art 6.1.a concerns enforcement, no conclusion can be drawn from it as to whether an action may be brought against the shipowner where a limitation fund has been established. In the 'relevant' procedure for the establishment and liquidation of a limitation fund under the provisions of the LLMC 1976 (ratified by Law 1923/1991), as amended by the 1996 Protocol (ratified by Law 3743/2009) and by Resolution LEG 5(99) of the IMO (ratified by art 16 of Law 4504/2017) (LLMC 1996), it is accepted that the establishment of a limitation fund constitutes a bar to bringing actions against a shipowner who established the limitation fund and against any other person who benefits from it. This prohibition is broad and covers any form of substantive or procedural right, which seeks directly or indirectly to satisfy the claim, such as an action for declaratory or injunctive relief, a petition for bankruptcy or liquidation, a petition for the appointment of a temporary board of directors, etc.

There is a clear similarity between art 13.1 of the LLMC 1996 and art 6.1.a of the CLC 1992. Although art 13.1 does not expressly prohibit an action against the shipowner, but is limited to the prohibition of the exercise of rights against the shipowner's property, it is accepted that the filing of a declaration of limitation of liability and the establishment of the relevant limitation fund impedes the bringing of an action not only against the shipowner but also against any other person benefiting from the establishment of the fund. In particular, it follows from art 13.1 of the LLMC 1996 that it results not merely in a suspension of the exercise of individual proceedings, but in a definitive deprivation of the creditors' right to exercise individual proceedings against the rest of the property of the creator of the fund (Supreme Court Decision 1402/2007 (CMI2408), Supreme Court Decision 1189/2007 (CMI2384)). Finally, it should be noted that the establishment of the limitation fund has serious consequences, since it entails the prohibition, and possibly the suspension, of individual claims against the debtor by or on whose behalf the fund was established in order to limit liability (Court of the Appeal of Piraeus Decision 748/2018 (CMI2525)).

By analogy, the assumption that the establishment of a limitation fund under the LLMC 1996 entails the definitive deprivation (or suspension) of the right of individual claims being brought against the shipowner who established the fund, without this being expressly provided for in the LLMC 1996, must also apply to the IOPC Fund and the establishment of a limitation fund under the LLMC 1996.

Furthermore, according to art 5.3 of the CLC 1992, the exercise of a right to limit the liability requires the establishment of a limitation fund, while according to art 6.1.a of the CLC 1992, the establishment of a limitation fund has the effect that any person who has suffered damage (whether or not it has notified a claim to the limitation fund) may not exercise any right against other assets of the shipowner.

The third ground of appeal must also be rejected because the defendant is the IOPC Fund, whose liability is objective. The legal action does not refer to any specific tortious conduct of the defendant. Thus, the Court of First Instance, in holding that the attempted grounding of the action on the basis of the tort provisions was inadmissible, correctly interpreted the law.