Lv * Kui and 78 Others v. Shanhaiguan * Industry Co., Ltd. over Liability for Marine Pollution

Case Brief

On 2 August 2010, seawater in the eastern area of Laolongtou, Shanhaiguan District, Qinhuangdao, was found to be abnormal. At 11:30 a.m., after receiving a tip-off about this abnormality, the Municipal Ecology and Environment Bureau of Qinhuangdao (EEB) sent environmental monitoring staff to the site, to work with the Deputy Party Secretary and the Secretary of the Committee for Discipline Inspection of Shanhaiguan District, as well as other personnel, in inspecting the coastal environment.

During the inspection, they found the seawater was reddish-brown and turbid. The EEB staff took samples of this water for testing, and reported findings on 3 August. Their analysis revealed the seawater was highly alkaline, with a pH of 8.28; and among other contaminants, its iron concentration was 13.1 milligrams per liter (mg/L).

The court commissioned the Institute of Maritime Forensic Sciences of Dalian Maritime University (IMFS) to conduct a judicial appraisal of the pollution, and the aquaculture losses it caused.

To identify causes of this pollution, the IMFS reviewed satellite remote sensing technology and selected two images taken by a National Oceanic and Atmospheric Administration (NOAA) satellite at 5:44 a.m. and 9:51 a.m. (Beijing time) on 2 August 2010. The first image showed a polluted area of sea near Shanhaiguan * Industry Co., Ltd. (the defendant), affecting about 5 square kilometers (km2). The later image showed an abnormal area of polluted seawater about 4 kilometers (km) south of the defendant’s enterprise, covering approximately 10 km2.

Analysing the pollution source, the IMFS ruled out the possibility of accidents such as red tides and large-scale oil spills, and concluded that the seawater pollution shown on the satellite image was caused by the discharge or leakage of sewage from a large enterprise. The defendant operated the only big factory close to the sea near Laolongtou, Shanhaiguan District; and its shipbuilding and repairing operations would produce a large amount of sewage. The high iron concentration in the sewage produced in the dock rust removal process would cause severe pollution to the nearby sea area once that sewage had leaked. Given these indicators, the IMFS determined that the pollution was caused by the defendant, and the sewage leaked between approximately 12 midnight and 4 a.m. (Beijing time) on 2 August 2010.

Analysing the pollution’s impact on aquaculture, the IMFS confirmed the geographic coordinates of aquacultural areas run by 21 people (including Wang [surname]). By comparing these coordinates with the polluted waters on an electronic nautical chart, the forensic scientists concluded that all aquacultural areas were within the contaminated waters. Evaluating the water quality and environment, the IMFS concluded that the seawater contained high concentrations of suspended solids, iron, and petroleum hydrocarbons, which far exceeded the national standards specified in the Water Quality Standard for Fisheries and the Sea Water Quality Standard. The primary pollutant was iron, which presented a serious hazard to fisheries and aquaculture water. It was determined that the plaintiffs and others had suffered aquaculture losses.

The defendant submitted an opinion challenging the evidence of aquaculture losses found by the IMFS, mainly contending there was no factual or forensic basis for concluding that the seawater was polluted with an iron concentration higher than the limit. The defendant argued that the only data available to the IMFS in their evaluation of the water quality and environment of the aquacultural areas came from the EEB analysis, which did not meet the format and content requirements specified in The Specification for Marine Monitoring. The defendant also submitted that the standards adopted by the EEB in analyzing the iron concentration were for surface water, groundwater, and industrial wastewater, so their report lacked any probative value.

The defendant further contended that in the Water Quality Standard for Fisheries and Sea Water Quality Standard adopted by the IMFS, there was no provision or restriction on the iron concentration level in seawater, so this was not an indicator of water quality standards for marine fisheries; and even if iron concentration level were one of the indicators, there was no relevant standard regarding the quantity limit that constitutes pollution or damage.

During the trial, the IMFS submitted a further report clarifying their forensic methods of analysis, interpretations, and conclusions. The court-appointed scientists explained that since the gray value of the abnormal area of polluted seawater shown on the satellite images was slightly lower than that of the surrounding seawater, the possibility of red tides was excluded; and as there was no oil platform in the Laolongtou waters of Shanhaiguan, nor any large ship collision or grounding accident around 2 August, the possibility of oil spills was ruled out. Given these factors, the IMFS calculated that this pollution resulted from the discharge or leak of sewage by the only large enterprise likely to be producing substantial volumes of sewage close to the affected area, which was operated by the defendant.

Lv * Kui and 78 other persons filed a lawsuit for damages, claiming the red sewage discharged by the defendant had killed a large number of scallops, causing the plaintiffs to suffer heavy financial losses.

Judgments

On 9 December 2013, the Tianjin Maritime Court issued the [2011, Tianjin, Maritime Court First Trial, No. 115] Civil Judgment, dismissing the claims of all 79 plaintiffs.

Lv * Kui and 78 other individuals appealed.

On 11 December 2014, the Tianjin Fourth Higher People’s Court issued the Final Civil Judgment No. 22 (2014).

Reversing the lower court’s decision, the appellate court ordered the defendant to compensate Wang * and 20 other plaintiffs for aquaculture losses worth a total of CNY 1,377,696 within 15 days from the date on which judgment was served. It dismissed the other claims of Lv * Kui and 78 other persons.

Reasoning

The court held that according to Article 66 of the Tort Law of the People’s Republic of China, where any dispute arises over environmental pollution, the polluter shall assume the burden to prove that it should not be liable, or that its liability could be mitigated under certain circumstances provided for by law, or that there is no causation between its conduct and the harmful consequences.

It was held that Lv * Kui and 78 other persons must prove that the defendant’s conduct caused pollution, and that this conduct caused damage to the plaintiffs’ interests. It was also held that the plaintiffs must submit prima facie evidence of a causal relationship between the damage and the conduct causing pollution.

To prove the pollution happened as a matter of fact, the plaintiffs submitted the IMFS and EEB reports as evidence. Regarding the probative value of such evidence, the trial court had commissioned the IMFS to conduct a forensic appraisal, based on the plaintiffs’ request. The remit of the IMFS covers maritime forensic appraisal, and each of their three forensic agents had the required qualifications, confirmed by the court. Moreover, the IMFS report, a statement made by the authority of Shanhaiguan District of Qinhuangdao in the Records of Inquiries, and a letter issued by the EEB corroborate each other. Such evidence proved that the Laolongtou sea area of Shanhaiguan was polluted on 2 August 2010.

Article 95(1) of the Marine Environmental Protection Law of the People's Republic of China defines "pollution damage to the marine environment" as "any direct or indirect introduction of substances or energy into the marine environment that results in deleterious effects, such as harm to marine living resources, hazards to human health, a hindrance to fishing and other legitimate activities at sea, impairment of the useful quality of seawater, and degradation of environmental quality."

The IMFS report confirmed the gray value of the abnormal area of polluted seawater was slightly lower than that of the surrounding seawater, excluding the possibility of red tides. Since there was no oil platform in the Laolongtou waters and no large ship collision or grounding accident occurring around 2 August 2010, the possibility of oil spills was also ruled out.

The EEB report showed the seawater was reddish-brown and turbid, with an iron concentration of 13.1 mg/L, so it was concluded that the pollution was caused by dire discharge or leakage of sewage.

Moreover, as the defendant operated the only large enterprise close to the sea near Laolongtou, and its main business was shipbuilding and repairing, it was concluded that the pollution was caused by the defendant’s leak of sewage containing high iron concentration levels from the rust removal process during the building and repairing of large ships.

Although not agreeing with the conclusion of the IMFS, the defendant failed to provide sufficient evidence and reasons to refute it—so the probative value of the pollution source analysis in the IMFS report was confirmed.

On whether the interests of Lv * Kui and 78 other persons were harmed: after analysing the polluted sea area by confirming geographic coordinates of the aquacultural areas run by 21 people, including Wang (surname), then comparing these coordinates with those of the polluted waters on an electronic nautical chart, the IMFS concluded that all their aquacultural areas had been polluted.

On the causal relationship between conduct that caused pollution and the damage: while satisfying the burden of proof that the defendant’s conduct caused pollution, and that such conduct damaged their interests, Wang and the 20 other plaintiffs were required to submit prima facie evidence proving a causal relationship between the damage and the conduct causing pollution.

According to the EEB sampling tests, water in that area had high concentration levels of suspended solids, iron, and petroleum hydrocarbons; but the primary pollutant was iron, presenting a serious hazard to fisheries and the aquaculture water. Therefore, Wang and the 20 other plaintiffs discharged their burden of proof.

Since the defendant claimed it was not the tortfeasor, it was required to prove that it should not be liable, that its liability could be mitigated under certain lawful circumstances, or that there was no causation between its conduct and the harm. The defendant claimed the standards adopted in the IMFS report had no provision or restriction on the iron concentration levels in seawater, so this was not an indicator of water quality standards. The defendant argued that even if iron concentration level were one of the indicators, there was no relevant standard regarding the quantity that constitutes pollution or damage.

On this issue, the court held that:

Firstly, the Marine Environmental Protection Law of the People’s Republic of China clearly provides that the introduction of substances or energy into the marine environment which results in deleterious effects is deemed pollution. In Article 65 of the Tort Law of the People’s Republic of China, the liability for environmental pollution is not limited to the discharge of pollutants exceeding limits set in national or local standards. Therefore, regardless of whether discharge control requirements for certain substances are stipulated in the national or local standards, or whether the pollutant discharge meets the national or local standards, the polluter shall be liable for damages as long as its pollution conduct has caused environmental damage. Secondly, the Water Quality Standard for Fisheries and Sea Water Quality Standard (Standards) currently used for the evaluation of seawater quality in the People’s Republic of China (PRC) have not been revised for a long time since their implementation, so those Standards may not cover all substances that can cause pollution in modern times. Therefore, the Standards are not the only basis for judging whether certain substances cause pollution damage.

Thirdly, the EEB also stated that pollutant discharge standards for iron concentration in seawater are not clearly stipulated in the PRC’s regulations or codes, so this requires further discussion by experts from relevant authorities to determine whether iron concentration in water impacts aquaculture.

In this case, the IMFS scientists had the requisite expertise to identify marine pollution, and had concluded that the levels of iron in the affected seawater were hazardous to fisheries and aquaculture. Accepting this forensic evidence, the courts found that the water had indeed been polluted by iron.