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Lanka’s worst-ever marine pollution: X-Press Pearl ordered to pay US$ 1bn in initial compensation
View(s):- SC slams state minister and top official responsible for marine environment for dereliction of duty
- SC holds Harbour Master and Port Authority acted according to law and industry practices
The Supreme Court this week held the Singapore-registered MV X-Press Pearl Group—owner, operator and local agent—jointly and severally responsible for the maritime disaster of May-June 2021 in Sri Lanka, and directed an initial payment of US$ 1 billion as compensation for environmental pollution, to be paid within one year of the date of the judgement.
The Court consolidated several fundamental rights applications to address the incident, looking into the causes of the fire aboard the X-Press Pearl and its subsequent sinking.
A five-judge bench presided over by Chief Justice Murdu Fernando, PC, and including Yasantha Kodagoda, PC, A.L. Shiran Gooneratne, Achala Wengappuli and K. Priyantha Fernando, found that the master, operator and local agent of the vessel “intentionally suppressed and withheld from the Harbour Master of the Colombo Port truthful, timely, comprehensive and accurate information regarding the situation that evolved over a period of time and prevailed at the time the afore-stated vessel entered the territorial waters of Sri Lanka.”
X-Press Pearl, the Singapore-flagged container ship, carried tonnes of hazardous chemicals
Private parties
The trio also failed to discharge their reporting obligations under international law—specifically Protocol I of the International Convention for the Prevention of Pollution from Ships (MARPOL), the International Convention for the Safety of Life at Sea (SOLAS) Regulations, and the International Maritime Dangerous Goods (IMDG) Code—thereby undermining international reporting norms and depriving Sri Lankan authorities of critical response time.
The local agent, Sea Consortium Lanka (Pvt.) Ltd., and its directors/principal executive officers were held responsible for the suppression of information, which ex facie constitutes the offence of cheating.
The Court explicitly stated that the standard of liability for the polluter is absolute and non-negotiable, and mere evidence of non-negligence should not be a defence in such a matter. Therefore, the X-Press Pearl group is accountable and liable under the “Polluter Pays Principle” (PPP).
State actors
In terms of State actors, the Court determined that Nalaka Godahewa, the former State Minister for Coast Conservation, had failed to constitute the Marine Environment Council of the Marine Environment Protection Authority (MEPA) as statutorily required by Section 14 of the Sri Lanka Marine Pollution Prevention Act (MPPA). This omission deprived the State of a crucial instrument for readiness and response to marine emergencies, it said.
Additionally, Dr. Godahewa failed to exercise the supervisory duties conferred upon him by the MPPA, thereby allowing MEPA to respond without necessary ministerial oversight during an emergency.
MEPA and its Chairperson Dharshani Lahandapura were found jointly and severally responsible for failing to efficaciously respond to the MV X-Press Pearl incident and for non-compliance with their statutory duties and obligations under the Marine Pollution Prevention Act.
The directives issued by MEPA were framed in broad and general terms, lacking the necessary specificity and clarity, and were not enforced as required by the Act, the Court held.
Ms. Lahandapura also did not convene the Board of Directors of MEPA when required, neglecting to obtain the views of members appointed to guide decision-making. Her actions were found to be a “clear departure from the collective decision-making structure that the statute requires”.
The Attorney General (AG) was deemed to have failed to perform his statutory function of indicting the owner and operator(s) of X-Press Pearl for their criminal responsibility under the MPPA.
“The decision taken by the Attorney General to institute civil legal action against the X-Press Pearl group of companies in a Singapore court, as opposed to instituting action in the High Court of the Republic of Sri Lanka exercising Admiralty jurisdiction, was an unreasonable, irrational and arbitrary decision, and was not in the best interests of Sri Lanka,” the Court determined.
SLPA exonerated
As regards the Sri Lanka Ports Authority, the Court found that the Harbour Master and the SLPA acted “according to law and industry practices” in granting anchorage to the ship, given the lack of prior disclosure about the damaged container. It concluded that the Harbour Master’s actions were guided by a risk-informed, structured, and timely decision-making process.
The Court holds that the Harbour Master and the Director General of Merchant Shipping, in their official capacities, “have acted with due diligence, taking the vital decisions reasonably and performed their statutory duties, under the given set of circumstances within which they had to function, according to law”.
The only institutional failure attributable to the Harbour Master and Director General of Merchant Shipping was the lack of a pre-prepared action plan for casualty management when the fire was reported on May 20, 2021. However, this was addressed post-disaster, as demonstrated by their successful handling of the Seaspan Lahore incident, the Court noted.
The Court rejected the contention by the X-Press Pearl group that the port authorities were “guilty of gross negligence and dereliction of duty” in firefighting, stating that this was based on “selected items of evidence that give a distorted picture”.
Enforcement
The judgment includes comprehensive mechanisms and orders for its enforcement. The first installment of not less than US$ 250 million is due from the owner, operators and local agent by September 23, 2025, and a minimum of US$ 500 million must be paid within six months. The remaining USD 250 million of the initial payment is due before the expiry of one year from the judgment date.
But it also states the X-Press Pearl group will be required to make further compensation payments as directed by the court in the future.
The funds must be held in a new, separate trust account within the Consolidated Fund of the Government of Sri Lanka, named “MV X-Press Pearl Compensation and Environment Restoration and Protection Fund,” with the Secretary to the Treasury acting as trustee.
Monies in this account will initially be allocated equally to two new post-judgment mechanisms established by the Court: the MV X-Press Pearl Compensation Commission and the MV X-Press Pearl Marine and Coastal Environment Restoration and Protection Committee.
The Compensation Commission will be chaired by Retired Justice E.A.G.R. Amarasekera, the judgment said, and will examine, assess, determine, quantify, and compute the harm caused to the marine and coastal environment; compensation payable for such harm; compensation for directly and indirectly affected individuals and organisations (e.g., fisherfolk); reimbursement for cleaning and restoration activities; and costs incurred by MEPA for establishing and maintaining these mechanisms. It will direct the Secretary to the Treasury to make these payments.
The Committee will have as its ex-officio chairperson the Secretary to the Ministry of Environment. Its mandate will be to determine and manage restoration and protection activities for the affected marine and coastal environment. It can require the Secretary to the Treasury to expend funds from the designated fund for these purposes.
Both the Commission and Committee are jointly responsible and answerable to the Supreme Court, the judgment states. Their chairpersons and members (including independent experts) will be remunerated by MEPA, with costs reimbursable from the compensation fund.
Criminal proceedings
Separately, the Auditor General shall audit the functioning of both bodies and the disbursement of funds. The Court has directed the Attorney-General to advise the Criminal Investigation Department (CID) to conduct further investigations into all disclosed offences (including Penal Code offences and marine/coastal environment laws) within three months and to institute criminal proceedings against all offenders.
The AG must also reappraise existing investigational material and cause the institution of criminal proceedings and must report to the Supreme Court quarterly on investigational and prosecutorial actions taken.
Steps must be taken to ensure that individuals responsible for compensation payments and those to be prosecuted are available in Sri Lanka.
And the AG is directed to undertake a gap analysis between international and domestic maritime and environmental laws, in consultation with competent authorities and independent experts, to advise the government on necessary amendments to ensure compliance and effective protection.
The Director-General of the Commission to Investigate Allegations of Bribery or Corruption is directed to conduct a fresh investigation into the allegations of bribery and corruption related to the disaster, focusing on parliamentary speeches and public domain information. CIABOC must submit quarterly confidential reports on the progress and outcomes of these investigations to the Supreme Court.
The Court states that its jurisdiction remains vested over these applications until further notice—meaning the court will continue to supervise the implementation of its orders and will not become functus officio upon delivery of this judgment.
The applications will be mentioned again on September 25, 2025, for the Court to take cognisance of compliance with its directions, consider appointments of independent experts to the Commission and Committee, and make necessary ancillary orders for full implementation.
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