The Duzgit Integrity Arbitration, Award, 5 Sept 2016

GLOSSARY OF DEFINED TERMS
AFE	Applicant Factual Exhibit
ALE	Applicant Legal Exhibit
APE	Applicant Photographic Exhibit
ARSIWA	Draft Articles on the Responsibility of States for Internationally Wrongful Acts, International Law Commission, 2001
AWS	Applicant Witness Statement
Bifurcation Request	Sao Tomé's request that the Tribunal rules on the question of jurisdiction and the admissibility of the claims as separate from the merits
Convention	United Nations Convention on the Law of the Sea, 1982
ECHR	European Court of Human Rights
HFO	Heavy Fuel Oil
ICJ	International Court of Justice
ILC	International Law Commission
IMAP	Port and Maritime Institute
ITLOS	International Tribunal for the Law of the Sea
MARPOL	International Convention for the Prevention of Pollution from Ships, 1973
MGO	Marine Gas Oil
MT	Metric ton, equal to one thousand kilograms
Notification	Notification of Arbitration
Criminal Code	Código Penal
PCIJ	Permanent Court of International Justice
Post-Hearing Submissions	Comments submitted by each Party in response to the information submitted by the other Party in response to the Tribunal's question(s) of 23 February 2016
	vi

Registry or PCA	Permanent Court of Arbitration
Radar Screen-Shot	Malta's radar screen-shot accompanying the audio-recording played during the hearing on jurisdiction, admissibility, and merits
Reply to Post-Hearing Submissions	Reply to comments submitted by each Party in response to the information submitted by the other Party in response to the Tribunal's question(s) of 23 February 2016
RFE	Respondent Factual Exhibit
RLE	Respondent Legal Exhibit
RWS	Respondent Witness Statement
Settlement Agreement	Settlement Agreement signed between the Government of Sao Tomé and Príncipe and DS Tankers, 23 November 2013
SOLAS	International Convention for the Safety of Life at Sea, 1974
STCW	International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978
STS	Ship-to-Ship
VDR	Voyage Data Recorder
VHF	Very High Frequency
Written Statement	Malta's written statement attaching 16 photographs in response to the questions posed by the Tribunal on 23 February 2016
	vii

DRAMATIS PERSONAE
Anuket Emerald	M/T Anuket Emerald, a vessel chartered by Monjasa PTE Ltd
Coast Guard	Sao Tomé Coast Guard
Committee	Negotiation Committee established on 21 August 2013 between the Government of Sao Tomé, DS Tankers, and Stena Oil
DS Tankers	DS Tankers Limited, a Maltese company and the owner of Duzgit Integrity
Directorate	Customs Directorate General
Duzgit Integrity	M/T Duzgit Integrity, a chemical tanker registered in Malta, owned by DS Tankers, and chartered by Stena Oil
Energizer	M/T Energizer, a vessel owned by Monjasa
IMAP	Port and Maritime Institute
Lefkoniko	Lefkoniko, a vessel registered under the Maltese flag
Malta	The Republic of Malta
Marida Melissa	M/T Marida Melissa, a fuel oil tanker, registered in the Marshall Islands and chartered by Stena Oil
Monjasa	Monjasa PTE Ltd
Parties	The Republic of Malta and The Democratic Republic of Sao Tomé and Príncipe
Sao Tomé	The Democratic Republic of Sao Tomé and Príncipe
Stena Oil	Stena Oil, a Swedish company that charted and operated Duzgit Integrity and Marida Melissa
	viii

1.

The Applicant in the present arbitration is the Republic of Malta ("Malta").

2.

The Applicant is represented in these proceedings by:

Mr. Ramón García-Gallardo, Agent and Counsel

Mr. Alexander Mizzi, Co-Agent and Co-Counsel

Mr. Alejandro Camacho, Co-Counsel

King & Wood Mallesons LLP

Square de Meeüs 1

Brussels B-1000, Belgium

3.

The Respondent in the present arbitration is the Democratic Republic of Sao Tomé and Príncipe ("Sao Tomé").

4.

The Respondent is represented in these proceedings by:

H.E. Manuel Salvador dos Ramos, Minister of Foreign Affairs and Communities, Agent Avenida 12 de Julho 101 Sao Tomé Democratic Republic of Sao Tomé and Príncipe

H.E. Américo Afonso Lima Viegas, Chargé d'Affaires a.i., Co-Agent Embassy of the Democratic Republic of Sao Tomé and Príncipe in Brussels Avenue Tervurenlaan 175 Brussels B-1150, Belgium

Ms. Juliette Luycks, Co-Agent and Counsel

Mr. Ruud Niesink, Co-Agent and Counsel Clifford Chance LLP Droogbak 1a 1013 GE Amsterdam, The Netherlands

Mr. Guilherme Posser da Costa, Government Legal Counsel Posser da Costa & Sociedade de Advogados, RL Av. Kwame N'Krumah

Sao Tomé

Democratic Republic of Sao Tomé and Príncipe

5.

The present arbitration results from the Parties' disagreement as to the lawfulness of Sao Tomé's conduct in respect of Duzgit Integrity¹— a Maltese flagged vessel —, its Master, crew, owner and charterer.

6.

Malta and Sao Tomé are parties to the United Nations Convention on the Law of the Sea ("Convention").²

7.

On 22 October 2013, Malta filed a Notification of Arbitration ("Notification") pursuant to Article 287 and Article 1 of Annex VII to the Convention with regard to a dispute concerning the vessel Duzgit Integrity.

8.

In its Notification, Malta appointed Professor Tullio Treves as a member of the Tribunal in accordance with Article 3(b) of Annex VII to the Convention.

9.

On the basis of the Parties' agreement that the procedure for the constitution of an arbitral tribunal composed of three arbitrators is governed by the provisions of Annex VII of the Convention and that Article 3 of Annex VII applies mutatis mutandis, the President of the International Tribunal for the Law of the Sea ("ITLOS"), in consultation with the Parties, appointed Judge James L. Kateka on 27 December 2013 as member of the Tribunal, and Professor Alfred H.A. Soons on 13 March 2014 as President of the Tribunal.

10.

The Parties agreed to appoint the International Bureau of the Permanent Court of Arbitration as the Registry in the arbitration ("Registry").

11.

Following the constitution of the Tribunal, Terms of Appointment dated 22 May 2014 were signed by the Parties, the President on behalf of the Tribunal, and the Registry.

12.

On 27 May 2014, after consultation of the parties, the Tribunal issued Procedural Order No. 1 in which it adopted Rules of Procedure and a provisional Procedural Timetable for the arbitration.

13.

The Registrar sent letters to the Parties on behalf of the Tribunal on 13 October and 27 November 2014, in which in each instance the Tribunal adopted a revised Procedural Timetable in consultation with the Parties and in accordance with Articles 9(1)-(2) of the Rules of Procedure.

14.

In accordance with the revised Procedural Timetable, Malta submitted its Memorial and corresponding exhibits and authorities on 12 December 2014.

15.

On 29 June 2015, Sao Tomé submitted its Counter-Memorial and corresponding exhibits and authorities.

16.

In its Counter-Memorial, Sao Tomé raised objections to the jurisdiction of the Tribunal and the admissibility of Malta's claims, and requested that the Tribunal rule on those objections first and separately from the merits of the dispute ("Bifurcation Request").

17.

By letter dated 3 July 2015, the Tribunal invited Malta to submit comments on Sao Tomé's Bifurcation Request by 20 July 2015.

18.

Between 20 July and 10 August 2015, the Tribunal heard the Parties' views on Sao Tomé's Bifurcation Request, and suspended the Procedural Timetable in its entirety until determination of the Bifurcation Request.

19.

By Procedural Order No. 2 dated 24 August 2015, the Tribunal rejected Sao Tomé's Bifurcation Request and fixed a revised Procedural Timetable.

20.

By letters dated 7 and 8 September 2015, the Parties submitted to the Tribunal an agreed schedule for the document production process. By letter dated 9 September 2015, the Tribunal confirmed the agreed document production schedule.

21.

In accordance with the document production schedule, on 24 September 2015, Malta submitted a set of disputed document production requests to the Tribunal. Sao Tomé submitted no such document production requests. By Procedural Order No. 3 dated 1 October 2015, the Tribunal ruled upon Malta's disputed document production requests.

22.

On 23 October 2015, Malta submitted its Reply and corresponding exhibits and authorities.

23.

In paragraph 435 of its Reply and by letter dated 26 October 2015, Malta announced the preparation by an expert of a Confirmatory Report by the end of November 2015 with the aim of "confirming the heads of quantification as accurate, fair, proportionate, and substantiated".

24.

By letter dated 3 November 2015, Sao Tomé submitted, inter alia, that, according to paragraph 19(6) of the Rules of Procedure, Malta should have submitted the Confirmatory Report, at the latest, with its Reply; and further submitted that if the Tribunal were minded to grant Malta the opportunity to submit the Confirmatory Report, it should consider deferring the question of damages to a second phase of the proceedings.

25.

By letter dated 11 November 2015, Malta requested permission to submit the Confirmatory Report; opposed the deferral of the question of damages to a second phase of the proceedings; and suggested that the Tribunal adopt procedures such that the question of damages could be dealt with in one phase while ensuring the equal treatment of the Parties.

26.

By Procedural Order No. 4 dated 19 November 2015, the Tribunal rejected, inter alia, Malta's request to submit a Confirmatory Report on damages.

27.

On 22 December 2015, Sao Tomé submitted its Rejoinder and corresponding exhibits and authorities.

28.

By Procedural Order No. 5 dated 22 January 2016, the Tribunal instructed the Parties to address at the forthcoming hearing all issues of jurisdiction, admissibility, and merits including the question of Malta's alleged entitlement to any heads of damage, but not the quantification of damages. By the same Procedural Order, the Tribunal invited the Parties to "attempt to agree on a hearing schedule for the Tribunal's consideration by 1 February 2016".

29.

By letter dated 25 January 2016, Malta notified the Tribunal that it "wishe[d] to call witness for the Respondent Francisco Mendes Ferreira [] for cross-examination". By email on the same date, Sao Tomé confirmed that it did not wish to call any of Malta's witnesses for crossexamination.

30.

By letter dated 1 February 2016, the Parties submitted to the Tribunal a proposed hearing schedule. While the Parties informed the Tribunal that they reached an agreement on "certain key issues", they were not "able to agree [on] how the hearing of the witness should be conducted". Malta stated that it preferred that the witness be examined immediately after both Parties had made their opening statements, whereas Sao Tomé was of the view that the witness should be heard after Malta's opening statement.

31.

By the same letter, the Parties also expressed their views on the interpretation of Article 20(5) of the Rules of Procedure on the examination of witnesses.

32.

By Procedural Order No. 6 dated 4 February 2016, the Tribunal directed the Parties to, inter alia, examine the witness after the Tribunal had submitted its questions to the Parties following their Opening Statements of the oral pleadings.

33.

By letter dated 17 February 2016, the Tribunal submitted questions to the Parties to be addressed in their Opening Statements of the oral pleadings.

34.

On 23 and 24 February 2016, a hearing on issues of jurisdiction, admissibility, and merits, including the question of Malta's alleged entitlement to any heads of damage, and the examination of the witness of the Respondent, Francisco Mendes Ferreira, Adjunct Sergeant of the Coast Guard, was held at the Peace Palace in The Hague.

35.

On the first hearing day, during its Opening Statement, Malta played an audio-recording to the Tribunal that was accompanied by a radar screen-shot ("Radar Screen-Shot").

36.

Following the conclusion of the first hearing day, the Tribunal posed questions to the Parties to be addressed during the Parties' respective Closing Statements the following day.

37.

On the second hearing day, in addition to its oral Closing Statement, Malta submitted to the Tribunal a written statement attaching 16 photographs in response to the questions posed to it by the Tribunal on 23 February 2016 ("Written Statement").

38.

During its Closing Statement, Sao Tomé stated that it had not previously seen the Radar ScreenShot and that while it had been provided with a copy of the Written Statement, it had not had an opportunity to review or verify its content.

39.

By Procedural Order No. 7 dated 25 February 2016, the Tribunal instructed Malta to submit a copy of the Radar Screen-Shot as well as the 16 photographs submitted with its Written Statement into the record and assign them exhibit numbering.

40.

By the same Procedural Order, the Tribunal invited each Party to, inter alia, "submit any comments that they may have in response to the oral or written information submitted by the other Party in answer to the Tribunal's question(s) of 23 February 2016" by 9 March 2016 ("Post-Hearing Submissions"), and their respective replies to those comments by 16 March 2016 ("Replies to Post-Hearing Submissions").

41.

By letter dated 9 March 2016, Malta submitted new exhibits and clarifications of these new exhibits.

42.

On the same date, each Party submitted its Post-Hearing Submissions.

43.

In its Post-Hearing Submissions of 9 March 2016, Malta requested leave to submit "three categories of information all of which is already in the possession of the Respondent, should the Tribunal consider it useful", namely: photographs presented to the Court of First Instance, the radar screen shots submitted by the Public Prosecutor, and the log-book of Duzgit Integrity. Malta also requested leave to submit "the full 21 hours of recording of the conversations that took place on public channel VHF 16" as recorded by the Voyage Data Recorder ("VDR") of Duzgit Integrity "together with an explanatory table which lists each conversation and its duration, should the Tribunal consider it useful".

44.

On 16 March 2016, each Party submitted its Reply to the Post-Hearing Submissions.

45.

In its Reply to Malta's Post-Hearing Submissions, dated 16 March 2016, Sao Tomé objected to Malta's requests for leave to submit the three categories of information. Sao Tomé also objected to the request to submit the 21 hours of recording.

46.

In its Reply to Sao Tomé's Post-Hearing Submissions, dated 16 March 2016, Malta requested leave to submit further "documentation and certification" relevant to the links between the flag State and Duzgit Integrity and its owners, "should the Tribunal deem it necessary". Malta further requested leave to submit evidence, "should the Tribunal deem appropriate", of the "final extension of class by Bureau Veritas [which] is not yet part of the evidence before the Tribunal".

47.

By Procedural Order No. 8 dated 25 March 2016, the Tribunal rejected Malta's request to submit additional evidence.

48.

The dispute concerns the Duzgit Integrity, a chemical tanker built in 2008 with IMO number 9380415, and owned by DS Tankers Limited ("DS Tankers"), a Maltese company.³ The vessel remains registered in Malta under DS Tankers' ownership.⁴ The dispute also involves a second vessel, Marida Melissa, a fuel oil tanker with IMO number 9438169 registered in the Marshall Islands.⁵

49.

Both Duzgit Integrity and Marida Melissa were chartered and operated by Stena Oil,⁶ a Swedish company that supplies marine fuels in the Scandinavian and North Sea waters⁷ as well as off the coast of west-Africa.⁸ The owners of the two vessels are not related.⁹

50.

According to Malta, in order to operate under a Maltese flag, a ship is required to have a valid statutory certificate issued from a recognised organisation on behalf of Malta.¹⁰ Pursuant to Article 94 of the Convention, Malta exercises its "jurisdiction and control in administrative, technical and social matters over ships flying its flag".¹¹ Maltese ships are subject to the Maltese Merchant Act as well as the ancillary regulations and the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers ("STCW") regarding the manning and certification of seafarers.¹²

51.

Sao Tomé is an island nation located in the Gulf of Guinea, to the west of Gabon and to the south of Nigeria.¹³ Sao Tomé is an archipelagic State within the meaning of Article 46 of the Convention, and consists of two main islands, "Sao Tomé" and "Príncipe", and some rocky islets.¹⁴ The baselines from which the limits of the archipelagic waters are drawn follow from Articles 2 and 3 of Decreto-Lei 1/98.¹⁵ The territorial sea of Sao Tomé has a breadth of twelve nautical miles, measured from the baseline, the outer limit of which is a line which at every point is twelve nautical miles from the nearest point of the baseline.¹⁶ The total area of archipelagic waters is 3,886 square kilometres.¹⁷

52.

Article 4 of Sao Tomé and Principe's Constitution stipulates that the territory of Sao Tomé consists of the land territory, territorial sea, and archipelagic waters.¹⁸ Paragraph 2 of that provision grants Sao Tomé sovereignty over "all of its ground territory".¹⁹ Moreover, Sao Tomé relies on Article 2 of the Customs Code of Procedure in asserting that "Sao Tomé's customs jurisdiction extends to its territorial sea"²⁰ including its archipelagic waters.²¹

53.

The west-African shipping route, where Sao Tomé is located, is an active one.²² Despite its importance, the route's facilities for commercial shipping are very limited.²³ With Sao Tomé's permission, vessels that cannot enter a harbour of Sao Tomé can anchor offshore in one of its three port zones.²⁴ Near Neves, at the north-western side of Sao Tomé, oil tankers normally anchor to supply oil to Sao Tomé.²⁵

54.

In light of the limited port facilities, activities including refuelling, provision of supplies, and transhipment often take place at sea through Ship-to-Ship ("STS") cargo transfer.²⁶ Supply arrangements are made with vessels operating along a specific route. According to Malta, the details of the operation including the location for transhipment are generally agreed upon in advance.²⁷

55.

Malta submits that, depending on the circumstances, permission to enter the port "can be obtained during or after the operation" through agents who work closely with Sao Tomé authorities.²⁸ Agents often become directly involved when they are contacted by vessels that are unable to reach Port Control by radio or public channel 16.²⁹ The agents then contact the authorities through phone or other means.³⁰

56.

The entry of vessels into the port of Sao Tomé is governed by the Decreto Lei 04/2010. It contains the term 'chegada'. According to Sao Tomé, 'chegada' "concerns the arrival in Sao Tomé of vessels that intend to do something else than simply navigate through the territorial sea or archipelagic waters in innocent passage".³¹ Sao Tomé submits that for bunkering or other STS operations, the Maritime and Port Institute ("IMAP") must be notified in advance; and IMAP will then coordinate with the Coast Guard, the customs and other relevant authorities.³²

57.

Duzgit Integrity was located in the Gulf of Guinea and was, Malta submits, laden with approximately 1,564 metric tons ("MT") of Marine Gas Oil ("MGO") and approximately 8,852 MT of Heavy Fuel Oil ("HFO"), owned by Stena Oil.³³

58.

Duzgit Integrity was scheduled to proceed to dry-dock in the port of Las Palmas for its five-year survey scheduled for 1 April 2013.³⁴ On its way to Las Palmas, and before proceeding to dry-dock, it was planned that Duzgit Integrity would provide approximately 8,200 MT of HFO to four vessels which were operating off the coast of Nigeria. Before that operation, Duzgit Integrity was scheduled to meet Marida Melissa in the area of Sao Tomé to transfer to it the approximately 1,555 MT of MGO as well as some equipment.³⁵

59.

Marida Melissa was located to the north of Sao Tomé island. The four scheduled subsequent operations were also located to the north.³⁶ Accordingly, it was decided that Duzgit Integrity would meet Marida Melissa 25-30 miles north-west of Sao Tomé island outside of the archipelagic waters of Sao Tomé on 15 March 2013. Then, it would supply the four vessels waiting off the coast of Nigeria.³⁷

60.

The first meeting point between Duzgit Integrity and Marida Melissa was set at 0031N; 0605E to the north-west of Sao Tomé island.³⁸ During the voyage to the north, the Master of Duzgit Integrity noticed a 1-2 meter swell from the south.³⁹ Accordingly, the Master decided that waters to the north-east of Sao Tomé island would be safer and coordinated with Marida Melissa to have a new meeting point at 00.31N; 06.45E.⁴⁰

61.

Duzgit Integrity proceeded to the new meeting point, located within the archipelagic waters of Sao Tomé. At this point in time the Master tried to communicate with Sao Tomé's authorities without success.⁴¹ On 14 March 2013, Duzgit Integrity drifted overnight while waiting for a response from the Sao Toméan Coast Guard ("Coast Guard").⁴²

62.

At 5:16 a.m. on 15 March 2013, Duzgit Integrity contacted Marida Melissa by radio indicating that its "engine [had] stopped and [its] heading [was] 230...".⁴³

63.

At 6 a.m., the Coast Guard Operation Centre informed the Arch Angel, a patrol boat of the Coast Guard on a routine mission,⁴⁴ of a radar detection that two oil tankers had entered "the territorial waters of Sao Tomé from different directions and seemed to be approaching each other in the archipelagic waters".⁴⁵ Sao Tomé states that the Operation Centre had not received prior notification or request for authorisation from the vessels prior to their presence in Sao Tomé's territorial and archipelagic waters.⁴⁶ The Coast Guard patrol boat was then ordered to make contact with both vessels in order to understand "the reasons for their presence in the territorial waters of Sao Tomé".⁴⁷

64.

According to Malta, the Coast Guard patrol boat approached Duzgit Integrity at 7:05 a.m.⁴⁸ Sao Tomé contests the reliability of the evidence submitted by Malta in this regard.⁴⁹

65.

Duzgit Integrity asked Marida Melissa by Very High Frequency ("VHF") to reduce its speed and indicated that a navy boat was on its port side.⁵⁰ Immediately thereafter, Francisco Mendes, the master-sergeant of the Coast Guard boat,⁵¹ communicated with the Master of Duzgit Integrity via public VHF⁵² without boarding the vessel.⁵³ At that point, "Duzgit Integrity was 6.5 nautical miles from the closest point on the shore".⁵⁴

66.

The transcript of the radio conversation provides in the relevant part:

CB: Coast Guard Boat Officer DI: Duzgit Integrity Master

…

CB: Good morning sir, I want to talk with, I need you speak, what you make the here over?

DI: I commence drifting, drifting about 15 miles north of your island and we will meet with M/T Marida Melissa for some equipment transfer, hose and fender. We will meet here if possible. If you not give permission we will proceed to offshore.

CB: Yes OK. We talk with you. My English is not very good. You have any guys in your ship speak Spanish, Spanish or French is good over.

DI: Negative, negative. We can speak just Turkish, English and Russian. Do you know these languages?

CB: OK, you, can you tell me you have, you have [authorisation/representation]in Sao Tome or your agency in Sao Tome.

…

DI: We will not port contact; we will not port contact of Sao Tome. We will make just Ship-To-Ship transfer, Ship-To-Ship transfer. And I will proceed offshore again. I will not visit your port. I will not visit your port.

CB: OK, thank you for us. I congratulate your [collaboration/cooperation]. Good morning sir.

DI: Thank you very much, thank you very much. If any problem STS operation on here we can proceed offshore. If you give permission I want to make operation here. Here sea condition very well for Ship-To-Ship transfer.

CB: OK thank you, good morning, good job.

DI: Thank you very much, thank you very much for your good cooperation. You are welcome and your information and navy boat is very well. We are thinking safety in here. Thank you.⁵⁵

67.

The Coast Guard patrol boat departed after the end of the conversation.⁵⁶ Sao Tomé points out that "there were a number of protracted silences during the conversation"⁵⁷ largely due to the patrol boat commander's contact with his supervisor to inform the Coast Guard Operations Centre, inter alia, that the vessel did not appear to have authorisation to enter Sao Tomé's waters.⁵⁸ Sao Tomé further submits that the language barrier led to a miscommunication between the Master of Duzgit Integrity and the Coast Guard.⁵⁹ Malta, on the other hand, avers that proper communication was possible despite the flawed level of English.⁶⁰

68.

According to Malta, at that time Marida Melissa "was approximately1.7/1.6 nautical miles away"⁶¹ from Duzgit Integrity. At that point the vessels were not "arm in arm".⁶²

69.

At 7:09 a.m., the Master of Duzgit Integrity contacted Marida Melissa :

I: Duzgit Integrity M: Marida Melissa

I: Navy boat proceeding to you and I take permission for sts operation for here. I think the navy boat, coast guard asking staying at drifting like that.

M: Ok well noted. We will do same cooperation with navy boat, that information.⁶³

70.

At around 8:25 a.m.⁶⁴Marida Melissa came alongside Duzgit Integrity.⁶⁵ The Master of Duzgit Integrity attempted to contact the Coast Guard without success.⁶⁶ Both vessels then prepared to transfer certain equipment (in the form of hose and fenders) and to perform the STS operation.⁶⁷ By 9:00 a.m. the vessels were "moored to one another".⁶⁸ Malta submits that when the Marida Melissa came alongside Duzgit Integrity, the vessels communicated on public channel VHF 16, "which the [Sao Toméan] authorities were able to listen to."⁶⁹ In that regard, Sao Tomé asserts that at that point "the vessel was thought to be simply in innocent passage and there was no reason to...take action".⁷⁰

71.

In the meantime, the Coast Guard Operations Centre informed the Commander of the Coast Guard that "the vessels appeared to have no authorisation to carry out any operation... and that they did not appear to have any agent".⁷¹ At that point, the intentions of the Duzgit Integrity were not clear to the authorities of Sao Tomé.⁷² The Coast Guard Operations Centre ordered the patrol boat to continue its mission.⁷³ Upon consultation with the Commander of the Coast Guard, the Coast Guard Operations Centre instructed the patrol boat to pay a second visit to Duzgit Integrity.⁷⁴

72.

At 9:16 a.m.⁷⁵ or 9:20 a.m.,⁷⁶ the Coast Guard patrol boat visited Duzgit Integrity a second time.⁷⁷ There had been no communication from the Coast Guard to Duzgit Integrity between the first and the second visit.⁷⁸ The Coast Guard reinitiated the conversation using the same public VHF radio channel 16.⁷⁹ The second conversation was also recorded by the VDR system of Duzgit Integrity.⁸⁰

73.

Malta submits that there was an attempt to contact the Coast Guard at 9:26 a.m.⁸¹ Sao Tomé, on the other hand, contends that the VDR was no longer recording at that time.⁸²

74.

According to Malta, at the time of the second visit, Duzgit Integrity was 6.78 nautical miles from the closest coastal point on the shore.⁸³ At that point, Marida Melissa was alongside Duzgit Integrity⁸⁴ and the two vessels were connected by hose.⁸⁵ Sao Tomé submits that the first and the second visit took place in the same location, approximately 6.4 nautical miles from the nearest point on the shore.⁸⁶

75.

The Coast Guard patrol boat informed the Master of Duzgit Integrity that the Master had no "authorisation to stop" in the waters of Sao Tomé.⁸⁷ The Coast Guard requested that the Masters of both vessels proceed to the Coast Guard depot.⁸⁸ The Master of Duzgit Integrity explained that no operation was underway and that, in any event, the vessel received permission "2 hours ago" by radio from a Coast Guard boat.⁸⁹ The Master also proposed to make the transfer offshore if the Coast Guard refused to give permission.⁹⁰ According to Sao Tomé, "[t]he Coast Guard... wanted the [M]asters to come ashore, to be able to properly investigate the matter further and to verify whether the assumption that they were infringing Sao Tomé's laws was correct".⁹¹ After a lengthy discussion,⁹² the Masters of both Duzgit Integrity and Marida Melissa anchored the vessels in the anchorage area (00.22.27N; 06.46.31E)⁹³ near Ana Chaves Bay,⁹⁴ and proceeded onshore to the Coast Guard depot.⁹⁵

76.

According to Malta, the Masters of the vessels were greeted by journalists and a camera crew.⁹⁶ Sao Tomé, on the other hand, disputes this assertion, but concedes that "the sight of two oil tankers anchoring near shore... will likely have drawn attention".⁹⁷

77.

In the meantime, Stena Oil along with the owners of both vessels appointed Mr. Wilson Morais of Agencia Equador,⁹⁸ a local agent, to assist with proceedings and "attempt to broker a solution"⁹⁹ to "regularise the vessels' situation".¹⁰⁰

78.

The Masters were then interrogated at the Coast Guard Operation Centre.¹⁰¹ During the interrogations, according to Sao Tomé, it was revealed that "Duzgit Integrity and Marida Melissa had not notified the authorities prior to entering Sao Tomé archipelagic waters and that... they had not obtained prior written authorisation for the transhipment of cargo they had commenced, but not completed as a result of the Coast Guard's intervention".¹⁰² Malta submits that no STS operation had commenced.¹⁰³

79.

The Masters were suspected of having committed or attempted to commit the crime of smuggling under Article 274 of the Código Penal ("Criminal Code").¹⁰⁴ According to Malta, the certificates of Duzgit Integrity and Marida Melissa along with the seamen's books and passports were confiscated and no receipt of the confiscated documents was issued.¹⁰⁵ The Masters were apprehended and ordered to stay in a hotel until the start of the criminal proceedings.¹⁰⁶ Malta contends that the Masters were also requested to sign documents in Portuguese without proper translation.¹⁰⁷

80.

Various legal proceedings were instituted against the Masters of Duzgit Integrity and Marida Melissa.

81.

On 16 March 2013, both vessels were fined (each for an amount of EUR 28,875) for failing to notify IMAP of their arrival in Sao Tomé waters 24 hours in advance in accordance with the provisions of Decreto-Lei 04/2010.¹⁰⁸ The fine was fixed pursuant to the same decree.¹⁰⁹ Malta contends that the fine was "excessive and unjustified" on the grounds that it "never entered, nor intended to enter" the port of Sao Tomé.¹¹⁰

82.

The decision was not appealed.¹¹¹ Stena Oil sent funds to Mr. Wilson Morais to pay the fines on a "without prejudice basis" in exchange for the release of the Masters and the vessels without delay.¹¹² The fine was paid on 8 November 2013.¹¹³

83.

On 19 March 2013, Lefkoniko, a vessel registered under the Maltese flag, was also stopped by the Sao Toméan authorities, according to Malta in similar circumstances to Duzgit Integrity.¹¹⁴ While in Sao Toméan territorial waters, Lefkoniko was ordered to cease operations and to proceed to port.¹¹⁵ An administrative fine was imposed against Lefkoniko on the same basis as the one imposed on Duzgit Integrity and Marida Melissa.¹¹⁶Lefkoniko was released two days after its detention.¹¹⁷

84.

On 27 March 2013, the Customs Directorate General ("Directorate") decided that both vessels breached Article 37(3) of the Customs Code of Procedure by moving "goods without fulfilling the applicable legal procedure"¹¹⁸ in Article 318 of the same Code, which consists of obtaining clearance by paying the custom duties.¹¹⁹ Accordingly, the Directorate imposed a penalty of EUR 1,08 million,¹²⁰ six times the value of the customs duties that would have been due over the total cargo on board Duzgit Integrity¹²¹ even though according to Malta "only a fraction [1,555 metric tonnes] of the cargo on board Duzgit Integrity was intended to be transferred to Marida Melissa".¹²²

85.

In the meantime, the Civil Court of First Instance ordered the seizure of the vessels and cargo in parallel proceedings brought by the Directorate against the Masters.¹²³

86.

The Masters appealed the Directorate's decision. On 26 April 2013, the appeal was dismissed and the Masters were ordered to pay the fine within 5 days.¹²⁴ However, the order was withdrawn when the owners of both vessels reached a settlement with Sao Tomé in October and November 2013.¹²⁵

87.

On 18 March 2013, the Coast Guard filed a report ''Auto de Notícia' with the Public Prosecutor of Sao Tomé accusing the Masters of smuggling under Article 274 of the Criminal Code.¹²⁶ According to the report, the vessels were caught alongside each other "performing transhipment operation".¹²⁷ Malta contends that the report "failed to mention the first visit by the Coast Guard [and that] no transhipment had occurred".¹²⁸

88.

On 20 March 2013, the Masters were escorted from the hotel to the office of the Public Prosecutor pursuant to a detention order.¹²⁹ The Masters were represented by Messrs. Alberto Paulino and Pascoal Daio, two lawyers selected by Agencia Equador.¹³⁰ An interpreter appointed by the Court provided English translation for the Masters.¹³¹ A first hearing was held on the same day "when accusations, the facts and evidence were presented before the judge of the Singular Court".¹³² The Masters were subsequently released upon payment of bail.¹³³

89.

Summary criminal proceedings commenced on 22 March 2013.¹³⁴ A hearing was held on 25 March 2013 and lasted until the next day.¹³⁵ On 29 March 2013, the Singular Court found the Masters guilty of the crime of smuggling and issued a sentence of three years of imprisonment.¹³⁶ The Singular Court established that the Masters were aware that transhipment of goods had commenced prior to obtaining authorisation and paying the required customs duties.¹³⁷

90.

In the same decision, the Singular Court convicted the owners of the vessels and the charterers jointly with the Masters to pay an indemnification of approximately EUR 5 million to Sao Tomé.¹³⁸ The Singular Court further declared the vessels and cargo "lost in favour of Sao Tomé".¹³⁹

91.

The Court indicated that the three-year prison sentence would be reduced to two years' probation provided that the Masters jointly pay the above-mentioned indemnification within 30 days.¹⁴⁰ The Masters appealed the decision before the Supreme Court.¹⁴¹

92.

The Singular Court proceedings were held in Portuguese.¹⁴² Malta contests the quality of the English translation provided to the Masters during the proceedings.¹⁴³ Malta also points out that DS Tankers and Stena Oil were not made party to the proceedings and were not called to defend themselves.¹⁴⁴ Malta further contends that the VDR record of the Coast Guard's first visit¹⁴⁵ was not among the evidence considered¹⁴⁶ by the Singular Court.¹⁴⁷ In this respect, Sao Tomé contesting the authenticity of the VDR recordings,¹⁴⁸ however, claims that these recordings were nonetheless admitted as evidence.¹⁴⁹

93.

On 23 April 2013, Malta sent a Note Verbale requesting the Sao Toméan authorities to review the case "in order to reach an equitable solution".¹⁵⁰ In its response, Sao Tomé indicated that "legal proceedings were still ongoing and that the Ministry would await the decision of the Supreme Court in order to inform the Maltese embassy in Brussels".¹⁵¹ On 15 May 2013, Malta sent another Note Verbale¹⁵² to which Sao Tomé did not respond on the grounds that legal proceedings were ongoing.¹⁵³

94.

On 20 June 2013, the Supreme Court dismissed the appeal and confirmed the decision of the Singular Court.¹⁵⁴ Unsuccessful applications for clarification and nullity followed, and the decision was again upheld by the Supreme Court on 9 July 2013 and 7 August 2013.¹⁵⁵ Stena Oil issued a press release on 9 July 2013 stressing that, among other things, "[the Masters were] victims of an unscrupulous government trying to enrich themselves by confiscating assets from foreign businesses".¹⁵⁶ Stena Oil also explained that it was "warning"¹⁵⁷ those of the international community who were conducting business in or near Sao Tomé.¹⁵⁸ On 17 July 2013, the Supreme Court decision was considered res judicata.¹⁵⁹

95.

On 5 August 2013, the Supreme Court granted the Sao Toméan State Attorney's request to sell the cargo on board Duzgit Integrity.¹⁶⁰ Malta notes that the cargo was only confiscated in October 2013.¹⁶¹Duzgit Integrity remained registered to DS Tankers under the Maltese flag at all times.¹⁶²

96.

Throughout and following the legal proceedings, several States (including Ukraine, the Marshall Islands, Sweden, and Turkey) expressed their concerns and hopes for a beneficial solution between Malta and Sao Tomé.¹⁶³

97.

On 21 August 2013, Sao Tomé created a Negotiation Committee ("Committee") "entrusted with the task of representing the government [of Sao Tomé] with the... owners of the vessels and Stena Oil to find an amicable solution".¹⁶⁴ Mr. Guilherme Posser da Costa acted as President of the Committee.¹⁶⁵

98.

On 22 and 23 August 2013, a meeting was held between representatives of the Government of Sao Tomé, Mr. Wagner Mesquita (representative of the owners of Marida Melissa), and Mr. Ramon Garcia Gallardo (in his capacity as representative of Stena Oil and DS Tankers as well as Malta and the Marshall Islands).¹⁶⁶ Malta contends that it took five months for Sao Tomé to establish the Committee¹⁶⁷ and that the owners, the legal representatives and the respective States have been "labouring for a reasonable solution" prior to the creation of the Committee.¹⁶⁸

99.

Sao Tomé proposed to grant presidential pardon to the Masters on the condition that:

(i) Formal apologies would be presented to the Government of Sao Tomé by Stena Oil, which had publicly and falsely portrayed Sao Tomé and Principe as a Pirate State;

(ii) No judicial proceedings would be brought against the State of Sao Tomé, its organs or any public entity and any proceedings already instituted would be terminated.¹⁶⁹

100.

In the same proposal, Sao Tomé suggested to release the vessels but enforce the part of the Supreme Court decision relating to the forfeiture of the cargo on board.¹⁷⁰ Mr. Garcia Gallardo rejected the proposal on the grounds that the loss of cargo was "unacceptable".¹⁷¹

101.

The negotiations continued between the Committee and Mr. Garcia Gallardo¹⁷² until 10 September 2013 when Mr. Garcia Gallardo informed the Committee that Stena Oil would continue to "expose the wrongful actions" through a media campaign,¹⁷³ absent a positive move from the side of Sao Tomé.¹⁷⁴ At this point, Sao Tomé considered that the negotiations had failed with Stena Oil.¹⁷⁵

102.

On 13 September 2013, on behalf of the owner of the vessel, Mr. Garcia Gallardo requested Sao Tomé to unconditionally release Duzgit Integrity, or in the alternative, to discharge the cargo to either Marida Melissa or to a third party ship.¹⁷⁶

103.

On 18 September 2013, the Agents appointed by Malta indicated to Sao Tomé that Malta would proceed to arbitration and expressed Malta's willingness to resolve the dispute amicably.¹⁷⁷ By a Note Verbale of 27 September 2013, Sao Tomé accepted Malta's invitation of 18 September 2013 to continue settlement discussions and proposed a meeting to be held in Sao Tomé.¹⁷⁸ Malta responded on 4 October 2013 and proposed that the meeting be held in Brussels, Lisbon, Luanda, or Praia instead.¹⁷⁹

104.

On 16 October 2013, the President of the Committee sent a letter to Mr. Garcia Gallardo stating that the negotiations were closed in view of Stena Oil's continuing pressure.¹⁸⁰ Malta contends that Sao Tomé not only terminated negotiations with respect to Stena Oil but also with respect to Duzgit Integrity.¹⁸¹

105.

On 26 September 2013, the President of Sao Tomé issued a decree by which both Masters were pardoned with respect to the prison sentence.¹⁸² The pardon did not affect the decision on compensation and the confiscation of the vessels and cargo in favour of Sao Tomé.¹⁸³ Sao Tomé notes that the President does not have authority to grant a pardon in respect of civil liabilities and accessory penalties.¹⁸⁴

106.

The Masters were released from prison on 2 October 2013 but were prohibited from boarding their vessels.¹⁸⁵ On 10 October 2013, the Masters' passports were returned and they left Sao Tomé.¹⁸⁶

107.

Sao Toméan authorities proceeded to execute the part of the court decision ordering the forfeiture of the cargo.¹⁸⁷ Sao Tomé considered that the large amount of oil on board posed a significant environmental risk.¹⁸⁸ Accordingly, it decided to sell the cargo in a private sale "as a matter of urgency".¹⁸⁹

108.

Sao Tomé received two expressions of interest in respect of the cargo. The first was from Monjasa PTE Ltd. ("Monjasa"), a Singapore based bunkering company (which according to Sao Tomé is part of a Danish group of companies) that operated a chartered vessel, M/T Anuket Emerald ("Anuket Emerald").¹⁹⁰ The second expression of interest was from the owner of Duzgit Integrity.¹⁹¹ Sao Tomé submits that it had already reached an agreement with Monjasa before it was approached by the owner of Duzgit Integrity.¹⁹² In that respect, Malta contends that Monjasa Dubai "is not a tanker operator, nor a manager; it is a bunker trader"¹⁹³ and does not hold valid safety management certificates and documents issued by Maltese authorities.¹⁹⁴ Sao Tomé observes that Monjasa is also "a group that supplies, among other things, bunkering services in West Africa".¹⁹⁵ Additionally, Sao Tomé avers that it demanded an explicit safety guarantee from Monjasa.¹⁹⁶

109.

On 11 October 2013, the Sao Toméan Coast Guard boarded Duzgit Integrity to oversee the transhipment operation to Anuket Emerald.¹⁹⁷ Sao Tomé submits that the Chief Officer of Duzgit Integrity refused to follow the instructions of the Coast Guard and tried to sabotage the operation.¹⁹⁸ Malta contends that all communications from and to Duzgit Integrity were banned by the "armed guards"¹⁹⁹ (or the Coast Guard).²⁰⁰ In spite of the ban, the Chief Officer successfully sent messages to the owners of the vesselin order to inform them of the situation.²⁰¹ The Coast Guard considered the Chief Officer's conduct as threatening to the safety on board and decided to lock him in a separate room.²⁰²

110.

According to Malta, the Duzgit Integrity crew warned the Coast Guard that there was no permission to conduct a STS transfer, nor was it safe to do so on the grounds that there was no Master or any sufficiently qualified personnel to oversee the operation.²⁰³ Malta contends that the crew was forced to unmoor Marida Melissa without safety precautions.²⁰⁴ In this respect, Sao Tomé maintains that "no weapons were used and no physical threat of force was made against the crew of... Duzgit Integrity".²⁰⁵

111.

The transhipment operation was later cancelled.²⁰⁶ According to Malta, it appears that the owners of Anuket Emerald refused to follow the instructions of Monjasa based on the warnings of Duzgit Integrity 's crew.²⁰⁷ Sao Tomé, on the other hand, submits that Monjasa refused to take the cargo because of the pressure exercised by Stena Oil.²⁰⁸

112.

On 19 October 2013, Monjasa sent another vessel, Energizer, to receive the cargo from Duzgit Integrity.²⁰⁹ The transhipment operation was led by the Second Officer of Duzgit Integrity and supervised by the Sao Toméan Coast Guard.²¹⁰

113.

According to Sao Tomé, it "took reasonable measures, to the best of its abilities, to avoid any unreasonable risk to the marine environment and it did not ignore the risks to the environment or to the safety of life at sea".²¹¹ Malta contends that the Second Officer was not qualified to lead the operation²¹² and that no preparations or precautions were taken in relation to the STS transfer.²¹³

114.

Malta further contends that Sao Tomé failed to demonstrate that both Anuket Emerald and Energizer applied for the necessary documentation and authorisation to anchor alongside Duzgit Integrity and paid the taxes due in relation to a commercial STS transfer.²¹⁴ In that regard, Sao Tomé submits that, in light of the agreement between Sao Tomé and Monjasa, the authorities "obviously" knew that Anuket Emerald and Energizer would come to Sao Tomé to perform STS operations; and that authorisation was issued accordingly.²¹⁵ Sao Tomé further observes that the operation "went smoothly" and both crewmembers of Energizer and Duzgit Integrity "worked together as one team".²¹⁶

115.

As a result of the events, Duzgit Integrity failed to undergo its scheduled dry-dock operation and re-classification on 1 April 2013.²¹⁷ Malta notes that by correspondence dated 13 and 23 September 2013, the Duzgit Integrity owner alerted Sao Toméan authorities that the class certificates were to expire imminently leading to an invalid insurance coverage and a breach of flag State and international obligations as a consequence.²¹⁸

116.

Between 22 October and 7 November 2013, Mr. Metin Düzgit of DS Tankers and the President of the Committee engaged in settlement discussions.²¹⁹ Prior to that, on 4 October 2013, Sao Tomé had entered into a settlement agreement with the owner of Marida Melissa. The terms of that agreement addressed the IMAP fine, the court ordered compensation, the return of the vessel and the waiver of all claims.²²⁰ Malta submits that Duzgit Integrity was treated differently because it had valuable goods on board.²²¹

117.

On 23 November 2013, a settlement agreement was concluded between DS Tankers and Sao Tomé ("Settlement Agreement").²²²

118.

The terms of the Settlement Agreement provided in relevant part:

First Clause

1. The State releases, on this date, and as it is, the Vessel Duzgit Integrity with registration no. IMO9380415, to its Owner who had possession of since March 2013 in the Ana Chaves Bay, territorial sea of Sao Tomé and Príncipe.

2. The conditions and stipulated by the State to the aforementioned release is as follows:

(i) the Owner shall pay forthwith a fine of EUR 28,875 to IMAP... which will receive these amounts on behalf of the State […]

(ii) The Owner shall pay the cargo inside the Vessel that was used by the authorities for exclusive purpose of the maintenance of the integrity of the stay in the Ana Chaves Bay, in the lump sum of USD 625, 000; […]

Second Clause

1. The Owner gives up and waives, as applicable, any judicial actions already filed or to be filed, in any tribunal, against the State, its administrative bodies, the representatives of the State, public entities or similar, in Sao Tomé and Príncipe or in another country, as well as any additional complaints filed with private or international entities.

2. The above mentioned waiver of rights by the Owner encompasses any request for indemnification, compensation and/or similar, in whichever manner, deriving from any fact related to the Vessel Duzgit Integrity whilst she was kept in the territorial sea of Sao Tomé and Príncipe, in relation to which there is nothing else to be claimed in whichever manner.

[...]

Third Clause

1. [The Owner] has not transferred, in any manner, including but not limited, to the State of Malta, any claim and/or rights the State deriving from the facts or consequences related to the stay of the Vessel in the national waters of Sao Tomé and Príncipe.²²³

119.

Duzgit Integrity was released on 25 November 2013.²²⁴ Malta considers that the Settlement Agreement was concluded under duress for the following reasons. First, Sao Tomé ordered DS Tankers not to inform Malta of the ongoing discussions "on pain of severance of all talks and possibilities for release".²²⁵ Second, Mr. Metin Düzgit was in Sao Tomé for a month in an attempt to find a solution.²²⁶ Third, the vessel had incurred exceptionally high losses by the time the settlement was reached.²²⁷ Fourth, the entire cargo had been confiscated and the crew had been suffering the psychological effects of the events on 11 October 2013. Finally, Duzgit Integrity had been treated differently than Marida Melissa.²²⁸

120.

Malta further submits that the Settlement Agreement had not been validated by the court²²⁹ and that Duzgit Integrity remained fully registered and maintained under the Maltese flag.²³⁰ Even after the commencement of the arbitral proceedings, Malta contends that it has attempted, without success, to negotiate with Sao Tomé.²³¹

121.

At the end of the hearing, Malta formulated its final submissions to the Tribunal as follows:

1. Pursuant to the Arbitral Tribunal's Procedural Order No. 5 not to deal with the quantification of damages compensation at the present hearing, Malta reserves the right to present further submissions concerning compensation at a later stage, in addition to those already filed.

2. [To render] a declaratory judgement confirming the wrongfulness of [Sao Tomé and Príncipe's] conduct, a formal apology, and compensation for moral and financial losses incurred as a result of [Sao Tomé and Príncipe's] action against all interest of the Duzgit Integrity, including shipowner, charterers and crew.

3. To reject and dismiss in their entirety Sao Tomé and Príncipe's preliminary objections to the jurisdiction of the Arbitral Tribunal and the admissibility of Malta's claims in this dispute.

4. To declare, adjudge and hold that the Arbitral Tribunal has jurisdiction to hear and determine these disputes, and that Malta's claims are well founded and fully admissible.

5. To declare and adjudge and order that the Sao Tomé and Príncipe authorities did give authorisation for the operation declared by the Duzgit Integrity during the first visit by the Coast Guard, and that therefore the entirety of the measures taken by Sao Tomé on and after 15th March 2013 were unjustified.

6. [To declare] [t]hat Sao Tomé and Príncipe failed to properly inform that without written authorisation by the competent authorities of Sao Tomé and Príncipe, [the Duzgit Integrity] had to leave the territorial waters or archipelagic waters to carry out any STS operation or any other transfer of equipment with the Marshall Islands ship M/T Marida Melissa.

7. [To declare] [t]hat Sao Tomé and Príncipe, in applying national legislation related to criminal and customs law and other administrative law -- in particular Decreto No. 4/2010 -- to the Duzgit Integrity, flying the flag of the Republic of Malta, breached its obligations to the Republic of Malta first on its own right to protect the ship as provided by Articles 91 and 94, and under customary international law.

8. Without prejudice to the above, to declare, adjudge and order, whether in whole or in part, that Sao Tomé and Príncipe violated its obligations pertaining to the exercise of its maritime sovereignty in terms of any or all of Articles 2(3), 49(3), and 25(1), and did so abusively and in bad faith, and in connected violation of Article 300 of the Convention and in violation of general international law in respect of Malta, the Maltese vessel Duzgit Integrity, her master, her crew, and all interests associated thereto.

9. Without prejudice to the above, to declare, adjudge and order that Sao Tomé and Príncipe violated, and did so abusively and in bad faith, and in connected violation of Article 300 of the Convention, generally applicable rules of international law related to fundamental human rights and humanitarian concerns of the master and crew of the Duzgit Integrity and her owners and charterers, particularly, without limitation, for not affording the rights to due process and for not respecting the principles of reasonableness, proportionality, non-differentiation and nonarbitrariness.

10. Without prejudice to the above, to declare, adjudge and order that Sao Tomé and Príncipe violated Articles 192, 194 and 225 of the Convention, and other generally applicable rules and principles of the international law directly related to the Law of the Sea, and did so abusively and in bad faith, and therefore also in breach of Article 300 of the Convention.

11. With respect to reparation [] the Republic of Malta respectfully requests the Arbitral Tribunal to award:

a. [F]irst, in full satisfaction, a declaratory judgment on the wrongfulness of the conduct of Sao Tomé and Príncipe in respect to the internationally wrongful acts indicated in Malta's Memorial and Reply;

b. [S]econd, a formal apology from Sao Tomé and Príncipe for those wrongful misconduct acts;

c. [T]hird, a compensation for material and non-material damages suffered by the Republic of Malta as a result of the law enforcement acts against all the interests of the Duzgit Integrity, including the shipowner, charterer and crews, as requested in this or in final submissions that the parties may yet be required to make if the quantification takes place.

12. With respect to the quantification of those damages, the Republic of Malta reserves the right to present further submissions at a later stage, pursuant [] to the Arbitral Tribunal's procedural order.

13. Finally, [to order] Sao Tomé and Príncipe [] to bear all costs and expenses incurred by the Applicant in this case, including, without limitation, the cost incurred in this case before the Arbitral Tribunal, legal costs, et cetera, with interest thereon.²³²

122.

In its final submissions made at the end of the hearing, Sao Tomé requested the Tribunal:

(i) First, to adjudge and declare that it is without jurisdiction to hear the present case.

(ii) Second, in the alternative, to adjudge and declare that the Republic of Malta's claims are inadmissible;

(iii) Third, in the alternative, to reject all claims made by the Republic of Malta, including those introduced during the oral hearings.

(iv) Fourth, to determine that the costs, disbursements and legal fees incurred by the Democratic Republic of Sao Tomé and Príncipe in these proceedings shall be fully borne by the Republic of Malta and that the Republic of Malta shall reimburse the Democratic Republic of Sao Tomé and Príncipe for its share of the expenses of the Tribunal, including the remuneration of its members.²³³

123.

The relevant provisions of the Convention as concerns the Tribunal's jurisdiction are Articles 286, 287(3), and 288:²³⁴

ARTICLE 286

Application of procedures under this section

Subject to section 3, any dispute concerning the interpretation or application of this Convention shall, where no settlement has been reached by recourse to section 1, be submitted at the request of any party to the dispute to the court or tribunal having jurisdiction under this section.

ARTICLE 287

Choice of Procedure

3. A State Party, which is a party to a dispute not covered by a declaration in force, shall be deemed to have accepted arbitration in accordance with Annex VII.

ARTICLE 288

Jurisdiction

1. A court or tribunal referred to in article 287 shall have jurisdiction over any dispute concerning the interpretation or application of this Convention which is submitted to it in accordance with this Part.

2. A court or tribunal referred to in article 287 shall also have jurisdiction over any dispute concerning the interpretation or application of an international agreement related to the purposes of this Convention, which is submitted to it in accordance with the agreement.

3. The Seabed Disputes Chamber of the International Tribunal for the Law of the Sea established in accordance with Annex VI, and any other chamber or arbitral tribunal referred to in Part XI, section 5, shall have jurisdiction in any matter which is submitted to it in accordance therewith.

4. In the event of a dispute as to whether a court or tribunal has jurisdiction, the matter shall be settled by decision of that court or tribunal.

124.

Sao Tomé objects to the Tribunal's jurisdiction on the grounds that this dispute does not concern the interpretation or application of the Convention.²³⁵

125.

Sao Tomé submits that Articles 288(1) and 287 stipulate that the dispute settlement procedures provided for in the Convention only apply to "disputes concerning the interpretation or application" of the Convention, and not to any claims in some way related to maritime issues.²³⁶ It argues that the fundamental nature of the compromissory clause in Article 286 is to limit jurisdiction to claims brought under the Convention.²³⁷

126.

Sao Tomé adds that it is for the Tribunal to characterise the dispute before it, "by examining the position of both parties" as held by the International Court of Justice ("ICJ") in the Nuclear Tests Case.²³⁸

127.

Citing the M/V Louisa Case, Sao Tomé insists that in order to establish that the dispute concerns a provision of the Convention, a claimant state must demonstrate a real and substantial connection between the facts and the relevant provision of the Convention.²³⁹ Therefore, "mere invocation of a provision of the Convention cannot itself mean that there is a dispute concerning the Convention".²⁴⁰

128.

Sao Tomé submits that "the nature of the dispute is not of a kind that falls under the Convention".²⁴¹ It claims that Malta relies on rules and norms of international law, fundamental human rights and general principles of law as the basis for its claims, and only mentions the Convention as an aside.²⁴² Moreover, Sao Tomé submits that Malta relies on generic provisions of the Convention that do not contain specific rights or obligations and attempts to use them to introduce the principles and norms of international law upon which it relies.²⁴³

129.

Sao Tomé submits that other Annex VII tribunals that applied other norms of international law did so in the context of disputes that concerned a specific provision of the Convention.²⁴⁴ Sao Tomé submits that, in this case, Malta is requesting the Tribunal to extend its jurisdiction by looking exclusively to norms outside the Convention.²⁴⁵ In this regard, Sao Tomé cites the conclusion in the Chagos Islands Case that "an incidental connection between the dispute and some matter regulated by the Convention is insufficient to bring the dispute, as a whole, within the ambit of Article 288(1)".²⁴⁶

130.

Sao Tomé further notes that Malta is asking the Tribunal to rule on the enforcement of Sao Tomé laws.²⁴⁷ It refers again to the M/V Louisa Case to claim that it is not incumbent on the Tribunal to determine whether Sao Tomé has violated its internal legislation, or to act as a human rights tribunal, or an appellate forum for procedures conducted in Sao Tomé.²⁴⁸

131.

Sao Tomé argues that the scope of jurisdiction is not altered by Article 293 of the Convention (Applicable Law).²⁴⁹ While this article permits a tribunal to apply other rules and principles of international law which are "necessary to settle claims over which it has jurisdiction", it does not extend the jurisdiction of the Tribunal to claims based on instruments other than the Convention.²⁵⁰ It finds support for this contention in the MOX Plant Case, the Arctic Sunrise Arbitration and the M/V Louisa Case.²⁵¹

132.

Malta rejects Sao Tomé's contention that the Tribunal does not have jurisdiction because the dispute does not fall under the Convention.²⁵² Malta considers that Sao Tomé's interpretation of the dispute settlement clauses is unduly restrictive.²⁵³ It submits that "[t]he Convention does not use the word "only" but the word "any" so that a tribunal "shall have jurisdiction over any dispute concerning the interpretation and application of [the] Convention".²⁵⁴ Malta finds support in the joint dissenting opinion of six judges in the Virginia G case:

There is no provision of the Convention which is immune from interpretation by the competent judicial body. Therefore, when the occasion arises, the Tribunal is competent to interpret every word and expression in the Convention. Any other view will be contrary to the rule of law.²⁵⁵

133.

Malta claims that the dispute relates to Sao Tomé's exercise of its maritime sovereignty (as granted under the Convention in Articles 2(1) and 49(1)) against the rights of another State, its flag and vessel (enjoyed in the terms of the Convention in Articles 91 and 94).²⁵⁶ It adds that the relevant events took place over a protracted time, starting within the territorial sea of Sao Tomé and continuing within its archipelagic waters.²⁵⁷ Malta submits that the events that took place between March and December 2013 "clearly characterise this case as a claim for damages between the flag State of the Duzgit Integrity and Sao Tomé and Príncipe, under the international law of the sea".²⁵⁸ It follows that "the nature of this dispute is intimately linked with the Convention".²⁵⁹

134.

Malta submits that the dispute includes claims that Sao Tomé violated its obligations and duties when exercising maritime sovereignty under Articles 2(1), 2(3), 49(1) and 49(3)²⁶⁰ and that the principles and rights relied upon also apply as a matter of general international law.²⁶¹ Malta also alleges breaches of Article 192, 194 and 225 with respect to Sao Tomé's obligation towards the marine environment.

135.

Malta invokes Article 300 of the Convention as "a common thread linking all the claimed violations of the rights and obligations".²⁶² Article 300 imposes an obligation of good faith upon the exercise of any right endowed by any provision of the Convention. Malta submits that Sao Tomé has abused its right to exercise sovereignty in its treatment vis-a-vis the Duzgit Integrity and thus, breached Article 300.²⁶³

136.

Malta objects to Sao Tomé's assertion that Malta is merely using the Convention as a "pretext".²⁶⁴ Malta explains that the Convention operates within the larger context of international law and links to other international law regimes and that, therefore, a violation of the Convention is also a violation of international law.²⁶⁵

137.

Malta explains that it is not contesting the validity or legitimacy of Sao Tomé's internal legislation, but rather the extent and manner of enforcement.²⁶⁶ Malta submits that, in the terms of Article 2(3), Article 49(3) and similar provisions in the Convention, "Sao Tomé has an obligation not to exercise its sovereignty in breach of the Convention or other rules of international law".²⁶⁷

138.

Article 288(1) limits the jurisdiction of the Tribunal to disputes concerning the interpretation or application of the provisions of the Convention. This dispute concerns Malta's claims that (i) the arrest of Duzgit Integrity, the detention of the Master, the fines imposed and the confiscation of the vessel and its cargo constitute breaches of Arts. 2(3), 25(1), 49(3) and 300 of the Convention; and (ii) the transhipment of oil from Duzgit Integrity to Energizer carried out by Sao Tomé on 19 October 2013 breached Arts. 192, 194, 225 and 300 of the Convention. Sao Tomé disputes all of Malta's claims. The dispute concerns the Parties' divergent views as to whether Sao Tomé acted within the lawful confines of its enforcement jurisdiction as prescribed by the Convention. In order to determine Malta's claims, the Tribunal will have to determine which provisions of the Convention apply to the present circumstances and whether Sao Tomé's conduct complied with those provisions. The Tribunal finds that this dispute clearly concerns the interpretation and application of certain provisions of the Convention. Consequently the requirement for finding jurisdiction is satisfied.

139.

Sao Tomé argues that Malta's claims are inadmissible on the following grounds: (i) the requirement of Article 295 of exhaustion of local remedies has not been met; (ii) Malta has not sufficiently specified the grounds on which several of its claims are based; (iii) the damages suffered by the owners of Duzgit Integrity have been settled; and (iv) the requirement of Article 283 of an exchange of views has not been observed.²⁶⁸

140.

Malta contests all of Sao Tomé submissions regarding inadmissibility.²⁶⁹

141.

Article 295 of the Convention provides:

ARTICLE 295

Exhaustion of local remedies

Any dispute between States Parties concerning the interpretation or application of this Convention may be submitted to the procedures provided for in this section only after local remedies have been exhausted where this is required by international law.

142.

Sao Tomé notes that customary international law requires that "before international proceedings may be instituted in the context of diplomatic protection, local remedies must be exhausted".²⁷⁰ It highlights that Malta itself states that this is a case of diplomatic protection.²⁷¹ Sao Tomé argues that "[c]ases of diplomatic protection are examples par excellence of instances where the rule that local remedies must be exhausted applies".²⁷²

143.

In any event, Sao Tomé pleads that, even if this is not strictly speaking a case of diplomatic protection, "the Tribunal has to decide whether the preponderant element of Malta's claims concerns direct injury to the state, or whether Malta is bringing the claims on behalf of the vessel and its crew".²⁷³ It submits that Malta's claims do not regard a violation of the State's own rights.²⁷⁴ Sao Tomé submits that even if the claim by Malta could be regarded as containing both elements of direct and indirect injury, Malta is "principally bringing claims on behalf of DS Tankers, Stena Oil and the Master and crew of Duzgit Integrity".²⁷⁵ Therefore, Sao Tomé insists that the requirement of exhaustion of local remedies applies.²⁷⁶

144.

Sao Tomé refutes Malta's assertion that no effective remedies were available.²⁷⁷ Sao Tomé submits that Stena Oil could have requested nullification of the decision of the Singular Court of 29 March 2013, on the basis that it had been sentenced without being personally notified of the legal proceedings (Articles 75(2), 87(e) and 88 of the Code of Criminal Procedure).²⁷⁸ Sao Tomé adds that other remedies were available; namely an administrative procedure to demand the release of the vessel²⁷⁹ and the possibility to request an indemnification for the value of the forfeited goods under the Criminal Code.²⁸⁰ Sao Tomé disagrees with Malta's submission that there was no confidence in the guarantees of due process in Sao Toméan system.²⁸¹

145.

Malta submits that its claims as a whole are brought on the basis of an injury to itself by the wrongful acts of Sao Tomé and, therefore, the requirement of exhaustion of local remedies does not apply.²⁸² Malta submits that these rights belong to it under Articles 91 and 94 the Convention, "principally by virtue of the vessel Duzgit Integrity having Maltese nationality and being under Maltese jurisdiction" throughout the relevant period of the dispute and remaining so today.²⁸³ Malta claims, therefore, that it "is asserting its own rights to ensure, in the person of its subjects, respect for the rules of international law"—in particular, for the obligations on coastal States.²⁸⁴ Malta further notes that under international law the vessel and all of its associated interests are considered as one and the same unit, benefiting from the nationality of the flag State.²⁸⁵

146.

In its Reply, Malta characterised this claim as one of diplomatic protection.²⁸⁶

147.

The exhaustion of local remedies is a requirement under international law when a State is exercising diplomatic protection. While Malta has characterised its claim as one of diplomatic protection, it has also invoked its rights as a flag State under the Convention.

148.

The Convention is a multilateral treaty which establishes a framework of rules that apply to all State parties. In certain circumstances, the provisions of the Convention apply in such a way that a relationship of a bilateral character between two parties is created.²⁸⁷ Part IV of the Convention sets out the rights and duties of coastal States and other States, including flag States, within the coastal State's archipelagic waters. Part XII of the Convention sets out obligations of States with respect to the protection and preservation of the marine environment. Article 300 of the Convention provides that States Parties shall fulfil in good faith the obligations assumed under this Convention and shall exercise the rights, jurisdiction and freedoms recognised in this Convention in a manner which would not constitute an abuse of right.

149.

To be satisfied that Malta has standing to bring claims against Sao Tomé, the Tribunal need only be satisfied that obligations were owed by Sao Tomé to Malta under the Convention. Sao Tomé owed certain obligations to Malta under the Convention. Pursuant to Arts. 49(3) and 300 of the Convention, Sao Tomé had to ensure that any law enforcement measures taken by it against a vessel under Malta's flag in Sao Tomé's archipelagic waters complied with the Convention. The Tribunal concludes that under the Convention Malta has standing to invoke the international responsibility of Sao Tomé for breaches of obligations owed by Sao Tomé as coastal State to Malta as flag State.

150.

The Tribunal accepts that Duzgit Integrity and all persons on board the ship at the relevant times should be considered as part of the unit of the ship. In the Arctic Sunrise Arbitration, M/V "SAIGA" (No. 2) and M/V "Virginia G", it was held that "every person involved or interested" in a vessel's operations should be considered as part of the unit of the ship and thus treated as an entity linked to the flag State.²⁸⁸ The Tribunal considers Duzgit Integrity to be a unit such that its crew, all persons and objects on board, as well as its owner and every person involved or interested in it are included. Malta is entitled to bring claims in respect of alleged violations of its rights under the Convention which resulted in damage to the ship, its master, and owner and charterer. This conclusion applies regardless of the nationality of the person or entity in question.

151.

Once determined that Malta has standing to bring the current claims under the Convention, in order to decide whether the requirement of exhaustion of local remedies is still to be met, it must be clarified whether Malta's claims are preponderantly for injury to its direct or indirect rights, namely, for injury to its rights as the flag State of the vessel in relation to damages incurred by it. The test of preponderance is set out in Article 14(3) of the International Law Commission's ("ILC") Draft articles on Diplomatic Protection which states:

Local remedies shall be exhausted where an international claim, or request for a declaratory judgment related to the claim, is brought preponderantly on the basis of an injury to a national or other person referred to in draft article 8.²⁸⁹

152.

In the Virginia G Case, ITLOS has accepted this test stating that:

When the claim contains elements of both injury to a State and injury to an individual, for the purpose of deciding the applicability of the exhaustion of local remedies rule, the Tribunal has to determine which element is preponderant²⁹⁰

153.

As noted by the ILC in its commentary to the above quoted provision:

In practice it is difficult to decide whether the claim is "direct" or "indirect" where it is "mixed", in the sense that it contains elements of both injury to the State and injury to the nationals of the State.²⁹¹

154.

The difficulty signaled by the ILC would present itself in the present case, were it not for the fact that DS Tankers concluded a Settlement Agreement with Sao Tomé and that in such Agreement, DS Tankers:

... gives up and waives, as applicable, any judicial actions already filed or to be filed, in any tribunal, against the State, its administrative bodies, the representatives of the State, public entities or similar, in Sao Tomé and Principe or in another country, as well as any additional complaints filed with private or international entities.²⁹²

155.

Consequently, the main private entity which has suffered injury that can be seen as giving rise to an "indirect" claim of Malta cannot avail itself of any remedy in Sao Tomé.

156.

In light of this, the direct claims of Malta for injury suffered as a State may be considered as preponderant. Consequently, there is no need that the private entities involved different from DS Tankers exhaust local remedies.

157.

As the flag State under the Convention, Malta has standing to bring the current claims under the Convention. There is no requirement for the exhaustion of local remedies in the circumstances of the present case under the Convention. On this basis, this objection to admissibility is rejected.

158.

Sao Tomé submits that under general principles of international law and Article 1 of Annex VII of the Convention, a party initiating arbitration must make clear the legal bases of its claims.²⁹³ Sao Tomé considers that Malta has not fulfilled this obligation in relation to some of its claims, which should therefore be considered inadmissible.²⁹⁴

159.

Sao Tomé explains that Malta refers to the International Convention for the Prevention of Pollution from Ship ("MARPOL"), International Convention for the Safety of Life at Sea ("SOLAS") and STCW, but it is not clear which precise rules of these instruments have allegedly been breached.²⁹⁵

160.

Sao Tomé further submits that Malta has failed to specify the legal basis for its claims that Sao Tomé has "violated fundamental human rights of the Master and crew".²⁹⁶ Sao Tomé asserts that Malta relies on various human rights treaties and on case law of the European Court of Human Rights ("ECHR"), none of which, Sao Tomé states, is binding upon both Parties.²⁹⁷ As a result, Sao Tomé concludes that these treaties cannot themselves constitute the source of obligations between the Parties or establish the legal basis for a claim by Malta.²⁹⁸

161.

Malta submits that it has specified the legal bases of its claims,²⁹⁹ as contemplated by provisions of the Convention and other rules of international law recognised by the Convention or of rules of law that are peremptory in nature or of general application.³⁰⁰

162.

Malta explains that the obligations that arise under Article 225 of the Convention, together with Articles 192 and 194 operate in tandem with Sao Tomé's other international responsibilities, including those arising as a result of its IMO membership and under MARPOL and SOLAS.³⁰¹

163.

Malta submits that its claims based on human rights and humanitarian considerations are admissible.³⁰² Malta argues that the Convention contains numerous references to "other rules of international law" (or similar phrasing).³⁰³ Malta refers to several law of the sea cases where the phrases "human rights", "humanitarian concerns", "due process of law" and "civil rights" appear.³⁰⁴

164.

The Tribunal is satisfied that Malta has amply and sufficiently specified the legal bases in the Convention for its claims in its Memorial dated 12 December 2014, Reply dated 23 October 2015, and its oral submissions at the Hearing held on 23-24 February 2016. The Tribunal does not find that the fact that Malta has referred to several instruments apart from the Convention renders its claims insufficiently specified.

165.

Sao Tomé submits that the claims for damages suffered by the owner of Duzgit Integrity, DS Tankers, are inadmissible given that they were the object of the Settlement Agreement.³⁰⁵ Malta objects to this on the grounds that (i) Malta was not a party to the Settlement Agreement; and (ii) the Settlement Agreement is in any event invalid ab initio.³⁰⁶

166.

Sao Tomé notes that a number of Malta's claims for monetary compensation relate to damages allegedly suffered by DS Tankers.³⁰⁷

167.

Sao Tomé recalls that it concluded the Settlement Agreement with DS Tankers on 23 November 2013, according to which Sao Tomé released Duzgit Integrity on 25 November 2013 upon payment of the IMAP fine plus an additional sum.³⁰⁸ Sao Tomé states that, as part of the Settlement Agreement, DS Tankers explicitly (i) agreed to waive its rights to bring claims against Sao Tomé, including any request for damages or compensation; and (ii) confirmed that it had not transferred its alleged claims to third parties, including Malta.³⁰⁹ In turn, Sao Tomé also agreed to waive its rights, claim or sum against the vessel and any associated persons, property, interest.³¹⁰ Through such waiver, Sao Tomé demonstrates that the agreement was fair and reciprocal between the Parties.

168.

Sao Tomé notes that Malta claims to be asserting its own right in exercising diplomatic protection over one of its nationals and, therefore, that it is was not for DS Tankers to waive any claims (the "Mavrommatis fiction").³¹¹ Sao Tomé submits that this fiction is subject to qualification. Sao Tomé argues that it has been recognised that in such situations a State is not asserting its own right only, but also the right of the injured national.³¹² Sao Tomé considers that the law has evolved in this regard,³¹³ and it invites the Tribunal to:

adopt the view that if the rights of the national have been adequately safeguarded because it voluntarily settled the dispute and - in this case - was returned its vessel, there is no longer place for the national's State to pursue a claim for damages allegedly resulting from that same dispute....³¹⁴

169.

Sao Tomé submits that it justifiably expected that Malta would be informed of the Settlement Agreement given that Mr. Gallardo was both acting as agent for Malta and representing Stena Oil and DS Tankers in the settlement discussions and given that Mr. Düzgit confirmed that he would inform Mr. Gallardo of the settlement reached.³¹⁵ Sao Tomé states that it "genuinely assumed that the matter was fully and finally settled" as evidenced by the letter from Sao Tomé's Foreign Minister to Malta's Foreign Minister on 12 December 2013.³¹⁶

170.

Sao Tomé maintains that Malta's allegations that the negotiations were conducted to "apply maximum pressure on the owners and the charterers" and that the Settlement Agreement was concluded under duress are false and not substantiated.³¹⁷ Sao Tomé submits that the text in the remittance note referred to by Malta does not constitute adequate and conclusive evidence of coercion, suggesting that there may have been a number of reasons for the inclusion of that text (including possible insurance claims).³¹⁸ Sao Tomé also recalls in this context that it was "DS Tankers itself [that] had initiated the settlement negotiations" after 22 October 2013 and first proposed to pay a lump sum compensation.³¹⁹ Following the conclusion of the agreement, Mr. Düzgit "explicitly confirmed" that he would ask Malta to withdraw the arbitration. Sao Tomé observes that "clearly, the agreement was breached and the arbitration was not withdrawn".³²⁰

171.

Sao Tomé further notes that the Settlement Agreement contains an exclusive choice of forum clause conferring jurisdiction on the courts of Portugal for any disputes arising from it.³²¹

172.

In light of the above, Sao Tomé emphasises that if a matter has been settled amicably, "there is no longer place for the national state to pursue a claim for damages".³²² It concludes that all claims brought by Malta that relate to damages suffered by DS Tankers are inadmissible.³²³

173.

Malta submits that the Settlement Agreement cannot render its claims inadmissible given that Malta is not a party to the Settlement Agreement—and did not participate in the negotiations.³²⁴ Malta further highlights that the Settlement Agreement was concluded after arbitration proceedings had already been instituted.³²⁵

174.

Malta challenges Sao Tomé's objection to admissibility on three further grounds: (i) DS Tankers could not waive Malta's rights to claim reparation under international law; (ii) the second clause paragraph 1 (regarding waiver of the right to claim) and the third clause paragraph 1 (regarding transference of rights) are "ambiguous and anomalous" and do not mention the present dispute; and (iii) there is no need for DS Tankers to transfer any rights to Malta given that this action is being brought by Malta itself under diplomatic protection (the rights invoked therefore belong principally to Malta).³²⁶

175.

Malta adds that it is "not convinced that [Sao Tomé] intended [the] document to be a settlement in good faith or, indeed, a settlement with Malta".³²⁷ Malta argues that the timing, manner, and circumstances in which negotiations were conducted evidence that Sao Tomé was only interested in dealing with DS Tankers. It did not invite Malta to partake in the discussions, negotiations, and/or conclusion of the Settlement Agreement.³²⁸

176.

Malta further submits that the Settlement Agreement was concluded in coercive circumstances, "under duress", and by applying maximum pressure on the owners and charterers of Duzgit Integrity to give in to Sao Tomé's demands, without the diplomatic involvement of Malta, the flag State which had already initiated arbitration proceedings.³²⁹

177.

Malta asks the Tribunal to consider circumstances that it submits illustrate the pressure felt by DS Tankers to reach an agreement in order to have Duzgit Integrity released. These circumstances constitute duress factors: (i) the 8 months of detention of Duzgit Integrity and the liability, costs, and losses incurred during this period; (ii) the worsening state of the ship and the loss in its value;³³⁰ (iii) state of the crew on board, particularly following the events of 11 and 19-22 October 2013; (iv) the confiscation and private sale of cargo (at a price that was likely 60% less than market value); (v) the release of Marida Melissa in unclear circumstances (differentiating the treatment of both vessels);³³¹ and (vi) the "excessive" payment of USD 625,000 representing the cargo inside the vessel that was used for maintenance purposes during detention.³³²

178.

Malta notes that the remittance note detailing DS Tankers' payment of the USD 625,000 states that payment was made under duress. It reads: "WITHOUT ACCEPTING ANY LIABILITY PAYMENT UNDER DURESS OF INVOICE FA0075/13 DATE 16.03.2013".³³³

179.

Malta concludes therefore that the Settlement Agreement is invalid ab initio, and, in any event, does not render any part of Malta's claim inadmissible.³³⁴

180.

As stated above, the Tribunal finds that Malta has standing under the Convention to bring claims against Sao Tomé (supra paragraphs 147-157). This standing extends to claims for damages suffered by all entities that are considered as part of the unit of the ship, including the owner DS Tankers. On 23 November 2013, DS Tankers entered into a Settlement Agreement with Sao Tomé by which, inter alia, it gave up and waived any judicial actions against the State.³³⁵

181.

The Tribunal finds that the Settlement Agreement reached between DS Tankers and Sao Tomé has no bearing on Malta's entitlement to bring claims against Sao Tomé under the Convention. The claims settled by DS Tankers under the Settlement Agreement are distinct from those brought by Malta at international law under the Convention.

182.

The Tribunal further notes that Malta is not a party to the Settlement Agreement and therefore is not bound by it. The Tribunal determines that the Settlement Agreement is thus not relevant to the question of the admissibility of Malta's claims as they pertain to DS Tankers.

183.

The Settlement Agreement may be relevant to a later phase of these proceedings as concerns the quantification of any damages suffered by DS Tankers, but the Tribunal makes no finding at this stage in that regard.

184.

Article 283 contains a requirement for an "exchange of views" between parties to a dispute. It reads as follows:

ARTICLE 283

Obligation to exchange views

1. When a dispute arises between States Parties concerning the interpretation or application of this Convention, the parties to the dispute shall proceed expeditiously to an exchange of views regarding its settlement by negotiation or other peaceful means.

2. The parties shall also proceed expeditiously to an exchange of views where a procedure for the settlement of such a dispute has been terminated without a settlement or where a settlement has been reached and the circumstances require consultation regarding the manner of implementing the settlement.

185.

Sao Tomé submits that Malta did not satisfy the requirement for an exchange of views before initiating the present arbitration.³³⁶ Sao Tomé says that Article 283 requires that a party wishing to bring a dispute to arbitration under the Convention must have mentioned the prospect of arbitration and specified on which provisions it relies.³³⁷ Sao Tomé asserts that in this case, Malta did not specify the basis of its claims prior to initiating arbitration.³³⁸ Sao Tomé submits that it was put on notice that Malta would refer the dispute to arbitration by a letter of 18 September 2013, wherein reference was made to the Convention, but not to any of its provisions.³³⁹

186.

Sao Tomé submits that, at that stage, Article 283(2) required the parties to exchange views again. Sao Tomé accepts that the Parties had agreed to conduct negotiations, but notes that negotiations were terminated by Malta. Sao Tomé argues that it was incumbent upon Malta to initiate an exchange of views to discuss the possible settlement of the dispute by other means prior to initiating arbitration.³⁴⁰

187.

Sao Tomé argues that it had been in the process of settlement discussions with Malta.³⁴¹ Sao Tomé states that it granted pardon to the Masters as part of these negotiations and adds that the Parties were trying to agree on a place for a meeting when Malta suggested by two Notes Verbales that Sao Tomé never responded to any of its communication and on 22 October 2013 initiated arbitration.³⁴²

188.

Sao Tomé emphasises that at no point in time during the negotiations did Malta make clear on which specific provisions of the Convention it was relying for its claims.³⁴³ Additionally, Malta did not exchange views on what method of dispute settlement to use after it considered negotiations terminated.³⁴⁴

189.

Malta submits that it fulfilled the requirements of Article 283.³⁴⁵ Malta states that it attempted to open diplomatic discussions but its efforts were barred by Sao Tomé's unwillingness to reach an amicable settlement.³⁴⁶ Malta asserts that Sao Tomé's actions led to an impasse and it was Sao Tomé that officially terminated all negotiations stating that "there are no longer any conditions to maintain the discussion... with Stena Oil Ab and the owner of the vessel Duzgit Integrity".³⁴⁷

190.

Malta states that Sao Tomé omits any mention to the relevance of the escalation of events on 11 October 2013,³⁴⁸ to which Stena Oil's letters were a direct reaction.³⁴⁹ Malta explains that Sao Tomé took offence to Stena Oil's reaction, decided to terminate negotiations and pursue a second attempt to remove the cargo from Duzgit Integrity, disregarding also Malta's clear request (as the flag State) for Sao Tomé to not proceed with the removal.³⁵⁰

191.

Malta submits that it initiated arbitral proceedings after these events, when "it was manifest that there was no scope for talks or settlement" given that Sao Tomé had "not once replied substantively [...] in a manner that might begin to be considered as a reciprocal exchange of views".³⁵¹ Malta considers that the first time that Sao Tomé corresponded substantially was by a letter dated 12 December 2013, after arbitration had been initiated and the default mechanism to appoint an arbitrator had been triggered.³⁵²

192.

Malta submits that an analysis of the time-line of communications and key events between the Parties³⁵³ demonstrates that (i) Malta attempted several times to pursue talks, until immediately before instituting arbitral proceedings; (ii) Malta offered alternative mechanisms for dispute resolution (namely, submission to ITLOS); (iii) Sao Tomé was not genuinely open to talks with Malta; and (iv) it was Sao Tomé that escalated events, and definitively terminated negotiations on 16 October 2013.³⁵⁴

193.

For instance, Malta submits that its letter of 18 September 2013 was a pre-notification of arbitration, clearly indicating the existence of a dispute. Malta further submits that it made reference to the grounds on which the dispute was based and included an indication of a possible alternative method of resolving disputes—submission to ITLOS.³⁵⁵ Malta notes that Sao Tomé's reply did not address its arguments nor provide a position on possible settlement mechanisms, stating only its availability for a meeting (later not agreeing on the location).³⁵⁶

194.

Malta sent further communications to Sao Tomé after the event on 11 October 2013, stating its concern with the ongoing events, reiterating alternative dispute-resolution methods, and specifying a date for a possible meeting as a final attempt.³⁵⁷

195.

Malta states that it made still another attempt at negotiations after the arbitration proceedings had been initiated and did not receive a reply from Sao Tomé.³⁵⁸ According to Malta, even after the release of the vessel, Malta continued trying to resolve the dispute peacefully until today. Such effort includes the meeting between the Prime Minister of Malta and the President of Sao Tomé at the occasion of the EU-Africa Summit in Brussels.³⁵⁹

196.

Malta reiterates that a proper exchange of views implies a reciprocal effort. It submits that it made several attempts and that Sao Tomé showed unwillingness to reach an amicable settlement throughout this process.³⁶⁰ Malta concludes therefore that it "was not obliged to continue with an exchange of views, it being manifest that the possibilities of reaching agreement were exhausted", and accordingly the requirements of Article 283 were satisfied.³⁶¹

197.

Article 283 requires the Parties to exchange views regarding the means for resolving their dispute. As stated by the tribunal in the Chagos Islands Case :

Article 283... was intended to ensure that a State would not be taken entirely by surprise by the initiation of compulsory proceedings. It should be applied... without an undue formalism as to the manner and precision with which views were exchanged and understood. In the Tribunal's view, Article 283 requires that a dispute have arisen with sufficient clarity that the Parties were aware of the issues in respect of which they disagreed.³⁶²

198.

In the Arctic Sunrise Arbitration, the tribunal held that:

The Tribunal understands this provision to require that the Parties exchange views regarding the means by which a dispute that has arisen between them may be settled.... Article 283(1) does not require the Parties to engage in negotiations regarding the subject matter of the dispute.³⁶³

199.

The Tribunal finds that the requirement for an exchange of views has been satisfied in this case. By Note Verbale of 23 April 2013, the Maltese Ministry of Foreign Affairs wrote to the Sao Tomé Ministry of Foreign Affairs to raise its concerns around the incident involving the vessel and the severity of the sentence passed by the Sao Tomé court of first instance. Malta exhorted the Sao Tomé authorities to review the case and come to an equitable resolution.³⁶⁴ Sao Tomé acknowledged receipt of Malta's Note Verbale on 29 April 2013 by Note Verbale dated 29 April 2013, noting that the matter was before the Supreme Court.³⁶⁵ On 22 April 2013, the Maltese Transport Centre wrote to the Permanent Secretary for the Ministry of Foreign Affairs of Sao Tomé with respect to the arrest of the vessel and the master, seeking a review of the court's decision to bring it "in accordance with international norms, primarily the [Convention]."³⁶⁶ On 15 May 2013, the Ministry of Foreign Affairs of Malta again wrote to its Sao Tomé counterpart with concerns as to the severity of the decision of the court of first instance, seeking that it be reviewed to comply with international norms as reflected in the Convention.³⁶⁷ By letter dated 18 September 2013, the Agents of Malta wrote to Sao Tomé to provide pre-notification of the imminent submission of the dispute surrounding the vessel to arbitration under the Convention.³⁶⁸ This was a 5-page letter providing a detailed overview of the dispute, sent in both English and in Portuguese. It stated:

The government of Sao Tomé is hereby put on notice that Malta shall imminently proceed to refer the dispute to arbitration pursuant to Article 286 UNCLOS under the applicable procedure set out in Annex VII UNCLOS. Both States are parties to UNCLOS and neither State has made any choice of procedure pursuant to Article 287 UNCLOS.³⁶⁹

200.

This correspondence was acknowledged by Sao Tomé in a Note Verbale dated 27 September 2013,³⁷⁰ in which Sao Tomé proposed a meeting to discuss settlement talks. It was shortly thereafter that Sao Tomé boarded Duzgit Integrity and performed a transhipment of the cargo to the Energizer. Upon learning of these events, on 14 October 2013, Malta requested Sao Tomé not to take any action that would further aggravate the situation, and reserved its right as the flag State "to take all other possible actions at law, including to refer the matter before an international arbitration panel set up in terms of the United Nations Convention on the Law of the Sea".³⁷¹ This had been stated in a letter from Malta to the Chief of Cabinet of Sao Tomé on 18 September 2013.³⁷²

201.

In light of the above, the Tribunal considers that Sao Tomé was sufficiently notified of the possibility that Malta would initiate the present proceedings and that the nature of the dispute was made sufficiently clear. The Tribunal does not consider that it was necessary for Malta to specify the provisions of the Convention that it relied upon. The Tribunal concludes that for the purposes of Article 283 there had been a sufficient exchange of views.

202.

Article 293(1) of the Convention provides:

ARTICLE 293

Applicable law

1. A court or tribunal having jurisdiction under this section shall apply this Convention and other rules of international law not incompatible with this Convention.

203.

Malta's position is that this case concerns not only the application and interpretation of the Convention, but also other rules of international law that are applicable to this case, in line with Article 293 of the Convention.³⁷³ Malta submits that "fundamental human rights... fall within the scope of 'other rules of international law'".³⁷⁴ Malta claims that Sao Tomé did not respect fundamental human rights enshrined in various domestic and international instruments—such as the Universal Declaration of Human Rights—in the exercise of its sovereignty.³⁷⁵ Malta "invokes the articles or principles of law which are of paramount importance, namely human rights considerations and the protection of the environment."³⁷⁶

204.

Sao Tomé does not dispute that it is under an obligation to observe rules of customary international law and general principles of law. It argues that the scope of the dispute resolution framework under the Convention is limited to deciding disputes relating to the interpretation and application of the Convention and thus, in so far as Malta's claims are based on other rules of international law that are separate and distinct from the Convention, the Tribunal should find it has no jurisdiction.³⁷⁷

205.

Sao Tomé emphasises the difference between applicable law under Article 293 and jurisdiction under Article 288(1).³⁷⁸ The former provision enables a tribunal to "apply rules and principles that may be necessary to settle a claim under the Convention" but does not extend the jurisdiction of a tribunal, which is a matter governed exclusively by the latter provision, to determine claims based upon instruments other than the Convention.³⁷⁹

206.

Sao Tomé recognises the relevance of human rights and due process in the law of the sea but rejects that they can, by virtue of Article 293, form the basis of a tribunal's jurisdiction. Sao Tomé challenges Malta's reliance on M/V Louisa on the basis that the tribunal in that case found that it did not have jurisdiction despite acknowledging the importance of human rights law and considerations of due process.³⁸⁰ Sao Tomé finds further support in the Arctic Sunrise Arbitration :

Article 293 is not, however, a means to obtain a determination that some treaty other than the Convention has been violated, unless that treaty is otherwise a source of jurisdiction, or unless that treaty directly applies pursuant to the Convention.³⁸¹

207.

Article 288(1) limits the jurisdiction of this Tribunal to disputes concerning the interpretation or application of the provisions of the Convention. Article 293(1) provides that the Tribunal shall apply the Convention and other rules of international law not incompatible with the Convention. The combined effect of these two provisions is that the Tribunal does not have jurisdiction to determine breaches of obligations not having their source in the Convention (including human rights obligations) as such, but that the Tribunal "may have regard to the extent necessary to rules of customary international law (including human rights standards) not incompatible with the Convention, in order to assist in the interpretation and application of the Convention's provisions that authorise the arrest or detention of a vessel and persons".³⁸²

208.

While Article 293(1) does not extend a tribunal's jurisdiction, it ensures that a tribunal can give full effect to the provisions of the Convention. For this purpose, some provisions of the Convention directly incorporate other rules of international law.³⁸³ As stated by the tribunal in the Arctic Sunrise Arbitration, in order properly to interpret and apply particular provisions of the Convention, it may be necessary for a tribunal to resort to foundational or secondary rules of general international law such as the law of treaties or the rules of State responsibility. In the case of some broadly worded or general provisions, it may also be necessary to rely on primary rules of international law other than the Convention in order to interpret and apply particular provisions of the Convention. Both arbitral tribunals and ITLOS have interpreted the Convention as allowing for the application of relevant rules of international law.³⁸⁴ Article 293 of the Convention makes this possible.

209.

The exercise of enforcement powers by a (coastal) State in situations where the State derives these powers from provisions of the Convention is also governed by certain rules and principles of general international law, in particular the principle of reasonableness. This principle encompasses the principles of necessity and proportionality.³⁸⁵ These principles do not only apply in cases where States resort to force, but to all measures of law enforcement. Article 293(1) requires the application of these principles. They are not incompatible with the Convention.

210.

The Tribunal is not competent to determine if fundamental human rights obligations were violated by Sao Tomé, or if Sao Tomé applied its own laws correctly; the Tribunal cannot act as an appeals court. The Tribunal can only determine if the measures actually taken by Sao Tomé on and subsequent to 15 March 2013 breached its international law obligations resulting from the principle of reasonableness as applied to law enforcement measures by a coastal State. The criterion of proportionality is relevant to a determination of whether the measures taken by Sao Tomé were reasonable.

211.

Malta has invoked Article 300 of the Convention in relation to all of its claims on the merits.

212.

Article 300 provides:

ARTICLE 300

Good faith and abuse of rights

States Parties shall fulfil in good faith the obligations assumed under this Convention and shall exercise the rights, jurisdiction and freedoms recognized in this Convention in a manner which would not constitute an abuse of right.

213.

Malta relies on Article 300 to extend the obligation of good faith and non-abuse of rights contained therein to "each and every provision in the Convention that endows a state with a right or imposes an obligation".³⁸⁶ Malta submits that human rights and humanitarian considerations are relevant to the abuse of right under Article 300.³⁸⁷ It argues that such considerations have been accepted into the law of the sea. Just as with human rights, Malta argues that, by virtue of Article 293 of the Convention and Article 11 of the Rules of Procedure, other rules of international law beyond the Convention also impose limitations upon the sovereignty of a coastal state.³⁸⁸ Malta claims that its reliance on human rights considerations and other rules of international law is, therefore, "perfectly justified"³⁸⁹ and would not take the dispute outside the Convention.

214.

Sao Tomé opposes Malta's claim that Article 300 "incorporates human rights and humanitarian considerations into the concept of abuse of rights"³⁹⁰ thereby subjecting Sao Tomé's exercise of sovereignty to the scrutiny of human rights law. Sao Tomé argues that if the Convention intended to impose such a limitation, it would do so expressly, as with Article 73(1) and (2) of the Convention. Sao Tomé argues that when there are no explicit limitations, "it is not for a court or tribunal to establish them by use of generic provisions".³⁹¹

215.

Sao Tomé submits that "an abuse of right" under Article 300 requires "a particular level of severity".³⁹² The question is whether a state exercised "its right in bad faith for a purpose that they were not intended and... caused significant damage to another state or its nationals"³⁹³ in a "perverse, improper, corrupt, deceitful or fraudulent" manner³⁹⁴ which can only be proved by "clear and compelling evidence".³⁹⁵ Sao Tomé considers that Malta has failed to provide such evidence on the basis of its mere speculation as to the possible motivation for the actions of Sao

Tomé.³⁹⁶

216.

Article 300 is an overarching provision which applies to all provisions of the Convention. It is not a stand-alone provision. In M/V Louisa, the tribunal held that:

... it is apparent from the language of article 300 of the Convention that article 300 cannot be invoked on its own. It becomes relevant only when "the rights, jurisdiction and freedoms recognised" in the Convention are exercised in an abusive manner.³⁹⁷

217.

In M/V Virginia G, the tribunal also noted that:

... it is not sufficient for an applicant to make a general statement that a respondent by undertaking certain actions did not act in good faith and acted in a manner which constitutes an abuse of rights without invoking particular provisions of the Convention that were violated in this respect.³⁹⁸

218.

Accordingly, Article 300 is an example of the application of rules of general international law, albeit by explicitly incorporating them into the Convention. It may be invoked when rights, jurisdiction and freedoms recognised in the Convention are exercised in an abusive manner.³⁹⁹ In the following analysis, Article 300 will be examined in connection with alleged violations of specific provisions of the Convention.

219.

Article 49 of the Convention provides, in relevant part:

ARTICLE 49

Legal status of archipelagic waters, of the air space over archipelagic waters and of their bed and subsoil

1. The sovereignty of an archipelagic State extends to the waters enclosed by the archipelagic baselines drawn in accordance with article 47, described as archipelagic waters, regardless of their depth or distance from the coast.

[...]

3. This sovereignty is exercised subject to this Part.

[…]

220.

Malta alleges that the overall conduct and measures taken by Sao Toméan authorities in respect of Duzgit Integrity, the Master, crew, owner, charterer and all interests associated with the vessel were unjustified, manifestly disproportionate, and in violation of, inter alia, Articles 49(3) and 300 of the Convention.⁴⁰⁰ Malta's specific allegations in relation to Sao Tomé's conduct towards the Duzgit Integrity 's Master, owner, and charterer, and Malta (as flag State) are set out in the sub-sections that follow.

221.

It is Malta's case that it was granted verbal authorisation to undertake the STS transfer by the Sao Tomé Coast Guard patrol boat during its first visit.⁴⁰¹

222.

Malta maintains that the Master of Duzgit Integrity "disclosed his intentions in full" on the first visit by the Coast Guard at 7:05:18 a.m. on 15 March 2013⁴⁰² by mentioning key words such as "equipment transfer", " STS", and "Marida Melissa".⁴⁰³ The radio transcript of the first visit⁴⁰⁴ shows that the Master disclosed "key information" regarding the upcoming arrival of Marida Melissa for the intended STS operation.⁴⁰⁵ The Master stated that the vessel was in that area for safety reasons, but he would immediately leave if Sao Tomé were to object.⁴⁰⁶ Malta also points out that no STS operation could have commenced at the time of the first visit because Duzgit Integrity was alone.⁴⁰⁷

223.

Malta further submits that the Coast Guard patrol boat left the scene with the knowledge that the STS operation would take place, and failed to raise any objections or take any measures until Marida Melissa was alongside Duzgit Integrity.⁴⁰⁸ The Coast Guard understood the Master and concluded their conversation "in a confirmatory and reassuring manner" without objections.⁴⁰⁹ Malta submits that the level of English of both sides was "more than sufficient for the Coast Guard to have understood what the Master stated".⁴¹⁰ Malta points out that the Coast Guard officer stated "there was no misunderstanding between himself and the accused over the radio" during court proceedings.⁴¹¹

224.

Malta also submits that if the Coast Guard had not understood the conversation, it would be grossly negligent for it to have responded with the phrases "I congratulate your cooperation", "Good morning", and "Good job".⁴¹² Malta also points out that the first exchange happened via public VHF channel 16⁴¹³ and the Coast Guard on shore were also within range but did not intervene via radio.⁴¹⁴

225.

Malta also submits that while the Master stated during the first encounter that Duzgit Integrity would leave if the Coast Guard gave no permission, the Coast Guard failed to clearly order the Master to stop.⁴¹⁵ Malta adds that during both the first and second visits the Master stated that he would move offshore if no permission was given, with no direct answer from Sao Tomé.⁴¹⁶

226.

Malta states that there was sufficient time for the Coast Guard to take action had it intended to prevent the STS operation from taking place or seek further information.⁴¹⁷ Malta submits that the responsibility was shifted to the Coast Guard, as they could have and should have taken action during the first visit or immediately after.⁴¹⁸

227.

Sao Tomé contends that Duzgit Integrity failed to obtain prior authorisation to make an STS transfer in accordance with its law. Decreto-Lei 04/2010 requires 24-hour notice of arrival before entering the ports of Sao Tomé and is interpreted to be applicable to anchorages in the archipelagic waters and territorial sea.⁴¹⁹ Sao Tomé submits that Stena Oil was fully aware of the procedures and requirements⁴²⁰ for obtaining prior written authorisation to enter Sao Tomé territorial waters and carry out operations,⁴²¹ referring to Duzgit Integrity 's own manuals and several previous instances where the charterer had applied for authorisation.⁴²² According to Sao Tomé, vessels like Duzgit Integrity intending to perform an STS operation are required to provide prior notification to the coastal State under international law, a requirement of which the Master was aware.⁴²³ Sao Tomé notes that Duzgit Integrity failed to comply with this requirement and entered Sao Tomé waters to transfer large quantities of oil without notifying the authorities.⁴²⁴

228.

Referring to the radio transcript of the first visit, Sao Tomé contests Malta's contentions that authorisation was granted verbally during the Coast Guard's first visit, and argues that:

(i) The Master did not disclose his intentions in full; he merely stated his intention to carry out an equipment transfer of hoses and fenders;

(ii) The Master failed to declare key information about the intended transfer; the most important part of the operation-the transhipment of some 1,555 MT of oil—is not mentioned at all during the entire conversation;

(iii) The level of English of the Coast Guard officer was poor, and this was made clear at the beginning of the conversation.⁴²⁵

229.

Sao Tomé states that the Coast Guard officer's "understanding of the first conversation was limited to the fact that the Duzgit Integrity did not seem to have authorisation or an agent in Sao Tomé."⁴²⁶ No one present in the Coast Guard Operation Centre could speak English or could assist the Coast Guard officer in the conversation.⁴²⁷ Sao Tomé concludes that Duzgit Integrity did not request and obtain written authorisation and the Coast Guard did not give explicit authorisation.⁴²⁸

230.

Sao Tomé contends that there was no implicit authorisation given during the first visit,⁴²⁹ and notes that "the Master himself was not convinced that he had obtained authorisation" since the Master tried to contact the Coast Guard again to request permission for the operation.⁴³⁰

231.

Sao Tomé claims that it did not act in violation of the Master's legitimate expectations because no such expectations were created.⁴³¹ Sao Tomé contends that: (i) the radio conversation during the first visit does not objectively and reasonably give rise to such expectations as the requirements for authorisation are extensive and strict, and the Master's subjective expectations are not sufficient;⁴³² (ii) the Coast Guard's response was ambiguous, and the Master should have been put on alert as the Coast Guard made clear his English was poor; it is in fact evident that the Master was put on alert as he asked for permission again later;⁴³³ and (iii) because "the Master did not disclose his intentions in full" nor did he mention details of the operation, he could not have obtained authorisation even if the Coast Guard's English was perfect.⁴³⁴

232.

Sao Tomé denies that the information disclosed by Duzgit Integrity shifted responsibility to the Coast Guard, and argues that the responsibility remained with Duzgit Integrity to disclose information and seek authorisation.⁴³⁵

233.

As far as the second visit is concerned, Sao Tomé states that "the Sao Tomé authorities did not consider accepting the proposal to proceed offshore because it was suspecting the Duzgit Integrity of being engaged in illegal activity, which warranted further investigation".⁴³⁶

234.

Article 49 of the Convention is applicable because Duzgit Integrity was located in the archipelagic waters of Sao Tomé at the time of arrest.⁴³⁷ The Tribunal determines that Malta has failed to establish that the Sao Toméan authorities gave explicit authorisation to Duzgit Integrity to conduct the intended STS transfer, even though it appears that the Master may have held a bona fide but mistaken belief that he had been given permission by the Sao Tomé Coast Guard. Consequently, the Tribunal finds that the actions undertaken by the Sao Toméan authorities in relation to Duzgit Integrity on 15 March 2013, namely, the Coast Guard's instruction to the Masters to anchor the vessels in the anchorage area and proceed onshore,⁴³⁸ were not unlawful.

235.

The Tribunal considers that Sao Tomé acted lawfully and in accordance with its law enforcement jurisdiction resulting from its sovereignty over its archipelagic waters in relation to Duzgit Integrity on 15 March 2013. The Master knew that Duzgit Integrity had an obligation to obtain permission prior to entering Sao Tomé's waters for making any transhipment. There was no obligation on Sao Tomé to inform Duzgit Integrity of that obligation separately, or to advise Duzgit Integrity to leave Sao Tomé's waters rather than arrest the ship after it had started preparing STS operations with Marida Melissa ; Sao Tomé was acting within its sovereign powers to arrest the ship in the circumstances.

236.

The Tribunal does not accept Malta's shift-in-responsibility argument. A foreign ship may not commence STS operations in the waters under sovereignty of a coastal State without authorisation. Duzgit Integrity had ample time to notify its agent to seek authorisation from Sao Tomé. The Duzgit Integrity charterers were not new to the West African region; they had done STS transfers in Sao Tomé waters before.⁴³⁹ In the Tribunal's view, the measures taken by Sao Tomé were necessary to ensure compliance with its laws and regulations adopted in conformity with the Convention. Duzgit Integrity did not have a written authorisation, and the radio communications with the master of the Coast Guard patrol boat during its first visit did not constitute such authorisation. Non-compliance with a requirement for prior authorisation under domestic law to undertake an STS operation has been found to be a serious violation.⁴⁴⁰

237.

Malta contends that the bases for IMAP fines⁴⁴¹ imposed on Duzgit Integrity and Marida Melissa on 16 March 2013 (EUR 28,875 each)⁴⁴² were unclear and unjustified for the following reasons:⁴⁴³ (i) the legal basis of the fine relates specifically to entry into port, however the Master made clear that he did not have such intention;⁴⁴⁴ (ii) the maximum fine of EUR 5,000 was not justifiable, as it is only applicable to "very serious offences: those that result from practices capable of jeopardising the operation of the systems for the protection of vessels and port installations";⁴⁴⁵ (iii) the additional 50 percent increase of the fines (EUR 2,500) for each vessel (on the ground that the ac t was committed by a legal entity) was not justifiable, as the legal entity was not made party to the judicial proceedings;⁴⁴⁶(iv) the charge of EUR 20,000 to each vessel as costs for intervention by the national authorities was questionable;⁴⁴⁷and (v) a further "other costs" of EUR 1,375 charged to each vessel was unexplained.⁴⁴⁸

238.

Sao Tomé submits that it should be granted a high degree of deference in respect of its exercise of sovereignty in its archipelagic waters and territorial sea,⁴⁴⁹ and therefore "international courts and tribunals should exercise restraint when carrying out judicial review".⁴⁵⁰ Sao Tomé contends that the facts in this case do not meet the high threshold for such review.⁴⁵¹ Sao Tomé submits that because Duzgit Integrity did not obtain prior written authorisation, its penalties are justified and not erroneous.⁴⁵²

239.

Sao Tomé contends that Decreto-Lei 04/2010, the basis of the IMAP fine, requires 24-hour notice of arrival before entering the ports of Sao Tomé and is interpreted to be applicable to anchorages in the archipelagic waters and territorial sea.⁴⁵³ Sao Tomé submits that "[t]he amount of the fine was based on Articles 21 and 22 of Decreto-Lei 04/2010 and was increased with an amount as compensation for costs incurred as a result of the intervention of the Coast Guard".⁴⁵⁴ Sao Tomé also contends that an explanation of the fine was provided to Malta.⁴⁵⁵

Alfred H.A. Soons	President
Tullio R. Treves	Appointed by the claimant
James Kateka	Appointed by the Appointing Authority

The Duzgit Integrity Arbitration

Documents of the case

Lawyers, other representatives, expert(s), tribunal’s secretary

Award

I. INTRODUCTION

A. THE PARTIES

B. THE DISPUTE

II. PROCEDURAL HISTORY

III. FACTUAL OVERVIEW

A. MARITIME CONTEXT

1. Duzgit Integrity's owner, charterer, and ship registry

2. Sao Tomé and Principe's geographic location and maritime limits

3. Ship-to-ship transfers along the west-African shipping route

B. EVENTS BEFORE 15 MARCH 2013: DUZGIT INTEGRITY'S SCHEDULED OPERATION

C. EVENTS ON 15 MARCH 2013: VESSEL DETENTION

1. First visit by the Sao Tomé and Principe's Coast Guard

2. Second visit by the Sao Tomé and Príncipe's Coast Guard and vessel detention

D. EVENTS AFTER 15 MARCH 2013: INSTITUTION OF JUDICIAL PROCEEDINGS AND IMPOSITION OF PENALTIES

1. Port and Maritime Institute administrative penalty

2. Customs Directorate General administrative fine

3. Criminal proceedings against the Masters

E. EFFORTS TO REACH A SOLUTION

1. Settlement discussions in the summer of 2013

2. Pardon of Masters

F. DISCHARGE OF OIL CARGO FROM DUZGIT INTEGRITY

G. SETTLEMENT AGREEMENT AND RELEASE OF DUZGIT INTEGRITY

IV. PARTIES' REQUESTS FOR RELIEF

V. JURISDICTION AND ADMISSIBILITY

A. JURISDICTION RATIONE MATERIAE

i. Respondent's position

ii. Applicant's position

iii. Decision of the Tribunal

B. ADMISSIBILITY OF CLAIMS

1. Exhaustion of local remedies under Article 295 of the Convention

i. Respondent's position

ii. Applicant's position

iii. Decision of the Tribunal

2. Specificity of legal bases

i. Respondent's position

ii. Applicant's position

iii. Decision of the Tribunal

3. Effect of the Settlement Agreement

i. Respondent's position

ii. Applicant's position

iii. Decision of the Tribunal

4. Exchange of views under Article 283 of the Convention

i. Respondent's position

ii. Applicant's position

iii. Decision of the Tribunal

VI. APPLICABLE LAW

i. Applicant's Position

ii. Respondent's Position

iii. Decision of the Tribunal

VII. MERITS

A. ARTICLE 300

i. Applicant's Position

ii. Respondent's Position

iii. Decision of the Tribunal

B. ALLEGED VIOLATION OF ARTICLE 49(3) OF THE CONVENTION IN CONNECTION WITH A VIOLATION OF ARTICLE 300

1. Whether explicit authorisation was given during the Coast Guard's first visit

i. Applicant's position

ii. Respondent's position

iii. Decision of the Tribunal

2. Whether the penalties imposed by Sao Tomé were disproportionate

(a) The IMAP fines

i. Applicant's position

ii. Respondent's position