HHQ’s Sea You in Court Series

This is Part 2 of HHQ’s 3-part series on maritime pollution liability and enforcement in Malaysia, which is broken down as follows:-

Part 1 –  The legal framework governing maritime pollution liability in Malaysia.
Part 2 –  The civil/criminal liabilities and penalties imposed on parties who breach their statutory duties.
Part 3 –  The defences/limitations of liability available to parties.

In case you missed Part 1, click on this link to read all about it: https://hhq.com.my/posts/navigating-toxic-waters-maritime-pollution-liability-and-enforcement-in-malaysia-part-1-of-3/

Part 2

Civil and Criminal Liabilities for Breach of Statutory Duties in Malaysia’s Maritime Pollution Regime

Building on Part 1’s overview of Malaysia’s maritime pollution framework, this article examines the civil and criminal liabilities imposed on parties who breach their statutory duties under key legislation governing maritime pollution in Malaysia.

Malaysia adopts a dual liability regime, where a single pollution incident may trigger: –

a) Civil liability (primarily compensatory in nature); and
b) Criminal and regulatory liability (punitive and deterrent in nature).

The result is a layered enforcement landscape that significantly amplifies the legal and financial consequences of maritime pollution incidents.

Key Legislation

1. Merchant Shipping (Liability and Compensation for Oil and Bunker Oil Pollution) Act 1994 (“MSOPA 1994”)

Whilst primarily compensatory in nature, the MSOPA 1994 imposes civil liabilities and criminal penalties to ensure the framework functions properly.

i. Civil liabilities

A shipowner is strictly liable for any pollution damage caused (whether to Malaysia or other CLC and Bunker Oil Convention 2001 countries’ territorial sea and exclusive economic zone) by the discharge or escape of oil or bunker oil from the ship [1].

Where multiple vessels are involved, liability is joint and several, allowing claimants to pursue any one or more shipowners for the entirety of the pollution damage caused [2].

ii. Criminal Penalties

A shipowner carrying more than 2,000 tons of oil in bulk must maintain compulsory insurance for oil pollution liability, while a shipowner of a vessel exceeding 1,000 gross tonnage must maintain compulsory insurance for bunker oil pollution liability.

Entry into / departure from Malaysian ports or terminal installations (including any attempts thereof) without a certificate of insurance or other financial security as provided under the CLC and the Bunker Oil Convention 2001, constitutes an offence. If the shipowner or master is found guilty of the said offence, they will be liable to a fine of up to RM50,000, imprisonment for up to 4 years, or both[3].

Separately, if a ship fails to carry the requisite certificate of insurance, or the master fails to produce the same when demanded by the Director of Marine of the Marine Department Malaysia, the master will be subject to a fine of up to RM10,000 or up to 1 year in prison or both [4].

iii) Ship Detention

Where there has been non-compliance with compulsory insurance requirements bringing about criminal penalties (as set out above), the ship may be detained if it attempts to leave a port / terminal installation in Malaysia [5].

iv) Direct Action against Insurers

If a shipowner has incurred civil liability for oil pollution or bunker oil pollution, and there is a compulsory insurance certificate in force, proceedings may be brought by the aggrieved party directly against the insurer [6].

v) Corporate Liability

If a company commits an offence under the MSOPA 1994, then every director, manager, secretary, or similar officer at the time of the offence may be deemed personally liable [7].

2. Environmental Quality Act 1974 (“EQA 1974”)

The EQA 1974 is the primary environmental statute in Malaysia, and its criminal penalties have been significantly enhanced by the Environmental Quality (Amendment) Act 2024, which came into force in 2024.

i) Criminal Penalties

ii) Ship Detention & Sale

Where the DG has reason to believe that a discharge of oil (including any mixtures containing oil) or scheduled wastes came from a vessel, the said vessel may be detained until the shipowner deposits an adequate sum or provides security for cleanup costs [13].

If the shipowner cannot satisfy the cleanup costs, the DG may then make an application in Court to sell the vessel, and the proceeds from said sale will be applied toward cleanup costs [14].

iii) Civil Liabilities

In a pollution incident, the DG may take action to eliminate or mitigate pollution and recover all costs and expenses from the polluter [15].

Upon conviction under the EQA 1974, in addition to imposing a penalty for the offence, a court may order the offender to pay compensation for loss suffered by or damage occasioned to property of the aggrieved party[16].

iv) Corporate and Vicarious Liability

Where an offence is committed by a company, firm, society or other body of persons, the following persons will also be deemed guilty of the said offence:-

• Director, CEO;
• Manager or similar officer; or
• Partner [17].

Further, principals will also be held vicariously liable for contravening acts of its clerk, servant, or agent in the course of employment [18].

3. Exclusive Economic Zone Act 1984 (“EEZ Act 1984”)

i) Civil Liabilities

The EEZ Act 1984 governs pollution incidents occurring within Malaysia’s exclusive economic zone (“EEZ”) and continental shelf, and is notable for its broad attribution of liability.

Where there has been a discharge / escape of oil, mixtures containing oil, or pollutants from a vessel, liability is imposed on a wide class of parties, including the shipowner, master, and any other person responsible, all of whom will be held jointly and severally liable for:-

• All clean up and mitigation costs [19];
• Damage caused to any person or property;
• Losses to fishing and economic activities; and
• Policing, surveillance and enforcement activities [20].

ii) Criminal Penalties

Any person (including the shipowner or master) found guilty of discharging oil, mixtures containing oil, or pollutants into the EEZ will be liable to a fine not exceeding RM1 million [21]. Even a failure to report the said discharge would result in liability to a fine not exceeding RM10,000 [22].

Under the EEZ Act 1984, the DG has powers to direct for the elimination or mitigation of the damage caused by the aforementioned discharge. If a party fails to comply with the DG’s directions, they will be deemed guilty of an offence carrying a fine up to RM10,000 [23].

Notably, the master of a vessel is also held personally liable to a fine of up to RM1 million for any of the foregoing offences, even where the offending act was committed by another person on board[24]. This means the master can be prosecuted alongside the individual offender and the shipowner.

iii) Ship Detention & Sale / Forfeiture

Enforcement powers under the EEZ Act 1984 are extensive and include:-

• Detention of offending vessels [25];
• Criminal penalty of a fine not exceeding RM1 million for unauthorised departure of a vessel while under detention [26];
• Court-ordered sale of the vessel to satisfy fines and clean-up costs [27]; and
• Forfeiture of the vessel upon conviction of an offence [28].

iv) Corporate Liability

• Under the EEZ Act 1984, if an offence is committed by a company, partnership, or firm, the following persons are also deemed guilty of that offence and will be liable to a fine of up to RM1 million: –
• Every director and officer of the company who is directly connected with the activity resulting in the offence.
• Every member of a partnership.
• Every person concerned with the management of the firm or business [29].

4. Merchant Shipping Ordinance 1952 (“MSO 1952”)

i) Criminal Penalties

Under the MSO 1952, the discharge of oil or harmful substances into Malaysian waters, coasts, reefs or the EEZ is strictly prohibited and is punishable by a fine not exceeding RM50,000 or imprisonment for a term not exceeding 2 years, or both [30].

If oil or harmful substances is escaping/likely to escape from a vessel, in an effort to prevent or reduce the extent of pollution, the Director of Marine may issue a notice to the shipowner for remedial action to be taken in respect of the ship or its cargo and/or prohibit the removal of the ship or its cargo from a specified location [31].

If the shipowner or master fails to comply with the aforementioned notice regarding escaping pollutants, they will face a fine of up to RM50,000 per day for the period of default[32].

Further, it is an offence under the MSO 1952 to send an unseaworthy ship to sea that endangers life. The offending party is liable to a fine up to RM20,000, or up to 2 years imprisonment, or both [33].

ii) Civil Liabilities

In addition to the criminal penalty imposed (as expounded above), a shipowner who fails to comply with a notice regarding escaping pollutants would also be liable for any expenses incurred by the Director of Marine in preventing or mitigating pollution from a vessel.

Where expenses have been incurred by the Director of Marine in preventing or mitigating the pollution, such costs:-

• Becomes a debt due to the Government, which is recoverable from the shipowner;
• May constitute a charge on the vessel; and
• May justify detention of the vessel [34].

Where pollutants escape from two or more ships and cannot be separated, each ship is deemed liable for the total escape. However, the Government cannot recover from the shipowners more than the total actual expenses incurred by the Director of Marine in preventing or mitigating pollution from the multiple vessels[35].

iii) Special Powers in Maritime Casualties

In cases of a maritime casualty (stranding, abandonment, or material damage causing discharge), the Director of Marine has the power to: –

• Direct measures to sink or destroy the ship or its cargo.
• Take over control of the ship to prevent or reduce pollution [36].

If there has been a failure by the master of a vessel to report a maritime casualty or discharge incident as soon as possible, he shall be liable to a fine not exceeding RM10,000 [37].

iv) Vessel Detention
If upon inspection by the Director of Marine (or any authorised officer), they are satisfied that there has been a contravention of the MSO 1952, the offending vessel may be detained [38].

Disclaimer: This article is for general information only and does not constitute legal advice or legal opinion. It should not be relied upon as a substitute for specific legal advice. No person should act (or refrain from acting) based on this article without obtaining advice on the specific facts and circumstances. Halim Hong & Quek does not accept responsibility or liability for any loss or damage arising from reliance on this article. Halim Hong & Quek reserves the right to update, amend or withdraw this article at any time. All rights reserved.

Subscribe to DISPUTES DECODED BY HHQ, our bi-monthly legal update, at https://mailchi.mp/hhq/2nofd6rjlt to receive our latest legal updates and articles. You may also visit the HHQ website at https://hhq.com.my/insights/ for further articles and insights from our team.

[1] Sections 3 & 3A of the MSOPA 1994
[2] Sections 3(3) & 3A(4) of the MSOPA 1994
[3] Sections 11(6) & 11A(6) of the MSOPA 1994
[4] Sections 11(7) & 11A(7) of the MSOPA 1994
[5] Sections 11(8) & 11A(8)  of the MSOPA 1994
[6] Section 13 of the MSOPA 1994
[7] Section 28 of the MSOPA 1994
[8] Section 27(1) & (2) of the EQA 1974
[9] Section 29(1) & (2) of the EQA 1974
[10] Section 32(1) & (2) of the EQA 1974
[11] Section 34B(1) & (4) of the EQA 1974
[12] Section 48(2) of the EQA 1974
[13] Section 48(1) of the EQA 1974
[14] Section 48(3) of the EQA 1974
[15] Section 47(1) of the EQA 1974
[16] Section 46E of the EQA 1974
[17] Section 43(1) of the EQA 1974
[18] Section 43(2) of the EQA 1974
[19] Section 14(3) & (4) of the EEZ Act 1984
[20] Section 40 of the EEZ Act 1984
[21] Section 10(1) & (2) of the EEZ Act 1984
[22] Section 12(2) of the EEZ Act 1984
[23] Section 14(2) of the EEZ Act 1984
[24] Sections 29 & 31 of the EEZ Act 1984
[25] Section 15(1) of the EEZ Act 1984
[26] Section 15(3) of the EEZ Act 1984
[27] Section 15(4) of the EEZ Act 1984
[28] Section 33 of the EEZ Act 1984
[29] Sections 29 & 30 of the EEZ Act 1984
[30] Section 306CA of the MSO 1952
[31] Section 306D of the MSO 1952
[32] Section 306F(1) of the MSO 1952
[33] Section 300(1) and (4) of the MSO 1952
[34] Section 306G(3) of the MSO 1952
[35] Section 306H of the MSO 1952
[36] Section 306I of the MSO 1952
[37] Section 306J of the MSO 1952
[38] Section 306Q of the MSO 1952

About the authors

Siva Kumar Kanagasabai
Senior Partner
Head of Dispute Resolution Practice Group
Halim Hong & Quek
kumar@hhq.com.my

○
Pavidren Sivananda Ratnam
Associate
Dispute Resolution
Halim Hong & Quek
pavidren@hhq.com.my