• 4 years on, SL is still struggling to enforce landmark $ 1 b compensation order
• With court proceedings concluded, enforcement now rests with Executive
• MEPA confirms limited recovery as Compensation Commission remains in limbo 

The sinking of the MV X-Press Pearl in June 2021 stands as the most severe environmental disaster in the recorded history of Sri Lanka. The Singapore-flagged container vessel caught fire off the western coast while carrying a cargo that included hazardous chemicals and plastic nurdles, triggering extensive marine pollution and long-term ecological damage. 

While emergency response operations ended years ago, the legal and institutional response to the disaster remains unresolved. 

In July 2025, the Supreme Court (SC) of Sri Lanka issued a landmark judgment directing the payment of $ 1 billion in compensation for environmental damage, economic loss, and public harm caused by the incident. 

The ruling was widely hailed as a decisive assertion of the polluter pays principle. However, as of February, the initial instalments required under that judgment have not been credited to the Treasury.

The compensation process has since entered a prolonged period of uncertainty, marked by competing legal strategies, institutional delays, and unresolved enforcement mechanisms.

A process at an impasse

More than four years after the disaster, Sri Lanka’s efforts to recover compensation remain fragmented. Key stakeholders hold sharply differing views on how the order of the Supreme Court should be enforced. 

The Attorney General’s (AG) Department has emphasised diplomatic engagement and negotiated settlement, particularly in relation to ongoing proceedings in foreign jurisdictions. Environmental advocates argue that domestic enforcement should take priority and have called for contempt proceedings against non-compliant parties. 

Meanwhile, the statutory Compensation Commission established under the direction of the SC has yet to become operational due to unresolved procedural requirements.

SC order

The intervention of the SC in the X-Press Pearl matter followed multiple petitions filed by State agencies, environmental organisations, and private parties. In July 2025, a five-judge bench led by then Chief Justice Murdu Fernando delivered a judgment fixing compensation at $ 1 billion. Following the non-payment of the initial instalments by the September deadline, the court convened again to review the progress of implementation. 

On 26 January this year, the proceedings reached a definitive conclusion before a three-judge bench comprising Justices Shiran Gooneratne, Achala Wengappuli, and Priyantha Fernando. The court considered a motion filed by the AG, represented by Additional Solicitor General Nerin Pulle, which outlined the specific steps taken to implement the judgment. 

These steps included obtaining travel bans against 14 directors of the local agent, Sea Consortium Lanka Ltd., and initiating investigations into their assets through the Criminal Investigation Department. 

Upon reviewing these submissions, the court approved the motion and directed the AG to proceed with the implementation of the judgment. With this directive, the court effectively concluded the hearing of the Fundamental Rights (FR) petitions, thereby terminating the phase of direct judicial supervision. 

Attorney General Parinda Ranasinghe, speaking to The Sunday Morning, stressed the legal significance of this specific development. “Because there is so much misinformation, it is important to clarify this point. The case is formally closed. The court issued a final order on 26 January, distinct from a judgment, which means there are no further hearing dates. The case record is public; anyone may verify the final journal entry.” 

According to Ranasinghe, the issuance of this final order means that the judicial phase of the domestic case has concluded, shifting responsibility to the Executive branch for implementation and recovery.

The AG’s strategy

The Attorney General has firmly rejected speculation that Sri Lanka intends to abandon its claims in foreign courts, particularly before the Singapore International Commercial Court. 

“With regard to suggestions that I am attempting to withdraw the case, there is absolutely no truth to them. We do not intend to withdraw any pending litigation. There are several strategic decisions to be made. Once those are finalised, we will advise the Government and inform the President of the appropriate course of action. For the time being, the only concrete development is the order issued by the SC,” he said. 

Ranasinghe framed the dispute not as a question of liability, which he considers conclusively established, but as a matter of financial quantification. 

“These are not cases we expect to lose. In maritime pollution claims worldwide, the standard outcome is a negotiated settlement. You negotiate to secure the necessary compensation. The shipping company may initially refuse, much like an insurance company disputing a quotation for vehicle repairs, but matters rarely proceed to full trial. Ultimately, the fact that we suffered damage is beyond dispute. The ship sank, and we sustained significant injuries and losses. It is now simply a question of quantification,” he said. 

He also emphasised that decisions regarding enforcement and settlement would first be communicated internally within the Government. “Consequent to the SC order, our priority is to advise the Government. It is appropriate that the Government is informed directly rather than through the press. Once the Government has been advised, we will be in a position to disclose further details.” 

Concerns of environmentalists, activists

Environmental organisations and activists have expressed growing concern over what they describe as prolonged inaction following the SC judgment. 

Centre for Environmental Justice (CEJ) Co-Founder, Attorney-at-Law Dr. Ravindranath Dabare argued that the termination of proceedings in January did not justify delay, but rather activated the enforcement stage. 

“When court proceedings are terminated, the appropriate remedy is to file complaints against any party that has failed to comply with the order. There are multiple directives applicable to both private and State parties. If compliance is not forthcoming, we will have no alternative but to initiate contempt proceedings,” he told The Sunday Morning. 

Dabare warned that the absence of continued judicial supervision complicated enforcement. “The termination of proceedings creates challenges in supervising the implementation of the judgment. This absence of oversight may lead to unforeseen complications.” 

While acknowledging that the Government was pursuing diplomatic engagement with Singaporean authorities, he remains sceptical of relying on foreign litigation as the primary recovery mechanism. His concern centres on international liability caps that could significantly limit recoverable compensation compared to the domestic order. 

“From the outset, we were optimistic about domestic remedies and opposed to litigation in foreign jurisdictions. We maintained that it was a misuse of State resources. That position has been vindicated by the judgment.” 

Dabare also rejected arguments that contempt proceedings would be ineffective against foreign entities, noting that local agents and representatives fell within Sri Lankan jurisdiction. “While views may differ, the fact remains that responsible parties are present within Sri Lanka. Their local agent is established here. Under the terms of the court order, the X-Press Pearl Group is jointly and severally liable. That liability extends to the local agent.”

Compensation Commission

To oversee the distribution of compensation, the SC directed the establishment of a Compensation Commission chaired by retired Supreme Court Justice Gamini Amarasekera. However, the commission has yet to commence operations. 

Justice Amarasekera, speaking to The Sunday Morning, said that the body remained unable to function due to the absence of formal written communication regarding the recent closure of proceedings. 

“I was not formally informed of the proceedings at the final hearing. My only information is that the case has been terminated. I have instructed the Secretary of the commission to obtain a certified copy of the order. Until we review that document and discuss it within the commission, we cannot determine our future course of action.” 

He confirmed that the Terms of Reference of the commission, which define its authority and procedures, had not yet been approved. “The critical issue is whether the commission can function following the termination of proceedings, particularly given that its Terms of Reference remain unapproved. We submitted the Terms of Reference to the SC and are still waiting for a response. We cannot authorise the release of compensation without first determining the quantum. Even then, the power to enforce such orders resides with the court. The commission is not a court of law empowered to issue writs.”

MEPA and the procedural shift

The Marine Environment Protection Authority (MEPA), which played a central role in the initial response to the disaster, now occupies a more limited position in the compensation process. 

MEPA Chairman Samantha Gunasekara highlighted the significant procedural shift arising from the SC hearing held on 26 January. “On 26 January, the court directed that the conduct of the matter be restored to the AG’s Department. This marks a departure from the earlier judgment, which sought to proceed against the department. The new bench has effectively returned all directional authority to the AG,” he said. 

He clarified that while a final order had been issued in cases filed by private parties, several related proceedings remained pending. “The recent judgment pertains to the FR applications filed by private petitioners. However, cases filed by MEPA and other entities remain pending. There are also ongoing proceedings in Singapore and London, as well as a separate MEPA action in Colombo. All these matters must be brought to a conclusion.” 

Gunasekara emphasised that compensation recovery did not fall within the current mandate of MEPA. “The compensation claim in question was pursued by private parties; it is not within the purview of MEPA. Our cases have not yet concluded. All matters regarding the private compensation claim are handled by the AG’s Department.”

Limited payments and lack of coordination

MEPA General Manager Jagath Gunasekara confirmed to The Sunday Morning that only a single payment had been received thus far. “To date, the local shipping agent has remitted Rs. 300 million. No other parties have made payments,” he said. 

This payment, made by the local shipping agent, represents the only tangible financial recovery since the SC judgment. Gunasekara also acknowledged the absence of a coordinated enforcement plan. “There has been no discussion regarding the specific steps required to fulfil this judgment. At this stage, all inquiries regarding the legal process must be directed to the AG’s Department.”

He added that the role of MEPA was now largely supportive. “We are providing all necessary support to the AG’s Department. This is fundamentally a State matter. The proceedings in Singapore are still pending. Beyond that, we have not initiated further action at this time.” 

The X-Press Pearl compensation process now stretches across domestic courts, pending cases in Singapore and London, and unresolved statutory mechanisms in Sri Lanka, complicating enforcement and delaying recovery.

While the AG favours international negotiation, environmental groups warn that prolonged diplomacy could weaken domestic court orders. More than four years after Sri Lanka’s worst environmental disaster, most of the compensation ordered by the SC remains unpaid, with accountability still unresolved.