X-Press Pearl Disaster: Supreme Court Orders $1 Billion Compensation in Landmark Ruling

In a historic ruling that marks a major victory for environmental justice in Sri Lanka, the Supreme Court has ordered the non-state parties involved in the MV X-Press Pearl maritime disaster to pay an initial compensation of USD 1 billion within one year. The payment is to be made directly to the Secretary to the Treasury.

The ruling, delivered by a five-judge bench led by Chief Justice Murdu Fernando, comes over four years after the MV X-Press Pearl caught fire and sank off the coast of Colombo in May 2021, triggering the worst maritime environmental disaster in the country’s history.

The Court also directed the establishment of a MV X-Press Pearl Compensation Commission, to be chaired by retired Supreme Court Justice Gamini Amarasekera. The commission will oversee the management and disbursement of the compensation funds and ensure that affected communities and environments are properly addressed.

In a further significant development, the Court held former State Minister for Urban Development and Coast Conservation, Nalaka Godahewa, responsible for failing to take appropriate supervisory action during the crisis. This inaction, the Court ruled, constituted a violation of the Fundamental Rights of Sri Lankan citizens.

Background

The MV X-Press Pearl, a container ship registered under a foreign flag, was carrying hazardous chemicals including nitric acid when a fire broke out on board. The incident led to the release of toxic materials, plastic pellets (nurdles), and pollutants into the ocean, causing extensive environmental damage to marine ecosystems, fisheries, and coastal livelihoods.

Local communities, particularly fishing families along the western coast, suffered significant economic and environmental losses, sparking widespread calls for accountability and restitution.

Legal and Environmental Significance

This judgment is widely seen as a turning point in how Sri Lanka addresses corporate and institutional accountability in environmental disasters. Legal analysts are calling it one of the most substantial environmental compensation orders ever issued by a South Asian court.

The ruling emphasizes not only the responsibility of international shipping companies but also the duty of government officials to protect the rights and well-being of citizens during environmental emergencies.

What Happens Next

With a 12-month deadline imposed for the compensation payment, the focus now turns to compliance by the shipping and insurance entities involved. The newly established Compensation Commission is expected to outline a plan for evaluating claims, funding recovery efforts, and restoring damaged ecosystems.

This case may also set a regional precedent, encouraging stronger regulatory oversight and more robust legal responses to maritime environmental incidents in the future.