Trail Smelter Arbitration - State's Responsibility for Environmental Injury

The Trail Smelter Arbitration is regarded as a milestone in the development of State responsibility for environmental injury and as having laid out the foundations of International Environmental Law as regards trans-frontier pollution.

Brief facts of the Case - The Consolidated Mining and Smelting Co. of Canada operated a large zinc and lead smelter at Trail in British Columbia, a province of Canada. The smelter used a process by which stacks of Sulphur dioxide were discharged into the air and subsequently carried downstream by the wind into the Washington State in USA, where they caused damage to private farms and timber lands. The injured citizens of USA in the State of Washington could not bring an action directly against the smelter in the Canadian city of Trail because of common law doctrine known as the 'local action rule', which required that actions to recover for injury to the land be brought in the jurisdiction where the land was located. Since the jurisdiction could not be obtained over the smelter in the state of Washington, the plaintiff were compelled to request that the USA government to take up their claims, which it undertook in 1927. The USA and Canadian governments approached the International Joint Commission, which recommended an award of $ 3,50,000/- to be paid by Canadian authorities. The USA government found these recommendations unacceptable, and this resulted in the question of the quantum of damages to be paid to be referred to an independent tribunal established by both the nations. 

The tribunal was required to finally decide upon four important questions -            

1) Whether the damage caused by Trail Smelter in the State of Washington has occurred, and what indemnity should be paid therefore ?

2)  In the event of the answer to this question being in affirmative, whether the Trail Smelter should be required to refrain from causing any damage to the State of Washington in future ?

3) What measures should be adopted or maintained by the Trail Smelter ?

4) What indemnity or compensation should be paid on account of any decision or decision rendered by the tribunal pursuant to these questions?

In its answer to first question, the Tribunal decided that indeed Trail Smelter had caused damage to the State of Washington, and in pursuance of the same was liable for payment of an indemnity amounting to $ 78,000/- with interest.

However, the path-breaking decision by the Tribunal was in its answer to the second question, where it found Canada responsible in International Law for the Conduct of the Trail Smelter. As under the principle of International law - no State has right to use or permit the use of territory in such a manner such as to cause injury by fumes or to the territory of another or properties or persons therein, when the case is of serious consequences and the injury is established by clear and convincing evidence. By its statement Tribunal confirmed that there is an international obligation not to cause trans-boundary environmental injuries.

In answer to the third question, the tribunal laid down conditionalities on the operation of the Trail Smelter to prevent re-occurrence of such acts and last held that the quantum of indemnity prescribed was sufficient to act as adequate damages for those affected by the activities of Trail Smelter.

The case does indicate that States may be enjoined to take measures to prevent repetition of environmental injury for which they would be held responsible. Although Canada had no right to cause serious injury to United States, its right to continue to operate Smelter was maintained. Thus, despite admission by Canada of a breach of obligation, a balance of interests between the two parties was achieved through the tribunal's order, and indeed this formed the basis for the arbitration.

On the face of it, however, it appears that the Trail Smelter Arbitration has certain difficulties in being treated as a precedent for a 'no harm' rule or a rule of strict liability, or even as an accurate statement of International Law. The reason for the same is -

1) The law as expressed by the Statement bears little resemblance to the principle of equitable utilization developed and applied by the Supreme Court of the USA in inter-State Water Disputes.

2) Even it is an accurate statement of law, it prohibits only 'injury' and not harm.

3) It prohibits only injury of 'serious consequences' and not merely appreciable harm.

4) The case does not pin down erga omnes (i.e. obligation or rights towards all) right of a State to prevent trans-border pollution.

5) The decision of the award was mere obiter dictum, as Canada has already accepted to pay for any damages caused to USA, and by their compromise, the two governments had asked the tribunal to only determine the amount of compensation payable, and if the Smelter should be required to refrain from causing damage in future, and if so, to what extent.