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Tricks under Trade: How International Trade Both Facilitates and is Facilitated by Corporate Environmental Crime in the Waste and Hydrocarbon Sectors

Published online by Cambridge University Press:  15 May 2024

Giulia Giardi Open the ORCID record for Giulia Giardi [Opens in a new window]
Giulia Giardi*
Affiliation:
Faculty of Law, Maastricht University, Maastricht, Netherlands
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Email: [email protected]
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Abstract

Legal scholarship in the realm of international economic law has a blind spot: the practice of international trade. Cargo and container shipping is the blood and guts of international trade, and it is fuelled by bunker oil – a hydrocarbon mixture of the dirtiest petroleum-based products. Worryingly, there is empirical evidence of bunkers being intentionally contaminated with waste oils. This fraudulent contamination violates numerous international, national, and EU rules on waste management and poses immense risks to the health of planet and people alike. These same acts of fraud are also extremely profitable, and they facilitate the smooth functioning of our global economy. The fraud is itself not just incentivised in the tight-margins reality of international trade, but it is facilitated by the lack of proper legislation and the vulnerability of the existing means of enforcement in the areas where there is legislation to comply with. Economic operators often use falsified documents to market fuel oil that should be considered as waste. Systematic wrongdoing of this kind is detrimental to the environment and risks eroding the rule of law in both its formal and substantive conceptualisations.

Keywords

bunkersenforcement of environmental lawenvironmental crimewaste
Type
Articles
Information
European Journal of Risk Regulation , Volume 15 , Special Issue 3: Special Issue on the Evolving Nature of the Rule of Law in International Economic Law , September 2024 , pp. 588 - 601
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© The Author(s), 2024. Published by Cambridge University Press

I. Introduction

There is a clear omission in the legal literature on international trade. This omission concerns the practice of trade itself. This practice is taken for granted as both premise and consequence of the agreements that are usually scrutinised by legal scholars. Even political scientists, who look past the texts of trade agreements and arrangements to the actors who generate them, seem to overlook the blood and guts of international trade, namely the movement of goods, commodities, and other substances across the globe. While international trade is not merely the movement of products and substances, a large portion of it is just that.Footnote 1 It is partly those products or substances that take centre stage in this contribution and, even more so, the means by which they are manufactured and then transported across rivers, seas and oceans. International trade agreements rarely problematise shipping, yet it is undisputed that, without shipping, there would be no international trade to speak of. Indeed, increases in volumes of international trade almost automatically mean increases in the volume of international shipping. Therefore, in a discussion on the nature of the rule of law in international economic law, which is the central topic of this special issue,Footnote 2 considerations of the relationship between the rule of law and the practice of shipping should not be forgotten.

The contention in this article is that we cannot merely look at the texts of trade agreements and the therein explicitly agreed upon trade activities to make sense of the relationship between the rule of law and international economic law. Indeed, we must look at the prerequisites for those trade activities and how they fare in the face of increasing demands that the rule of law characterise international trade relationships; and in the face of a notion of the rule of law that more and more incorporates the demands of environmental protection and social justice.

This article reflects on results from empirical research that show systematic wrongdoing in industrial sectors that are essential to international shipping and are more generally connected to the practice of international trade. In many instances, these activities can be classified as crimes. Specifically, they involve the fraudulent mixing of hazardous waste oils into bunker fuel. Bunker fuel is the hydrocarbon substance that powers ships, i.e., the prerequisite for shipping and trade itself.Footnote 3 It is also important to note that Articles 18(1) and 21 of the Waste Framework Directive prohibit the mixing or dilution of hazardous waste with other waste.Footnote 4 The corollary of this principle is the obligation to separate hazardous waste already mixed with other waste where this is “technically and economically feasible” (Article 18(3)). This obligation has been incorporated into national law. The crimes indicated in this piece are violations of these EU and national rules.

The connection between international trade and crimes in the waste and hydrocarbon sectors can be understood through an organisational criminology lens, which helps us to unpack the regulatory and economic context that facilitates fraud and harm enacted by companies in the waste and bunker fuel industries. This contribution will consider what the findings of the empirical research mentioned above mean for the discussion being outlined in this special issue.

The article is made up of four sections. First, we consider the tension between profit and planet and how this materialises in the relationship between rule of law and international economic law. Then, we contemplate how this tension influences private actors. Second, we see the manifestation of this tension in international trade in practice. More specifically, we focus on shipping and the management of hazardous wastes as activities essential to trade. We look at how the actors within these sectors need to deal with the concomitant pressure to profit and to pursue environmental protection. Third, we see how mechanisms aimed at protecting the environment and resolving the abovementioned conflict of imperatives end up facilitating crime and environmental harm. Lastly, we reflect on how this crime-facilitative character of norms and legislation should problematise the way the rule of law is used to promote sustainability in international trade. Indeed, it is argued that the implementation of the rule of law may lead to the rise of risk-generating bureaucracies as opposed to contributing to social and environmental justice.

II. A bridge over troubled water? The rule of law and the tension between profit and planet

In this section, we explore the relationship between the rule of law and the criminological findings and analysis presented in the subsequent sections. Firstly, we outline the tension between profit and the protection of the environment. Then, we look at the role the rule of law may play in mediating that tension in the context of international economic relations. Finally, we see how that same tension plays out in the private sector.

Authors from several disciplines have come to agree that the ideal of unlimited economic growth and the connected mechanisms of resource extraction and energy generation as well as the procedures for manufacturing and distributing goods that characterise capitalism endanger the well-being of our planet.Footnote 5 There is little evidence to say that globalised capitalism is the cause of environmental degradation and the injustices that can be connected to such degradation. Nevertheless, there is some consensus regarding the incompatibility of the capitalism practiced today with the current understanding of environmentally friendly activities.Footnote 6 The perspectives on the relationship between economic growth and environmental conservation can be arranged on a wide spectrum. Some argue that a complete overhaul of the premises and structures of our economic system is the only way to reach acceptable levels of sustainability.Footnote 7 Others believe that capitalism itself and its promotion of technological innovation can deliver the solutions to our current climate- and resource-related troubles.Footnote 8

While academic and political debate seemingly leaves plenty of room for discussion, the fact is that, every day, choices are made at all levels of society to remedy the tension between the goals of profitability and conservation. At both international and national levels, laws are developed that demand increasingly large financial commitments to review or re-invent entire industrial sectors and make them less environmentally harmful.Footnote 9 In a formal sense, laws are beginning to rule environmentally sensitive activities taking place internationally, much like they have been regulating purely economic exchanges.

In his contribution to this special issue, Henri Culot examines the rule of law as a principle of governance that has numerous elements and sources. Culot delves into these different dimensions of the rule of law underlining how it is functional to the promotion of trade and investment. From that perspective, much like shipping and bunker fuel production, the rule of law provides a basis for flourishing trade relationships.Footnote 10

At the same time, de Sadeleer and Damjanovic distinguish between formal and substantive components of the rule of law: the former referring to “procedural characteristics of the legal order and the jurisdictional system” and the latter to “the moral requirements […] of the liberal democratic regime to which [the rule of law] is consubstantial.”Footnote 11 When we see the rule of law from this angle, questions begin to emerge about how we should deal with international trade practices premised on activities that are harmful to the environment and even criminal in nature.

The fact of criminal or otherwise illegal activities taking place raises issues in the realm of enforcement of environmental rules, which can, at first glance, be connected to the formal component of the rule of law.Footnote 12 When such illegal activities occur systematically, they indicate and contribute to the erosion of both legal certainty and the principle of legality, themselves two important sub-elements of the (formal) rule of law.Footnote 13 The problem here is that the practice of international trade appears to be at odds with the practice of the rule of law. While we generate measures through international treaties and national legislation to protect the environment, we also create incentives to harm the environment by insisting on growth in international trade.

The substantive component of the rule of law could provide a solution: trade should not come at the expense of upholding the moral values that underly the principles of legality and legal certainty.Footnote 14 Furthermore, if we accept a notion of the rule of law that promotes environmental justice,Footnote 15 we cannot tolerate international trade that is unjust from an environmental standpoint. By prioritising justice, we start to re-imagine how the rule of law might bridge the gap between international trade and environmental conservation.

At the most basic level, the rule of law functions in much the same way in the field of environmental protection as it does in any other legally regulated domain. Therefore, compliance with environmental rules - ensured through adequate enforcement procedures - is the way in which the rule of law leads to increased safeguarding of the environment. This positive relationship has even been demonstrated empirically through studies that show correlations between the rule of law and decreased pollution emissions.Footnote 16 However, complementary studies show how increased economic development, achieved partly through increased international trade, is actually detrimental to the environment.Footnote 17 What the literature in this field tries to grapple with is the dynamic between economic prosperity premised on trade liberalisation, the implementation of elements of the rule of law, and the ensuing impact on the environment.

The results are mixed: more economically prosperous countries, which also often display stronger adherence to the rule of law, end up doing more to protect the environment because they can both afford to prioritise the environment and they have the means to ensure compliance with environmental law. Countries that are less economically prosperous have fewer resources to dedicate to environmental protection in terms of enactment and enforcement of environmental law, but also in prioritising conservation above other societal needs.Footnote 18 Furthermore, trade liberalisation triggers specialisation in sectors in which countries have competitive advantages. If the latter are “largely derived from differences in environmental arrangements then the composition effect due to trade liberalisation will further damage the environment.”Footnote 19 At the same time, the more stringent a country’s pollution control policy, the less detrimental the effect of increased trade activities will be on the environment.Footnote 20

Therefore, relying on a formal understanding of the rule of law can only take us so far in the path to ensuring a high standard of environmental protection, over and above increases in profit and international trade. Once more, the invocation of the substantive notion of the rule of law that insists not just on legality but also on justice might provide a way to balance out this see-saw between profit and planet in the context of international economic law. We return to this idea in the conclusion.

However, the see-saw between planet and people, on the one hand, and profit on the other is not merely visible at the level of states. Liberalisation has consequences and is ultimately aimed at facilitating the performance of private entities that carry out trade activities. These entities are subjected to the same underlying tension, which is not, as we have seen until now, unambiguously resolved through the enactment of rules that guide companies in choosing how to prioritise environmental and economic imperatives. In fact, businesses subject to laws that require innovative efforts and expenditure of resources to protect the environment are equally subject to the demands of capitalism, which reveals itself most starkly in the requirement that a firm be solvent to exist.Footnote 21

In the criminological literature, this type of tension has been linked to deviant, harmful, and criminal behaviour. Criminologists have applied the notion of “strain” to situations where there may be a conflict between goals or where the goals towards which an individual or an organisation strives towards are incoherent with the legitimate means supplied to them to reach those goals.Footnote 22 In the case at hand, this can be translated as follows: economic operators in the waste management sector can choose to profit more (or incur fewer losses) by engaging in illegal activities that are harmful to the environment; or they can choose to profit less (or incur greater losses) by engaging in legitimate and less environmentally harmful activities. The possibility to decide between these two alternatives generates frustration, thereby provoking the individuals and organisations involved to release that frustration. The theory holds that illegal opportunities may be appealing enough to invite the economic operators to take advantage of them. How appealing an opportunity may be, is contingent upon several factors. These factors may relate to the specific circumstances and characteristics of an individual or firm; however, some factors are also determined by the economic and regulatory reality in which such individuals and firms operate.Footnote 23 These latter, structural circumstances are those of shipping, bunker fuel production, and waste management industries, in the context of international trade.

III. The routines and rituals of international trade

Three interconnected industries are central to the arguments outlined in this article: the waste (oil) management industry, the bunker fuel production industry and the (cargo and container) shipping industry. Each is discussed in turn and then the connections between these industries in the context of international trade are highlighted.

Waste management services are peculiar in their origin and character. The economic exchanges in this industry have been legally constructed. Industrialisation and urbanisation have led to the generation of new hazards – waste legislation has attached legal consequences and financial costs to the activities that are performed in respect of these new hazards. It has built a legal container that allows societies to manage the risks associated with substances now recognised as problematic. That legal container is the waste label as well as the processes connected to its application and removal. There is no ontological reality to waste – the lawmaker sets boundaries, and these boundaries generate costs and incentives for the economic actors subjected to them. The most basic effect of waste management rules is to bestow negative value on waste. They impose costs on waste generators through contracting specialised and authorised firms to supply waste management services.Footnote 24

The framework on waste management has been articulated at the international, EU, and national levels:Footnote 25 it provides the conditions according to which a substance classifies as waste. It also furnishes the conditions under which the waste label may be removed or under which the label may be avoided altogether. These conditions hinge partly on testable physical and chemical properties of the substances in question. However, the most important determinant of whether a substance is a waste or not is the subjective determination by its holder of the substance’s usefulness.Footnote 26 And, while this subjective element is conditional upon requirements of legality,Footnote 27 its mere existence shapes the waste sector and its relationship to overlapping industries.

Overlapping industries are industries of origin and destination of wastes. Waste oils, which we focus on here, come into existence by virtue of other industrial processes: Most commonly, refining procedures like the generation of fuels or products like pesticides or fertilisers – these are industries of origin.Footnote 28 Waste oils can end up in other industrial processes, such as the generation of bunker fuel or the production of cement. The latter are industries of destination. The boundaries circumscribing waste management and distinguishing it from industries of origin and destination are subject to the will of the legislator, itself moulded by policy priorities and the evolving evidence regarding environmental and public health impacts connected to the release of certain substances into the biosphere as well as technological innovations that mediate that impact.Footnote 29

Therefore, the contours of the waste oil industry are not fixed. They shift depending on production trends as well as changes in the acceptability of risks and hazards. Today, waste oils are generated in enormous amounts. The refining and use of petroleum has led to the emergence of “regimes of living” – much of our modern existence relies on either petroleum-containing products or petroleum-fuelled movement and manufacturing. International trade as it is performed today is dependent on the generation of waste oils.Footnote 30 It could be argued that modern international trade, in fact, generates the need for costly waste oil management services.

Bunker fuel is made up of two components: the residues from the initial refining of crude oil and blend components, which are often residues from other procedures for petroleum refining or use. Some of the largest firms in the world are involved in the various stages of bunker fuel production and the market for the sale of bunker fuel is highly concentrated.Footnote 31

At the same time, the blend component market is very open and competitive as there are few clear limitations on what classifies as a suitable product. Legislation in the bunker fuel sector is sparse and the most important instrument for its regulation is the ISO 8217 Standard, which primarily focuses on chemical-physical properties of the final bunker fuel product. This Standard is not legally binding and is comprised of a set of parameters against which a batch of bunker fuel may be tested. These parameters indicate if the fuel is of sufficient quality for an engine to run on it. While Annex B to ISO 8127 does inform bunker fuel producers about best practices in how to manufacture this substance, which include avoiding the introduction of wastes, there is no way of testing whether this advice is complied with. Furthermore, there are virtually no legally enforceable, hard law rules that state how bunker fuel should be generated and what its permissible components are.Footnote 32 Traders, who purchase all the elements for the bunker fuel recipe from disparate sources and then determine the ratios for their mixing, accomplish the generation of bunker fuel.Footnote 33

The world of oil extraction, refinement, and transport has always been closely associated to that of shipping. Shipping has been practiced for millennia, yet the character of shipping today is the product of the discovery of petroleum as a fuel source. International trade as we know it has been made possible because of fossil-fuelled international shipping. And burning fossil fuels has accelerated because of the breaking down of trade barriers assured by international economic law. Yet, the world of shipping is highly fragmented and the goal common to the diverse actors in this setting – ship owners, charterers, insurance companies, crews, port staff and authorities, to name a few – is that shipping remains a viable and profitable economic sector.Footnote 34

Since the use of petroleum-based fuels became dominant in shipping, the practice of using “residues” for making bunker fuel has been equally widespread. This practice only recently started changing because of changing demands for petroleum substances and, most importantly for us, because of new discoveries regarding the environmental and human health impact of burning these residues and mixtures thereof. Simultaneously, companies entrusted with the task of handling residues have had to adapt to the widening of the concept of waste, especially in the EU where the framework for the management of waste has grown substantially in the last decades. Indeed, where, previously, a firm had been handling a substance that could be sold further as a blend component, it is now handling a hazardous waste oil for which it either needs to have a permit and technology to manage safely; or for which it needs to pay another appropriately equipped waste management firm to handle. And, whereas before a bunker fuel trader would have purchased a residue it will often, instead, have to purchase an appropriately-treated-former-waste. Because the obligation of “discarding” has changed over time, the boundary of waste management legislation and services has expanded to include activities that were previously unregulated. Therefore, the landscape of attractive legitimate opportunities for companies in the bunker fuel and waste oil management industries has shrunk – the previously acceptable paths to profit have been swept away and new ones laid in their stead. Yet, from a purely material and practical perspective, the same residues can still be burned as blend components of bunker fuel by ships. In fact, the engines of ships seem not discriminate as much as lawmakers when it comes to what substances power them. The riverbed where the residues flowed for decades may have been deviated from through the construction of new legal canalisations, but the old channels have not been closed.

To accommodate the new definitions applied to some of the substances that end up in bunker fuel, firms may choose to navigate along the old channels in practice while claiming to comply with the rules on paper. This is an act of fraud, which violates international and EU rules and classifies as a criminal offence in the Netherlands.Footnote 35 In the criminological literature, this phenomenon is understood through the notion of de-coupling: the managers within an organisation adopt a façade that satisfies the needs of the regulatory environment and permits the continuation of “business as usual” at the level of operations. Through the use of inaccurate documentation, substances that should be classified and handled as hazardous wastes are, instead, labelled, traded, and used as products.Footnote 36 These substance pass unobserved: it is entirely possible for the entities involved to be holders of these “products”. The illegal movement is hidden in plain sight. It is, therefore, not just imaginable but also understandable that a firm, faced with the combined imperatives of profit maximisation and environmental protection could choose to appear to be doing the latter while only ensuring the former.

The foregoing demonstrates how the practice of international trade, which is facilitated by international economic law, is premised on routines and rituals that are often problematic from the perspective of environmental conservation. Sometimes, they are even outright illegal. Yet, international trade is partly dependent on the smooth persistence of these same routines and rituals to continue functioning. International trade, in fact, both facilitates and is facilitated by the acts of fraud. The paragraphs below discuss this further.

IV. A crime-facilitative system at the intersection of symbiotic industries

It is easier to understand why illegalities occur in the waste oil and bunker fuel industries knowing that the routinised use of residues predates the current classification of hazardous substances as wastes. However, this fact is insufficient to explain criminogenesis. Indeed, the criminological literature makes it clear that an illegitimate opportunity for obtaining one’s goal is but one element in the equation. Another element is that this opportunity be appealing, accessible, and acceptable within the definitional universe of the potential offender.Footnote 37 While no general statements can be made regarding the individual perceptions of employees and managers of firms in the bunker fuel and waste oil management industries, there is evidence stemming from the applicable legal framework that can open up the life-world of actors in these industries.

The cornerstone of waste management policy and practice in the EU and its Member States is the waste definition. Above, we saw how problematic this definition is because it is so malleable and will adapt to the peculiarities of the industries it enters. The term “to discard,” which is central to the determination of what is waste and what is not can have many meanings,Footnote 38 themselves context-dependent and not absolute. The economic and technological break between industries of origin and destination of wastes that this legal notion threatens may end up softening on impact.

In the context of international trade, the already tenuous nature of the waste definition becomes even more uncertain. There are some international rules regarding the classification of certain substances as wastes,Footnote 39 which also pre- and proscribe a range of procedures for the handling of these substances. Nevertheless, there are substances that are classified as wastes under EU rules but are not included within these international classifications. Indeed, there can be large differences across jurisdictions in the classification of wastes in the first place, but also in the interpretation of how such classification should be applied to a given substance. Equally problematic is the removal of the waste label – the conditions for a waste to become a product may be different in different jurisdictions. Not to mention the paradigmatic problem when considering cross border activities; namely, the disparities in enforcement of any rules on waste management.Footnote 40

Therefore, it is unsurprising that ambiguousness is part of the DNA of waste management rules and procedures. In the criminological literature, this situation has been captured through the notion of “drift.” The boundaries of acceptable conduct are determined by society, as are the permitted exceptions to the acceptable conduct. The killing of another human being is universally forbidden; but the excuse of self-defence is equally universal.Footnote 41 Similarly, a substance is a waste unless it is a product. Waste management legislation allows for and regulates the exceptions to the application of the waste label. These exceptions rely on the potential use that can be made of a substance. We previously saw that residues that are considered hazardous wastes in the EU could materially be used as blend components in the manufacturing of bunker fuel. The matter of whether they should be used in this way is debatable and it is this debate-ability that opens the way for firms in the waste oil and bunker fuel sectors to drift from the definition of waste to that of product.

Equally problematic is the fact that the industry of destination of wastes is no more solidly held together through definitions designed to defends the environment. Bunker fuel is merely a conglomerate of hydrocarbons that must be blended to the tone of ISO 8217. Besides requirements on the concentration of a mere two types of pollutants, producers and consumers of bunker fuel need not concern themselves too much about what is going into this product nor what is coming out once it is burned.Footnote 42 Therefore, not only are the realms of waste management and bunker fuel production problematic, but they overlap in ways that their individual weaknesses become symbiotic in facilitating crime.

In organisational criminology, we speak of “crime-facilitative systems” when referring to industries that are structured in a way that facilitates criminal conduct. These industries are characterised by high incentives and opportunities for crime-commission as well as low risks of detection and punishment of crimes.Footnote 43 The high incentives in the cases we are discussing now are twofold: first, there is the wish to alleviate the pressure and frustration that comes from the day-to-day requirement of maximising profits and avoiding losses in environmentally sensitive sectors that were outlined in Sections II and III above. Second, there is the fact that the pressure can materially be alleviated by fraudulent misrepresentation of economic activities that yield profits. Opportunity makes the thief is the maxim invoked by Sir Francis Bacon – the possibility of illegally benefitting constitutes an incentive for crime. The fact that this illegal prospect is widened as opposed to blocked by the applicable legal rules on waste management and bunker fuel production is the next opportunity that characterises the system we are discussing. The lack of universal agreement on what constitutes waste and of uniform enforcement of waste management rules across the globe is a further opportunity.

The asymmetry in enforcement is also a manifestation of the low risks involved in using wastes to make bunker fuel. It is one of four elements that lead to low risks of detection and prosecution for these acts of fraud. The other three are: (a) the fact that the same entities that label wastes and have expertise in applying this label are those who profit from conducting various waste management activities; (b) the fact that the documents accompanying wastes and other environmentally-risky substances are very easy to manipulate; (c) the fact that state agents who are supposed to monitor the waste sector often lack the knowledge, expertise, and resources to notice and uncover the fraud.Footnote 44

V. Rule of law in international trade: Bureaucracy or justice?

The foregoing has shown how the activities that constitute the practice of international trade, and which are often not addressed in international economic law, are problematic from the perspective of environmental justice. Indeed, we have seen that the promotion of international trade leads to increasing pressures that can be alleviated by environmentally irresponsible activities. At the same time, the increasing pressures for environmental conservation, which slowly begin to characterise the discourse in international (economic) relations,Footnote 45 are being addressed with inadequate and problematic measures. The legal framework on waste management, of which there are portions that are global in scope, has created a system whereby harm is avoided principally through the labelling and documenting of wastes and their movements. Labels and documents guarantee the free circulation of wastes – as well as that of other substances that could or should be defined as wastes. Risks are managed by checking these documents – by inhibiting individuals and organisations from handling hazardous substances labelled as such if they cannot do so safely. Yet, the same framework can be hijacked with ease: we become blind to risks because we trust the paperwork that has been devised to help us regulate them. We trust the entities that generate said paperwork. We remain ignorant to the material truth that the paperwork hides and are incapable of discovering the deception of which we are victims, of which our planet is the victim.

The rule of law – in its formal conceptualisation – has taken on the garb of a risk-generating bureaucracy in the waste and bunker fuel sectors. In fact, empirical evidence has shown that manipulating documents in these industries can be characterised not so much as an act of “covering up” illegalities, but rather as an instrumental step in completing a series of business activities.Footnote 46 Documents are seen only as a necessary element in completing the transactions among companies handling the residues that make up bunker fuel. The notion that residues are acceptable components of bunker fuel wins over the concern that their use may lead to adverse environmental impacts. Therefore, even if we were to extend the existing framework that protects the environment from hazards linked to waste generation and management from the EU, we would not necessarily be guaranteeing any true measure of defence against harmful and criminal activities like those discussed in this article. In fact, we would merely be opening the way to the circulation of more fraudulent documents that would superficially purify the dirty dealings in hydrocarbons.

These are important aspects to reflect on in considering the relationship between international trade and the rule of law. The argument being made here is the following: Loyalty to the substantive rule of law, i.e., to the morals and norms we associate with it, should encourage a more penetrating examination of the legal regimes we put in place in the context of international trade. It may be too easy, given the complexities involved in safeguarding the environment, to claim that the formal rule of law has been established. The above warning against risk-generating bureaucracies stems from the superficiality that the emphasis on form or procedure may induce in this policy area. Achieving a formal rule of law must be seen as a necessary but insufficient step to reaching a series of milestones along the path to a sustainable global economy. The substantive rule of law gives those steps and milestones their proper meaning and purpose: each needs to withstand the more fundamental test of whether its consequences lead to justice.Footnote 47

The latter cannot be attained through the meagre extension of regulatory regimes across borders or through the export of green norms. True pursuit of the rule of law needs to be rooted in a more fundamental process of institution building whereby commitment to environmental preservation and technical specialisation play a central role. The rule of law can only be upheld if a collective effort is made to rigorously apply legal standards in environmental matters,Footnote 48 which includes setting up effective enforcement strategies and mechanisms. These strategies need to include hard law instruments to regulate the production and consumption of bunker fuel that are global in reach to reflect the worldwide use and impact of bunker fuel. Furthermore, cooperation in monitoring waste management activities needs to be improved and harmonised. This also means strengthening the powers and capacities of enforcement agencies to detect fraud and wrongdoing.

More fundamentally, another important point of intervention is the opening up of discourse at all levels of society regarding the true cost of a globalised consumer economy. The comfort and ease to which a small portion of the world has become accustomed is heavily premised on the discomfort and destruction of other people and our planet. We cannot aim for a rule of law in name only. Instead, we need to more thoroughly assess the reality of international economic relationships and trade practices to determine how to bring them into alignment with the formal and, especially, the substantive facets of the rule of law where private and public actors alike are accountable to law and where law is increasingly used as the means to protect both planet and people.

Competing interests

The author has no conflicts of interest to declare.

References

1 IMO, “Fourth IMO GHG Study 2020” (2021); EU Commission, “Fourth Annual Report from the European Commission on CO2 Emissions from Maritime Transport (period 2018-2021)” C(2023)1585 final. European Parliament, “Sustainable maritime fuels” “Fit for 55ʼ package: The FuelEU Maritime proposal” Briefing EU Legisaltion in Progress (2023), available at https://www.europarl.europa.eu/RegData/etudes/BRIE/2021/698808/EPRS_BRI(2021)698808_EN.pdf (last accessed 16 December 2023).

2 N de Sadeleer and I Damjanovic (eds), “The Evolving Nature of the Rule of Law in International Economic Law” (2024) European Journal of Risk Regulation.

3 For details regarding both the mentioned criminal investigations, which were conducted in the Netherlands between 2010 and 2020, please see: G Giardi, Illegal Waste Management Activity in the Process of Bunker Fuel Production: A Criminological Case Study of Corporate Environmental Crime and Its Enforcement (Eleven International Publishing 2023). In the book, the crimes are described in detail as are the industrial contexts in which they materialised. The author used multiple theoretical frameworks applied to different levels of analysis to provide an integrated understanding of how and why the acts of fraud took place.

4 Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives, OJ L 312, 22.11.2008, pp 3–30. Furthermore, the activities should be criminalised in accordance with Directive 2008/99 of the European Parliament and of the Council of 19 November 2008 on the protection of the environment through criminal law, OJ L 328, 6.12.2008, pp 28–37. Arts. 3 (b) and (c) oblige MSs to ensure that the following conducts constitute criminal offences, when unlawful and committed intentionally or with at least serious negligence:

“(b) the collection, transport, recovery or disposal of waste, including the supervision of such operations and the after-care of disposal sites, and including action taken as a dealer or a broker (waste management), which causes or is likely to cause death or serious injury to any person or substantial damage to the quality of air, the quality of soil or the quality of water, or to animals or plants;

(c)the shipment of waste, where this activity falls within the scope of Art 2(35) of Regulation (EC) No 1013/2006 of the European Parliament and of the Council of 14 June 2006 on shipments of waste and is undertaken in a non-negligible quantity, whether executed in a single shipment or in several shipments which appear to be linked.”

5 M Lynch, P Stretesky and M Long, “The Treadmill of Production and the Treadmill of Law: Propositions for Analyzing Law, Ecological Disorganization and Crime” (2020) 31(1) Capitalism Nature Socialism 107; C Aller, L Ductor and MJ Herrerias, “The World Trade Network and the Environment” (2015) 52 Energy Economics 55; JA Frankel and AK Rose, “Is Trade Good or Bad for the Environment? Sorting out the Causality” (2005) 87(1) The Review of Economics and Statistics 85.

6 Some insightful perspectives in this regard include: WS van der Loeff, J Godar, V Prakash, “A Spatially Explicit Data-Driven Approach to Calculating Commodity-Specific Shipping Emissions per Vessel” (2018) 205 Journal of Cleaner Production 89 – here we see how estimates can be made regarding the environmental impact of shipping as a crucial element in international trade. Other sources connecting international trade practices and adverse environmental impacts include: M Bruckner et al, “Quantifying the Global Cropland Footprint of the European Union’s Non-Food Bioeconomy” (2019) 14 Environmental Research Letters 045011; S Allain et al, “The ‘bioeconomics vs bioeconomy’ debate: Beyond criticism, advancing research fronts” (2022) 42 Environmental Innovation and Societal Transitions 58. Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation and repealing Regulation (EU) No 995/2010, OJ L 150 also explicitly addresses the consequences of globalised trade and the EU’s role in that context (see eg recital 8).

7 Examples include: SB Longo and B Clark, “An Ocean of Troubles: Advancing Marine Sociology” (2016) 63(4) Social Problems 463; T Dietz and A Jorgenson (eds) Structural Human Ecology: New Essays in Risk, Energy, and Sustainability (Washington University Press 2013); and A Schnaiberg and K Gould, Environment and Society: The Enduring Conflict (Blackburn Press 1994).

8 Examples include: U Beck, “The Cosmopolitan Perspective: Sociology of the Second Age of Modernity”(2000) 51(1) The British Journal of Sociology, 79; A Giddens, Politics of Climate Change (Polity 2009). In their contribution Clark and others have provided an overview of this spectrum of perspectives (TP Clark et al., “Capitalism and Sustainability: An Exploratory Content Analysis of Frameworks in Environmental Political Economy” (2022) 9(2) Social Currents 159.

9 As an example, we can peruse the findings of the United Nations Environment Programme, which recently issued the first global assessment of air pollution regulation, which surveys the measures adopted (or not adopted) in 194 States (UNEP, Regulating Air Quality (2021)).

10 H Culot, “The Concept of the Rule of Law and Global Governance: Theoretical Perspectives” (2024) European Journal of Risk Regulation. It should be noted here that Culot’s arguments rest, in part, on perspectives that connect the rule of law to the definition and protection of property rights specifically.

11 de Sadeleer and Damjanovic, n. 1. Page number. It is important to note that the formal/substantive distinction indicated here is different than the that articulated in the discipline of legal philosophy. Indeed, within legal philosophy, a way of systematising the discussion on the rule of law is by distinguishing between the formal, procedural, and substantive aspects of governance through the rule of law (J Waldron, “The Rule of Law and the Importance of Procedure” (2011) 50 Nomos 3.) The boundaries of these categories differ from those outlined by de Sadeleer and Damjanovic. Moreover, the distinction between formal and substantive adopted here does not imply that a clear position exists in legal or legal philosophical scholarship on the precise definition of the rule of law. Such a definitive or uniform perspective is currently absent in the debate (Ibid; J Waldron, “The Rule of Law” in Edward N. Zalta and Uri Nodelman (eds.) The Stanford Encyclopedia of Philosophy (2023) <https://plato.stanford.edu/archives/fall2023/entries/rule-of-law> (last accessed 3 March 2024). Finally, it should be noted that the substantive component identified by de Sadeleer and Damjanovic is more often discussed in terms of the (moral) values that underly the rule of law in legal philosophy scholarship. In this regard, there appears to be a split among those who consider the establishment of expectations and security (intended as liberty from arbitrariness in both vertical and horizontal relationships) to be the paramount function of the rule of law (see, eg, Tom Bingham, The Rule of Law (Allen Lane 2010); Friedrich Hayek, The Constitution of Liberty (University of Chicago Press 1960); Jeremy Bentham, The Theory of Legislation, C.K. Ogden (ed.) (Kegan Paul, Trench, Trubner & Co 1931 [1802, 1864]) and which is also echoed in Culot’s contribution to this special issue (see also n. 10 above). However, like in the article of de Sadeleer and Damjanovic, the position taken here is that, the substantive component of the rule of law is inextricable from the moral requirements of the liberal democratic regime, which in legal philosophy is, in some respects, the perspective taken by Raz and Fuller who connect the rule of law’s guarantees of freedom to the complete exercise of individual autonomy and as functional to ensuring human dignity (J Raz, “The Rule of Law and its Virtue”, in his book, The Authority of Law (Oxford University Press [1977] 1979); Lon Fuller, The Morality of Law (Yale University Press 1964).

12 B Magraw, Daniel “Rule of Law and the Environment,” (2014) 44(1–2) Environmental Policy and Law 201–210.

13 The principle of legality as a component of the rule of law is discussed in Case C496/99 P Commission v CAS Succhi di Frutta [2004] ECR I-03801, para 63; and the principle of legal certainty in Joined cases 212 to 217/80 Amministrazione delle finanze dello Stato and others [1981] ECR I-02735, para10.

14 In her contribution, Alexovicova also looks at the distinction between formal and substantive rule of law and acknowledges the importance of effective enforcement to guarantee what she terms procedural rule of law I Alexovicova, “Enforcement of Multilateral Trade Regulation by Non-State Actors. Desirable and Feasible?” (2024). The emphasis here is, however, on the danger that systematic erosion of formal or procedural manifestations of the rule of law end up impacting its substantive components. As mentioned in n. 11 above, the substantive notion of the rule of law is taken to indicate the moral core connected to liberal democratic ideals, which is different from the substantive aspect as it is understood in legal philosophy.

15 LJ Kotzé and D French, “The Anthropocentric Ontology of International Environmental Law and the Sustainable Development Goals: Towards an Ecocentric Rule of Law in the Anthropocene” (2018) 7(1) Global Journal of Comparative Law 5; R Kim and K Bosselmann, “International Environmental Law in the Anthropocene: Towards a Purposive System of Multilateral Environmental Agreements” (2013) 2(2) Transnational Environmental Law 285; J Ebbesson, “The Rule of Law in Governance of Complex Socio-Ecological Changes” (2010) 20(3) Global Environmental Change 414. It is also important to note that, in legal philosophy, the approximation of the rule of law with justice is not an accepted position (Waldron, n. 11). Yet there are examples of the line between the rule of law and justice being blurred. For example, Dworkin approximates the rule of law to legality and claims that there may be different notions of legality: he cites the example of the Nuremberg trials and assigns equal worth to both the claim that legality was respected because only through the trials could true legality be assured and to the claim that the trials offended legality but were justified in the interest of other values, such as justice (R Dworkin, “Hart’s Postscript and the Character of Political Philosophy” (2004) 24 Oxford Journal of Legal Studies 1, 24).

16 W Kaufmann and A Lafarre, “Does Good Governance Mean Better Corporate Social Performance? A Comparative Study of OECD Countries” (2021) 24(6) International Public Management Journal 762; C Castiglione, D Infante and J Smirnova, “Environment and Economic Growth: Is the Rule of Law the Go-Between? The Case of High-Income Countries” (2015) 5 Energy, Sustainability and Society 26.

17 M Sulaman, L Xingle, “Rule of Law and CO2 Emissions: A Comparative Analysis Across 65 Belt and Road Initiative (BRI) Countries” (2021) 279 Journal of Cleaner Production 123539; NPW Setyari, “Economics and Environmental Development: Testing the Environmental Kuznets Curve Hypothesis.” (2021) 11(4) International Journal of Energy Economics and Policy 51.

18 Setyari, n 15.

19 Ibid 53. The notion of composition effect indicates: “the part of the observed between-group difference in the distribution of some economic outcome that can be explained by differences in the distribution of covariates.” C Rothe, “Decomposing the Composition Effect: The Role of Covariates in Determining Between-Group Differences in Economic Outcomes” (2015) 33(3) Journal of Business & Economic Statistics 323.

20 Setyari, n 15; NW Hlongwane and OD Daw, “Testing environmental Kuznets Curve hold in South Africa: an econometric approach” (2022) 12(3) International Journal of Energy Economics and Policy, 385.

21 G Slapper and S Tombs, Corporate Crime (Longman 1999). A highly publicised example is that of “Dieselgate” whereby several companies in the autmotive sector committed large-scale, systematic fraud to disguise the true emissions their products were releasing in irder to comply with increasing restrictions (for a discussion, see, eg, C Braun and J Van Erp, “International Regime Complexes and Corporate Crime: A Research Agenda Based on the Volkswagen Diesel Fraud Case” (2022) 77 Crime, Law and Social Change 185.

22 RA Cloward, “Illegitimate Means, Anomie, and Deviant Behavior” (1959) 24(2) American Sociological Review 164; R Merton, Social Theory and Social Structure (Simon and Schuster 1968); “Social Structure and Anomie” (2003) Crime 201; N Passas, “Anomie and Corporate Deviance” (1990) 14(2) Contemporary Crises 157; R Agnew, “Building on the Foundation of General Strain Theory: Specifying the Types of Strain Most Likely to Lead to Crime and Delinquency” (2001) 38(4) Journal of Research in Crime and Delinquency 319.

23 Giardi, n 3. J Coleman, “Toward an Integrated Theory of White-Collar Crime” (1987) 93(2) American Journal of Sociology 406; M Needleman and C Needleman, “Organizational Crime: Two Models of Criminogenesis” (1979) 20 American Journal of Sociology 517.

24 N Dorn, S Van Daele and T Vander Beken, “Reducing Vulnerabilities to Crime of the European Waste Management Industry: The Research Base and the Prospects for Policy” (2007) 15 European Journal of Crime, Criminal Law and Criminal Justice 23.

25 Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal (adopted 22 March 1989, entered into force 5 May 1992) (1989), 28 ILM 657. Regulation (EC) 1013/2006 of the European Parliament and of the Council of 14 June 2006 on shipments of waste, OJ L 190, p 1, 12.07.2006. Directive 2008/98, see n 4. Directive 2019/883/EU of the European Parliament and of the Council of 17 April 2019 on port reception facilities for the delivery of waste from ships, amending Directive 2010/65/EU and repealing Directive 2000/59/EC, OJ L 151, 7.6.2019, pp 116–142. Wet van 13 juni 1979, houdende regelen met betrekking tot een aantal algemene onderwerpen op het gebied van de milieuhygiëne. Besluit van 19 maart, houdende regels met betrekking tot het inzamelen van bedrijfsafvalstoffen of gevaarlijke afvalstoffen. Besluit van 25 maart 2010, houdende regels ter uitvoering van de Wet algemene bepalingen omgevingsrecht. Please note that, since the time of writing the Dutch legal framework has been substantially amended and consolidated through the entry into force of the new Environmental Law: Omgevingswet 01.01.2024.

26 Art. 3 (1) of Directive 2008/98 reads: “[W}aste” means any substance or object which the holder discards or intends or is required to discard.

27 The definition of waste cited in the footnote immediately above already hints at this by mentioning “required” to discard. Further indications of a legal obligation to apply the waste label may be contingent on more objective assessments of hazardousness and risk. The List of Wastes enumerates a series of codes that are to be applied to substances or objects that are already recognised as wastes. Where the conditions of the list are met in regard to the classification of a substance or object as hazardous, this classification is binding. Fuel oils are classified as hazardous wastes (can fall under code 01.3 Used oils; 01.4; 02; 03.1 Chemical wastes, specifically 03.1.13 07 01* fuel oil and diesel). This list continues to evolve and can also serve as a helpful tool to determine whether substances not included in it, but which resemble items already listed, might be susceptible to be defined as wastes. (Commission Decision of 3 May 2000 replacing Decision 94/3/EC establishing a list of wastes pursuant to Article 1(a) of Council Directive 75/442/EEC on waste and Council Decision 94/904/EC establishing a list of hazardous waste pursuant to Article 1(4) of Council Directive 91/689/EEC on hazardous waste (notified under document number C(2000) 1147) (2000/532/EC). However, the inclusion of a substance in the list is not determining factor in its classification as a waste (see Joined cases C-418/97 and C-419/97 ARCO Chemie [2000] ECR I-4475 para. 49).

28 See Section 1 Chapter 3 of Giardi, n 3; Neil Cockett, Neil Cockett on Bunkers (LLP 1997); M Broekman and J Bakker, “Milieurisico’s Van Specifieke Stoffen in Bunkerolie in Zeeschepen: Onderzoek Van De Literatuur En De Reach-Dossiers” (RIVM Rapport 2016-0067, 2016); A De Buck et al, “Blends in Beeld. Een Analyse Van De Bunkerolieketen”, (CE Delft 2011), C Fisher, R Meech and J Denholm, Bunkers: An Analysis of the Technical and Environmental Issues (Petrospot Ltd., 4th edn. 2013), RP Pskowski, “Bad Bunker: Fuel Contamination Claims, Imo 2020, and the Houston Problem” (2019) 44 Tulane Maritime Law Journal 217.

29 Giardi, n 3.

30 H Appel, A Mason and M Watts (eds), Subterranean Estates: Life Worlds of Oil and Gas (Cornell University Press 2015).

31 De Buck, Smit, Faber, and Van Grinsven, n 28; Giardi, n 3; Fisher, Meech, and Denholm, n 28; Hannah Appel, Arthur Mason, and Michael Watts n 30.

32 The exception here is regarding the amount of SOx and NOx concentration is permissible in bunker fuel, which is regulated under Annex VI of MARPOL (International Convention for the Prevention of Pollution from Ships (MARPOL), November 2, 1973, entry into force 17.02.1978, 17 I.L.M. 546). In the EU, this is implemented through Directive 2005/35/EC on ship-source pollution and on the introduction of penalties for infringements, OJ L280, 27.10.2009, p. 52. There is also no clear definition of what bunker fuel is besides it being a mixture of hydrocarbons (See, eg Art. 1 (5) International Convention on Civil Liability for Bunker Oil Pollution Damage 2001, entry into force 21 November 2008: “Bunker oil” means any hydrocarbon mineral oil, including lubricating oil, used or intended to be used for the operation or propulsion of the ship, and any residues of such oil.)

33 Giardi, n 3; De Buck, Smit, Faber, and Van Grinsven, n 28; A Spapens, “Vuile Olie: Een Onzichtbaar Probleem Met Grote Gevolgen” (2013) 75(8) Het tijdschrift voor de politie 20.

34 Giardi, n 3; De Buck, Smit, Faber, and Van Grinsven, n 28.

35 See Giardi, n 3. The data used in that study derived from the criminal investigation files of police and public prosecution in the Netherlands. The crimes they investigated occurred, at least in part, on Dutch territory. Until now, there has not been any other systematic study of this type of crime in other jurisdictions. Nevertheless, from the evidence gathered by the Dutch authorities in the cases pursued as well as from conversations those same authorities have conducted with partner authorities in other jurisdictions, these same criminal activities and flows of substances can be observed beyond the Netherlands and beyond Europe.

36 Ibid., SC Monahan and BA Quinn, “Beyond ‘Bad Apples’ and ‘Weak Leaders’: Toward a Neo-Institutional Explanation of Organizational Deviance” (2006) 10(3) Theoretical Criminology 361.

37 James Coleman, n 23.

38 This is set out clearly in the case-law of the CJEU: Joined Cases C-241/12 and C-242/12 Shell Nederland [2013] ECR I-821, para. 39; Case C-188/07 Commune de Mesquer [2008] ECR I-4501, para. 53; Case C-263/05 Commission v Italy [2007] ECR I-11745, para. 32 and recently confirmed in Case C-624/17 Tronex BV [2019] ECR I-564, para. 19.

39 See, for example, the waste oils under codes A3020, A3190 and A4060 Annex VIII of Basel Convention, n 25.

40 It is also important to acknowledge that EU rules are often considered more stringent in the realm of environmental protection and of waste management compared to those developed and applied in other jurisdictions. The point of view being taken in this contribution is that this more stringent approach is, in fact, correct. In fact, this point of view mirrors the growing practice of seeing the EU as a (legitimate) exporter of green norms, which, in turn, are founded on highly specialised and science-based policymaking in this portion of the globe. However, it is also important to advance these arguments knowing that this assumption lies at their heart and is liable to debate. The EU Green Deal is a clear example of this trend.

41 David Matza, Delinquency and Drift (Routledge, 1964).

42 These two types of pollutants are sulfur oxides (SOx) and nitrogen oxides (NOx). They are explicitly mentioned in Annex VI to MARPOL as well as the Directive on ship-source pollution cited at n 31. They are also reported in the most recent versions of ISO 8217.

43 Needleman and Needleman, n 23.

44 Giardi, n 3.

45 See, for example, the work of Giovanni Gruni (“The present and future of labour standards in EU’s free trade agreements” (2024) European Journal of Risk Regulation) in this special issue as well as his article with Marco Bronckers “Retooling the Sustainability Standards in EU Free Trade Agreements” (2021) 24 Journal of International Economic Law 25.

46 Giardi n 3.

47 This relationship between form/procedure and substance resembles but is different from Raz’s perspective in that he argues that the rule of law must ultimately mean that individuals are able to exercise their agency in a legal context that is predictable and fair (see: Craig, P. (2017). Formal and substantive conceptions of the rule of law: an analytical framework (R. Bellamy, Ed.). Routledge, p 4 and Raz 1977 n 11.) What is being argued in this article also overlaps with and can be understood by referring to part of Unger’s reflections on the rule of law in post-liberal societies. He warns against the threat to the generality of the law (that which also characterises “good” laws in formal conceptions). Because states and their agents are increasingly tasked with remedying modernity’s ills, laws need to become more open-textured and vague to accommodate the nuances and complexities of those modern ills. These features of “post-liberal” law then lead to increasing space for interpretation by judges, thereby investing the latter with political powers that are incoherent with the liberal notion of the rule of law and which lead to fragmentation and ambiguities in the law’s application. Judges are vested with such political powers because their interpretations are anchored in notions of justice, which authors like Raz (and Unger himself) place in the separate domain of political theory (see: Craig 2017 above and RM Unger, Law in Modern Society: Toward a Criticism of Social Theory (Free Press 1976)). To some extent, the perspective in this article follows the same reasoning but comes to a different conclusion than Unger. In fact, my contention is that the goal of “sustainability” is ever more present in international (economic) relations and that institutions across the globe – regardless of whether they are legislative, executive, or judicial, public or private in nature – are being faced with the responsibility of making political decisions – ie, of balancing different interests.

48 N de Sadeleer, “The Rule of Law: A Core Premise for the Effectiveness of International Environmental Law” (2024) European Journal of Risk Regulation.