PAJ Oil Spill Symposium '98
Part I

7 October 1998

S. O SA N A I
IO P C F u n d s
1

Introduction

I was informed by PAJ that this symposium high lights the Pontoon 300 incident.
However, as I was also informed that this is the first time to attend the PAJ symposiumfor most of you, who belong to oil companies. So at this opportunity, I would like toexpress the Funds' appreciation to oil companies in Japan and like to start what is the
purpose of the IOPC Funds and what we are doing.
Compensation for pollution damage caused by spills from oil tankers is governed by aninternational regime elaborated under the auspices of the International Maritime
Organization (IMO). The framework for the regime was originally the 1969
International Convention on Civil Liability for Oil Pollution Damage (1969 Civil
Liability Convention) and the 197 1 International Convention on the Establishment ofan International Fund for Compensation for Oil Pollution Damage ( 197 1 Fund
Convention). This 'old' regime was amended in 1992 by two Protocols, and the amended
Conventions are known as the 1992 Civil Liability Convention and the 1992 Fund
Convention. The 1992 Conventions entered into force on 30 May 1996.
Since the 1969 Civil Liability Convention and the 1971 Fund Convention have beendenounced by a number of States and will lose importance, this note deals primarily
with the 'new regime', ie the 1992 Civil Liability Convention and the 1992 Fund
Convention.
The 1992 Civil Liability Convention governs the liability of shipowners for oil
pollution damage. The Convention lays down the principle of strict liability forshipowners and creates a system of compulsory liability insurance. The shipowner isnormally entitled to limit his liability to an amount which is linked to the tonnage of his
ship.

The 1992 Fund Convention, which is supplementary to the 1992 Civil Liability
Convention, establishes a regime for compensating victims when the compensation
under the applicable Civil Liability Convention is inadequate. The International Oil
Pollution Compensation Fund 1992 (IOPC Fund 1992 or 1992 Fund) was set up
under the 1992 Fund Convention. The 1992 Fund is a worldwide intergovernmentalorganization established for the purpose of administering the regime of compensation
created by the 1992 Fund Convention. By becoming Party to the 1992 Fund Convention,a State becomes a Member of the 1 992 Fund. The Organization has its headquarters in
London.
As at 20 August 1998, 38 States were Parties to the 1992 Civil Liability Convention,and 36 States were Parties to the 1992 Fund Convention.
2

1992 Civil Liability Convention

2. 1

Scope of application

The 1992 Civil Liability Convention applies to oil pollution damage resulting fromspills of persistent oil from tankers.
The 1992 Civil Liability Convention covers pollution damage suffered in the territory,
territorial sea or exclusive economic zone (EEZ) or equivalent area of a State Party to
the Convention. The flag State of the tanker and the nationality of the shipowner are
irrelevant for determining the scope of application.
'Pollution damage' is defined as loss or damage caused by contamination. For
environmental damage (other than loss of profit from impairment of the environment)compensation is restricted, however, to costs actually incurred or to be incurred forreasonable measures to reinstate the contaminated environment. The notion ofpollution damage includes measures, wherever taken, to prevent or minimize pollution
damage in the territory, territorial sea or EEZ of a State Party to the Convention("preventive measures"). Expenses incurred for preventive measures are recoverable
even when no spill of oil occurs, provided that there was a grave and imminent threat ofpollution damage.

The 1992 Civil Liability Convention covers spills of cargo or bunker oil from sea-goingvessels constructed or adapted to carry oil in bulk as cargo, and applies thus to bothladen and unladen tankers (but not to dry cargo ships).
Damage caused by non-persistent oil is not covered by the 1992 Civil Liability
Convention. Spills of gasoline, light diesel oil, kerosene, etc, therefore do not fall within
the scope of the Convention.
2.2

Strict liability

The owner of a tanker has strict liability (ie he is liable also in the absence of fault) for
pollution damage caused by oil spilled from the tanker as a result of an incident. He is
exempt from liability under the 1992 Civil Liability Convention only if he proves that:(a)the damage resulted from an act of war or a grave natural disaster, or(b)

the damage was wholly caused by sabotage by a third party, or(c)the damage was wholly caused by the negligence of public authorities inmaintaining lights or other navigational aids.

2.3

Limitation of liability

Under certain conditions, the shipowner is entitled to limit his liability under the 1992
Civil Liability Convention. The limits are: (a) for a ship not exceeding S 000 units ofgross tonnage, 3 million Special Drawing Rights (SDR) (US$4 million); (b) for a shipwith a tonnage between 5 000 and 140 000 units of tonnage, 3 million SDR (US$4
million) plus 420 SDR (US$557) for each additional unit of tonnage; and (c) for a ship of
140 000 units of tonnage or over, 59.7 million SDR (US$79.2 million)<1>. There is a
simplified procedure under the 1992 Civil Liability Convention for increasing theselimits.
If it is proved that the pollution damage resulted from the shipowner's personal act oromission, committed with the intent to cause such damage, or recklessly and withknowledge that such damage would probably result, the shipowner is deprived of theright to limit his liability.
1The unit of account in the 1992 Conventions is the Special Drawing Right (SDR) as definedby2.4
the International
Monetary
Fund. In this paper, the SDR has been converted into US dollars at
Compulsory
insurance
the rate of exchange applicable on 20 August 1998, ie 1 SDR US$l.32732.

The owner of a tanker carrying more than 2 000 tonnes of persistent oil as cargo is
obliged to maintain insurance to cover his liability under the 1992 Civil Liability
Convention. Tankers must carry a certificate on board attesting the insurance coverage.
When entering or leaving a port or terminal installation of a State Party to the 1992
Civil Liability Convention, such a certificate is required also for ships flying the flag of
a State which is not Party to the 1992 Civil Liability Convention.
Claims for pollution damage under the 1992 Civil Liability Convention may be brought
directly against the insurer or other person providing financial security for the owner's
liability for pollution damage.

3

1992 Fund Convention

3 . 1 Supplementary compensation
The 1992 Fund pays compensation to those suffering oil pollution damage in a State
Party to the 1992 Fund Convention who do not obtain full compensation under the 1992
Civil Liability Convention in the following cases:(a)the shipowner is exempt from liability under the 1992 Civil Liability Convention
because he can invoke oneof the exemptions under that Convention; or(b)the shipowner is financially incapable of meeting his obligations under the 1992
Civil Liability Convention in
full and his insurance is insufficient to satisfy' the claims for compensation forpollution damage; or(c)the damage exceeds the shipowner's liability under the 1992 Civil Liability
Convention.

The 1992 Fund does not pay compensation if:(a)the damage occurred in a State which was not a Member of the 1992 Fund; or(b)the pollution damage resulted from an act of war or was caused by a spill from awarship; or(c)the claimant cannot prove that the damage resulted from an incident involving
one or more ships as defined(ie a sea-going vessel or seaborne craft of any type whatsoever constructed or
adapted for the carriage of oil in bulk as cargo).

3.2

Limit of compensation

The maximum amount payable by the 1992 Fund in respect of an incident is 135 million
SDR (US$179 million), including the sum actually paid by the shipowner (or his
insurer) under the 1992 Civil Liability Convention. There is a simplified procedure
under the 1992 Fund Convention for increasing the maximum amount payable by the
1992 Fund.
3.4

Financing of the 1992 Fund

The 1992 Fund is financed by contributions levied on any person who has received in
one calendar year more than 150 000 tonnes of crude oil and heavy fuel oil(contributing oil) in a State Party to the 1992 Fund Convention.
Basis of Contributions
The levy of contributions is based on reports of oil receipts in respect of individual
contributors. A State shall communicate every year to the 1992 Fund the name andaddress of any person in that State who is liable to contribute, as well as the quantity ofcontributing oil received by any such person. This applies whether the receiver of oil isa Government authority, a State-owned company or a private company.
Contributing oil is counted for contribution purposes each time it is received at ports
or terminal installations in a Member State after carriage by sea. The term received
refers to receipt into tankage or storage immediately after carriage by sea. The place ofloading is irrelevant in this context; the oil may be imported from abroad, carried fromanother port in the same State or transported by ship from an off-shore production rig.
Also oil received for transhipment to another port or received for further transport bypipeline is considered received for contribution purposes.
Payment of Contributions

Annual contributions are levied by the 1992 Fund to meet the anticipated payments ofcompensation and administrative expenses during the coming year. Each contributor
pays a specified amount per tonne of contributing oil received. The amount levied isdecided each year by the Assembly.
The Director issues an invoice to each contributor, following the decision taken by the
Assembly to levy annual contributions. A system of deferred invoicing exists whereby
the Assembly fixes the total amount to be levied in contributions for a given calendar
year, but decides that only a specific lower total amount should be invoiced for payment
by 1 February in the following year, the remaining amount, or a part thereof, to be
invoiced later in the year if it should prove to be necessary.
The contributions are payable by the individual contributors directly to the 1992 Fund.
A State is not responsible for the contributions levied on contributors in that State,
unless it has voluntarily accepted such responsibility.
Level of contributions
The 1992 Fund Convention introduced a cap on contributions payable by oil receivers inany given State. This cap was set at 27.5% of any levy of contributions to the 1992 FundThe capping system will cease to apply when the total quantity of contributing oil
received during a calendar year in all Member States of the 1992 Fund exceeds 750
million tonnes.
Payments made by the 1992 Fund in respect of claims for compensation for oil pollution
damage may vary considerably from year to year, resulting in fluctuating levels ofcontributions. The following table sets out the contributions levied by the 1992 Fundduring the period 1996-1997.

4

The 'old' regime: the 1969 Civil Liability Convention and the 1971 Fund
Convention

4. 1

1969 Civil Liability Convention

The 1969 Civil Liability Convention entered into force in 1975. As at 20 August 1998, 76
States were Parties to the Convention.
The 1969 Civil Liability Convention was adopted to govern the liability of shipowners
for oil pollution damage resulting from spills of persistent oil from laden tankers. The
main features of the Convention are the same as those of the 1992 Civil Liability
Convention, except on the following points.
Unlike the 1992 Civil Liability Convention, the 1969 Convention is limited to pollution
damage suffered in the territory (including the territorial sea) of a State Party to theConvention. Furthermore, it applies only to damage caused or measures taken after anincident has occurred in which oil has escaped or been discharged. The Convention
therefore does not apply to pure threat removal measures, ie preventive measures
which are so successful that there is no actual spill of oil from the tanker involved.
The 1969 Civil Liability Convention applies only to ships which are actually carrying
oil in bulk as cargo, ie normally laden tankers. Spills from tankers during ballast
voyages are therefore not covered by the 1969 Convention, nor are spills of bunker oilfrom ships other than tankers.
'Pollution damage' is defined in the 1969 Civil Liability Convention as loss or damage
caused by contamination, without any reference to reinstatement of the contaminatedenvironment.

Under the 1969 Civil Liability Convention, the limits of the shipowner's liability aremuch lower than under the 1992 Civil Liability Convention, ie 133 SDR (US$177) per
ton of the ship's tonnage or 14 million SDR (US$18.6 million), whichever is the lower.
Under the 1969 Civil Liability Convention, the shipowner may be deprived of the rightto limit his liability if a claimant proves that the incident occurred as a result of thepersonal fault (the "actual fault or privity") of the owner.
Claims for pollution damage under the 1969 Civil Liability Convention can be madeonly against the registered owner of the tanker concerned. This does not preclude
victims from claiming compensation outside this Convention from persons other thanthe owner. However, the Convention prohibits claims against the servants or agents of
the owner. The owner is entitled to take recourse action against third parties inaccordance with national law.
4.2

1971 Fund Convention

The International Oil Pollution Compensation Fund 1971 (IOPC Fund 197 1 or 1971
Fund) was set up under the 1971 Fund Convention, when the latter entered into force
in 1978. As at 20 August 1998, 52 States were Parties to the 1971 Fund Convention.
The 1971 Fund pays compensation to those suffering oil pollution damage in a State
Party to the 1971 Fund Convention who do not obtain full compensation under the 1969
Civil Liability Convention in cases corresponding to those set out above in respect of
the 1992 Fund Convention (section 3.1).
The total amount of compensation payable by the 1971 Fund per incident is much lower
than the maximum amount payable by the 1992 Fund, ie 60 million SDR (US$79.6
million), including the sum actually paid by the shipowner (or his insurer) under the1969 Civil Liability Convention.
In the great majority of incidents dealt with by the 1971 Fund, all claims have been
settled out of court. So far, court actions against the 1971 Fund have been taken in
respect of only six incidents. In these cases, the aggregate amounts claimed greatly
exceed the maximum amount payable under the 1969 Civil Liability Convention andthe 1971 Fund Convention.
The 1971 Fund is financed in the same way as the 1992 Fund, although there is no
capping mechanism. In addition to annual contributions, however, the 1971 Fund
(unlike the 1992 Fund) levies initial contributions which are payable whena State becomes a Member of the 1971 Fund.
5

Conclusions

The advantages for a State of being a Member of the 1992 Fund can be summarised asfollows. If a pollution incident occurs involving a tanker, compensation is available togovernments or other authorities which have incurred costs for clean-up operations or
preventive measures and to private bodies or individuals who have suffered damage asa result of the pollution. For example, fishermen whose nets have become polluted areentitled to compensation, and compensation for loss of income is payable to fishermen
and to hoteliers at seaside resorts. This is independent of the flag of the tanker, theownership of the oil or the place where the incident occurred, provided that the damage
is suffered within a 1992 Fund Member State.
As a number of States has left the 1969 Civil Liability Convention and the 1971 Fund
Convention, the 'old' regime will therefore lose its importance. Moreover, the 1992 Civil
Liability Convention and the 1992 Fund Convention provide a wider scope of
application on several points than the Conventions in their original versions, and muchhigher limits of compensation. For these reasons, it is suggested that Governments
might wish to accede to the 1992 Protocols to the Civil Liability Convention and theFund Convention (and not to the 1969 and 197 1 Conventions) and thereby become
Parties to the Conventions as amended by the Protocols (the 1992 Conventions). The
Protocols would enter into force for the State in question 12 months after the deposit of
its instrument(s) of accession.
States which are already Parties to the 1969 Civil Liability Convention are advised todenounce that Convention at the same time as they deposit their instrument(s) inrespect of the 1992 Protocol thereto, so that the denunciation of that Convention would
take effect on the same day as the Protocols enter into force for that State.
***

ANNEX
States Parties to both the
1992 Protocol to the Civil Liability Convention and the1992 Protocol to the Fund Convention
as at 20 August 1998

States Parties to the
1992 Protocol to the Civil Liability Convention
but not to the 1992 Protocol to the Fund Convention
as at 20 August 1998
(and therefore not Members of the 1992 Fund)*

Singapore will become a Member of the 1992 Fund on 31 December 1998 (see table above)

States Parties to both the 1969 Civil Liability Convention
and the 1971 Fund Convention
as at 20 August 1998
(and therefore Members of the 1971 Fund)*

The 1971 Fund Convention applies only to the Hong Kong Special Administrative Region

States Parties to the 1969 Civil Liability Convention
but not to the 1971 Fund Convention
as at 20 August 1998
(and therefore not Members of the 1971 Fund)*

Singapore has denounced the 1969 Civil Liability Convention with effect from 31 December 1998

PAJ OIL Spill Symposium '98
S OSANAIIOPC Funds
Part II
PONTOON N°300
1

The incident

1.1 On 7 January 1 998, intermediate fuel oil was spilled from the barge Pontoon
N°300 (4 233 GRT), which was being towed by the tug Falcon 1 off Hamriyah in Sharjah,
United Arab Emirates. The barge had reportedly become swamped during high seas andstrong north‑westerly winds and had taken on water whilst losing oil. During the courseof the night of 8 January, the barge sank and settled on the seabed at a depth of
21 metres, six nautical miles off Hamriyah.
1.2

The Pontoon N°300 was registered in Saint Vincent and the Grenadines and wasowned by a Liberian Company. The tug Falcon I is registered in Abu Dhabi and owned
by a citizen of that Emirate.
1 .3

The Pontoon N°300 is a flat‑top barge of 4 233 gross tons and 9 885 tons loaded

displacement. The deadweight tonnage for the Pontoon N°300 is 8 037 tons. The barge
is constructed with 24 buoyancy tanks in six rows of four tanks each, and a double
centre bulkhead. Divers have also reported signs of diesel oil having been loaded
in fore and aft ballast tanks in the barge.
1.4

The Executive Committee of the IOPC Fund considered whether the Pontoon N°

300 fell within the definition of 'ship' laid down in Article 1.1 of the 1969 Civil
Liability Convention, ie "any seagoing vessel and any seaborne craft of any typewhatsoever, actually carrying oil in bulk as cargo". The Committee took the view that
it was the factual situation which was of primary importance, and noted that it had
been established that the barge was actually transporting oil in bulk as cargo fromone place to another. The Committee decided that the Pontoon N°300 fell within thedefinition of 'ship' in the I 969 Civil Liability Convention.

1.5

At the Executive Committee of the IOPC Fund, a number of delegations observedthat the circumstances of the case (such as the apparent absence of an insurance
certificate and the use of buoyancy tanks for cargo) merited close scrutiny. It wasstressed, however, that the I 971 Fund's priority should be the payment of compensation
to claimants.
2

Clean‑up operations

2.1

The spilt oil spread over 40 kilometres of coastline, affecting four Emirates,

namely Sharjah, Ajman, Umm Al Quwain and Ras Al Khaymah. The worst affected Emirate
was Umm Al Quwain, where there is a beach hotel and a fishing harbour at Al Naqaa.
2.2

For the first six days after the initial spill oil drifted off the coast. On

I 3 January strong onshore winds drove the drifting oil ashore and deposited it on
sandy beaches and in the adjoining vegetation. The only oil remaining offshore was
the small continuous release from the sunken wreck.
2.3

Intermediate fuel oil is naturally dispersible, and natural dispersion in thesurf zone significantly reduced the quantity of oil deposited on the shorelines.
2.4

Initially, very little was done to deal with the spilt oil and there was

uncertainty as to who was in charge. At a meeting on 9 January 1 998 chaired by the
Minister of Health, in his capacity as Chairman of the Federal Environment Agency(FEA), it was clarified that FEA was to co‑ordinate spill response activity, withsupport from the Frontier and Coast Guard Service (FCGS) and municipal authorities.
However, co‑ordination and control of clean‑up activity by FEA was hampered by a lackof resources and funding. Onshore clean‑up operations were carried out by the Abu
Dhabi National Oil Company (ADNOC), the Dubai Petroleum Company, Lamnalco (a local
contractor) and Fairdeal under the co‑ordination of FEA. Collected oily waste wastransported to an inland disposal site. All shoreline clean‑up operations weresuspended on 24 January, when government funds allocated for the task had been
exhausted.
2.5

After a standstill of seven weeks, beach cleaning was resumed on I 2 March 1

998 with a labour force of 1 00 men provided by Lamnalco. Six different clean‑up sites

have been identified.
3

Affected resources

3.1

Marine resources research centre

3.1.1 A marine resources research centre located at Umm al Quwain, run by the Ministryof Agriculture and Fisheries, cultivates commercially important species of fish andprawns, conducts scientific surveys and research, and provides training and promotionin the field of aquaculture. The Centre operates four large outdoor tanks, numerous
smaller tanks and an educational aquarium stocked with local marine life. The presenceof oil in the entrance channel to Khawr Umm al Quwain on 8 January prompted the complete
closure of the sea water intake to the centre. The facility then relied on re‑circulation pumps and additional aeration to maintain water quality in its tanks.
On 1 0 January pumping from the sea water well was resumed at times of high water
during the day when the sea water intake site could be confirmed to be free of driftingoil. It is possible, however, that suspended oil droplets entered the facility withthe sea water.
3.1.2 The interruption of the continuous sea water pumping led to a mangrove lagoon
and ditch becoming partially drained. Two temporary barriers were constructed on 10
January to prevent more oil from entering the lagoon and to maintain water levelsin the lagoon. However, during spring high tides of I 3‑1 4 January the whole mangrove
area was inundated by floating oil, causing extensive contamination of mangrove roots.
As it was generally recognised that oiled mangroves would probably recover naturally,no attempts were made to clean individual mangrove trees.
3.2

Traditional fishing
There are a number of fishing villages in the area affected by the oil pollution.

Fishing is carried out from small boats using nets and traps. There are also numerous
floating pens for storing or rearing fish that have been captured live in traps. There
are two main fish markets in the Umm Al Quwain area.
3.3

Desalination and power plants

3.3.1 Drifting oil near sea water intakes caused a desalination plant in Sharjah tobe closed from 12 to 14 January. A water bottling company in Sharjah which is supplied
from the desalination plant was reportedly also closed for one or two days.
3.3.2 A desalination plant in Ajman was closed on 7 January and re‑opened on 10 January
after booms had been deployed at the intakes and protective screens had been fitted.
The plant was again closed from 12 to 19 January. Judging from newspaper reports,
the two closures did not cause any serious shortage of drinking water in the Emirate.
Most of the water for Ajman City is supplied through wells, and the desalination plantis reported to be a supplementary source when demand is high, ie during the summer.
3.3.3 There have not been any reports of disrupted sea water supplies to power stations
and other industrial facilities.
3.4

Tourism
The sandy beach in front of an hotel in Umm al Quwain was heavily oiled. It

is reported that bookings at the hotel have been severely affected.
4Claims for compensation

4.1

As at I October 1 998, ten claims for compensation had been received. These claims,

totalling Dhs 7 370 1 58.95 (approx. ¥300 million), relate to clean‑up operations.
They are being examined by the I 971 Fund's experts.
4.2 Seven of ten claims have been presented by the FEA totalling Dhs 5 21 5 71 7.1
8 (approx. ¥210 million).
4.3 Lamnalco has submitted three claims totalling Dhs 2 1 54 441 .77 (approx. ¥86
million) in respect of work carried out between I 2 March and I 0 June 1 998. These
claims have been settled at Dhs 2 1 53 230.89 and paid at 75 % of the agreed amountfollowing the decision of the Executive Committee to raise the level of payment from50 % to 75 %.
5

Level of the 1971 Fund's payments

5.1 In view of the uncertainty as to whether the total amount of the claims might
exceed the total amount available under the I 969 Civil Liability Convention and the
1 971 Fund Convention (60 million SOR, corresponding to approximately ｣48 million),the Executive Committee, on its February 1998 session, decided that, for the time
being, the 1971 Fund's payments should be limited to 50% of the loss or damage actually
suffered by each claimant, as assessed by the experts of the Fund at the time thepayment was made.
5.2

The Executive Committee raised the level of payment to 75 % in its April 1 998

session.

CIVIL LIABILITY CONVENTION (CLC)
Scope for Application
oil pollution damage*, persistent oil**,laden tankers****

oil pollution damage suffered in the territory of a State Party
oil pollution damage includes preventive measures** persistent oil ‑‑ crude oil, fuel oil,heavy diesel oil, lubricating oil
non persistent oil ‑‑ gasoline, light diesel oil, kerosine*** ballast voyage not c (but covered by 92 Protocol)
bankers from non‑t nkers not covered‑1‑

L IM IT S L A ID D O W N lN T H E C O N V E N T IO N S‑ 2 ‑Limitation of Liability
133 SDR (US$207) per ton of the ships tonnageor
14 million SDR (US$22mlliion), whichever 18 the less
If a claimant proves that the Incident occurred as a resultof the personal fault (the "actual fault or privity"),
the owner will be deprived of the right to limit his liability‑ 3 ‑92 PROTOCOLSSPECIAL LIABILITY LIMIT FOR OWNERS OF SMALL VESSELSSUBSTANTIVE INCREASE OF THE UMITATION AMOUNT<5 000 units of gross tonnage

3 million SDR

5 000<

3 million SDR + 420 SDR<14 000 units

for each additional tonnage
14 000 units<59.7 million SDR‑ 4 ‑WIDER APPLICATIONSExtended geographical scope ‑ ‑ EEZ
Unladen tankers
Pure threat removal measures
NEW DEFINITION OF POLLUTION DAMAGE
CAPPING OF CONTRIBUTIONS IN ANY GIVEN STATE (27.5%)‑5‑

ORGANISATION OF THE IOPC FUNDASSEMBLY (all Member States)
EXECUTIVE COMMITTEE (15 Member States)
SECRETARIAT ‑ DIRECTOR‑ 6 ‑Financing of the IOPC FundContributions ‑levied on any person who has received more than
150 000 tonnesof contributing oil (crude oil and heavy fuel oil)in one calendar year
after sea transport in a State Party‑ 7 ‑Levy of Contributions ‑based on reports on oil receipts of individual contributor
reports are submitted by Government to the IOPC Fundcontributions are paid by Individual contributor directly to the IOPC Fund

‑ 8 ‑Contributing oil is counted for contribution purposeseach time it is received
at ports or terminal installations in a Fund Member Stateafter carriage by sea* received ‑ ‑ physically received‑ 9 ‑IOPC Fund pays compensation, when1

shipowner is exempt from liability

2

shipowner is financially incapable of meeting his obligation In fulland his insurance is insufficient3

damage exceeds shipowner's liabIlity

Fund does not pay compensation1

damage In non‑member State2

damage resulted from act of war

3

the claimant cannot prove that the damage resulted from anincident involving one or more ships‑ 10 ‑

The IOPC Fund is not obliged to a Indemnification when
the damage resulted from the wilful misconduct of the owner,ora result of the personal fault of the ship's non‑compliance with therequirements laid down in certain Conventions(SOLAS, MARPOL, LL, COLREG)‑ 11 ‑

Claims Settlement
The IOPC Fund's function Is to provide compensation for victims of oil pollution
damage as quickly as possible.
Co‑operation with P & I clubs such as joint assessment of claims
Delegation of power to the Director to settle claims
arising out of a small incident(not exceeding 2.5 million SDR, US$3.9miiilon)
from individuals and small businesses
up to an amount of 0.667 million SDR (US$1mlliion)
without prior approval of the Executive Committee‑ 12 ‑

Admissibility of claims

Acceptable claims ‑ those that fall within the definition of
POLLUTION DAMAGE and PREVENTIVE MEASURES
A uniform Interpretation of the definition is essential for the function of thesystem‑ 13 ‑

Fund's policy on the admissibility of claims has been established by theMember States.
Each claim has its own characteristics, and It is necessary to consider It on thebasis of ITS OWN MERITS.
A claim is admissible ONLY TO THE EXTENT that the AMOUNT of the loss ordamage IS ACTUALLY DEMONSTRATED.
EVIDENCE must give the IOPC Fund the possibility of forming its OWNOPINION.
Certain flexibility Is exercised in respect of the requirements of documents,
taking account of the particular circumstances.

‑ 14 ‑DAMAGE TO PROPERTY
Cost of cleaning polluted property
Cost of replacement subject to deduction for wear and tear
CONSEQUENTIAL LOSS
Loss of earnings suffered by the owners or users of property polluted‑ 15 ‑

CLEAN‑UP OPERATIONS
on shore andoff shore
In most cases considered as PREVENTIVE MEASURES
Cost of REASONABLE MEASURES are accepted.
Loss or damage caused by preventive measures are accepted.
Assessments are made on the basis of OBJECTIVE CRITERIA.
The technical reasonableness is assessed on the basis of the facts available atthe time of the decision to take the measures.

‑ 16 ‑

Cost of personal and hire or purchase of equipment and materials
Cost of cleaning and repairing clean‐up equipment
Replacing materials consumed during operation
Deduction of residual value is made.

‑ 17 ‑FIXED COSTSA REASONABLE PROPORTION of FIXED COSTS admissible
Ifsuch costs correspond closely to the clean‑up period in questionanddo not include REMOTE OVERHEAD charges‑ 18 ‑

PURE ECONOMIC LOSS

Loss of earnings sustained by persons whose property has not been polluted
Admissible only if caused by CONTAMINATION, eg fishermen, hotelier
There must be a REASONABLE DEGREE OF PROXIMITY between thecontamination and the loss

‑ 19 ‑CRITERIAGEOGRAPHICAL PROXIMITY OF ACTIVITY AND CONTAMINATION
DEGREE OF ECONOMIC DEPENDENCY OF THE RESOURCEAVAILABILITY OF ALTERNATIVE SOURCES OF SUPPLY OR BUSINESSOPPORTUNITIESDEGREE OF INTEGRATION OF THE ECONOMIC ACTIVITY OF THE AFFECTED
AREA‑ 20 ‑

MEASURES TAKEN TO REINSTATE THE̲MARINE̲ENVIRONMENT
May be accepted

Cost of the measures should be reasonable
Cost of the measures should not be disproportionate to the results achieved or
the results which could reasonably be expected
The measures should be appropriate and offer a reasonable prospect of
success‑ 21 ‑