International Oil Spill Compensation Schemeand Damages for the Natural Resources
Tokio Marine and Fire Insurance Co.,Ltd.
Toshiaki Iguchi

1.United States (OPA 90)
1980

Pollution of soil : CERCLA( “ Superfund Law “ ) was enacted.

1986

Natural Resources Damage Assessment Regulation was enacted by theDepartment of Interior

1989

State of Ohio vs. Department of Interior: Appeals Judgment

1989

Exxon Valdez incident

1990

Oil Pollution Act

1991

NOAA(Department of Commerce) Panel’s Study of the feasibility ofCVM(Contingent Valu ation Method)

1993 Report of the Panel
1996

OPA 90 : Natural Resources Damage Assessment Regulation

1997

G.E. vs. Department of Commerce : Appeals Judgment

2.CLC Convention(1) History
1979

Antonio Gramsci incident (Latvia)
Assembly Resolution: “Claim is not to be made on the basis of an abstract
quantification of damage calculated in accordance with theoretical models.”

1985

Patmos incident ( Messina Straits)

1992

Haven incident (Genoa)

1992 Procol to CLC (in force in 1996)
Definition of the “Pollution Damage”:“ provided that compensation for impairment of the environment other thanloss of profit from such impairment shall be limited to costs of reasonablemeasures of reinstatement actually undertaken or to be undertaken.”(2) Claims Manual of the IOPC Fund (adopted in 1994)
N o te: CMI Guidelines on the Scope of Compensation for Claims for OilPollution Damage( adopted in 1994 )(3) Discussion on Environmental Damage in IOPC Fund (2000-2002)-Revision of the Claims Manual3.Europe(1) Lugano Convention of 1993
(2) White Paper on Environmental Liability( 2000)(3) Erika incident (1999)

Movement of Europe
with regard to the Environmental Damage

1992 Rio Declaration regarding the environment and the development, which wasadopted at the Earth Summit
1993 Lugano Convention ( Convention on Civil Liability for Damage Resulting
from Activities Dangerous to the Environment )( Movement of the EU )1993 Green Paper on Remedying Environmental Damage
1994 European Parliament’s Recommendation to the European Commission toadopt a Directive on the Civil Liability for the Environmental Damage
1998 Draft White Paper on Environmental Liability
Note: While admitting that there is no rules on Environmental Damage
in each country, it is necessary that the legal framework of responsibility
to the flora and fauna which are protected under the EU Law.
2000

(February)
White Paper on Environmental Liability-Strict Liability-Polluter Pay Principle

2000(December)
Second Package of the Erika Proposal:-Proposal of the COPE Fund (The Fund for Compensation for Oil

Pollution in European Waters)-Addressing the shortcomings of the CLC, FC Convention-Compensation of damage caused to the environment should be reviewed
and widened

Amendment to the 1992 Fund's Claims Manual
The Section "Environmental damage" on pages 31 and 32 of the June 2000 editionof the Claims Manual is replaced by the following text:
Environmental damage
In most cases a major oil spill will not cause permanent damage to theenvironment as the marine environment has a great potential for naturalrecovery. Whilst there are limits to what man can do in taking measures
to improve on natural processes, in some circumstances it is possible toenhance thespeedof natural

recovery

afteranoilspillthrough reasonable reinstatement measures. The costs of such measures
will be accepted by the 1992 Fund under certain conditions.
The aim of any reasonable measures of reinstatement should be to bring
the damaged site back to the same ecological state that would haveexisted had the oil spill not occurred, or at least as close to it as possible(that is to re-establish a biological community in which the organisms
characteristic of that community at the time of the incident are present
and are functioning normally). Reinstatement measures taken at somedistance from, but still within the general vicinity of, the damaged area
may be acceptable, so long as it can be demonstrated that they would
actually enhance the recovery of the damaged components of theenvironment. This link between the measures and the damaged
components is essential for consistency with the definition of pollution
damage in the 1992 Civil Liability and Fund Conventions (see page 9).
In addition to satisfying the general criteria applied to the admissibility ofclaims for compensation under the 1992 Fund Convention (see page 19),
claims for the costs of measures of reinstatement of the environment will
only be considered admissible if the following criteria are fulfilled:• the measures should be likely to accelerate significantly the naturalprocess of recovery• the measures should seek to prevent further damage as a result of
the incident• the measures should, as far as possible, not result in the degradation

of other habitats or in adverse consequences for other natural or economic
resources• the measures should be technically feasible•the costs of the measures should not be out of proportion to theextent and duration of the damage and the benefits likely to be achieved.
The assessment should be made on the basis of the information available
when the specific reinstatement measures are to be undertaken.
Compensation is paid only for reasonable measures of reinstatement
actually undertaken or to be undertaken, and if the claimant hassustained an econo mic loss that can be quantified in monetary terms. The
Fund will not entertain claims for environmental damage based on an
abstract quantification calculated in accordance with theoretical models.
It will also not pay damages of a punitive nature on the basis of thedegree of fault of the wrong-doer.
Studies are sometimes required to establish the precise nature and extent ofenvironmental damage caused by an oil spill and to determine whether or not
reinstatement measures are necessary and feasible. Such studies will not benecessary after all spills and will normally be most appropriate in the case of majorincidents where there is evidence of significant environmental damage.
The Fund may contribute to the cost of such studies provided that they concern
damage which falls within the definition of pollution damage in the Conventions,
including reasonable measures to reinstate a damaged environment. In order to beadmissible for compensation it is essential that any such post-spill studies arelikely to provide reliable and usable information. For this reason the studies must
be carried out with professionalism, scientific rigour, objectivity and balance. Thisis most likely to be achieved if a committee or other mechanism is establishedwithin the affected Member State to design and co-ordinate any such studies, aswell as reinstatement measures.
The scale of the studies should be in proportion to the extent of the contaminationand the predictable effects. On the other hand, the mere fact that a post-spill
study demonstrates that no significant long-term environmental damage
has occurred or that no reinstatement measures are necessary, does not by itself
exclude compensation for the costs of the study.
The Fund should be invited at an early stage to participate in the determination

of whether or not a particular incident should be subject to a post-spill
environmental study. If it is agreed that such a study is justified the Fund should
then be given the opportunity of becoming involved in the planning and inestablishing the terms of reference for the study. In this context the Fund can play
an important role in helping to ensure any post-spill environmental study does
not unnecessarily repeat what has been done elsewhere. The Fund can also assist
in ensuring that appropriate techniques and experts are employed. It is essentialthat progress with the studies is monitored, and that the results are clearly andimpartially documented. This is not only important for the particular incident but
also for the compilation of relevant data by the Fund for future cases.
It is also important to emphasize that participation of the Fund in the planningof environmental studies does not necessarily mean that any measures ofreinstatement later proposed or undertaken will be considered o~mira admissible.

i hlA

TOPC Fund Claims Manual (Former Text)
Environmental damage
Claims for impairment of the environment are accepted only if the claimant hassustained an economic loss which can be quantified in monetary terms. The
definition of pollution damage in the 1992 Conventions provides that compensation
for impairment of the environment is payable only for costs incurred for reasonablemeasures to reinstate the contaminated environment.
This definition of pollution damage clarifies and codifies the 1971 Funds
interpretation of the term pollution damage as contained in a Resolution of the1971 Fund, which stated that "...the assessment of compensation to be paid by theInternational Oil Pollution Compensation Fund is not to be made on the basis of anabstract quantification of damage calculated in accordance with theoreticalmodels".
The 1992 Fund accepts claims for loss of profit (net income) resulting from damage
to the marine environment suffered by those who depend directly on earnings fromcoastal or sea-related activities, such as fishermen or ho teliers and restaurateurs
at seaside resorts.
The 1992 Fund does not pay damages of a punitive nature, calculated on the basisof the degree of the fault of the wrong-doer and/or the profit earned by thewrong-doer.
Costs for measures taken co reinstate the marine environment after an oil spill
may be accepted by the 1992 Fund under certain conditions. To be admissible forcompensation, such measures should fulfill the following criteria:**

the cost of the measures should be reasonable
the 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 ofsuccess.
The measures should be reasonable from an objective point of view in the light of
the information available when the specific measures are taken. In most cases amajor oil spill will not cause permanent damage to the environment, as themarine environment has a great potential for natural recovery. There are alsolimits to what man can actually do in taking measures to improve on the naturalprocess.
Compensation is paid only for measures actually undertaken or to be undertaken
Post-spill environmental studies are sometimes carried out to establish the precise
nature and extent of the pollution damage caused bv an oil spill and/or the need forreinstatement measures.
The 1992 Fund may contribute to the cost of such studies, provided that thestudies concern damage which falls within the definition of pollution damage laid
down in the Conventions as interpreted by the 1992 Fund, including reasonablemeasures to reinstate the environment. In such cases, the 1992 Fund should begiven the possibility of becoming involved at an early stage in the selection of theexperts who will carry out the studies, and in the determination of the mandate ofthese experts. The studies should be practical and likely to deliver the required
data. Their scale should not be out of proportion to the extent of the contaminationand the predictable effects. The extent of the studies and associated costs should
also be reasonable from an objective point of view and the costs incurred should bereasonable.