THE INTERNATIONAL REGIME FORCOMPENSATION FOR OIL POLLUTION DAMAGEandTHE DRAFT PROTOCOL TO
THE HNS CONVENTIONNOBUHIRO TSUYUKI
Legal Counsel
International Oil Pollution Compensation Funds
PAJ OIL SPILL SYMPOSIUM
3 March 2010
Tokyo, Japan
1OUTLINE FOR PRESENTATION• The international regime for compensation foroil pollution damage;(membership of Conventions; applicability ofConventions; concept of “pollution damage”)• Piracy/terrorism and the international regime• The HNS Convention• Draft Protocol to the HNS Convention
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STATES PARTIES
1992 Civil Liability Convention (CLC)¾122 States Parties

1992 Fund Convention (FC)¾103 States Parties

2003 Supplementary Fund Protocol¾26 States Parties

1971 Fund Convention ceased to be in force on
24 May 2002
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STATES PARTIES

5THE THREE TIER SYSTEM
3rdTIER

SupplementaryFund Protocol

SupplementaryFundOil receivers
after seatransport

2ndTIER

1992 FundConvention

1992 FundOil receivers
after seatransport

1stTIER

1992 Civil Liability
Convention

Shipowners

Insurers
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RATIONALE OF THE INTERNATIONALREGIME¾ Provide compensation to victims of pollution
damage caused by spills of persistent oil fromtankers¾ Compensation through amicable settlements;
court involvement avoided¾ Uniform application in all Member States¾ Equal treatment of all claimants and contributors

7CONVENTIONS APPLY TO¾ Pollution damage¾ Spills of persistent oil from tankers¾ Territory, territorial sea and EEZ or equivalent¾ Preventive measures¾ Bunker spills from unladen tankers(unless “clean”)¾ ‘Mystery spills’ from a tanker
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POLLUTION DAMAGE(Art. I.6, 1992 CLC)
¾ (a) Loss or damage caused outside the ship bycontamination resulting from the escape ordischarge of oil from the ship, wherever such
escape or discharge may occur,¾ provided that compensation for impairment of theenvironment other than loss of profit from such
impairment shall be limited to costs of reasonablemeasures of reinstatement actually undertaken or
to be undertaken;¾ (b) The costs of preventive measures and further
loss or damage caused by preventive measures.
9MAIN TYPES OF CLAIM¾ Clean-up operations and preventive measures¾ Property damage¾ Losses in fishery, mariculture and tourism sectors:¾Consequential loss
¾Pure economic loss
¾ Environmental damage;limited to costs of reasonable measures ofreinstatement actually undertaken or to beundertaken
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ADMISSIBILITY OF CLAIMS;SOME GENERAL PRINCIPLES¾ Loss or damage caused by contamination (link ofcausation between the contamination and the loss)¾ Claimant must prove loss or damage¾ Loss must be economically quantifiable¾ Any expense or loss must actually have been incurred¾ Any expense must be for measures which arereasonable and justifiable

111ST TIER

1992 CIVIL LIABILITY CONVENTION(1992 CLC)

¾ Strict liability of registered shipowner (Art. III)(no fault required; very few exemptions)¾ Limitation of liability (Art. V)
Shipowners may lose right of limitation (Art. V,2)
¾ Compulsory insurance (Art. VII)
Direct action against insurer
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LIMITS OF SHIPOWNER’S LIABILITY(Art. V,1 1992 CLC)
GTSDR

US $

GT < 5 000

4 510 000

6 913 000(per additional GT)

+ 631

+ 967

140 000 < GT

89 770 000

137 600 000

Exchange rate as of 12 February 201013

1ST TIER

SHIPOWNER EXEMPT WHEN INCIDENT(Art. III,2 1992 CLC)

¾ Resulted from an act of war or a grave
natural disaster¾ Was wholly caused by an intentional act ofa third party¾ Was wholly caused by negligence of publicauthorities in maintaining navigational aids

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2ND TIER

1992 IOPC FUND CONVENTION(1992 FC)

¾ Provides compensation for pollution damage
to the extent that the compensation available
under the 1992 CLC is inadequate¾ Creates an intergovernmental organisation:
the IOPC Fund 1992
¾ Maximum compensation 203 million SDR,
including amounts payable under 1992 CLC
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2ND TIER

1992 FC APPLIES WHEN
(Art. 4,1)

¾ Shipowner exempt under 1992 CLC¾ Shipowner financially incapable of meetingobligations(NB. Compulsory insurance over 2,000 tons of oil as cargo)¾ Damage exceeds the shipowner’s liability

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2ND TIER

1992 FC DOES NOT APPLY¾ Damage in non-Member State (Art. 3)¾ Damage caused by an act of war or spillfrom warship (Art. 4,2(a))¾ Claimant cannot prove oil originated froma “ship” as defined in the Conventions(Art. 4,2(b))

17TIME BAR(Art. 6 1992 FC)

Claimants will lose their right to compensation
against the 1992 Fund:¾3 years from the date the damage occurred¾And in any event 6 years from the date ofthe incident¾Unless they bring court action against the1992 Fund before those dates18

3RD TIER

SUPPLEMENTARY FUND PROTOCOL¾ Protocol establishing a Supplementary Fund
entered in force in March 2005
¾ Maximum compensation 750 million SDR,including amounts payable under 1992
Conventions¾ Contributions to Supplementary Fund payableby oil receivers in States Parties to Protocol
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LIMITS OF COMPENSATION

Supplementary Fund

1992 Fund
1992 CLC

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WHO CONTRIBUTES TO THE FUND?
¾ Person receiving > 150 000 tons ofcontributing oil/year after sea transport¾ Contributing oil = crude oil and heavy fuel oil¾ Contributions decided by Fund Assembly¾ Oil receivers pay, not governments

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1992 FUND:
GENERAL FUND CONTRIBUTIONSOthers 24%

Japan 17%

Italy 9%Spain 4%Singapore 5%
Canada 5%
United Kingdom5%
France 7%

India 8%
Rep. of Korea
8%
Netherlands 8%
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Supplementary Fund:
General Fund contributions

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STOPIA / TOPIA 2006
¾ Voluntary industry agreements¾ Sharing of financial burden between shipowners andoil industry
STOPIA 2006 (for incidents in 1992 Fund States Parties)
Voluntary increase to 20 million SDR of limitation
amount for tankers up to 29 548 GT
TOPIA 2006 (for incidents in Supplementary Fund States Parties)
Shipowner will indemnify the Supplementary Fund for
50% of the compensation it has paid to claimants
24THE INTERNATIONAL REGIME AND
PIRACY / TERRORISM¾ Shipowner has strict liability¾ Ownership is not normally lost by act ofpiracy/terrorism¾ Fund States Parties on East coast of Africa¾ Exoneration for shipowner in Art.III, para 2,
1992 CLC¾ Exoneration for IOPC Fund in Art.4, para 2,
1992 FC
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THE INTERNATIONAL REGIME AND
PIRACY / TERRORISM¾ For shipowner and IOPC Fund to prove:... that the damage resulted from an act of war,
hostilities, civil war or insurrection¾ For shipowner to prove:... that the damage was wholly caused by anact or omission done with intent to cause
damage by a third party
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THE DRAFT PROTOCOL TO
THE HNS CONVENTION

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THE HNS CONVENTION (1996)
Aim¾ To ensure adequate, prompt and effective
compensation for:• Loss of life or personal injury• Loss of or damage to property outside the shipcarrying HNS and economic losses• Costs of preventive measures, clean-up andreasonable measures of reinstatement of theenvironment¾ Caused by Hazardous and Noxious Substances(HNS) in connection with their transport by sea
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DEVELOPMENT OF HNS CONVENTION¾ 1984

Diplomatic Conference failed to agree
original HNS Convention¾ 1996¾ ~2007

HNS Convention agreed
Work on implementation on Convention(Both in IOPC Funds and IMO LEG)

¾ 2007
HNS Focus Group set up at IOPC Fund¾ 2008
IOPC Fund submitted draft Protocol to IMO¾ 2008-09 IMO LEG discussed draft Protocol¾ Apr.2010 IMO has Diplomatic Conference to adopt
draft Protocol to the HNS Convention
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LIMITS OF COMPENSATION
GTSDR

US $

GT < 2 000

10 000 000

15 328 000(per additional GT)+ 1 500+ 2 300

50 00082 000 000

125 686 000(per additional GT)

+ 360

+ 552

100 000 < GT

100 000 000

153 275

250 000 000

383 188 000

Shipowner

HNS FundExchange rate as of 12 February 201030

LIMITS OF COMPENSATION

250 million SDR

HNS Fund
100 million SDR

Shipowner

31COMPARISON WITH CLC/FC SYSTEM¾ Covers very wide range of substances inboth bulk and packaged form
¾ Not just pollution but other types of claims;
e.g. death or personal injury, fire andexplosion risks¾ Contribution system much more complicated,
due to wide range of substances contributing
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COMPARISON WITH CLC/FC SYSTEM
LIMITS OF COMPENSATION(million SDR)

HNSConvention

1992 CLC /1992 Fund

Supplementary
Fund

Shipowner minimum

104.5-

Shipowner maximum

100

89.8-

Fund

250

20375033

THE DRAFT PROTOCOL¾ Revise the HNS Convention to resolve
three main issues:• Concept of “Receiver”• Contributions to the LNG Account• Non-reporting of contributing cargo¾ Not a wholesale revision of HNS Convention¾ April 2010: Diplomatic Conference by IMO

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THE CONCEPT OF “RECEIVER”(Art.1.4)

Issue:¾ Definition of receiver* creates
administrative burden for reporting
Packaged HNS* “Receiver” means; (Article 1.4(a))

the person who physically receives
contributing cargo discharged in theports and terminals of a State Party
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BULK HNS AND PACKAGED HNS(Art. 1.5)
Bulk HNS(i)Oils carried in bulk(ii) Noxious liquid substances carried in bulk(iii) Dangerous liquid substances carried in bulk(v) Liquefied gases(vi) Liquid substances carried in bulk with a flash
point not exceeding 60°C(vii) Solid bulk materials
Packaged HNS(iv) Dangerous, hazardous and harmful substances,materials and articles in packaged form
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CONCEPT OF THE “RECEIVER”
Solution by the Draft Protocol:¾Packaged HNS to be covered forcompensation by the HNS Fund but
not liable for contributions (Art.1.2)¾Increase the shipowner’s limit of liability
to balance extra contributions byreceivers of bulk HNS (Art.7)
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CONTRIBUTIONS TO THE LNG ACCOUNTIssue:¾ Contributor to the LNG account may
not be subject to jurisdiction of aState Party and therefore paymentof contributions cannot be enforced

38

CONTRIBUTOR TO THE HNS FUND
(Art.1.4, Art.18, Art.19)

The person liable to pay contributions,¾ All types of HNS (except LNG/persistent oil):The person who physically receives cargo¾ LNG:The person who held title to an LNG cargo
immediately prior to discharge¾ Persistent oil:The person liable to contribute to 1992 Fund
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CONTRIBUTIONS TO THE LNG ACCOUNT
Solution by the Draft Protocol: (Art.11)
Contribution to the LNG account shall be made by¾Receiver of LNG cargo¾Titleholder of LNG cargo where:(i) titleholder entered agreement with receiver that
titleholder shall make such contribution(ii) receiver informed State Party about agreement¾Receiver shall contribute if titleholder does not40

NON-REPORTING
OF CONTRIBUTING CARGOS(Art.43)

Issue:
14 States have ratified the HNS Convention
but only 2 States have submitted reports¾ Claimants in those non-reporting States
would still be eligible for compensation¾ Difficult to determine the conditions for entry
into force of the HNS Convention
41

CONDITIONS FOR ENTRY INTO FORCE(Art.46)

18 months after:¾ Ratification by at least 12 States(including 4 States each with not less than
2 million of gross tonnage)
and¾ 40 million tonnes of contributing cargo(bulk solids and other HNS, not oil, LNG or LPG)

received in these States in previous
calendar year
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NON-REPORTING
OF CONTRIBUTING CARGOS
Solution by the Draft Protocol:
Non-reporting by State¾No compensation by the HNS Fund until
the reports have been completed (Art.14)¾Temporary suspension from being aContracting State if non-reporting afterratification (Art.20(7))
43Conclusion
The International Regime for Oil Pollution¾ The regime has in general worked well
¾ Used as model in other Conventions
The Draft Protocol to the HNS Convention¾ The Draft Protocol was made to resolve theissues of the HNS Convention¾ Expected to be adopted at Dip-Con in April
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Thank you for your attention!
For further informationwww.iopcfund.org

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