Maintaining Future Effective Preparedness
against an Oil SpillPAJ Oil Spill SymposiumTokyo
28-29 January 2016Jose Maura
Director
International Oil Pollution Compensation Funds

Who we are• The International Oil Pollution Compensation Funds are twointergovernmental organisations (the 1992 Fund and theSupplementary Fund) which provide compensation for oilpollution damage resulting from spills of persistent oil fromtankers.

• It has 114 Member States, covering 94% of the world
tonnage.
• It has been involved in some 150 oil spills worldwide.

The Member States
January 2016

1992 Fund Convention (114 Member States)
1992 Civil Liability Convention (133)Supplementary Fund (31)1969 Civil Liability Convention (34)Why we are needed
Tanker oil spills do happen

Why we are needed
1971 Fund Incidents

Why we are needed
1992 Fund incidents

Why we are needed• Tanker spills are in decline but the figure of oil transported
by sea in 114 Member States is some 1,500 million tonnes
per year.
• Japan received more than 213 million tonnes of oil in 2014
with tankers passing the Japanese coastline every day.
• The transport of oil creates a risk and the oil industry
worldwide recognised long ago that it had a responsibility tocover that risk.
• The international liability and compensation regime, whichshares the cost of covering that risk provides a goodsolution, and has done so for nearly 40 years.

Why we are needed

The IOPC Funds provide:•Compensation through amicablesettlement•

Uniform and consistent
application of the compensation
regime•Equal treatment of all claimants

How the compensation regime works
Three tier system

Paying organisation
Compensation regime

Source of money

Oil receivers in
Supplementary Fund
States Parties

Supplementary FundContribution

3rd tier

1992 Fund Convention
2nd TierInsurancePremium

Insurance (P&I Clubs)

1992 Civil Liability Convention
1st tier

Claimants

Shipowner

Contribution

Payment

1992 FundOil receivers in1992 FundStates Parties

Supplementary Fund Protocol

Compensation limits

How the Fund element is financed
Contributions from the oil industry•Oil receivers: ‘persons’ who receive morethan 150,000 tonnes of contributing oil(crude oil and heavy fuel oil) per year
after sea transport•

The Fund Assembly decides the amountof contributions to be levied each year,
based on amounts required to meetclaims•

The cost of financing the IOPC Fund isdivided fairly. The levy per tonne isbased on the total of the oil reports forthe relevant year•

Oil receivers (not governments) pay

Contributions
From Member States’ oil industry

Contributions to the 1992 Fund (2014)
Japan 15%
Others22%

Japan 15%

India 13%
Republic of Korea 9%
Italy 8%

India 13%

Netherlands 8%

Singapore 7%
France 5%
Spain 5%
Korea 9%Singapore 7%

Netherlands
8%

Italy 8%

United Kingdom 4%

Canada 4%

Oil reports
States obligations•Member States must inform the IOPC Funds of the quantity of contributing
oil received in the previous calendar year.

•Term “received” refers to first receipt immediately after carriage by sea– Oil may be transported from abroad, from another port in same State or froman off-shore production facility.
– Oil received for transhipment to another port or received for further transport
by pipeline also considered as receipt.

•Non-submission of oil reports can result in delays of compensation

Contributions timeline• Letters from the Funds to Member States requesting oil reports
By Jan 15

By April30October• Submission of oil reports from Member States• Assembly decides on the amount of levies for contributions• Secretariat issues invoices to contributors based on oil reports• Payment of contributions by each contributor directly to theFunds
By MarchN+1

When we invoice• The price of oil is falling and it is a bad time for any
perceived hidden extra costs. However, the contributions tothe IOPC Funds can generally be both small and infrequent.
• Annual contributions to the General Fund are levied to:
Meet administrative expenses during the year (~ £3-4million)
Pay for compensation for small incidents (below SDR4million)• Contributions are levied to pay compensation for large oilspills:
A Major Claims Fund is established for those incidents
when necessary

What we have invoiced
Levies payable in 2014 - 2016

Yearpayable

Oil year

Total oil(tonnes)

Total levy

Levy(£ pertonne)

2016

General Fund2014

1,514.0 million 4,400,0000.0029061

2015

General Fund2013

1,533.5 million 3,800,0000.0024779

2014

General Fund2012

1,565,7 million 3,300,0000.0021077

2014

Volgoneft 139
MCF

2006

1,534.0 million 7,500,000

0.0048892

2014

Prestige MCF

2001

1,356.6 million 2,500,0000.0018429

What we have paid
1978 - 2015

Supplementary Fund

• No incident• No compensation paid

The 1992 Fund

• Has been involved in 42 incidents• Paid about £237 million in compensation

The 1971 Fund

• Was involved in 107 incidents• Paid about £331 million in compensation
and/or indemnification

Total• Incidents: 149• Compensation paid: £567 million

When and who we pay
Main types of claims• Clean-up operations and preventivemeasures• Property damage• Economic losses in fishery, mariculture
and tourism sectors:– Consequential loss
– Pure economic loss
• Environmental damage– Reasonable costs for reinstatement of
the environment

When and who we pay
General criteria for admissibility of claims
The admissibility criteria is strictly applied.
• Any loss must actually have been incurred.
• Any loss must relate to measures that are consideredreasonable and justifiable.
• There must be a close link of causation between the loss
and the contamination.
• A claimant is entitled to compensation only if he/she has
suffered a quantifiable economic loss.
• A claimant has to prove the amount of his loss by producing
documents or other evidence.
• Claimants are required to declare that their claims are a true
reflection of the losses.

Problems faced by the Funds
Implementation of the Conventions

1. Claims– Interpretation by national courts– Conflict with national law
2. Oil reporting and contributions– Implementation of the 1992
Fund Convention in national law– Consequences

Importance of correct implementation
Risks and measures• Lack of implementation can result in financial loss to IOPC
Funds and its contributors:– Non reporting of oil and non payment of contributions– Failure by State to ensure that shipowners maintain right type of
insurance cover– Court judgments not following decisions of Member States– IOPC Funds may be forced to pay compensation for nonadmissible claims• CLC/Fund Conventions must be implemented to ensure equal
treatment between Member States (fairness).
– Development of a policy to address failure by Member States toimplement the Conventions– Priority given to dialogue with State concerned to resolve
implementation issues– Ultimately, Assembly may decide to take legal action against aMember State to recover a loss

Example - Volgoneft 139Russian Federation, 2007

Insurance gap ofsome SDR 1.5 million•Russian-registered small tanker
breaks apart in a storm in KerchStrait•

Spills 1 200–2 000 tonnes of fuel oil•

50 km of shorelines in RussianFederation and Ukraine affected.
Ukraine not party to 1992
Conventions•

1992 CLC limit (before November2003) is SDR 3 million•

1992 CLC limit (after November 2003)
is SDR 4.5 million•

Force majeure defence•‘Metodika’ claim for environmental
damage not admissible

Volgoneft 139
Russian Federation, 2007

•The Russian Federation had not implemented the new 1992 CLC
limit decided by the Legal Committee of IMO at the time of theincident (SDR 4.5 M)– the shipowner’s insurance covers only SDR 3 M.

•Legal proceedings ongoing to solve the insurance gap issue

The IOPC Funds Secretariat
Its role•

Administer Fund Conventions•

Consist of Assembly, Executive Committee and Secretariat•

Establish criteria for admissibility of claims••

Assess claims and pay compensation to victims when applicable
Maintain cooperation between the parties:- insurer (P&I Club)- 1992 Fund/Supplementary Fund
- Government (both central and local)- Oil industry/Contributors

Engagement with Member States
Importance of maintaining good contacts• In the event of an incident, good lines of communication are
essential between the affected State and the Secretariat• Contacts must be established long before a spill to ensure
Conventions are implemented and victims are protected– Support is available from the IOPC Funds in matters oftraining and assistance with implementation, oil reporting andclaims submission, including an in-house short course.

General Public Information
Printed and online publications – www.iopcfunds.org

The role of Member States• The IOPC Fund is an organisation which
belongs to its Member States who take thedecisions on compensation andcontributions.

• Active participation at meetings ofGoverning bodies by Member States isvital to the functioning of theOrganisation.
• The international compensation regime isnecessary because the risk of oil spills is
still there.

www.iopcfunds.org

Jose MauraDirector