The role of the IOPC Funds in the protection of themarine environment now and in the future
Gaute Sivertsen, Director
International Oil Pollution Compensation Funds

18 October 2023

Providing compensation for oil pollution damage resulting
from spills of persistent oil from tankers
A form of “insurance company” for States,
managed by States

The IOPC Funds - Who we are
The cost of oil spills is shared between the shipowner and the oil industry

Why do we exist?

1967
Torrey Canyon ran aground
Environmental disaster
120 000 tonnes of crude oil spilled
Fishing waters and livelihoods impactedIssueVictims not protected
No international rules on liability
and compensation in the event ofan oil spill

OutcomeEstablishment of an international
regime for compensation forvictims of oil pollution

The international liability and compensation regime
Legal framework

Previous regime

Current regime

1969 Civil Liability
Convention

1971 Fund
Convention

1992 Civil Liability
Convention(1992 CLC)

1992 Fund
Convention

2003
Supplementary
Fund Protocol(33 Member States)(dissolved in 2014)(146 Member States)(121 Member States)(32 Member States)

The international regime
Basic principles

Compensate victims of pollution damage
Sharing of cost of compensation between
shipowner/insurer and oil receiver
Uniform consistent application ofcompensation regime
Equal treatment of all claimants

States Party to the Conventions

Supp. Fund---32 Member States---SDR 750m

1992 Fund---121 Member
States---SDR 203m
1992 CLC---146 Member
States---SDR 89m
1969 CLC---32 Member
States---SDR 14m

Limits of liability
750800

USD 986 million (£804 million)

How much canbe paid incompensation?

SDR Million

600

400

20320089100

USD 267 million (£218 million)
USD 118 million (£96 million)

4.5050100

150200250

Tonnage of ship (x 1 000 units)
Exchange rates as at 29 September 2023

Who finances the regime?

123

1992 Civil
Who pays:
LiabilityConvention

1992 Fund
WhoConvention
pays:

SupplementaryWhopays:Protocol
Fund

Insurance premium
paid by theshipowners

Contributions paid byoil receivers inMember States

Contributions paid byoil receivers inMember States

the insurer

SDR 89million=USD 118
million1992 Fund

Supplementary FundSDR 203
million=USD 267
millionSDR 750
million=USD 986
millionNo limitation of liability

The 1992 CLC
Strict liability of registered shipownerLimitation of liability based on the gross
tonnage of the ship
Compulsory third-party insurance andcertificate
Direct action against insurer

Exceptions to Liability
Act of war / force majeure | Sabotage | Negligence by public authority

if damage caused by owner’s personal act or omission,committed with intent or recklessly and with knowledgeof the likely damage

Limited exceptions

1992 Fund Convention
Pays compensation when:
Damage exceeds shipowner’s liability underthe 1992 CLC
Shipowner financially incapable of meeting
their obligations
No liability under the 1992 CLC
Maximum compensation :SDR 203 million, including 1992 CLC

Damage from act of war

State ship

Claimant unable to proveincident involved a ship

Minimum contribution:

Supplementary Fund Protocol
Pays compensation when:
Damage exceeds the 1992 Fund’s limit

Maximum compensation :SDR 750 million, including 1992 CLC and1992 Fund

Financed by contributions from oil receivers in State
Parties to the Supplementary Fund Protocol

1 million tonnes in each State Party

STOPIA and TOPIA
Shipowners’ voluntary indemnification agreements
750STOPIA

800

Ships up to29 548 GT600

SDR Million

TOPIA 2006

SUPPLEMENTARY FUND400TOPIA
50% ofincidents
covered by theSupplementaryFund

203 200
89

1992 FUND

100

1992 CLC

204.5050100150
Tonnage of ship (x 1 000 units)

200250Budget of the 1992 Fund
What are contributions for?

General Fund

Major Claim Funds(Based on prior year ‘s oil reports)
Administrative
budgetWorking capital
Loans to Major
Claims Funds(Based on receipts on the year
before the incident)

Minor claims
costs

Incident costs >SDR 4 million

Incident costs<SDR 4 million

Compensation
Assessment costs
Legal costs

Levying and invoicing
How do we calculate contributions?

×The Amount per Tonne(£ per T)

Amount per
Tonne of oilreceived(£ per T)=

Quantity of oil received
by each contributor(Metric Tonnes)

÷=Total contribution
levied (£)

Total of contributing oil
received in all Member
States (Metric Tonnes)

Amount to be
paid by that
contributor inPounds
Sterling (£)

Total Oil (1992 Fund)

India
16%Contributing Oil Received in 2021

Others28%

Total received:

Japan
11%

1 343 467 925 tonnes
10 States represent 72% of contributions
40 States reported nil tonnages
21 States yet to complete reporting

Tonnages reported by 31 December 2022

Canada3%
Republic ofKorea
10%

UnitedKingdom…
Thailand
3%
Spain
5%

Singapore
7%

Italy
7%

Kingdom of theNetherlands
7%

Total Oil (Supplementary Fund)Contributing Oil Received in 2021

Total received:
867 195 799 tonnes
10 States represent 82% of contributions
8 States reported less than 1 million tonnes

Tonnages reported by 31 December 2022

Japan
17%

Others18%

Greece3%
Türkiye4%

Republicof Korea
15%

France4%
Canada5%
UnitedKingdom
5%

Spain
7%

Netherlands
11%
Italy
11%

Key stakeholders

Shipowners

Oil Receivers

Member StatesFirst tierSecond & Third Tier

Governance

Paid by the ship’s insurers under the1992 CLC.

>420 oil receivers finance the 1992Fund.

The Member States decide oncompensation, policy matters andmanagement of the organisations.

>130 oil receivers also financeSupplementary Fund.

The role of the IOPC Funds
In general
Administer the 1992 Fund Convention andthe Supplementary Fund Protocol
Establish criteria for admissibility of claims
Assess claims and pay compensation tovictims when applicable
Decide on the level of payments
Receive oil reports and contributions

How do the IOPC Funds work?
IOPC Funds Governing Bodies
1992 Fund
Executive Committee

1992 FundAssemblyOversight

In Member States
Fund Lawyers

Director& Secretariat

Audit Body

Advisory

Technical Experts
Local Claims Handling Offices

Supplementary
Fund Assembly

Gaute Sivertsen
Director

Investment Advisory Body

The role of the IOPC Funds
During an incident
Cooperation with various stakeholders
Cooperate with the P&I Clubs (joint experts/ assessments &costs / CHO set up)
Meet with authorities, the public and the media
Regular visits to affected sites / meeting with claimants
Report to 1992 Fund Executive Committee

Cooperation iskey to effective
incident
response andcosts recovery

Types of claims

Clean-up activities &preventive measures

Property damage

Tourism sector

Environmental
damages & post spill
studies

Fisheries andmariculture sector

Any damage
directly linked
to a spill could
receivecompensation

Key
principles

01

Occurrence of an incident is notenough to receive compensation

02

A loss must have occurred

03

Sufficient link of causation
between the damage / loss, andthe contamination

04

Claimant must prove his/her loss

Following an incident
Member States’ initiatives
Early notification to enable
Club/Fund/experts to attend on-site
Identification of focal point/person incharge vis-à-vis the Fund
Member States can facilitate dialogue
between Fund/experts and responders orpotential claimants

Common issues withmajor incidents
Coordination and Surveillance(aerial / vessels / shoreline)
Salvage operations
Clean up at sea (dispersants / oil recovery)
Role & position of the authorities; “Mediapollution”; Public opinion; Volunteers.
Shoreline protection and cleanup
Record keeping

Claim Time Limityearsyears
from the damage

An amicable agreement should be foundwith the Fund within 3 years from thedamage

from the incident

Absolute cut-off
no action after 6 years

The system in practice - Hebei Spirit incident

Amount spilled
10 800T

Coastline affected
375km

Total numberof claims

128 464

Amount claimed
KRW 4.2 billion

Compensation available
KRW 340 billion

Hebei Spirit incident
Not enough compensation under the1992CLC/1992 Fund
Supplementary Fund not in placeThree bilateral agreements Coastline
betweenaffected
375km
insurer/Government/Fund
Government paid all established losses
in excess of the 1992 CLC/1992 Fundlimits

Cooperation between the main parties key toCompensation
Amount claimed
resolving
the incident
available KRW
340bill
KRW4.2 bill

Challenges facing the 1992 Fund
Current and future challenges
Ongoing incidents
Dealing with effects of sanctions
Ensuring contributions are paid
Ensuring treaty-compliant insurance
arrangements
Assisting with entry into force of HNS
ConventionAdapting to new incidents
Challenges and Solutions
The IOPC Funds constantly have to:• adapt and be flexible• adjust its approach• respond to evolving situations• develop and implement innovativesolutions
Consistently applying the criteria
established by Member StatesOngoing incidents - MT Princess Empress
Challenges

Solutions

Large number of subsistence claimants
Approx. 95% in fishery sector

Individual interviews conducted in open venues
Provisional assessments & payments of claims

Remote areas difficult to access

Mobile claims caravans to assist
submission of data collection

Few claimants with bank accounts

Payment facilitated through money transfer
service

Political pressure intensified during ongoing
elections

Engage with Authorities, claimants and media

Dealing with effects of sanctions
Russian sanctions and substandard insurers

Reinstating the sharing of burden between shipowners and oil industry is vital

Risk of insufficientcompensation forStates and victims

Risk of IOPC Funds
having to pay allcompensation

Results in nonconformity with IMO
tanker safety standards

Ensuring contributions are paid
Reducing inequality and unfairness
Challenges

Solutions

Small number of States never submit oilreports

Withhold compensation payments to Stateauthorities until resolved (Resolution 12)

Reports form the basis for levying
contributions

Consider levying contributions based on
estimates (Draft Resolution 13)

Small number of receivers don’t
pay contributions

Prevent election of State to Executive
Committee or Audit Body

Consequence: this leads to inequality andunfairness in the regime

Result should ensure equitable sharing offinancial burden among contributors andavailability of compensation for claimants

Ensuring treaty-compliant insurance arrangements
Some non-IG insurers
incapable/unwilling to comply
with treaty obligations.

IMO guidelines for acceptance ofinsurance companies and financial
guarantees (IMO Circ. Letter 3464)

Flag State issued certificates
based on unsatisfactory
insurer’s ‘blue cards’

The 1992 Fund pays from‘ground up’ (tier 1 and tier 2)

Formation of informal
Correspondence Group

Formation of associationof quality non-IG insurers

Assisting with entry into force of HNS Convention
April 2010

October 2010

Resolution 1 of the International
Conference requests the1992 Fund Assembly to instruct
the IOPC Funds to carry outtasks necessary to set up theHNS FundTo carry out theadministrative
tasks for setting up
the HNS Fund

Adoption of the 2010 HNS Protocol

1992 Fund Assembly instructed the Director

To give allnecessary
assistance to IMO

To makepreparations forthe first Assemblyof the HNS Fund

Status of the 2010 HNS Convention
6 Contracting States

4 Signatories

Norway (21/4/17)

FranceCanada (23/4/18)

Germany

Including 4 States each with fleet greaterthan 2 million gross tonnage

Turkey (23/4/18)

GreeceTotal general account’s contributing
cargo volume at least 40 million tonnes

Denmark (28/6/18)

Netherlands

South Africa (16/7/19)
Estonia (10/1/22)

Requirements
Minimum of 12 States ratify

Protocol enters into force
18 months later

Conclusion>150
incidents
involving theIOPC Funds

International compensation
regime a proven success@IOPCFunds

International Oil Pollution Compensation Funds
4, Albert Embankment, London, SE1 7SR, UnitedKingdom
www.iopcfunds.org