THE INTERNATIONAL REGIME ON LIABILITY AND
COMPENSATION FOR OIL POLLUTION DAMAGE“OLD” PRACTICE; RECENT DEVELOPMENTS; NEW CASES

Willem Oosterveen
International Oil Pollution Compensation Funds
PAJ Oil Spill Symposium 2007
Tokyo, Japan
22-23 February 2007
121

COMPENSATION REGIMES
Old regime:1969 Civil Liability Convention/1971 Fund Convention
1971 Fund
New regime:
1992 Civil Liability Convention/1992 Fund Convention
1992 Fund2003 Supplementary Fund Protocol
Supplementary Fund
3

1992 CIVIL LIABILITY CONVENTION
115 States Parties

1992 FUND CONVENTION
99 States Parties

2003 PROTOCOL TO 1992 FUND CONVENTION20 States Parties1971 Fund Convention ceased to be in force on
24 May 2002
42

THE THREE TIER SYSTEM

THIRD
TIER

Oil receivers
after seatransport

Supplementary Fund
ProtocolSupplementaryFund

1992 FundConvention

1992
Fund

1992 Civil Liability
Convention

Insurers

SECOND Oil receivers
after sea
TIER
transport

FIRST
TIER

Shipowners

51992 CONVENTIONS APPLY TO:
 Pollution damage
 Spills of persistent oil from tankers
 Territory, territorial waters and EEZ orequivalent Preventive measures
 Bunker spills from unladen tankers
 ‘Mystery spills’ from a tanker
63

1ST TIER
1992 CIVIL LIABILITY CONVENTION

 Strict liability of registered shipowner
 Limitation of liability
 Shipowners may lose right of limitation
 Compulsory insurance

7SHIPOWNER EXEMPT WHEN INCIDENTRESULTED FROM Act of war or a grave natural disaster Sabotage by a third party Negligence of public authorities inmaintaining navigational aids84

2ND TIERFUND CONVENTION APPLIES WHEN

 Shipowner exempt Shipowner financially incapable of meeting
obligations
 Damage exceeds the shipowner’s liability

92ND TIERFUND CONVENTION DOES NOT APPLY Damage in non-Member State Damage caused by an act of war or spillfrom warship Claimant cannot prove oil originated froma “ship” as defined in the Conventions

105

MAXIMUM AMOUNT OF COMPENSATION
 1992 CLC/Fund Conventions– 135 million SDR (US$ 201 million)– 203 million SDR (US$ 301 million) 2003 Supplementary Fund
– 750 million SDR (US$ 1 114 million)
11

LIMITS LAID DOWN IN THE CONVENTIONS
1,200

1,000

$ (millions)

800600400

20000201992 CLC

4060
80
100
Units of tonnage of s hip (1 000 units)1992 Fund120

140160

Supplementary Fund

126

RECENT DEVELOPMENT: SHIP-TO-SHIP
TRANSFER OF OIL (1) Study by independent expert
 Permanently and semi-permanently
anchored vessels engaged in STS oiltransfer operations
 Definition of “ship”
 Notion of “received”
 Relevant for cover & contribution
13RECENT DEVELOPMENT: SHIP-TO-SHIP
TRANSFER OF OIL (2) Permanently & semi-permanently anchoredvessels engaged in STS transfer of oil
 “Ship”: only when carrying oil as cargo on avoyage to or from a terminal outside thelocation where they normally operate (buttaking into account particular circumstances;case-by-case) “Received”: all contributing oil
1471992 FUND: GENERAL FUNDCONTRIBUTIONS 2006
Japan 17%

Others 32%
Italy 9%Netherlands 9%
Spain 4%
Republic ofKorea 8%

Singapore 5%
United Kingdom
5% Canada 5%

India 7%
France 7%

15

The Haven incident, Italy, 1991

168

SOME MAJOR SPILLS INVOLVING THE
FUNDSAntonio Gramsci (Sweden)

1979

US$18 M

Tanio (France)

1980

US$36 M

Haven (Italy)

1991

US$58 M

Aegean Sea (Spain)

1992

US$65 M

Braer (United Kingdom)

1993

US$87 M

Keumdong No 5 (Republic of Korea)

1993

US$21 M

Sea Prince (Republic of Korea)

1995

US$40M

Yuil No 1 (Republic of Korea)

1995

US$30 MSea Empress (United Kingdom)

1996

US$60 M

Nakhodka (Japan)

1997

US$212 M

Nissos Amorgos (Venezuela)

1997

US$21 M

Osung No 3 (Republic of Korea)

1997

US$16 M

Erika (France) (so far)1999

US$145 M

Prestige (Spain, France and Portugal) (so far)2002

US$154 M

17

MAIN TYPES OF CLAIM
 Property damage
 Clean-up operations and preventivemeasures
 Losses in fishery, mariculture and tourism
sectors:
Consequential lossPure economic loss
 Environmental damage
189

RECENT DEVELOPMENT: ADMISSIBILITY
CRITERIA FOR PREVENTIVE MEASURES (1) Background: pumping operations Prestige
 Examination of admissibility criteria byDirector
 Existing criteria: Claims Manual Reasonableness; objective criteria;
relationship between costs and benefits
 Discussion in Assembly October 2006
19

RECENT DEVELOPMENT: ADMISSIBILITY
CRITERIA FOR PREVENTIVE MEASURES (2) Reasonableness is overarching criterion for
all preventive measures
 Take into account potential environmentaldamage with direct or indirect economiceffect No social or political considerations
 Determine sub-criteria by combining
proposal by Director and France/Spain
2010

POSSIBLE SUB-CRITERIA FOR REMOVALOF OIL FROM SUNKEN SHIPS (Director)
 Vulnerability of shoreline; likely economic damage
following release of remaining oil Likely damage to environment Likelihood of a release reaching shoreline
 Quantity, type and characteristics of the oil Alternative methods for containing or rendering
harmless of the oil?
 Likely cost of operation and likelihood of success Likelihood of significant release during extraction
21POSSIBLE SUB-CRITERIA FOR REMOVALOF OIL FROM SUNKEN SHIPS (Fra & Spa) Risks associated with situation of ship Risks associated with volume of oil in ship Technical viability of operation
 Reasonable cost; including per tonne
recovered2211

The Erika incident, France, 1999

23

DEVELOPMENT OF THE INTERNATIONALCOMPENSATION REGIME
 1992 Civil Liability and Fund Convention
 Adopted in 1992
 In force 1996

 Increase in limits Decided 2000
 In force 2003

 Supplementary Fund Protocol
 Adopted 2003
 In force 2005
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3RD TIER
SUPPLEMENTARY FUND
 Protocol establishing a Supplementary Fundin force in March 2005
 Maximum compensation 750 million SDR(US$1 114 million), including amounts
payable under 1992 Conventions
 Contributions to Supplementary Fund
payable by oil receivers in States Parties toProtocol
25

SHARING OF FINANCIAL BURDEN BETWEENSHIPOWNERS AND OIL INDUSTRY Cost study Impact of Supplementary Fund
 STOPIA / TOPIA 2006

2613

STOPIA 2006
 Applies to pollution damage in 1992 Fund
Member States Voluntary increase to 20 million SDR of limitation
amount for ships up to 29 548 gross tonnage
 1992 Fund remains liable to pay compensation toclaimants over 4.51 million SDR (US$6.7 million)
 1992 Fund will be indemnified by the shipownerfor difference between CLC limit and 20 million
SDR
27

TOPIA 2006
 Applies to pollution damage in Supplementary
Fund Member States
 Supplementary Fund will continue to pay
compensation to claimants in accordance withSupplementary Fund Protocol
 Shipowner will indemnify the Supplementary
Fund for 50% of the compensation it has paid
to claimants
28

14

NEW CASE: SOLAR 1

 Sank on 11 August 2006 in heavy weather
in Guimaras Straits (Philippines) Around 124 km shoreline and 500 hectaresof mangrove polluted
 Clean-up claims: totalling GBP 3.2 million

29301531

NEW CASE: SOLAR 1 (2) ± 7000 persons engaged in small-scale fisheries
directly affected
 ± 4000 persons engaged in small-scale fisheries
indirectly affected
 ± 90 fishponds; ± 77 seaweed farmers
 ± 70 tourism businesses Restaurants, retailers, transport services etc.
 Fund conducted series of claims workshops toexplain functioning of international regime andFund
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SUBSISTENCE FISHERY CLAIMS 11,200 claims assessed & approved Assessments based on information provided
by fisherfolk
 Claims entered into database & grouped into
different fishing categories
 Average daily incomes per categorycompared with published data and results offield surveys
33

SUBSISTENCE FISHERY CLAIMS (2) Assessed losses ranged from £25-£300
depending on fishing category
 Total amount to be paid ± £1.3 million
 Payments being made to individual claimants

34

17

35

NEW CASE: SOLAR 1 (3) At sea response: dispersants, booms
 Shoreline clean-up: 1500 persons; 63 000man-days Removal of oil from wreck?
 Underwater survey: majority of oil may still
be on board
 Seismically active area; proximity tosensitive economic and environmental
resources
36

18

NEW CASE: SOLAR 1 (4) Executive Committee Oct. 2006: removal of oil
admissible in principle
 First STOPIA-case Complication: P&I Club reserved right under Article III,para 3 CLC 1992 (contributory negligence) Different for Fund: Article 4, para 3 FC 1992
 Fund reserved its position regarding contributory
negligence

37

CONCLUSIONS The international compensation regime of the1992 Conventions has in general worked well
 135 incidents in 28 years (including old regime)
 US$ 1 060 million paid to victims (including oldregime) Used as model in other fields
 Developments to ensure it meets the needs ofsociety in the 21st century

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Prestige incident, Spain November 2002

The Prestige incident, Spain, 2002
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