THE INTERNATIONAL REGIME FOR COMPENSATION FOR OIL
POLLUTION DAMAGE
Explanatory note prepared by the Secretariat of the International Oil Pollution
Compensation Funds
February 2010

1

Introduction

Compensation for pollution damage caused by spills from oil tankers is governed by an international regime
elaborated under the auspices of the International Maritime Organization (IMO). The framework for the
regime was originally the 1969 International Convention on Civil Liability for Oil Pollution Damage (1969
Civil Liability Convention) and the 1971 International Convention on the Establishment of an International
Fund for Compensation for Oil Pollution Damage (1971 Fund Convention). This 'old' regime was amended
in 1992 by two Protocols, and the amended Conventions are known as the 1992 Civil Liability Convention
and the 1992 Fund Convention. The 1992 Conventions entered into force on 30 May 1996.
Due to a number of denunciations of the 1971 Fund Convention, this Convention ceased to be in force on
24 May 2002. A large number of States have also denounced the 1969 Civil Liability Convention.
Therefore this note deals primarily with the 'new regime', ie the 1992 Civil Liability Convention and the1992 Fund Convention.
The 1992 Civil Liability Convention governs the liability of shipowners for oil pollution damage. The
Convention lays down the principle of strict liability for shipowners and creates a system of compulsory
liability insurance. The shipowner is normally entitled to limit his liability to an amount which is linked tothe tonnage of his ship.
The 1992 Fund Convention, which is supplementary to the 1992 Civil Liability Convention, establishes aregime for compensating victims when the compensation under the applicable Civil Liability Convention isinadequate. The International Oil Pollution Compensation Fund 1992, generally referred to as the
IOPC Fund 1992 or the 1992 Fund was set up under the 1992 Fund Convention. The 1992 Fund is aworldwide intergovernmental organisation established for the purpose of administering the regime ofcompensation created by the 1992 Fund Convention. By becoming Party to the 1992 Fund Convention, aState becomes a Member of the 1992 Fund. The Organisation has its headquarters in London.
As at 1 February 2010, 123 States had ratified the 1992 Civil Liability Convention, and 104 States had
ratified the 1992 Fund Convention. The States Parties are listed in the Annex.
21992 Civil Liability Convention

2.1

Scope of application

The 1992 Civil Liability Convention applies to oil pollution damage resulting from spills of persistent oilfrom tankers.
The 1992 Civil Liability Convention covers pollution damage suffered in the territory, territorial sea or
exclusive economic zone (EEZ) or equivalent area of a State Party to the Convention. The flag State of thetanker and the nationality of the shipowner are irrelevant for determining the scope of application.

2'Pollution damage' is defined as loss or damage caused by contamination. In the case of environmental
damage (other than loss of profit from impairment of the environment) compensation is restricted to costs
actually incurred or to be incurred for reasonable measures to reinstate the contaminated environment.
The notion of pollution damage includes measures, wherever taken, to prevent or minimise pollution
damage in the territory, territorial sea or EEZ or equivalent area of a State Party to the Convention('preventive measures'). Expenses incurred for preventive measures are recoverable even when no spill ofoil occurs, provided that there was a grave and imminent threat of pollution damage.
The 1992 Civil Liability Convention covers spills of cargo and/or bunker oil from laden, and in somecases unladen sea-going vessels constructed or adapted to carry oil in bulk as cargo (but not to dry cargoships).
Damage caused by non-persistent oil, such as gasoline, light diesel oil, kerosene etc, is not covered by the
1992 Civil Liability Convention.
2.2

Strict liability

The owner of a tanker has strict liability (ie he is liable also in the absence of fault) for pollution damage
caused by oil spilled from his tanker as a result of an incident. He is exempt from liability under the 1992
Civil Liability Convention only if he proves that:a) the damage resulted from an act of war or a grave natural disaster, orb) the damage was wholly caused by sabotage by a third party, orc) the damage was wholly caused by the negligence of public authorities in maintaining lights or othernavigational aids.
2.3

Limitation of liability

The shipowner is normally entitled to limit his liability under the 1992 Civil Liability Convention. The
limits were increased by some 50.37% on 1 November 2003 as follows. The increased limits apply toincidents occurring on or after that date:a) for a ship not exceeding 5 000 units of gross tonnage, 4 510 000 Special Drawing Rights (SDR)(US$7 million);b) for a ship with a tonnage between 5 000 and 140 000 units of tonnage, 4 510 000 SDR(US$7 million) plus 631 SDR (US$978) for each additional unit of tonnage; andc) for a ship of 140 000 units of tonnage or over, 89 770 000 SDR (US$139 million)<1>.
If it is proved that the pollution damage resulted from the shipowner's personal act or omission, committedwith the intent to cause such damage, or recklessly and with knowledge that such damage would probably
result, the shipowner is deprived of the right to limit his liability.
2.4

Channelling of liability

Claims for pollution damage under the 1992 Civil Liability Convention can be made only against theregistered owner of the tanker concerned. This does not preclude victims from claiming compensation
outside this Convention from persons other than the owner. However, the Convention prohibits claims
against the servants or agents of the owner, members of the crew, the pilot, the charterer (including bareboat
charterer), manager or operator of the ship, or any person carrying out salvage operations or preventive
measures. The owner is entitled to take recourse action against third parties in accordance with national law.
<1>

The unit of account in the 1992 Conventions is the Special Drawing Right (SDR) as defined by the International Monetary
Fund. In this document, the SDR has been converted into US dollars at the rate of exchange applicable on
1 February 2010 ie 1 SDR = US1.54915.

3

2.5

Compulsory insurance

The owner of a tanker carrying more than 2 000 tonnes of persistent oil as cargo is obliged to maintaininsurance to cover his liability under the 1992 Civil Liability Convention. Tankers must carry a certificate
on board attesting the insurance coverage. When entering or leaving a port or terminal installation of a State
Party to the 1992 Civil Liability Convention, such a certificate is required also for ships flying the flag of aState which is not Party to the 1992 Civil Liability Convention.
Claims for pollution damage under the 1992 Civil Liability Convention may be brought directly against theinsurer or other person providing financial security for the owner's liability for pollution damage.
2.6

Competence of courts

Actions for compensation under the 1992 Civil Liability Convention against the shipowner or his insurer
may only be brought before the Courts of the State Party to that Convention in whose territory, territorial sea
or EEZ or equivalent area the damage occurred.

3

1992 Fund Convention

3.1

Supplementary compensation

The 1992 Fund pays compensation to those suffering oil pollution damage in a State Party to the 1992 Fund
Convention who do not obtain full compensation under the 1992 Civil Liability Convention for one of thefollowing reasons:a) the shipowner is exempt from liability under the 1992 Civil Liability Convention because he can
invoke one of the exemptions under that Convention; orb) the shipowner is financially incapable of meeting his obligations under the 1992 Civil Liability
Convention in full and his insurance is insufficient to satisfy the claims for compensation forpollution damage; orc) the damage exceeds the shipowner's liability under the 1992 Civil Liability Convention.
In order to become Parties to the 1992 Fund Convention, States must also become Parties to the 1992 Civil
Liability Convention.
The 1992 Fund does not pay compensation if:a) the damage occurred in a State which was not a Member of the 1992 Fund; orb) the pollution damage resulted from an act of war or was caused by a spill from a warship; orc) the claimant cannot prove that the damage resulted from an incident involving one or more ships as
defined (ie a sea-going vessel or seaborne craft of any type whatsoever constructed or adapted forthe carriage of oil in bulk as cargo).
3.2

Limit of compensation

The maximum amount payable by the 1992 Fund in respect of an incident occurring before
1 November 2003 was 135 million SDR (US$209 million), including the sum actually paid by the
shipowner (or his insurer) under the 1992 Civil Liability Convention. The limit was increased by some
50.37% to 203 million SDR (US$314.5 million) on 1 November 2003. The increased limit applies only toincidents occurring on or after this date.

4

3.3

Competence of courts

Actions for compensation under the 1992 Fund Convention against the 1992 Fund may only be brought
before the Courts of the State Party to that Convention in whose territory, territorial sea or EEZ or equivalentarea the damage occurred.
Experience in past incidents has shown that most claims are settled out of court.

3.4

Organisation of the 1992 Fund

The 1992 Fund has an Assembly, which is composed of representatives of all Member States. The
Assembly is the supreme organ governing the 1992 Fund, and it holds regular sessions once a year. The
Assembly elects an Executive Committee comprising 15 Member States. The main function of thisCommittee is to approve settlements of claims.
The 1992 Fund shares a Secretariat with the 1971 Fund and the Supplementary Fund (see sections 4 and6.2 below). The joint Secretariat is headed by a Director, and has at present 27 staff members.

3.5

Financing of the 1992 Fund

The 1992 Fund is financed by contributions levied on any person who has received in one calendar year
more than 150 000 tonnes of crude oil and heavy fuel oil (contributing oil) in a State Party to the 1992 Fund
Convention.
Basis of Contributions
The levy of contributions is based on reports of oil receipts in respect of individual contributors. Member
States are required to communicate every year to the 1992 Fund the name and address of any person in that
State who is liable to contribute, as well as the quantity of contributing oil received by any such person. Thisapplies whether the receiver of oil is a Government authority, a State-owned company or a private company.
Except in the case of associated persons (subsidiaries and commonly controlled entities), only persons
having received more than 150 000 tonnes of contributing oil in the relevant year should be reported.
Oil is counted for contribution purposes each time it is received at a port or terminal installation in a Member
State after carriage by sea. The term received refers to receipt into tankage or storage immediately after
carriage by sea. The place of loading is irrelevant in this context; the oil may be imported from abroad,
carried from another port in the same State or transported by ship from an off-shore production rig. Also oil
received for transhipment to another port or received for further transport by pipeline is considered received
for contribution purposes.
Payment of Contributions
Annual contributions are levied by the 1992 Fund to meet the anticipated payments of compensation andadministrative expenses during the coming year. Each contributor pays a specified amount per tonne ofcontributing oil received. The amount levied is decided each year by the Assembly.
The Director issues an invoice to each contributor, following the decision taken by the Assembly to levy
annual contributions. A system of deferred invoicing exists whereby the Assembly fixes the total amount tobe levied in contributions for a given calendar year, but decides that only a specific lower total amountshould be invoiced for payment by 1 March in the following year, the remaining amount, or a part thereof,
to be invoiced later in the year if it should prove to be necessary.

5

The contributions are payable by the individual contributors directly to the 1992 Fund. A State is not
responsible for the payment of contributions levied on contributors in that State, unless it has voluntarily
accepted such responsibility.
Level of Contributions
Payments made by the 1992 Fund in respect of claims for compensation for oil pollution damage may varyconsiderably from year to year, resulting in fluctuating levels of contributions. The following table sets out
the contributions levied by the 1992 Fund during the period 1996-2008.
Annualcontributions

Date due

1996

01.02.1997
01.09.1997
01.02.1998
Maximum deferred levy
01.02.1999
01.09.1999
Credit: 01.03.2000
01.09.2000
01.03.2001
Maximum deferred levy
01.03.2002
Maximum deferred levy
01.03.2003
01.03.2004
Maximum deferred levy
01.03.2005
01.03.2006
Maximum deferred levy
01.03.2007
01.03.2008
01.11.2008
01.03.2009
Maximum deferred levy

1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2008

4

Total
contribution£
4 000 000
10 000 000
9 500 000
30 000 000
28 200 000
9 000 000
-3 700 000
53 000 000
49 500 000
43 000 000
41 000 000
21 000 000
31 000 000
82 000 000
40 500 000
37 800 000
05 500 000
3 000 000
3 000 000
50 000 000
10 000 000
85 500 000

Contribution per tonneof contributing oil£
0.0110440
0.0188066
0.0114295(No deferred levy made)0.0400684
0.0134974-0.0056367
0.0552651
0.0545770(No deferred levy made)0.0428439(No deferred levy made)0.0274518
0.0052994(No deferred levy made)0.0273362(No deferred levy made)0.0020156
0.0019699
0.0328304
0.0064870(No deferred levy made)International Oil Pollution Compensation Supplementary FundOn 3 March 2005 a third tier of compensation was established by means of a Supplementary Fund under aProtocol adopted in 2003. So far 26 States have ratified the Protocol.
The Supplementary Fund provides additional compensation over and above that available under the
1992 Fund Convention for pollution damage in the States that become Parties to the Protocol. As a result,
the total amount available for compensation for each incident for pollution damage in the States whichbecome Members of the Supplementary Fund is 750 million SDR (US$1 161.8 million), including theamounts payable under the 1992 Civil Liability Convention and the 1992 Fund Convention,
203 million SDR (US$314.5 million).
The Supplementary Fund only pays compensation for pollution damage for incidents which occur after theProtocol has entered into force for the State concerned.
Membership of the Supplementary Fund is optional and any State which is a Member of the 1992 Fund may

6join the Supplementary Fund.
Annual contributions to the Supplementary Fund will be made in respect of each Member State by any
person who, in any calendar year, has received total quantities of oil exceeding 150 000 tonnes after sea
transport in ports and terminal installations in that State. However, the contribution system for the
Supplementary Fund differs from that of the 1992 Fund in that, for the purpose of paying contributions, atleast 1 million tonnes of contributing oil will be deemed to have been received each year in each Member
State.
No incidents have occurred which have involved the Supplementary Fund. The following table sets out thecontributions levied in 2006 to meet the Supplementary Fund’s administrative expenses:
Annualcontributions

Date due

2006

01.03.2007

Total
contribution£
1 400 000

Contribution per tonneof contributing oil£
0.0017223

The Supplementary Fund, which is administered by the 1992 Fund Secretariat (see section 3.4), has its own
Assembly composed of representatives of its Member States.

5

STOPIA 2006 and TOPIA 2006

The two-tier international compensation regime created by the 1992 Civil Liability and Fund Conventions
was intended to ensure an equitable sharing of the economic consequences of marine oil spills from tankers
between the shipping and oil industries. In order to address the imbalance created by the establishment of
the Supplementary Fund, which will be financed by the oil industry, the International Group of P&I Clubs(a group of 13 mutual insurers that between them provide liability insurance for about 98% of the world's
tanker tonnage) has introduced, on a voluntary basis, a compensation package consisting of two agreements,
the Small Tanker Oil Pollution Indemnification Agreement (STOPIA) 2006, and the Tanker Oil Pollution
Indemnification Agreement (TOPIA) 2006. These contractually-binding agreements entered into force on
20 February 2006.
The 1992 Fund and the Supplementary Fund will in respect of incidents covered by STOPIA 2006 and
TOPIA 2006 continue to be liable to compensate claimants in accordance with the 1992 Fund Convention
and the Supplementary Fund Protocol respectively. The Funds will then be indemnified by the shipownerin accordance with STOPIA 2006 and TOPIA 2006. Under STOPIA 2006 the limitation amount isincreased on a voluntary basis to 20 million SDR (US$31 million) for tankers up to 29 548 gross tonnage fordamage in 1992 Fund Member States. Under TOPIA 2006, the Supplementary Fund is entitled toindemnification by the shipowner of 50% of the compensation payments it has made to claimants if theincident involved a ship covered by the agreement.
STOPIA 2006 and TOPIA 2006 also provide that a review should be carried out after ten years of theexperience of pollution damage claims during the period 2006-2016, and thereafter at five-year intervals.

6

The 'old' regime: the 1969 Civil Liability Convention and the 1971 Fund Convention

6.1

1969 Civil Liability Convention

The 1969 Civil Liability Convention entered into force in 1975. As at 1 February 2010, 38 States were
Parties to the Convention (as listed in the Annex).

7

The main features of the Convention are the same as those of the 1992 Civil Liability Convention, except
on the following points.
Unlike the 1992 Civil Liability Convention, the 1969 Convention is limited to pollution damage suffered in
the territory (including the territorial sea) of a State Party to the Convention. Furthermore, it applies only todamage caused or measures taken after an incident has occurred in which oil has escaped or been discharged.
The Convention therefore does not apply to threat removal measures, ie preventive measures which are so
successful that there is no actual spill of oil from the tanker involved.
The 1969 Civil Liability Convention applies only to ships which are actually carrying oil in bulk as cargo,
ie laden tankers. Spills of bunkers from tankers during ballast voyages are therefore not covered by the1969 Convention, nor are spills of bunker oil from ships other than tankers.
Under the 1969 Civil Liability Convention, the limit of the shipowner's liability is much lower than underthe 1992 Civil Liability Convention, ie 133 SDR (US$206) per ton of the ship's tonnage or 14 million SDR(US$21.7 million), whichever is the lower.
The shipowner may be deprived of the right to limit his liability if a claimant proves that the incident
occurred as a result of the personal fault (the 'actual fault or privity') of the owner.
Claims for pollution damage under the 1969 Civil Liability Convention can be made only against theregistered owner of the tanker concerned. This does not preclude victims from claiming compensation
outside this Convention from persons other than the owner. However, the Convention prohibits claims
against the servants or agents of the owner. The owner is entitled to take recourse action against third parties
in accordance with national law.
6.2

1971 Fund Convention

The International Oil Pollution Compensation Fund 1971, generally referred to as the IOPC Fund 1971 or
the 1971 Fund, was set up under the 1971 Fund Convention, when the latter entered into force in 1978. The
1971 Fund Convention ceased to be in force on 24 May 2002 and does not apply to incidents occurring afterthat date.
The total amount of compensation payable by the 1971 Fund per incident was much lower than the
maximum amount payable by the 1992 Fund, ie 60 million SDR (US$93 million), including the sum
actually paid by the shipowner (or his insurer) under the 1969 Civil Liability Convention.
In the great majority of incidents dealt with by the 1971 Fund, all claims have been settled out of court.
Before the 1971 Fund can be wound up it has to fulfil its obligations to pay compensation to victims ofincidents which occurred when the 1971 Fund Convention was in force. During the winding up period the1971 Fund is governed by an Administrative Council composed of all States which at any time were Parties
to the 1971 Fund Convention. As indicated above (section 3.4), the 1971 Fund shares a Secretariat with the
1992 Fund.
The 1971 Fund has been financed in the same way as the 1992 Fund.

8

7

Conclusions

The advantages for a State being Party to the 1992 Civil Liability Convention and the 1992 Fund
Convention can be summarised as follows. If a pollution incident occurs involving a tanker, compensation
is available to governments or other authorities which have incurred costs for clean-up operations or
preventive measures and to private bodies or individuals who have suffered damage as a result of thepollution. For example, fishermen whose nets have become polluted are entitled to compensation, andcompensation for loss of income is payable to fishermen and to hoteliers at seaside resorts. This isindependent of the flag of the tanker, the ownership of the oil or the place where the incident occurred,provided that the damage is suffered within a State Party.
As mentioned above, the 1969 Civil Liability Convention and the 1971 Fund Convention have beendenounced by a number of States, and the 1971 Fund Convention ceased to be in force on 24 May 2002.
Moreover, the 1992 Civil Liability Convention and the 1992 Fund Convention provide a wider scope of
application on several points and much higher limits of compensation than the Conventions in their original
versions. For these reasons, it is recommended that States which have not already done so should accede to
the 1992 Protocols to the Civil Liability Convention and the Fund Convention (and not to the 1969 and 1971
Conventions) and thereby become Parties to the Conventions as amended by the Protocols (the 1992
Conventions). The 1992 Conventions would enter into force for the State in question 12 months after thedeposit of its instrument(s) of accession.
States which are already Parties to the 1969 Civil Liability Convention are advised to denounce that
Convention at the same time as they deposit their instruments in respect of the 1992 Protocols, so that thedenunciation of that Convention would take effect on the same day as the 1992 Protocols enter into force forthat State.
As regards the Supplementary Fund Protocol, a State will have to consider whether, in the light of its
particular situation, ratification of the Protocol is in the interests of that State.
***

States Parties to both the
1992 Civil Liability Convention and the1992 Fund Convention
as at 4 February 2010
(and therefore Members of the 1992 Fund)
103 States for which 1992 Fund Convention is in force
Albania
Georgia
NorwayAlgeria
Germany
Oman
AngolaGhana
PanamaAntigua and Barbuda
GreecePapua New Guinea
Argentina
GrenadaPhilippines
Australia
GuineaPolandBahamasHungary
Portugal
BahrainIceland
Qatar
Barbados
India
Republic of Korea
Belgium
Ireland
Russian Federation
BelizeIslamic Republic of IranSaint Kitts and Nevis
Brunei Darussalam
IsraelSaint Lucia
Bulgaria
Italy
Saint Vincent and theCambodia
Jamaica
Grenadines
Cameroon
Japan
Samoa
CanadaKenya
Seychelles
Cape Verde
Kiribati
Sierra Leone
China (Hong Kong Special
LatviaSingapore
Administrative Region)
Liberia
Slovenia
Colombia
Lithuania
South Africa
Comoros
Luxembourg
Spain
Congo
Madagascar
Sri Lanka
Cook Islands
Malaysia
SwedenCroatia
Maldives
Switzerland
CyprusMalta
Tonga
Denmark
Marshall Islands
Trinidad and Tobago
Djibouti
Mauritius
Tunisia
Dominica
MexicoTurkeyDominican Republic
MonacoTuvaluEcuador
MoroccoUnited Arab Emirates
Estonia
Mozambique
United Kingdom
Fiji
Namibia
United Republic of Tanzania
FinlandNetherlands
Uruguay
FranceNew Zealand
Vanuatu
Gabon
Nigeria
Venezuela

1 State which has deposited an instruments of accession, but for which
the 1992 Fund Convention does not enter into force until date indicatedSyrian Arab Republic

24 April 2010

States Parties to the Supplementary Fund Protocol
as at 4 February 2010
(and therefore Members of the Supplementary Fund)

Australia
Barbados
Belgium
CanadaCroatia
Denmark
Estonia
FinlandFrance26 States Parties to the Supplementary Fund Protocol
Germany
Netherlands
GreeceNorwayHungary
PolandIreland
Portugal
Italy
Slovenia
Japan
Spain
LatviaSwedenLithuania
United Kingdom
MoroccoStates Parties to the 1992 Civil Liability Convention
but not to the 1992 Fund Convention
as at 4 February 2010
(and therefore not Members of the 1992 Fund)
19 States for which 1992 Civil Liability Convention is in force
Azerbaijan
KuwaitRepublic of
Syrian Arab
Chile
LebanonMoldova
Republic
China
Mongolia
Romania
UkraineEgypt
Pakistan
Saudi Arabia
Viet Nam
El Salvador
Peru
Solomon Islands
Yemen
Indonesia
1 State which has deposited an instrument of accession but for which the 1992 Civil Liability
Convention does not enter into force until date indicatedTurkmenistan
21 September 2010

States Parties to the 1969 Civil Liability Convention
as at 4 February 2010
38 States Parties to the 1969 Civil Liability Convention
Mauritania
Georgia
Azerbaijan
Mongolia
Ghana
Benin
Nicaragua
GuatemalaBrazilPeru
GuyanaCambodiaSaint Kitts and Nevis
Honduras
Chile
Sao Tomé and Principe
Indonesia
Costa Rica
Saudi Arabia
JordanCôte d'Ivoire
SenegalKazakhstan
Dominican Republic
SerbiaKuwaitEcuadorSyrian Arab Republic
LatviaEgypt
Turkmenistan
LebanonEl Salvador
United Arab Emirates
Libyan Arab Jamahiriya
Equatorial Guinea
Maldives
GambiaNote: the 1971 Fund Convention ceased to be in force on 24 May 2002