oil pollution compensation

8/6/2019 Oil Pollution Compensation

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Oil Pollution and Compensation

an overview of oil theinternational oil spill

compensation regimes

ImageSource:OSRL

/EARL


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Those effected by spills of persistent crude oil and fuel oilfrom tankers now benefit from a uniquely successfulcompensation regime (ITOPF 2007)


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Torrey Canyon (1967)Torrey Canyon (1967)

ImageSource:theLivingMemoryAssociation

121,000 tonnes of Kuwaiti crude oil spilled

Coasts UK and France affected No International Convention Limited Compensation paid

121,000 tonnes of Kuwaiti crude oil spilled

Coasts UK and France affected No International Convention Limited Compensation paid


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Swift and effective compensation aimed at protecting thevictims of oil pollution

1. The Three Layers of International Compensation The Regimes

2. Claims processes


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Three Levels of Compensation (1)

Civil LiabilityConvention

FundConvention

Tanker OwnerInsurance(P&I Clubs)

SupplementaryConventionIOPC Fund Oil CargoReceivers

IOPC Fund Oil CargoReceivers

Primary Layer of Compensation

Supplementary Layer of Compensation


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The International Convention on Civil Liability for Oil Pollution

Damage (1992 CLC) Registered tanker owner

adequate financial security required (oil pollution insurance through P&Iclub)

amount determined by the gross tonnage of the tanker claims brought against the insurer not the tanker owner

Strict Liability

liable in the absence of fault (few exceptions)

pay compensation for oil spill damage and clean-up in the EEZ of theeffected state

overall objective to benefit victims of oil spill


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The International Convention on Civil Liability for Oil Pollution

Damage (1992 CLC) Limitation of liability

e.g. ships below 5,000gt USD7mill

ships above 140,000gt USD137million

can be lost if if damage resulted from personal act or omission of ownerdone with intent or recklessly and with knowledge that damage wouldoccur

Key points

International

Simplicity

90% of claims paid by owners irrespective of fault


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FundConvention







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The International Convention on the Establishment of an

International Fund for Compensation for Oil PollutionDamage (1992 Fund)

And provides and additional level of compensation for victims

Operates if:

claims exceed tanker owners limit of liability (1992 CLC)

if tanker owner is exempt from liability under 1992 CLC (war etc.)

tanker owner unable to meet the claims

Funded by Oil receivers (crude oil and heavy fuel oil by sea)

oil companies and other entities located in oil receiving states who are aparty to the 1992 Fund


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USDMillions

306

135

140,000 GT

Compensation Limits

1992 Fund

1992 CLC

5 GT


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FundConvention







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Source: ITOPF 2006


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International Oil Pollution Compensation Supplementary Fund

2003 (Supplementary Fund) Concerns by states that the levels of compensation in first two tiers maybe insufficient to cover all valid claims arising from a major tankeraccident

Similar finance arrangement as 1992 Fund for oil receivers (1 milliontonnes pa minimum)

Entry into force 3 March 2005


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USD Millions

1,132

306

135

140GT x 1,000

Compensation Limits

Supplementary Fund

1992 Fund

1992 CLC

5


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Claims (1)

Admissible Claims

Assessed by P&I Clubs and 1992 Fund (expertise drawn in from likes

of the International Tanker Owners Pollution Federation - ITOPF) Admissible = Pollution Damage or Preventive Measures

1. Preventive Measures (clean-up)

2. Damage to property

3. Economic loss

4. Reinstatement/restoration of impaired environments


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Admissible Claims

1. Preventive Measures (clean-up)

Removing oil from a damaged/sunken tanker Preventing oil from reaching sensitive areas

Clean-up costs at sea and on the coast/shoreline

Disposal costs of recovered oil/debris

Reasonable cost qualification

Technical assessment at time of incident

Regardless of result of measure

No hindsight assessment

2. Damage to property Contaminated fishing gear, mariculture, yachts, industrial installations,ports, terminals etc.

Replacement possible

Claims (2)


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Claims (3)

Admissible Claims

1. Economic loss

Fishing activity Tourism

Consequential and Pure economic losses

1. Contaminated fishing gear prevents fishing (consequential)

2. Oil in fishing areas prevents fisherman from working (pure economic)

2. Reinstatement/restoration of impaired environments

Technically feasible measures

Enhancement of natural recovery

Reasonable/Proportionate to expected results of measures


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Other Regimes

International

1. Bunker Spills Convention

2. HNS Convention

3. OPRC Convention (OPRC-HNS)

Regional/National

1. OPA 90 (USA)

2. SOPF (Canada)

oil pollution compensation

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