José MauraInternational Oil Pollution Compensation Funds

Maritime Institute of Technolgoy and Graduate StudiesMaryland, 6 June 2011

Addressing Potential Underwater Threats:IOPC Funds’ perspective

Presentation outline

Part I

IOPC Funds’ role• Who we are• Oil removal from sunken

ships

Part II

Case studies• Prestige

• Solar I

The international regimeWhy do we need it?

• It provides compensations to victims of pollution damage caused by spills of persistent oil from tankers

• It provides compensations through amicable settlements, avoiding court involvement

• Application is uniform• Everyone gets equal treatment

The international compensation regime

The compensation regime:How does it work?

Cla

iman

ts

Third tierSupplementar

y Fund

Third tierSupplementar

y Fund

Compensation regime

Source of money: contributors Paying organism

Second tier1992 Fund Convention

Second tier1992 Fund Convention

First tier1992 Civil Liability

Convention

First tier1992 Civil Liability

Convention

Gross Tonnage (x 1000 tonnes)

$143 m

$323m

$1 196 m

1992 Fund

1992 CLC

Compensation limitsLaid down by the Conventions

The Member States

(Map: ITOPF)

• 1992 Fund Convention (105 Member States)• 1992 Civil Liability Convention (124)

• Supplementary Fund (27)• 1969 Civil Liability Convention (37)

ContributionsFrom the Member States’ oil industry

• Majority claims settled in 3 years and no court action

• Article VIII –1992 Civil Liability Convention

• Article 6 – 1992 Fund Convention

– ‘Rights to compensation shall be extinguished unless’

– ‘Action is brought within 3 years from date of damage; or’

– ‘In no case shall an action be brought after 6 years from the date of the incident’

Time barFor submission of claims

The 1992 Fund Convention does not apply when:

• ‘the pollution damage resulted from an act of war, hostilities, civil war or insurrection’

• ‘ . . . [the pollution damage] was caused by oil which has escaped or been discharged from a warship or other ship owned . . . by a State and used . . . only on Government non-commercial service’

Article 4. 2. (a)

1992 Fund ConventionExceptions

Criteria fundamentalsRemoval of oil from sunken ships

Claims Manual

‘Claims for the cost of measures to remove any remaining persistent oil from a sunken ship are . . . subjective to the overall criterion of reasonableness from an objective point of view . . . the relationship between costs and benefits . . . should be reasonable’

Criteria fundamentals

Claims Manual‘The fact that a government . . . decides to take certain measures does not in itself mean that the measures are reasonable for the purposes of compensation under the Convention’

Oil removal from sunken ships‘Reasonableness’ determined case by case

Claims ManualSpecific sub-criteria

A.Situation and condition of sunken ship, such as the likelihood of release of the remaining oil, quantity and type of oil, stability of the seabed

B.Likely pollution damage in relation to the cost of removal operation, such as the area’s economic and environmental vulnerability to oil pollution damage

Oil removal from sunken ships‘Reasonableness’ determined case by case

Claims ManualSpecific sub-

criteria

C. Feasibility of operation, such as the likelihood of success of removal operation and release of significant quantity of oil during such operation

D. The cost of removal operation in relation to likely pollution damage

Prestige Spain 2002

• Broke in two in November 2002 in north west of Spain; 63,000 tonnes of heavy oil estimated to have been lost

• Approximately 10,500-foot depth

• In 2003, operation to seal further oil leaks emanating from the sunken and surveys cost €9.5 million

• In 2004, oil removal operation and introduction of nutrients into the tanks in the sunken ship (to promote biodegradation of remaining oil) costs €100 million

PrestigeSpain 2002

• 1992 Fund Executive Committee decides the costs incurred in 2003 to seal the oil leaks are admissible in principle

• The cost of operation to remove oil from the sunken ship incurred in 2004 are not admissible – as the relationship between costs and benefits was judged not reasonable

• Social and political considerations are outside the scope of the Conventions

Solar IPhilippines 2006

• Sank in the Guimaras Straights, Philippines in August 2006; small oil leak from the sunken ship continues

• Approximately 1,900-foot depth

• Survey shows the possibility of significant quantity of oil remaining on board

• The sunken ship located in seismically active area, close to sensitive coastal environmental and economic resources

• 1992 Fund Executive Committee decides the cost of extracting oil is admissible in principle, as it is proportionate to the risks of pollution damage resulting from further oil leak

Solar IPhilippines 2006

• Operation removes remaining oil from the sunken vessel in 2007

• Only 9 tonnes of oil found on board

• The entire cargo had been spilt at the time of incident

• Total cost of the operation approximately $6 million

José MauraActing DirectorHead of Claims Department

www.iopcfund.org