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Oil Pollution and Compensation
an overview of oil the international oil spill
compensation regimes
Tim WilkinsRegional Manager Asia-Pacific
Environmental Manager
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: OS
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“Those effected by spills of persistent crude oil and fuel oil from tankers now benefit from a uniquely successful compensation regime”
(ITOPF 2007)
Torrey Canyon (1967)Torrey Canyon (1967)
Imag
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: the Liv
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• 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
Swift and effective compensation aimed at protecting the victims of oil pollution
1. The Three Layers of International Compensation – The Regimes
2. Claims processes
Three Levels of Compensation (1)
Civil Liability Convention
Fund Convention
Tanker Owner
Insurance (P&I Clubs)
Supplementary ConventionIOPC Fund
Oil Cargo Receivers
IOPC Fund Oil Cargo Receivers
Primary Layer of Compensation
Supplementary Layer of Compensation
Three Levels of Compensation (2)
Primary Layer of Compensation
The International Convention on Civil Liability for Oil Pollution Damage (1992 CLC)
• Registered tanker owner– adequate financial security required (oil pollution insurance
through P&I club)– 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
the effected state– overall objective to benefit victims of oil spill
Three Levels of Compensation (3)
Primary Layer of Compensation
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 owner done with intent or recklessly and with knowledge that damage would occur
• Key points
– International
– Simplicity
– 90% of claims paid by owners irrespective of fault
Three Levels of Compensation (4)
Civil Liability Convention
Fund Convention
Tanker Owner
Insurance (P&I Clubs)
Supplementary ConventionIOPC Fund
Oil Cargo Receivers
IOPC Fund Oil Cargo Receivers
Primary Layer of Compensation
Supplementary Layer of Compensation
Three Levels of Compensation (5)
Supplementary Layer of Compensation
The International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (1992 Fund)
• And provides and additional level of compensation for victims• Operates if:
– claims exceed tanker owner’s 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 a party to the 1992 Fund
Three Levels of Compensation (6)
USD Millions
306
135
140,000 GT
Compensation Limits
1992 Fund
1992 CLC
5 GT
Three Levels of Compensation (7)
Civil Liability Convention
Fund Convention
Tanker Owner
Insurance (P&I Clubs)
Supplementary ConventionIOPC Fund
Oil Cargo Receivers
IOPC Fund Oil Cargo Receivers
Primary Layer of Compensation
Supplementary Layer of Compensation
Three Levels of Compensation (9)
Supplementary Layer of Compensation
International Oil Pollution Compensation Supplementary Fund 2003 (Supplementary Fund)
• Concerns by states that the levels of compensation in first two tiers may be insufficient to cover all valid claims arising from a major tanker accident• Similar finance arrangement as 1992 Fund for oil receivers (1 million tonnes pa minimum)• Entry into force 3 March 2005
Three Levels of Compensation (10)
USD Millions
1,132
306
135
140GT x 1,000
Compensation Limits
Supplementary Fund
1992 Fund
1992 CLC
5
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 property3. Economic loss4. Reinstatement/restoration of impaired environments
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)
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
Other Regimes
International
1. Bunker Spills Convention2. HNS Convention3. OPRC Convention (OPRC-HNS)
Regional/National
1. OPA 90 (USA)2. SOPF (Canada)
Further reading and information
• ITOPF– ITOPF Handbook 2007/2008– www.itopf.com
• IOPC Fund– IOPC Fund Annual Report 2006– www.iopcfund.org