International Oil Pollution Compensation Funds
3rd ELD Stakeholder Workshop Handling of Environmental Claims by the IOPC Funds
Liliana Monsalve Head, Claims Department
Management Centre Europe Brussels 26 November 2014
Incidents do happen
The oil pollution compensation regime Why do we need it?
• Compensation to victims of
pollution damage caused by spills
of persistent oil from tankers
• Compensation through amicable
settlement
• Uniform and consistent
application of compensation
regime
• Equal treatment of all claimants
• 1969 Civil Liability Convention
• 1971 Fund Convention (not in force since 2002) Previous regime
• 1992 Civil Liability Convention
• 1992 Fund Convention Current regime
• Supplementary Fund 2003 Supplementary
Fund Protocol
Legal framework The international compensation regimes
The compensation regime How does it work?
Levies on oil receivers in
Supplementary Fund Member States
Supplementary Fund
Levies on oil receivers in 1992
Fund Member States
1992 Fund
Ship owner
(Strict liability)
Insurance
(P&I Clubs)
Cla
ima
nts
Third tier
Supplementary
Fund
Compensation regime Source of money Paying organism
Second tier
1992 Fund
Convention
First tier
1992 Civil
Liability
Convention
1992 Civil Liability Convention First Tier
• Strict liability of registered tanker
owner
• Limitation of liability based on the
gross tonnage of the ship
• Shipowners required to have
compulsory, third party insurance
and certificate
• Few exceptions to liability
1992 Fund Convention Second Tier – The 1992 Fund
• Pays compensation when:
– Claims exceed shipowner’s
liability under the first tier (CLC)
– Shipowner financially incapable
of meeting its obligations
– Shipowner is exempt under the
1992 CLC
• Limit of compensation
– Maximum 203 million SDR,
including limit under CLC
• Contributions from oil receivers
in State Parties to the 1992 Fund
• Very limited exceptions
Supplementary Fund Third Tier
• Protocol establishing a
Supplementary Fund entered
into force in 2005
• Maximum compensation 750
million SDR, including
amounts payable under 1992
Conventions
• Contributions from oil
receivers in State Parties to
Supplementary Fund
Protocol
• Minimum contribution 1
million tonnes
Compensation limits
Pollution damage Article I.6 1992 CLC
• ‘Pollution damage’ means:
• Loss or damage caused outside the ship by contamination
from the escape or discharge of oil from the ship, wherever
such escape or discharge may occur, provided that
compensation for impairment of the environment other than
loss of profit from such impairment shall be limited to costs
of reasonable measures of reinstatement actually
undertaken or to be undertaken;
• The costs of preventive measures and further loss or
damage caused by preventive measures.
Preventive measures &
Incident Articles I.7 and I.8 1992 CLC
• ‘Preventive measures’ means any reasonable measures
taken by any person after an incident has occurred to
prevent or minimize pollution damage.
• ‘Incident’ means any occurrence, or series of occurrences
having the same origin, which causes pollution damage or
creates a grave and imminent threat of causing such
damage.
Main types of compensation
• Clean-up operations and preventive
measures
• Property damage
• Economic losses in fishery, mariculture
and tourism sectors:
– Consequential loss
– Pure economic loss
• Environmental damage
– Reasonable costs for reinstatement of
the environment
Environmental damage What the Conventions cover
• Loss of profit from the use of the environment
• Cost of studies to determine if remedial action is required.
• Cost of reinstatement of environment (factors to consider):
– Scientific analysis
– Reasonable
– Proportionate
– Technically feasible
– NEBA (Net Environmental Benefit Analysis)
– Possibility to accelerate rate of natural recovery
What we have paid in total 1978 - 2012
• No incident
• No compensation paid Supplementary Fund
• has been involved in 38 incidents
• paid about £330 million in compensation The 1992 Fund
• has been involved in 107 incidents
• paid about £237 million in compensation and/or indemnification
The 1971 Fund
• Incidents: 145
• Compensation paid: £567 million Total
Major incidents and compensation
020406080
100120140160180200
Braer (UK, 1993) Nakhodka(Japan, 1997)
Erika (France,1999)
Prestige (Spain,France and
Portugal, 2002)
Hebei Spirit(Korea, 2007)
Amount paid (and to be paid) in claims including shipowner’s contribution under 1992 CLC
£112m
To be paid
£141m
£111m
£52m
To be paid
£179m
• 1992 Fund Convention (113 Member States)
• 1992 Civil Liability Convention (133 States)
• Supplementary Fund (31 States)
• 1969 Civil Liability Convention (35 States)
The Member States October 2014
Liliana Monsalve Head, Claims Department
www.iopcfunds.org