A third tier of compensation for oil pollution incidents from tankers, to
supplement compensation currently available under IMO's Civil Liability and
Fund Conventions, is set to be adopted at an international conference to be
held at IMO Headquarters from 12-16 May 2003.
The International Conference on the Establishment of a Supplementary Fund for
Compensation for Oil Pollution Damage is expected to adopt a Protocol to the
International Convention on the Establishment of an International Fund for
Compensation for Oil Pollution Damage, 1992.
The Protocol as drafted would establish a supplementary Fund, intended to
provide compensation over and above that currently available under the 1992
Civil Liability/Fund regime, thereby creating a third tier of compensation
for pollution damage caused by oil spills at sea.
The 2003 Protocol is intended to supplement, but not replace, the 1992 Fund
Protocol. Participation in the Protocol will be voluntary and, while it will
be open to all States Parties to the 1992 Fund Convention, claimants in those
States which decide not to join it will continue to have their claims met, as
they have been up to now, under the terms of the 1992 Civil Liability/Fund
regime, which will remain unaltered.
The proposed new fund, to be financed solely by receivers of oil in
participating States, will be available only in respect of claims for
pollution damage arising within States Parties to the Protocol, to the extent
that such claims have not been fully satisfied under the existing 1992
regime. The limits of compensation will be set by the diplomatic conference.
The proposed new fund is to be a separate legal entity with its own Director
and its own Assembly, but it is expected to operate very closely with the
existing IOPC Fund system. For example, information on oil receipts made to
the Director of the 1992 IOPC Fund shall be deemed to be made also under the
Protocol. Similarly, claims made against the 1992 Fund will be regarded as
claims made against the supplementary Fund. The draft Protocol further
provides that payment under the supplementary Fund will be triggered whenever
there is a risk that the damage exceeds the applicable limit of compensation
laid down in the 1992 Fund Convention.
It will also be possible for the supplementary fund to share a Secretariat
and a Director with the 1992 Fund if it so wishes, providing that the 1992
Fund Assembly agrees to this arrangement.
The 1992 Protocols to the International Convention on Civil Liability for Oil
Pollution Damage (CLC), 1969 and the International Convention on the
Establishment of an International Fund for Compensation for Oil Pollution
Damage, (Fund Convention) 1971 replaced the original Conventions.
The CLC ensures that compensation is paid to victims, with liability placed
on the shipowner, up to a set limit. If an accident at sea results in
pollution damage which exceeds the compensation available under the CLC,
additional compensation is available through the IOPC Fund, financed by
contributions by oil receivers. The compensation regime as a whole thereby
ensures that the burden of compensation is spread between shipowner and cargo
In the wake of the Nakhodka oil tanker incident in 1997 off Japan
Erika oil tanker incident off the coast of France of December 1999, the IMO
Legal Committee in October 2000 adopted amendments to the 1992 Protocols to
the CLC and Fund Conventions which raise by 50 percent the limits of
compensation payable to victims of pollution by oil from oil tankers.
The amendments to the 1992 Protocols to the CLC and Fund Conventions will
enter into force on 1 November 2003. They raise the limits payable under the
CLC to 89.77 million Special Drawing Rights (SDR) for a ship over 140,000
gross tonnage, up from 59.7 million SDR in the 1992 Protocol. The Fund
Convention amendments raise the maximum amount of compensation payable by the
IOPC Fund for a single incident, including the limit established under the
CLC amendments, to 203 million SDR, up from 135 million SDR.
For a number of States, even these proposed increases were still too low. A
European proposal for the establishment of a fund which would provide
compensation over and above that generated by the 1992 Civil Liability and
Fund Conventions whenever an oil pollution incident occurred in European
waters was brought to the attention of the IOPC Fund Assembly, which in April
2000 decided to set up an Intersessional Working Group to further consider
the matter. The Working Group met for three sessions (in July 2000 and in
March and June 2001) and recommended the establishment of a supplementary
fund, to provide compensation over and above that currently available under
the 1992 Civil Liability/Fund regime, thus in essence creating a third tier
of compensation for pollution damage caused by oil spills at sea. This
supplementary fund will not be limited geographically to Europe but will
cover oil spills wherever they occur.
The text of the draft Protocol was approved by the sixth session of the IOPC
Fund Assembly in October 2001 and submitted to the Secretary-General of IMO.
At its 84th session, in April 2002, the IMO Legal Committee approved the
draft text, prior to its submission to the current conference.
The IOPC Funds and IMO
Although the IOPC Funds were established under Conventions adopted under the
auspices of IMO, they are independent legal entities with their own Directors
and own Assemblies.
Unlike IMO, the IOPC Funds are not United Nations agencies and are not part
of the UN system. They are intergovernmental organizations outside the United
Nations, but follow procedures which are similar to those of the United
To become a member of the 1992 Fund, a State must accede to the 1992
Protocols to the Civil Liability Convention and the Fund Convention by
depositing a formal instrument of accession with the Secretary-General of
IMO. These Conventions should be incorporated into the national law of the