New Compensation Limits for Oil Pollution Disasters

Thursday, October 30, 2003
Amendments which raise by 50 percent the limits of compensation payable to victims of pollution by oil from oil tankers enter into force on November 1, 2003. The amendments to the 1992 Protocol of the International Convention on Civil Liability for Oil Pollution Damage (CLC Convention) and to the 1992 Protocol of the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (IOPC Fund) were adopted in October 2000. The CLC Convention makes the shipowner strictly liable for damage suffered as a result of a pollution incident and the amendments raise the limits payable to 89.77 million Special Drawing Rights (SDR) (approximately US$127 million) for a ship over 140,000 gross tonnage, up from 59.7 million SDR (US$85 million) established in the 1992 Protocol. The IOPC Fund amendments raise the maximum amount of compensation payable from the IOPC Fund for a single incident, including the limit established under the CLC amendments, to 203 million SDR (US$289 million), up from 135 million SDR (US$192 million). However, if three States contributing to the Fund receive more than 600 million tonnes of oil per annum, the maximum amount is raised to 300,740,000 SDR (US$428 million), up from 200 million SDR (US$285million). While the Civil Liability Convention regulates the shipowner's liability, the Fund is made up of contributions from oil importers. The principle is that if an accident at sea results in pollution damage which exceeds the compensation available under the Civil Liability Convention, the Fund will be available to pay an additional amount. In this way, the regime established by the two treaties ensures that the burden of compensation is spread more evenly between shipowner and cargo interests.
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