Marine Link
Thursday, October 27, 2016

Supplementary Fund for Compensation for

December 9, 2004

Increased levels of compensation will be available for victims of oil pollution from oil tanker accidents, following the ratification by Spain (on Friday 3rd December) of the 2003 Protocol establishing an International Oil Pollution Compensation Supplementary Fund. Spain's ratification means the instrument has now reached the entry into force criteria (ratification by at least eight States who have received a combined total of 450 million tons of contributing oil) set at its adoption by a diplomatic conference held at IMO Headquarters in London in May 2003. The new Fund will come into existence on 3 March 2005, three months after the date of Spain's ratification.

The Fund will supplement the compensation available under the 1992 Civil Liability Convention (CLC) and Fund Convention with an additional, third tier of compensation. Participation is optional, although open to all States Parties to the 1992 Fund Convention.

The total amount of compensation payable for any one incident will be limited to a combined total of 750 million Special Drawing Rights (SDR) (just over US$1,152 million) including the amount of compensation paid under the existing 1992 CLC/Fund Convention.

With the entry into force of this Protocol, IMO has substantially enhanced the compensation available under the 1992 Convention. The supplementary scheme introduced by the 2003 Protocol should therefore ensure, for the foreseeable future, that victims of oil pollution damage will be fully compensated for their losses.

It is expected that the increased compensation should put an end to the practice of pro-rating of payment of claims, which, although it has been unavoidable, has led to criticisms of the 1992 Convention.

The supplementary Fund will apply to damage in the territory, including the territorial sea, of a Contracting State and in the Exclusive Economic Zone of a Contracting State.

Annual contributions to the Fund will be made in respect of each Contracting State by any person who, in any calendar year, has received total quantities of oil exceeding 150,000 tons. However, for the purposes of the 2003 Protocol, there is a minimum aggregate receipt of 1,000,000 tons of contributing oil in each Contracting State.

The Assembly of the Supplementary Fund will assess the level of contributions based on estimates of expenditure (including administrative costs and payments to be made under the Fund as a result of claims) and income (including surplus funds from previous years, annual contributions and any other income).

Amendments to the compensation limits established under the Protocol can be adopted by a tacit acceptance procedure, so that an amendment adopted in the Legal Committee of IMO by a two-thirds majority of Contracting States present and voting, can enter into force 24 months after its adoption.

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