IMO Conference Addresses Oil Pollution Compensation

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. Background 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 interests. In the wake of the Nakhodka oil tanker incident in 1997 off Japan and the 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 Nations. 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 State concerned.