The International Group of P&I Clubs, the IOPC Funds and ITOPF have collaborated on a new booklet on liability and compensation for ship-source oil pollution in the marine environment.
his document provides an overview of the international and selected national arrangements in place, as well as background information on ‘who pays’.
When an incident takes place involving a ship
Responsibility for responding to a release of oil varies globally. In some countries, the response will be led by the government, with the involvement of a shipowner restricted possibly to crew and salvage matters, or providing technical support and paying compensation ultimately through the relevant insurer.
In other countries, a shipowner-led response is required with government agencies retaining the authority to direct operations and intervene in defined circumstances.
In other cases, a response would take place by a combination of the government and the shipowner. The necessary resources may be provided by a combination of government agencies, private contractors and other sources.
When an incident takes place, the ship’s insurer, or other body paying compensation, may send a representative to the site, for example from the insurer’s local correspondent. Local surveying companies may be engaged to record the extent of the pollution and response, and to help in determining losses.
In jurisdictions requiring a shipowner-led response, other organisations like a spill management team may be mobilised to act as a liaison with government agencies and with potential claimants.
Expert organisations such as ITOPF may also be requested to provide advice on appropriate clean-up techniques, environmental damage assessment, and on measures to mitigate economic losses.
What is more, guidance may also be provided on the admissibility of potential claims as defined under the international conventions, the types of evidence required to support a claim and how a claim should be formulated and submitted.
Where a financial loss is anticipated as a result of an oil release, a potential claimant should notify the liable party at the earliest opportunity, thereby allowing such advice to be provided in a timely manner
the booklet says.
Within countries that are State Parties to the 1992 Fund Convention, the agreement existing between the P&I Clubs within the International Group and the IOPC Funds to share information during an incident allows claims to be coordinated between the two organisations.
In significant tanker incidents, a claims office may be established jointly by the vessel’s P&I Club, the IOPC Funds and/or domestic funds, to receive and process claims. Contact details for a claims office may be advertised in the local media, although there is no obligation to do so in these states, unlike the U.S. where the RP is compelled by law to publish full details of how claims can be registered and made against them.
In addition, the IOPC Funds and/or domestic funds can become involved in an incident when the tanker owner is unable to pay or where the shipowner is unknown. In such instances, claims would be submitted to the fund.
USA – Oil Pollution Act of 1990 – Oil Spill Liability Trust Fund
The US Government participated in negotiations on the Civil Liability and Fund Conventions and signed the 1984 Protocols to these Conventions.
However, the booklet notes that the US Senate was not able to ratify these Conventions for a number of reasons, including the pre-emption of US State laws and the perceived low liability limits.
Instead, afte rthe discharge of oil from EXXON VALDEZ, in 1989, the US Congress passed the Oil Pollution Act of 199034 (OPA ‘90), which amended the existing Clean Water Act
OPA ‘90 includes provisions for liability and compensation of damage resulting from discharges, or the substantial threat of discharges, of oil from onshore and offshore facilities, ships and other watercraft.
It does not prevent individual US States from implementing stricter laws for discharges of oil and many have done so. However, this document is limited to an overview of the Federal law.
OPA ‘90 also applies to discharges of oil of any kind and in any form, including petroleum, fuel oil, sludge, oil refuse, and oil mixed with wastes other than dredged spoil.
As such, OPA ’90 applies to incidents involving persistent and non-persistent mineral oils and to non-mineral based oils.
However, OPA ’90 does not apply to substances listed specifically in, or designated as a hazardous substance under, the separate Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA)35
explains IG Clubs.
Under OPA ’90, the owner, operator or bareboat charterer of a vessel from which oil is discharged, or which poses a substantial threat of discharge, into the navigable waters of mainland USA, within the US Exclusive Economic Zone, or its overseas territories and possessions, is liable for removal costs and damages. The first level of liability is placed on the Responsible Party and varies according to the type and size of the ship.
Canada – Ship-source Oil Pollution Fund
Canada is a State Party to the 1992 Civil Liability and Fund Conventions, to the Supplementary Fund protocol and to the Bunkers Convention 2001. These Conventions are incorporated into Canadian legislation, within the Marine Liability Act.
Canada is also a Contracting Party to the 2010 HNS Convention, although this Convention is not yet in force. Where applicable, claims for oil pollution from qualifying incidents would be paid under those Conventions. The Marine Liability Act also covers incidents that fall outside the international conventions.
Moreover, the Canadian Ship-source Oil Pollution Fund (SOPF) was established in 1989 to pay claims for oil pollution damage or anticipated damage at any place in Canada, including the Canadian Exclusive Economic Zone (EEZ), caused by the discharge of oil from a ship. The SOPF pays claims for oil spills from all classes of ships and boats.
Therefore, for a spill of persistent oil from a tanker, the SOPF is available to provide additional compensation in the event that money from a vessel’s insurer or the IOPC Funds is insufficient to meet all established claims for compensation for a release of oil in Canada, or if the shipowner is unknown or unable to pay
says the booklet.
The great majority of cases dealt with by the SOPF fall outside the scope of the international conventions, for example abandoned or derelict ships at risk of discharging oil.
China – Oil Pollution Compensation Fund
China is a State Party to the 1992 Civil Liability Convention and the Bunkers Convention 2001. The 1992 Fund Convention applies in Hong Kong SAR only. The 2010 Regulations on the Prevention and Control of Marine Pollution from Ships established the China Oil Pollution Compensation Fund (COPCF) as an additional source of compensation.
Claims may be submitted to the COPCF if damages from an incident exceed the shipowner’s liability under these Conventions, or if the shipowner is exempt from liability, the shipowner is unable to pay; or the damage was caused by an unidentifiable ship.
The COPCF will provide compensation for a release, or the threat of a release, of persistent or nonpersistent oil cargo, fuel oil and oil residues.