Shipping industry concerns that the 1971 Fund should be wound up by the end of 2014 notwithstanding that there remain outstanding claims against the 1971 Fund. Consider postponing the winding up of the 1971 Fund pending an orderly resolution of the outstanding claims against the Fund.
ICS, BIMCO and INTERTANKO have submitted a paper highlighting the industry’s concerns with the approach taken by the Administrative Council in this regard and the consequences that it could have for the international liability and compensation regime for oil pollution damage arising from tanker incidents, as well as the impact that it could have on the co-operation that exists between industry, States and the Fund to ensure that claimants who suffer pollution damage receive prompt and adequate compensation.
The shipping industry supports a deferral in the winding up of the 1971 Fund in order to allow for an orderly resolution of the outstanding claims against the 1971 Fund.
The shipping industry recognises that the outstanding incidents are old cases and that the
Administrative Council is seeking to resolve as many of the outstanding issues as possible in order to reach an agreement at its October 2014 session that the 1971 Fund should be dissolved by the end of 2014. However, the industry considers that it is premature and contrary to Article 44 of the 1971 Fund Convention to wind up the 1971 Fund before claims have been determined in outstanding cases. The 1971 Fund has a clear obligation under the Convention to meet its obligations in respect of any incident occurring before the Convention ceased to be in force and the industry has strong concerns that the Administrative Council is disregarding these treaty obligations in order to meet the objective of dissolving the 1971 Fund as soon as possible.
The shipping industry has strong concerns that if the Administrative Council continues with this approach and agrees at its October 2014 session to dissolve the Fund by the end of 2014, this could result in fundamental changes to how pollution damage cases from oil tankers are handled in the future and that any such changes are, unfortunately, likely to be to the detriment of the system as a whole.
It is noted in this regard that the founding principle which underpins the international regime is to ensure that compensation is paid swiftly and efficiently to oil pollution damage claimants. The present practice of insurers facilitating interim payments arose because if the text of the Civil Liability and Fund Conventions was strictly followed, each claimant would receive payment of part of their compensation from a fund established in court by the shipowner/Club, and then, when the shipowners’ limits are reached, the balance would be received from the 1971 Fund. However, the proportions due from each source are unknown until all claims have been finally determined. In a major incident with multiple claims, and some going to court, it can take years for this point to be reached.
If the Administrative Council continues with its current approach, then there is a greater likelihood that in future incidents, insurers will simply follow their treaty obligations and pay compensation into court, for distribution as the court sees fit, rather than make interim payments to ensure claimants receive prompt payment of compensation without having to rely on the court system. The consequences would be particularly severe for claimants with narrow operating margins, for example, in the fisheries and tourism industries. If this approach is adopted by insurers, then both the international regime and any State that experiences oil pollution damage from a future tanker spill will come under considerable pressure and criticism if claimants have to wait many years to receive their compensation. This would be extremely regrettable if this arose as a direct consequence of the current approach taken by the 1971 Fund Administrative Council and should be deeply concerning for all interested parties, including Member States Parties to the 1992 Fund.
The shipping industry is strongly of the view that the winding up of the 1971 Fund should be
postponed pending an orderly resolution of the outstanding claims against the Fund.
ICS believes that those governments that have supported the decision to wind up the 1971 Fund may not have not given full regard to these long term dangers.
“It is important to understand that these unintended consquences are real” said ICS Secretary General, Peter Hinchliffe. “The P&I Clubs, which are owned by shipowners, have made it very clear that this decision is likely to have very serious implications. We are therefore pleased that the United Kingdom has recognised our concerns, suggesting that the decision to wind up the 1971 Fund should be deferred at next week’s critical meeting of the IOPCF. We hope very much that other IMO Member States will support the UK’s submission.”
For four decades the regime established by the IMO Civil Liability (CLC) and Fund Conventions, with costs divided between shipowners and cargo interests, has provided a quick and efficient means of compensating pollution victims. The shipowners’ contribution is paid regardless of fault, with claimants having recourse to the IOPCF (which is funded by contributions from the oil industry) if the shipowner’s liability under the CLC Convention is exceeded.
“We wish to avoid jeopardising the future operation of the IMO regime” said Peter Hinchliffe. “The decision to wind up the 1971 Fund before claims have been settled also appears to contravene the IMO Fund Convention. We therefore hope that governments will do the right thing and reverse this unfortunate decision.”
In the onset, I was forthright with you propecia before and after has changed my existence. It has become much more fun, and now I have to run. Just as it is incredible to sit.