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Oil Pollution and Compensation. an overview of oil the international oil spill compensation regimes Tim Wilkins Regional Manager Asia-Pacific Environmental Manager. Image Source: OSRL/EARL.

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oil pollution and compensation

Oil Pollution and Compensation

an overview of oil the international oil spill compensation regimes

Tim Wilkins

Regional Manager Asia-Pacific

Environmental Manager

Image Source: OSRL/EARL

slide2
“Those effected by spills of persistent crude oil and fuel oil from tankers now benefit from a uniquely successful compensation regime”(ITOPF 2007)
slide3
Torrey Canyon (1967)
  • 121,000 tonnes of Kuwaiti crude oil spilled
  • Coasts UK and France affected
  • No International Convention
  • Limited Compensation paid

Image Source: the Living Memory Association

slide4
Swift and effective compensation aimed at protecting the victims of oil pollution
  • The Three Layers of International Compensation – The Regimes
  • Claims processes
three levels of compensation 1
Three Levels of Compensation (1)

Civil Liability Convention

Supplementary Layer of Compensation

Supplementary Convention

Oil Cargo Receivers

IOPC Fund

Fund Convention

Oil Cargo Receivers

IOPC Fund

Insurance (P&I Clubs)

Tanker Owner

Primary Layer of Compensation

three levels of compensation 2
Three Levels of Compensation (2)

Primary Layer of Compensation

The International Convention on Civil Liability for Oil Pollution Damage (1992 CLC)

  • Registered tanker owner
    • adequate financial security required (oil pollution insurance through P&I club)
    • amount determined by the gross tonnage of the tanker
    • claims brought against the insurer not the tanker owner
  • Strict Liability
    • liable in the absence of fault (few exceptions)
    • pay compensation for oil spill damage and clean-up in the EEZ of the effected state
    • overall objective to benefit victims of oil spill
three levels of compensation 3
Three Levels of Compensation (3)

Primary Layer of Compensation

The International Convention on Civil Liability for Oil Pollution Damage (1992 CLC)

  • Limitation of liability
    • e.g. ships below 5,000gt USD7mill

ships above 140,000gt USD137million

    • can be lost if if damage resulted from personal act or omission of owner done with intent or recklessly and with knowledge that damage would occur
  • Key points
    • International
    • Simplicity
    • 90% of claims paid by owners irrespective of fault
three levels of compensation 4
Three Levels of Compensation (4)

Civil Liability Convention

Supplementary Layer of Compensation

Supplementary Convention

Oil Cargo Receivers

IOPC Fund

Fund Convention

Oil Cargo Receivers

IOPC Fund

Insurance (P&I Clubs)

Tanker Owner

Primary Layer of Compensation

three levels of compensation 5
Three Levels of Compensation (5)

Supplementary Layer of Compensation

The International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (1992 Fund)

  • And provides and additional level of compensation for victims
  • Operates if:
    • claims exceed tanker owner’s limit of liability (1992 CLC)
    • if tanker owner is exempt from liability under 1992 CLC (war etc.)
    • tanker owner unable to meet the claims
  • Funded by Oil receivers (crude oil and heavy fuel oil by sea)
    • oil companies and other entities located in oil receiving states who are a party to the 1992 Fund
three levels of compensation 6
Three Levels of Compensation (6)

Compensation Limits

USD Millions

1992 Fund

306

1992 CLC

135

5 GT

140,000 GT

three levels of compensation 7
Three Levels of Compensation (7)

Civil Liability Convention

Supplementary Layer of Compensation

Supplementary Convention

Oil Cargo Receivers

IOPC Fund

Fund Convention

Oil Cargo Receivers

IOPC Fund

Insurance (P&I Clubs)

Tanker Owner

Primary Layer of Compensation

three levels of compensation 9
Three Levels of Compensation (9)

Supplementary Layer of Compensation

International Oil Pollution Compensation Supplementary Fund 2003 (Supplementary Fund)

  • Concerns by states that the levels of compensation in first two tiers may be insufficient to cover all valid claims arising from a major tanker accident
  • Similar finance arrangement as 1992 Fund for oil receivers (1 million tonnes pa minimum)
  • Entry into force 3 March 2005
three levels of compensation 10
Three Levels of Compensation (10)

Compensation Limits

USD Millions

1,132

Supplementary Fund

1992 Fund

306

1992 CLC

135

5

140

GT x 1,000

claims 1
Claims (1)

Admissible Claims

  • Assessed by P&I Clubs and 1992 Fund (expertise drawn in from likes of the International Tanker Owners Pollution Federation - ITOPF)
  • Admissible = Pollution Damage or Preventive Measures
  • Preventive Measures (clean-up)
  • Damage to property
  • Economic loss
  • Reinstatement/restoration of impaired environments
claims 2
Claims (2)

Admissible Claims

  • Preventive Measures (clean-up)
    • Removing oil from a damaged/sunken tanker
    • Preventing oil from reaching sensitive areas
    • Clean-up costs at sea and on the coast/shoreline
    • Disposal costs of recovered oil/debris
    • ‘Reasonable cost’ qualification
      • Technical assessment at time of incident
      • Regardless of result of measure
      • No hindsight assessment
  • Damage to property
    • Contaminated fishing gear, mariculture, yachts, industrial installations, ports, terminals etc.
    • Replacement possible
claims 3
Claims (3)

Admissible Claims

  • Economic loss
    • Fishing activity
    • Tourism
    • ‘Consequential’ and ‘Pure economic’ losses
      • Contaminated fishing gear prevents fishing (consequential)
      • Oil in fishing areas prevents fisherman from working (pure economic)
  • Reinstatement/restoration of impaired environments
    • Technically feasible measures
    • Enhancement of natural recovery
    • Reasonable/Proportionate to expected results of measures
other regimes
Other Regimes

International

  • Bunker Spills Convention
  • HNS Convention
  • OPRC Convention (OPRC-HNS)

Regional/National

  • OPA 90 (USA)
  • SOPF (Canada)
slide19
Further reading and information
  • ITOPF
    • ITOPF Handbook 2007/2008
    • www.itopf.com
  • IOPC Fund
    • IOPC Fund Annual Report 2006
    • www.iopcfund.org