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Key liability issues for tanker operators

Key liability issues for tanker operators. CLC/FC - Succesfully protecting and compensating the victims of oil spills Criminalising accidental oil spills – International law disregarded Presented by John C. Fawcett-Ellis General Counsel & Regional Manager Asia-Pacific London, 1 June 2005.

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Key liability issues for tanker operators

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  1. Key liability issues for tanker operators • CLC/FC - Succesfully protecting and compensating the victims of oil spills • Criminalising accidental oil spills – International law disregarded Presented by John C. Fawcett-Ellis General Counsel & Regional Manager Asia-Pacific London, 1 June 2005

  2. Anti-trust Compliance StatementINTERTANKO is firmly committed to maintaining a fair and competitive environment in the world tanker trade, and to adhering to all applicable laws which regulate INTERTANKO’s and its members’ activities in this market. These laws include the anti-trust and competition laws, which the US, the European Union and many nations of the world have adopted to preserve the free enterprise system, promote competition and protect the public from monopolistic and other restrictive trade practices. This meeting will be conducted in compliance with INTERTANKO’s anti-trust and competition law guidelines .

  3. International oil spill liability and compensation regime • CLC 92 • FC 92 • Supplementary Fund 2003 – entered into force - 3 March 2005

  4. Key features: - Channeling of liability to reg’d owner - Strict but limited liability - Owner’s liability insured through P&I cover - If cost of spill exceeds CLC limits then Fund set up by receivers - Owner’s right to limit liability is lost if it is proved that the spill was caused by “his personal act or omission, committed with intent to cause such damage, or recklessly and with knowledge that such damage would probably result”

  5. 800 1,209 700 1,057 Supplementary Fund (as from 3.3.05) 600 906 USD Millions SDR Millions SDR 750 m, USD 1,133 m) 500 755 400 604 300 453 1992 Fund, SDR 203 m, USD 307 m 200 302 1992 CLC pre STOPIA 100 151 0 0 0 50 60 70 80 90 40 10 20 30 '000 GT 100 110 120 130 140 160 150 IOPC Compensation Limits(as revised 2003 & 2005)

  6. How the regime has already been revised/updated: • 50% increase in limits under CLC and FC • Third tier of compensation introduced ”The Supplementary Fund” – will enter into force on 3 March 2005 • STOPIA – voluntary increase in small ships limit under CLC

  7. Success of the current regime: • Some 90 states signed up to CLC/FC – truly international • Protects the victims of oil spills • Merit of simplicity • 90% of claims paid out by owners irrespective of fault • Sharing of the cost of spills equally between owners and receivers

  8. The current debate • Should a new regime be devised? • The perception that the SF will upset the equitable sharing in the cost of spills • Addressing the issue of sub-standard shipping

  9. INTERTANKO’s Position • NO REVISION - Current regime operates well from the perspective of oil spill victims • The dangers of revision: Any new regime would result in increases in liability for owners and also possibly receivers, charterers? Producers? • Sub-standard shipping - Support the IG’s initiatives

  10. INTERTANKO’s position (cont.) • Sharing: recent reforms must be allowed time to settle otherwise it is pure speculation that there is an imbalance • Understand the need for a regular review

  11. IOPCF – Working Group • October 04 – states divided • March 05 – more states than ever spoke out but still they remained equally divided

  12. ALGERIA BAHAMAS CHINA CYPRUS DENMARK GABON GHANA GREECE LIBERIA MALAYSIA MALTA MARSHALL ISLANDS NIGERIA NORWAY PANAMA PHILLIPINES POLAND RUSSIAN FEDERATION REPUBLIC OF KOREA SINGAPORE TUNISIA UAE VANUATU IOPC Fund Working GroupSTATES AGAINST REVISION OF THE CLC/FC REGIME

  13. AUSTRALIA BELGIUM CANADA FINLAND FRANCE GERMANY IRELAND ITALY JAPAN LATVIA MEXICO MONACO NETHERLANDS NEW ZEALAND PORTUGAL SPAIN SWEDEN TURKEY UK VENEZUELA STATES FOR REVISION OF THE CLC/FC REGIME

  14. The tanker industry today: • Vital to the global economy • Provides a flexible, cost efficient and environmental safe transportation system to meet the world’s energy needs • Invested billions of USD in renewing its fleet • Despite an increase in tonne miles accidents and spills have decreased

  15. AS AN INDUSTRY WE MAY NOT BE LOVED BUT WE ARE NEEDED • World Oil Consumption 3.6 billion ts • Transported by sea 2.2 billion ts • 60% transported by sea.

  16. Oil pollution into the sea Maritime sources

  17. The world expects us tohave 0accidents. Even though 99.9997% of oil is delivered safely It takes only one accident to change the industry therefore we must have continuous impovement

  18. Tanker incidents: 1978-03 Number Source: LMIS, Informa, press, INTERTANKO

  19. Accidental oil pollution from tankers and tanker trade m ts spilt 1000 bn tm Source: ITOPF, Fearnleys

  20. The CLC/FC regime fulfulls its objectives by providing: • Adequate compensation • Prompt compensation • Truly international in scope • No fault based regime

  21. Who pays under the regime: • The first call is always on owners • 90% of all claims paid without any call on the Fund • Overall equal sharing in the cost of spills between owners and recievers

  22. The IOPCF Assembly – October 05 It is crucial that as many states as possible say ”We support the existing regime - no further revision”

  23. Criminalising accidental oil spills – International is being disregarded • EU Draft Directive • Canadian Bill C-15

  24. EU Directive - summary • Accidental pollution occurring in the territorial sea and internal waters will be regarded as a criminal offence • Suspects of ship-source pollution should be granted a fair and impartial hearing. Sanctions must be proportional • Ship-source pollution to be prosecuted if committed with intent, recklessly or serious negligence

  25. Cont. • Sanctions (fines etc) to be dealt with by member states • Directive targeted at anyone eg s/o, crew, charterers, etc except local authorities

  26. Canadian Bill C-15: • Strict liability offence for pollution unless accused proves they took all reasonable steps to avoid the pollution • Includes pollution within EEZ • Includes crew, managers ashore • Contrary to MARPOL and UNCLOS

  27. INTERTANKO’s action • Clear and coordinated lobbying stategy • Maintain a regular dialogue with our industry counterparts • Backed up by a strong Insurance & Legal Committee and mandate from our Council

  28. The IOPCF Assembly – October 05 It is crucial that as many states as possible say ”We support the existing regime - no further revision”

  29. Thank youStay informed and ahead with:www.intertanko.comINTERTANKOWeekly NewsINTERTANKO’s publications

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