Willem Oosterveen

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THE INTERNATIONAL REGIME ON LIABILITY ANDCOMPENSATION FOR OIL POLLUTION DAMAGE

A GLOBAL REGIME WITH REGIONAL AND LOCAL IMPACTRECENT DEVELOPMENTS; NEW CASES

Willem OosterveenInternational Oil Pollution Compensation Funds

SpillCon 2007Perth, Australia

26-30 March 2007

Copyright and all possible other relevant rights remain with the IOPC Fund

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Old regime:

1969 Civil Liability Convention/1971 Fund Convention

1971 Fund

New regime:

1992 Civil Liability Convention/1992 Fund Convention

1992 Fund

2003 Supplementary Fund Protocol

Supplementary Fund

COMPENSATION REGIMES

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1992 CIVIL LIABILITY CONVENTION

114 States Parties

1992 FUND CONVENTION

99 States Parties

2003 PROTOCOL TO 1992 FUND CONVENTION

20 States Parties

1971 Fund Convention ceased to be in force on24 May 2002

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1992 Civil Liability1992 Civil Liability

ConventionConvention

Supplementary FundSupplementary FundProtocolProtocol

THE THREE TIER SYSTEM

1992 Fund1992 FundConventionConvention

Shipowners Insurers

Oil receiversafter seatransport

Oil receiversafter seatransport

1992Fund

SupplementaryFund

THIRD

TIER

SECOND

TIER

FIRST

TIER

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1992 CONVENTIONS APPLY TO:

Pollution damage

Spills of persistent oil from tankers

Territory, territorial waters and EEZ orequivalent

Preventive measures

Bunker spills from unladen tankers

Mystery spills from a tanker


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1ST TIER1992 CIVIL LIABILITY CONVENTION

Strict liability of registered shipowner

Limitation of liability

Shipowners may lose right of limitation

Compulsory insurance

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SHIPOWNER EXEMPT WHEN INCIDENTRESULTED FROM

Act of war or a grave natural disaster

Sabotage by a third party

Negligence of public authorities in

maintaining navigational aids

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2ND TIERFUND CONVENTION APPLIES WHEN

Shipowner exempt

Shipowner financially incapable of meetingobligations

Damage exceeds the shipowners liability

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2ND TIERFUND CONVENTION DOES NOT APPLY

Damage in non-Member State

Damage caused by an act of war or spillfrom warship

Claimant cannot prove oil originated from

a ship as defined in the Conventions

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MAXIMUM AMOUNT OF COMPENSATION

1992 CLC/Fund Conventions

135 million SDR (US$ 201 million)

203 million SDR (US$ 301 million)

2003 Supplementary Fund

750 million SDR (US$ 1 114 million)

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0

200

400

600

800

1,000

1,200

0 20 40 60 80 100 120 140 160

Units of tonnage of ship (1 000 units)

$(millions)

1992 CLC 1992 Fund Supplementary Fund

LIMITS LAID DOWN IN THE CONVENTIONS


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1992 FUND: GENERAL FUNDCONTRIBUTIONS 2006

Republic of

Korea 8%

Netherlands 9%

Italy 9%

Japan 17%

India 7%

France 7%

Others 32%

Spain 4%

Singapore 5%

United Kingdom

5% Canada 5%

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TheHaven incident, Italy, 1991

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SOME MAJOR SPILLS INVOLVING THEFUNDS

Antonio Gramsci(Sweden) 1979 US$ 18 mill

Tanio (France) 1980 US$ 36 mill

Haven (Italy) 1991 US$ 58 mill

Aegean Sea (Spain) 1992 US$ 65 mill

Braer(United Kingdom) 1993 US$ 87 mill

Keumdong No 5 (Republic of Korea) 1993 US$ 21 mill

Sea Prince (Republic of Korea) 1995 US$ 40 mill

YuilNo 1 (Republic of Korea) 1995 US$ 30 mill

Sea Empress (United Kingdom) 1996 US$ 60 mill

Nakhodka (Japan) 1997 US$ 212 mill

Nissos Amorgos (Venezuela) 1997 US$ 21 mill

Osung No 3 (Republic of Korea) 1997 US$ 16 mill

Erika (France) (so far) 1999 US$ 145 millPrestige (Spain, France and Portugal) (so far) 2002 US$ 154 mill

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RECENT DEVELOPMENT: SHIP-TO-SHIPTRANSFER OF OIL (1)

Study by independent expert

Permanently and semi-permanentlyanchored vessels engaged in STS oiltransfer operations

Definition of ship

Notion of received

Relevant for cover & contribution

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RECENT DEVELOPMENT: SHIP-TO-SHIPTRANSFER OF OIL (2)

Permanently & semi-permanently anchoredvessels engaged in STS transfer of oil

Ship: only when carrying oil as cargo on avoyage to or from a terminal outside thelocation where they normally operate (buttaking into account particular circumstances;case-by-case)

Received: all contributing oil

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MAIN TYPES OF CLAIM

Property damage

Clean-up operations and preventive measures

Losses in fishery, mariculture and tourism sectors:

Consequential loss

Pure economic loss

Environmental damage; limited to costs ofreasonable measures of reinstatement actuallyundertaken or to be undertaken


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RECENT DEVELOPMENT: ADMISSIBILITYCRITERIA FOR PREVENTIVE MEASURES (1)

Background: removal operations Prestige

Examination of admissibility criteria byDirector

Existing criteria: Claims Manual

Reasonableness; objective criteria;relationship between costs and benefits

Discussion in Assembly October 2006

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RECENT DEVELOPMENT: ADMISSIBILITYCRITERIA FOR PREVENTIVE MEASURES (2)

Reasonableness remains overarchingcriterion for all preventive measures

Take into account potential environmentaldamage with direct or indirect economic

effectNo social or political considerations

Determine sub-criteria by combiningproposal Director and France/Spain

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POSSIBLE SUB-CRITERIA FOR REMOVALOF OIL FROM SUNKEN SHIPS (Director)

Vulnerability of shoreline; likely economic damagefollowing release of remaining oil

Likely damage to environment

Likelihood of a release reaching shoreline

Quantity, type and characteristics of the oil

Alternative methods for containing or renderingharmless of the oil?

Likely cost of operation and likelihood of success

Likelihood of significant release during extraction

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POSSIBLE SUB-CRITERIA FOR REMOVALOF OIL FROM SUNKEN SHIPS (Fra & Spa)

Risks associated with situation of ship

Risks associated with volume of oil in ship

Technical viability of operation

Reasonable cost; including per tonnerecovered

23TheErika incident, France, 1999 24

DEVELOPMENT OF THE INTERNATIONALCOMPENSATION REGIME

1992 Civil Liability and Fund Convention Adopted in 1992

In force 1996

Increase in limits Decided 2000

In force 2003

Supplementary Fund Protocol Adopted 2003

In force 2005


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3RD TIERSUPPLEMENTARY FUND

Protocol establishing a Supplementary Fundin force in March 2005

Maximum compensation 750 million SDR(US$1 114 million), including amountspayable under 1992 Conventions

Contributions to Supplementary Fundpayable by oil receivers in States Parties toProtocol

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SHARING OF FINANCIAL BURDEN BETWEENSHIPOWNERS AND OIL INDUSTRY

Cost study; showed imbalance for smallerships under present regime

Impact of Supplementary Fund; potential

exposure for contributors STOPIA / TOPIA 2006

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STOPIA 2006

Applies to pollution damage in 1992 FundMember States

Voluntary increase to 20 million SDR of limitationamount for ships up to 29 548 gross tonnage

1992 Fund remains liable to pay compensation toclaimants over 4.51 million SDR (US$6.7 million)

1992 Fund will be indemnified by the shipownerfor difference between CLC limit and 20 millionSDR

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TOPIA 2006

Applies to pollution damage in SupplementaryFund Member States

Supplementary Fund will continue to paycompensation to claimants in accordance withSupplementary Fund Protocol

Shipowner will indemnify the Supplementary

Fund for 50% of the compensation it has paidto claimants

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NEW CASE: SOLAR 1

Sank on 11 August 2006 in heavy weatherin Guimaras Straits (Philippines)

Around 124 km shoreline and 500 hectaresof mangrove polluted

At sea response: dispersants, booms, etc.

Shoreline clean-up: 1500 persons, 63 000days

First STOPIA-case

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OVERVIEW CLAIMS SITUATION

11.000 subsistence fishery claims Guimaras Island;settled for total of 1.3 mill; all paid

11.000 subsistence fishery claims Iloilo Province;offers made for total of 600.000; payment expected

April 2007

90 fishponds; total claimed 3.3 mill

77 seaweed farmers; total claimed 7.600

70 tourism businesses claimed total of 1.1 mill. 45settled so far for total of 9.000

Fund conducted series of claims workshops, toexplain functioning of international regime and Fund

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CLEAN-UP AND PROPERTY DAMAGECLAIMS

3 claims from oil spill responders; total 3.4mill. Interim payments made for total 1.9mill.

Claim by Petron Corporation for 2.0 mill.Interim payment made for 1.1 mill

Cost of underwater survey of wreck; 195.000 paid by Club

42 households claimed for enforcedevacuation; total 8.800

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SUBSISTENCE FISHERY CLAIMSGUIMARAS ISLAND

11,200 claims assessed & paid; total 1.3mill

Assessments based on information providedby fisherfolk

Claims entered into database & grouped intodifferent fishing categories

Average daily incomes per category

compared with published data and results offield surveys

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SUBSISTENCE FISHERY CLAIMSGUIMARAS ISLAND (2)

Assessed losses ranged from 25-300depending on fishing category

Total amount paid 1.3 million so far

Payments made to individual claimants;completed by end of January 2007

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REMOVAL OF THE OIL FROM THE WRECK

Underwater survey; majority of oil may still be onboard

Seismically active area; proximity to sensitiveeconomic and environmental resources

Executive Committee Oct. 2006: removal of oil

admissible in principle Contractor hired by Club

Operations have started 14 March; durationdepending on quantity of oil found

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MISCELLANEOUS CLAIMS

Proposals submitted for environmentalmonitoring; estimated total 1.4 mill;discussions between Club, Fund andauthorities ongoing

16 claims for beach front property damage;for total of 41.000

Claim by social welfare department forproviding emergency relief & alternativelivelihood programs; for total of 55.700

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CONCLUSIONS

The international compensation regimeof the 1992 Conventions has in generalworked well

135 incidents in 28 years (incl. oldregime)

US$ 1 060 million paid to victims (incl.old regime)

Used as model in other fieldsDevelopments to ensure it meets the

needs of society in the 21st century40

Prestige incident, Spain November 2002

ThePrestige incident, Spain, 2002

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Willem Oosterveen