Legal Committee - 81st Session: 27-31 March 2000


Committee agrees draft convention on bunker oil liability

    At its 81st session held between 27-31 March 2000, the Legal Committee completed its consideration of the draft international convention on civil liability for bunker oil pollution damage. It agreed that the draft convention should be forwarded to a diplomatic conference for adoption. The Committee requested Council that the diplomatic conference be convened for a period of one week, preferably to take place during the first half of 2001.

    In his opening remarks, the IMO Secretary-General Mr William A. O’Neil, said the adoption of international rules on liability and compensation for pollution damage caused by bunker fuel oil was not before time. He reminded the Committee that when the HNS Convention was drafted, a proposal to include bunker fuel oils was rejected on the understanding that the loophole left by this omission would be filled as soon as possible by a separate treaty instrument. A bunkers convention would complete the task initiated by the Committee more than thirty years ago, namely, the adoption of a comprehensive set of unified international rules governing the award of prompt and effective compensation to all victims of pollution from ships.

    Mr. O’Neil emphasised that the task was probably more important now than ever before. Incidents such as the Erika would test the ability of the 1992 Civil Liability and Fund Conventions to provide adequate compensation, as it seemed quite possible that these limits could prove to be too low. In this connection he noted how inadequate the limits provided for in the parent conventions of 1969 and 1971 would be to provide compensation for damage occurring in the waters of those States which are still Party to these treaties. In this connection he called upon States to denounce these instruments at the earliest opportunity and to become parties to the 1992 Protocols. This call he held to be even more important given that a Conference to be convened by IMO in September this year was expected to adopt rules which will accelerate the winding up of the 1971 Fund Convention in the very near future.

Provision of financial security

    The Committee considered a submission - prepared by Norway at the Committee’s earlier request - for a protocol to the Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea, 1974. The protocol is intended to provide for enhanced compensation, to establish a simplified procedure for updating limitation amounts, and to make insurance for the benefit of passengers compulsory.

    A key issue is whether the limitation amount in respect of compulsory insurance should be calculated on a per ship or per capita basis.

    Besides the basic text prepared by Norway, the Committee considered alternatives proposed by Japan and the International Group of P&I Clubs.

    The P&I Clubs proposed that limitation should be per ship rather than per capita. Their argument centred on the example of modern cruise ships: they were able to carry so many passengers that it was unlikely the P&I Clubs would be able to provide insurance or other financial security for such vessels on a per capita basis. Yet if the P&I Clubs withdrew, there was no other alternative in the market place to provide such cover.

    The delegation of Japan introduced a document containing a proposal based on the Montreal Convention on air transport for a two tier system for death or personal injury of passengers. Under the first tier, the carrier’s liability would be strict but limited; while under the second tier the carrier’s liability would be unlimited but dependent upon proof of fault.

    The basic draft stated that a carrier’s compulsory insurance or other form of financial security should be limited to [so many] units of account per passenger per carriage. The P&I Clubs proposed it should be limited in aggregate in respect of each ship.

    The Committee discussed the issue at length, with no conclusion being reached. However, several delegates made the point that it would be unacceptable to have a system where a passenger on a vessel carrying, say 3000 people, was at a disadvantage - in terms of making a claim in the event of death or injury - to a passenger on a vessel carrying substantially fewer people.

    Most delegates were in favour of the basic text, but some were prepared to consider alternatives. The Committee decided the issue should be further considered, bearing in mind a number of points that were made, including:

  • all ships should carry insurance sufficient to provide an adequate level of compensation;

  • claimants should have the right to pursue the insurer directly;

  • passengers should not suffer simply because of the size of the ship;

  • the industry view was that two caps on liability were required, that is, per passenger and per ship, and that direct action should be available up to a certain limit but not beyond;

  • it was desirable to achieve a solution within the mutuality system of current P&I insurance arrangements;

  • insurance is only as good as the security behind it;

  • there is a need to construct a realistic compensation system which could be implemented and which at the same time provides adequate compensation levels.

    The Committee recognized the need for further informal discussions to try to narrow the gap between different positions. It also called for greater participation by other interested delegations and observer delegations if progress was to be made.

Joint IMO/ILO Working Group

    The Committee considered the findings of the Joint IMO/ILO Ad Hoc Expert Working Group on Liability and Compensation regarding Claims for Death, Personal Injury and Abandonment of Seafarers, which met from 11-15 October 1999, and approved continuation of its work. In his opening remarks the Secretary-General had commended the Working Group’s progress. He said he could not think of a more relevant and worthy subject in the legal field requiring co-operation between IMO and the International Labour Organisation.

Draft convention on wreck removal

    A paper (LEG 81/6) reported on the intersessional work of the correspondence group on wreck removal.

    The co-ordinator of the Correspondence Group highlighted progress on matters such as the definition of wreck, preventive measures and hazard, rights and obligations to remove hazardous wrecks, reporting and locating of wrecks, financial liability for locating, marking and removing wrecks and contribution from cargo. He hoped the Committee could progress speedily in considering the draft convention and would soon be in a position to recommend the convening of a diplomatic conference during the 2002-2003 biennium.

    One delegation, supported by other delegations, expressed concern about the proposal to include in the definition of wreck the notion of "uncontrolled ships". In this connection the delegation pointed out that, as part of normal operations, a vessel could be for technical reasons "under no command" for a limited period of time. That vessel, concluded the delegation, should not fall under the definition of wreck.