Better deal for oil pollution victims as IMO adopts third tier of compensation

International Conference on the Establishment of a Supplementary Fund
for Compensation for Oil Pollution Damage: 12 - 16 May 2003

Increased levels of compensation will in future be available for victims of oil pollution from oil tanker accidents, following the adoption of a Protocol establishing an International Oil Pollution Compensation Supplementary Fund by a diplomatic conference held at IMO Headquarters in London.

The aim of the established Fund is to supplement the compensation available under the 1992 Civil Liability and Fund Conventions with an additional, third tier of compensation. The Protocol is optional and participation is open to all States Parties to the 1992 Fund Convention.

The total amount of compensation payable for any one incident will be limited to a combined total of 750 million Special Drawing Rights (SDR) (just over US$1,000 million) including the amount of compensation paid under the existing CLC/Fund Convention.

Speaking at the close of the Conference IMO Assistant Secretary-General Mr. Efthimios Mitropoulos, speaking on behalf of IMO Secretary-General Mr. William O'Neil, congratulated the Conference on achieving the adoption of the Protocol.

"With the adoption of this Protocol the Organization has succeeded in substantially enhancing the compensation available under the 1992 Convention. The supplementary scheme introduced by the Protocol should therefore ensure, for the foreseeable future, that victims of oil pollution damage will be fully compensated for their losses," Mr. Mitropoulos said.

"The increased compensation should also put an end to the practice of pro-rating of payment of claims, which, although it has been unavoidable, has led to criticisms of the 1992 Convention. For these reasons we are hopeful that, despite the voluntary nature of the supplementary scheme, the Protocol will soon attract a wide acceptance," he added.

Mr. Mitropoulos added that, following the signing of the Final Act of the Conference, the Governments concerned should turn their attention to the task of bringing the Protocol into force at the earliest possible date, and to arranging for its implementation.

Application of Protocol
The supplementary fund will apply to damage in the territory, including the territorial sea, of a Contracting State and in the exclusive economic zone of a Contracting State.

Contributions to the supplementary fund
Annual contributions to the Fund will be made in respect of each Contracting State by any person who, in any calendar year, has received total quantities of oil exceeding 150,000 tons. However, for the purposes of the Protocol, there is a minimum aggregate receipt of 1,000,000 tons of contributing oil in each Contracting State.

Assessment of annual contributions
The Assembly of the Supplementary Fund will assess the level of contributions based on estimates of expenditure (including administrative costs and payments to be made under the Fund as a result of claims) and income (including surplus funds from previous years, annual contributions and any other income).

Entry into force
The new Fund will come into existence three months after at least eight States have ratified the Protocol, who have received a combined total of 450 million tons of contributing oil. The Protocol will be opened for signature from 31 July 2003.

Amendments to the limits
Amendments to the compensation limits established under the Protocol can be adopted by a tacit acceptance procedure, so that an amendment adopted in the Legal Committee of IMO by a two-thirds majority of Contracting States present and voting, can enter into force 24 months after its adoption.

Resolutions adopted by the Conference

The Conference adopted three resolutions:

Conference resolution 1: Financing of the International Conference to adopt a Protocol to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992 - acknowledges that the funding of the International Conference was made available on the understanding that the amount paid to IMO for convening and holding the Conference would be reimbursed, with interest, by the Supplementary Fund to the 1992 Fund, and urges the Contracting States to the Protocol, when it has entered into force, to ensure that the amount paid to IMO is reimbursed by the Supplementary Fund, with interest, to the 1992 Fund.

Conference resolution 2: Establishment of the International Supplementary Fund for Compensation for Oil Pollution Damage - requests the Assembly of the International Oil Pollution Compensation Fund, 1992 (1992 Fund), to authorise and instruct the Director of the 1992 Fund to take on administrative and other functions relating to the setting up of the supplementary Fund; recommends the two Funds to share a single Secretariat and Director; and recommends meetings on 1992 Fund and supplementary Fund to be held simultaneously and in the same place.

Conference resolution 3: Review of the international compensation regime for oil pollution damage for possible improvement - requests the 1992 Fund Assembly to consider enhancements that could be made to the 1992 Liability Convention and the 1992 Fund Convention; urges all Contracting States to the Conventions to place a high priority on ongoing work towards a comprehensive review of the Conventions; and requests IMO to take action as necessary based on the outcome of the deliberations of the 1992 Fund Assembly.

Attendance
The Conference was attended by representatives of 51 Contracting States to the 1992 Fund Convention, while 17 other States and one IMO Associate Member sent observers to the Conference. Observers from two inter-governmental organizations and 11 non-governmental organizations also attended the Conference.

Officers of the Conference
The following were elected as Officers of the Conference:

President
His Excellency Mr. Mohammed Belmahi, Morocco

Vice-Presidents
Capt. Marcelo Gustavo Genne, Argentina
Ms Brigit Solling Olsen, Denmark
Her Excellency Mrs Nancy Kirui, Kenya
Her Excellency Ms Jean L. Kekedo, Papua New Guinea
Mr Abduljabbar A. Saifaldeen, Qatar

Chairman, Committee of the Whole
Mr. Alfred Popp, Canada

Vice-Chairmen of the Committee of the Whole
Capt. Luis Diaz, Venezuela
Prof. Chai Lee-Sik, Republic of Korea

Photographs of Mr. Belmahi, Mr. Popp, Mr. O'Neil and Mr. Mitropoulos are available on request.

Notes:
The 1969 International Convention on Civil Liability for Oil Pollution Damage (CLC), and the 1971 International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, (the Fund Convention, which established the IOPC Fund), ensure that compensation is available for victims of oil pollution from ships. The CLC places liability on the shipowner up to a set limit and requires the shipowner to take out insurance against such claims. If an accident at sea results in pollution damage which exceeds the compensation available under the CLC, additional compensation is available through the IOPC Fund, which is financed by contributions by oil receivers. The compensation regime as a whole thereby ensures that the burden of compensation is spread between shipowner and cargo interests.

The 1992 Protocols to the International Convention on Civil Liability for Oil Pollution Damage (CLC), 1969 and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (Fund Convention) 1971 replaced the original Conventions.

The 1992 Fund Convention has been ratified by 85 States, representing 87.18 per cent of world merchant shipping tonnage. The 1992 CLC Convention has been ratified by 91 States (91.29 per cent).

In the wake of the Nakhodka oil tanker incident in 1997 off Japan and the Erika oil tanker incident off the coast of France in December 1999, the IMO Legal Committee in October 2000 adopted amendments to the 1992 Protocols to the CLC and Fund Convention which will raise the limits of compensation payable by some 50 per cent to 89.77 million Special Drawing Rights (SDR) for a ship over 140,000 gross tonnage under the CLC and 203 million SDR payable by the IOPC Fund. These amendments will enter into force on 1 November 2003.

For a number of States, however, even these proposed increases were considered to be still too low. A European proposal for the establishment of a fund which would provide compensation over and above that generated by the 1992 Civil Liability and Fund Conventions whenever an oil pollution incident occurred in European waters was brought to the attention of the IOPC Fund Assembly, which in April 2000 decided to set up an Intersessional Working Group to further consider the matter. The Working Group met for three sessions (in July 2000 and in March and June 2001) and recommended the establishment of a supplementary fund, to provide compensation over and above that currently available under the 1992 Civil Liability/Fund regime, thus in essence creating a third tier of compensation for pollution damage caused by oil spills at sea. This supplementary fund will not be limited geographically to Europe but will cover oil spills wherever they occur.

The text of the draft protocol was approved by the sixth session of the IOPC Fund Assembly in October 2001 and submitted to the Secretary-General of IMO. At its 84th session, in April 2002, the IMO Legal Committee approved the draft text, prior to its submission to the current conference.

The IOPC Funds and IMO
Although the IOPC Funds were established under Conventions adopted under the auspices of IMO, they are independent legal entities with their own Directors and own Assemblies.

Unlike IMO, the IOPC Funds are not United Nations agencies and are not part of the UN system. They are intergovernmental organizations outside the United Nations, but follow procedures which are similar to those of the United Nations.

To become a member of the 1992 Fund, a State must accede to the 1992 Protocols to the Civil Liability Convention and the Fund Convention by depositing a formal instrument of accession with the Secretary-General of IMO. These Conventions should be incorporated into the national law of the State concerned.

Further information can be found on the IOPC Funds website at www.iopcfund.org

Special Drawing Rights Conversion Rates
The daily conversion rates for Special Drawing Rights (SDR) can be found on the International Monetary Fund website at www.imf.org under "IMF Finances".

IMO
IMO - the International Maritime Organization - is the United Nations Specialized Agency with responsibility for the safety of shipping and the prevention of marine pollution by ships.

Web site: www.imo.org

For further information please contact:
Lee Adamson, Senior External Relations Officer on 020 7587 3153 (media@imo.org)
or Natasha Brown, External Relations Officer on 020 7587 3274 (media@imo.org).