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Wednesday, October 17, 2018


The EP Transport Committee continues to advocate a European solution and in addition that the third tier should comprise two layers, the first to be paid by shipowners and the second by oil receivers, with linkage to HNS and compensation for bunker spills.

The EP debate and vote (28/29 May)

In April, the European Parliament Rapporteur (French MEP Mr. Alain Esclope) produced a draft report on the European Commission proposal for a ‘third tier fund’ of oil spill compensation. It was debated in late April in the EP Transport Committee and, with many proposed amendments being tabled, was voted on in the Committee on 29 May. INTERTANKO, in close cooperation with in particular ECSA, prepared briefing material and has met the Rapporteur and other key MEPs during the process. The basic message in the meetings and submissions was that a third tier of compensation (‘COPE’) should be created at the international rather than the regional level. On the grounds of both equity and in order to establish an international third tier within a reasonable timeframe, it should not involve shipowners in the financing of the third tier.

Whilst early indications during the debate gave good reason to hope that the parliament would take on board the main points put forward by the shipping industry, the results from the vote itself were not so encouraging. While the EP Transport Committee acknowledges that a third tier created at the international level is preferable and it takes a favourable view of the discussions that are taking place in IMO to that end, it continues to advocate a European solution. Clearly, this reflects the desire of the European Parliament (EP) to maintain pressure on IMO to reach agreement in the near future and a continued scepticism that IMO is capable of quick action, despite evidence to the contrary vis á is the single hull phase-out issue.

On the question of the funding of a third tier, the EP did not accept the principle that oil receivers should be the sole contributors and is advocating that the third tier should comprise two layers, the first to be paid by shipowners and the second by oil receivers.

The EP Transport Committee is also arguing that the scope of such a fund should be extended to cover hazardous and noxious substances as well as compensation for bunker spills. This approach was taken despite the European Commission making very clear in the debate prior to the vote that it could not accept any widening of the scope and that involving shipowners in contributing to the third tier would be inconsistent with international law and put in doubt the possibility of a global solution in the short term.

Conclusion and follow-up

The final EP text as it now stands will not be ready until some time next week since there are now quite substantial changes to be written into it.  We can therefore not comment in any further detail before we see the text itself. In essence, however, what the EP has actually now done is to combine an invitation to the IMO to deliver an international solution with a threat that if this does not happen (before the EU process comes to an end) the EP wants Europe to proceed on a regional basis including shipowner involvement in financing the third tier and including linkage to HNS and compensation for bunker spills.

Informal signals from Commission officials and MEPs approached underline that this is the initial, political reaction in what is a lengthy Parliamentary process over the next 6 months or more and that, should a third tier be agreed internationally based on oil receivers, it would be difficult for the EP to take a different approach. In practice the ball is now effectively back in the Commission's court. 

The Council of Ministers, which is the next body to deal with the issues, will not formally discuss them before the IOPC process is further advanced, and it will therefore now be up to the Commission to respond to the EP proposal by tabling a new and amended version of the proposal.

It is expected that the Commission may have serious problems in accepting the changes suggested by the EP Transportation Committee because they undermine the current system and therefore undermine an international system AND a quick solution on the compensation level/speed of compensation.