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Friday, January 19, 2018

IOPC FUND 1992 WORKING GROUP – FURTHER PROGRESS TOWARDS AN OPT-IN 3RD TIER OF COMPENSATION FOR STATES THAT HAVE RATIFIED THE 1992 FUND CONVENTION

The third intersessional meeting of the International Oil Pollution Compensation Fund 1992’s Working Group took place at the IMO this week. The Working Group spent much of its time on a draft Protocol to the 1992 Fund Convention. This Protocol provides for an additional tier of compensation to be available to the victims of an oil spill where the claims exceed the current limit under the 1992 Fund Convention. This supplementary fund would be financed by oil receivers. The limit of this supplementary fund has not been agreed although there are indications from the Oil Companies International Marine Forum (OCIMF) that they would be prepared to accept a figure of 400 million Special Drawing Rights (SDR) which is equivalent to some USD 550 million on certain conditions. Further details on the discussions and deliberations of the Working Group are contained in the detailed article below.

The third intersessional meeting of the International Oil Pollution Compensation Fund 1992’s Working Group took place at the IMO this week. The Working Group spent much of its time on a draft Protocol to the 1992 Fund Convention. This draft Protocol was submitted in a paper sponsored by Australia, Canada, Finland, France, Germany, Ireland, the Netherlands, Norway, Sweden and the United Kingdom.

The Protocol makes provision for a Supplementary Fund of compensation to be available to the victims of an oil spill where the claims exceed the sum available under the 1992 Civil Liability and Fund Conventions (currently USD 185 million rising to USD 277 million in November 2003). This Supplementary Fund is viewed by some as an interim solution to addressing the concerns raised following the Erika incident that the level of compensation available under the international regime was insufficient. Whilst the level of this Supplementary Fund will be left for decision by the diplomatic conference that will have to be convened to agree the Protocol there has been an indication from OCIMF that a level of SDR 400 million (USD 550 million) would be appropriate.

INTERTANKO’s position outlined in a paper submitted to the Working Group has been to maintain the existing regime of the CLC and Fund Conventions and for the maintenance of an equitable sharing of the cost of oil spills between shipowners and oil receivers. INTERTANKO has taken part in discussions with the other shipowner organisations and oil companies. The solution which has been proposed at the Working Group ensures that the key elements of the CLC/Fund regime are maintained, namely strict but limited liability of shipowners, which have provided a good system of compensating the victims of oil spills.

The International Group of P&I Clubs (IG) submitted two papers to the Working Group. The first of these papers included a recent study of the cost of 360 tanker spills (non US) during the years 1990-1999. These statistics showed that some 95% by number of these spills would have been fully compensated under the compensation available under the 1992 CLC Convention alone. The IG supports the idea of a Supplementary Fund financed by oil receivers.

The IG supported by INTERTANKO and the International Chamber of Shipping also put forward a paper to the Working Group which set out their proposal for a voluntary increase in the minimum level of liability for vessels of 5,000 gt and over. The current limit under the CLC Convention is SDR 3 million rising to SDR 4.51 million with the increases that take effect in 2003. The proposal is that there will be a three-fold increase to the minimum level for vessels of 5,000 gt. The rationale behind this proposal is to maintain the balance between shipowners and cargo interests in the short to medium term.

INTERTANKO welcomes the good progress that was made this week at the IOPC Fund Working Group and is encouraged that the International Community has been able to respond relatively rapidly and provide a practical solution to the need to increase the levels of compensation available to oil spill victims.