International Supplementary Fund For Compensation to the 1992 Oil Pollution Compensation Fund Convention
3 June 2003 No.03-005
A diplomatic conference held at IMO (International Maritime Organization) during the period from 12 May 2003 to 16 May 2003 adopted a Protocol to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992 ("1992 Fund Convention"). The aim of adopting the Protocol was to establish an International Supplementary Fund ("3rd Tier") as an addition to the fund under the 1992 Fund Convention. We would now like to offer you an outline of the Supplementary Fund together with related information about the 1992 Liability Convention ("1992 CLC") and the 1992 Fund Convention ("1992 FC").
| 1. | The maximum amount of compensation available after 3rd tier becomes effective becomes:- |
| 1992CLC(amended)* | maximum 89.77M SDR | (Effective 1 November 2003) |
| 1992FC(amended)* | maximum 203.00M SDR | (Effective 1 November 2003) |
| Supplementary Fund | maximum 547.00M SDR |
| Total | maximum 750.00M SDR | (about$10billion,@1SDR=$1.4) |
| *) See Annex 1., "The amount of compensation of 1992 CLC and 1992 FC" | ||
This Supplementary Fund will pay compensation to any person suffering pollution damage if that person has been unable to obtain full and adequate compensation under the 1992 FC. The aggregate amount of compensation payable by the Supplementary Fund will in respect of any one incident be limited and not exceed 750 million SDR, having included the amount of compensation actually paid under the 1992 CLC and the 1992 FC as amended.
| *1992 CLC | :Protocol of 1992 to amend the International Convention on Civil Liability for Oil Pollution Damage, 1969 |
| *1992 FC | :Protocol of 1992 to amend the International Convention on the International Fund for Compensation for Oil Pollution Damage,1971 |
| 2. | Cap on the contributions A transitional provision is introduced in the Protocol to the effect that the aggregate amount of annual contributions payable in respect of contributing oil received in a single contracting state during a calendar year will not exceed 20% of the total amount of annual contributions to the Supplementary Fund. This provision will operate until the total quantity of contributing oil received in all contracting states in a calendar year has reached 1,000 million tons or until 10 years after entry into force of the Protocol, whichever occurs first. |
| 3. | Entry into Force The Protocol will enter into force 3 months after (a) having been ratified by 8 States and (b) the total contributing oil received in the contracting states has reached at least 450 million tons. Only Contracting States to the 1992 Fund Convention may become Contracting States to the Protocol. |
| 4. | Background and Reveiw 1) 1992 CLC / 1992 FC The 1992CLC/FC entered into force in 1996 as the new regime succeeding the former 1969 CLC and 1971 FC. This enabled the level of compensation available to assist victims in the event of oil spill incidents to be increased. In the wake of major oil spills (e.g. the "Nakhodka" in 1997 and the "Erika" in 1999), the 82 session of Legal Committee of IMO held in 2000 adopted amendments so that the limitation amount under the 1992 CLC and the maximum amount of compensation under the 1992 FC would be increased by some 50%. These amendments will enter into force on the forthcoming 1 November 2003 (See a) and b) following for details). In spite of these amendments, an additional 3rd Tier was adopted due to strong pressure coming mainly from European countries, that the amended levels still provided insufficient compensation for large scale oil spill incidents. 2) Future Prospect In the 3rd Tier Protocol, it was agreed that the maximum amount of compensation would be at an almost similar level to OPA90 where the maximum amount of compensation is about $10 billion, as well as accepting the capping system by which large oil receiving countries are able to avoid an excessive level of contribution (see item 2 above). It is expected that the ratification of the Protocol will proceed smoothly.As a matter of fact, some sources predict that the Protocol could enter into force as soon as next year. 3) Increased Liability of Shipowners Under the new compensation regime, i.e., the 1992 CLC/1992 FC (as amended), including the 3rd Tier, the amount of compensation to be paid by oil receivers will be substantially higher than that to be paid by shipowners who are "polluters" in a major oil spill, like the "Prestige" incident which occurred off Spain in October, 2002. This would cause a considerable imbalance in the burden of compensation between the two industries and, therefore, the International Group proposed, as a counter-weight, a voluntary agreement to the effect that irrespective of the limitation amount provided under the 1992 CLC, as amended, the limitation amount should be voluntarily increased to 20 million SDR for tankers of less than about 30,000 G/T. These represent about 75% of the world's tanker fleet. (The Board of Directors of the Association resolved to support the initiative of the voluntary agreement in June 2002). It is the intention that not only the oil cargo receivers but also the tanker owners will share the additional burden arising from the operation of the 3rd Tier. As well as the 3rd Tier Protocol, there are other international conventions, yet to enter into force which will place an additional burden on shipowners, other than tanker owners, for example the 1996 LLMC, HNS, Athens and the Bunker Convention. Through the International Group of P&I Clubs, the Association intends to closely monitor these developments in order to protect the interests of the Members. |
| Encls. | 1. | 1992 Fund : Contributing Oil Received In The Calender Year 2001 In The Territories Of States Which Were Members Of The 1992 Fund On 31 December 2003 and the amount of compensation of 1992 CLC and 1992 FC |
| 2. | The graph of maximum Compensation | |
| 3. | Summary of Selected Articles from the Protocol of 2003 to the International Convention |