Oil Pollution Indemnity Clause For Penalties and Fines
4 March 2013 No.12-029
Members are referred to the previous circular No.12-015 dated 23 October, 2012.
In October 2012, an International Group recommended charterparty clause was drafted to address the concerns raised by owners and charterers in respect of the amendments to Australian legislation introducing increased penalties for pollution from ships and damage to the Marine environment. Since the recommended clause was circulated to Members, there have been further developments in relation to the Australian legislation1 and further consideration of the wording of the recommended clause, which has been updated as attached and further explained below;
Increase in the amount of penalties
On 28 December 2012, a new regulation came into force in Australia escalating the monetary value of financial penalties for Federal offences. The increase in penalty unit valuations is only applicable to offences committed on or after 28 December 2012.
The changes affect fines calculated on penalty units, such as fines imposed under the Protection of the Sea Act 1983, which imposes fines ranging from 500 penalty units to 20,000 penalty units for the offence of discharging oil or oily mixtures into the sea.
Under the previous penalty unit calculation, this resulted in maximum fines of AUD 2.2 million for an individual and AUD 11 million for a corporation. Under the new penalty unit calculation, the applicable maximum fines are now AUD 3.4 million2 for an individual and AUD 17 million3 for a corporation.
Amendments to the International Group recommended clause and explanatory notes
The recommended clause and explanatory notes are attached.
All Clubs in the International Group have issued similar circulars.
1 Australian Navigation Act 1912 and the Protection of the Sea Act 1983
2 Equivalent to approximately USD 3.5 million, as per the exchange rate on 21st February 2013
3 Equivalent to approximately USD 17.4 million, as per the exchange rate on 21st February 2013
In October 2012, an International Group recommended charterparty clause was drafted to address the concerns raised by owners and charterers in respect of the amendments to Australian legislation introducing increased penalties for pollution from ships and damage to the Marine environment. Since the recommended clause was circulated to Members, there have been further developments in relation to the Australian legislation1 and further consideration of the wording of the recommended clause, which has been updated as attached and further explained below;
Increase in the amount of penalties
On 28 December 2012, a new regulation came into force in Australia escalating the monetary value of financial penalties for Federal offences. The increase in penalty unit valuations is only applicable to offences committed on or after 28 December 2012.
The changes affect fines calculated on penalty units, such as fines imposed under the Protection of the Sea Act 1983, which imposes fines ranging from 500 penalty units to 20,000 penalty units for the offence of discharging oil or oily mixtures into the sea.
Under the previous penalty unit calculation, this resulted in maximum fines of AUD 2.2 million for an individual and AUD 11 million for a corporation. Under the new penalty unit calculation, the applicable maximum fines are now AUD 3.4 million2 for an individual and AUD 17 million3 for a corporation.
Amendments to the International Group recommended clause and explanatory notes
- Legal/Defence costs
- Indemnity in the event of contributory fault
The recommended clause and explanatory notes are attached.
All Clubs in the International Group have issued similar circulars.
1 Australian Navigation Act 1912 and the Protection of the Sea Act 1983
2 Equivalent to approximately USD 3.5 million, as per the exchange rate on 21st February 2013
3 Equivalent to approximately USD 17.4 million, as per the exchange rate on 21st February 2013