A global regime for compensation from oil pollution for ships could be under "serious threat", says the International Chamber of Shipping (ICS).
According to ICS, the governments' decision to wind up the 1971 International Oil Pollution Compensation Fund (IOPCF) is premature, mainly because there are a number of outstanding claims still to be processed.
At next week’s IOPCF meeting in London, ICS (in conjunction with BIMCO and Intertanko) will argue some of these claims are subject to litigation, with money potentially still owed to the shipowners’ insurers, the Protection & Indemity (P&I) Clubs.
ICS has stated that it will be supporting the position of the International Group of P&I Clubs on this issue and asking the governments to reconsider their position.
ICS will also claim that the decision to wind up the 1971 Fund before resolving outstanding claims breaches the 1971 International Convention on the Establishment of an International Fund for Compensation for Oil Pollution, and will result in a serious threat to the operation of the 1992 Fund, to the detriment of future pollution victims’ interests.
Because of the failure to address outstanding claims, P&I Clubs may no longer be willing to continue their practice of making advance interim payments, following pollution incidents, in excess of the shipowners’ limitation amounts (under the IMO Civil Liability Convention) if it is thought that these excess payments may not be compensated by the 1992 Fund in the future. This could delay compensation, resulting in significant hardship for claimants when they could already be in difficult circumstances.
“It is important to understand that these unintended consquences are real” said Peter Hinchliffe, ICS Secretary General.
“The P&I Clubs, which are owned by ship owners, have made it very clear that this decision is likely to have very serious implications. We are therefore pleased that the United Kingdom has recognised our concerns, suggesting that the decision to wind up the 1971 Fund should be deferred at next week’s critical meeting of the IOPCF. We hope very much that other IMO Member States will support the UK’s submission.”
For forty years the regime established by the IMO Civil Liability (CLC) and Fund Conventions, with costs divided between ship owners and cargo interests, has provided an efficient means of compensating pollution victims. The ship owners’ contribution is paid regardless of fault, with claimants having recourse to the IOPCF (which is funded by contributions from the oil industry) if the shipowner’s liability under the CLC Convention is exceeded.
“We wish to avoid jeopardising the future operation of the IMO regime” said Hinchliffe.
“The decision to wind up the 1971 Fund before claims have been settled also appears to contravene the IMO Fund Convention. We therefore hope that governments will do the right thing and reverse this unfortunate decision.”