1. Dr T H Moller Technical Team Manager INTERNATIONAL TANKER OWNERS POLLUTION FEDERATION www.itopf.com STATUS OF THE INTERNATIONAL COMPENSATION CONVENTIONS

2.  Role of ITOPF  How CLC & FC operate  Benefits of the Conventions  Measures to improve Conventions  Performance record : Future outlook

3. ITOPF MEMBERSHIP l 4,500 tanker owner Members l 8,000 tankers of 194 million GT l Other ship owner Associates l 310 million GT of non-tanker tonnage l P&I Clubs arrange ITOPF entries & pay dues

4. RESPONSE TO MARINE OIL SPILLS l Promoting an effective response to oil spills l Advising ship owners, P&I Clubs, IOPC Funds, spill response community & victims l Technical advice on merits of claims l Attended 450 spills in 70 countries since 1972, including 150 bunker spills from non-tankers

5. INTERNATIONAL COMPENSATION CONVENTIONS CIVIL LIABILITY CONVENTION (1992 CLC) The International Convention on Civil Liability for Oil Pollution Damage, 1992 The International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992 FUND CONVENTION (administered by 1992 Fund)

6. Supplementary Layer of Compensation Primary Layer of Compensation FUND CONVENTION CIVIL LIABILITY CONVENTION 1992 Fund Oil Cargo Receivers Tanker Owner Insurance (P&I Club) COMPENSATION CONVENTIONS a two-tier system

7. CLC 92 & Fund 92CLC 92 only Parties to Civil Liability and Fund Conventions at 1 December 2001 CLC 69 onlyCLC 69 & Fund 71

8. 1992 CLC : STRICT LIABILITY ~ RIGHT TO LIMIT LIABILITY l Registered owner liable, regardless of fault with very few exceptions (e.g. act of war) l Required to have insurance and certificate l Enables direct action against insurer l Right to limit lost if damage resulted from personal act or omission of owner done with intent or recklessly and with knowledge that damage would occur

9. CHANNELLING OF LIABILITY l Claims ‘channelled’ to registered owner l Servants, agents, any charterer, manager, operator, salvors or responders protected from claims for pollution damage l Unless damage resulted from their personal act or omission done with intent or recklessly with knowledge that damage would occur (same test as for owner) l Recourse actions not prevented

10. COMPENSATION LIMITS l Liability of tanker owner / P&I Club (in SDR) based on gross tonnage of tanker ~US$ 4 million for tanker of 140,000 GT l 1992 Fund limit ~ US$174 million, including 1992 CLC

11. EC CONCERNS l Inadequate limits of liability l Inappropriate balance between responsibilities of different players & their exposure to liability l Shipowner’s ‘unbreakable’ limitation rights l No incentive on industry to use ships of high quality l Inadequate cover for environmental damage

12. INCREASE OF LIMITS l Post-ERIKA, 50% increases of CLC and Fund agreed by IMO Legal Committee October 2000 l Under special terms in Conventions (tacit amendment procedure) new limits enter into force 1 November 2003, unless >25% object l CLC limits become:- ~US$ 6 million for tanker of < 5,000 GT to ~US$ 116 million for tanker of > 140,000 GT l 1992 Fund limit ~ US$ 261 million (incl. CLC)

15. current CLC CLC + 50% current FC FC + 50% ERIKA NAKHODKA HAVEN

16. IOPC FUND RESPONSE l Response to EC and other concerns l 1992 Fund Intersessional Working Group on operation of CLC and Fund l Consideration of issues could lead to fundamental revision of Conventions l WG met in March and June and reported to Fund Assembly in October 2001 l Input by industry observer associations

17. MAXIMUM LIMITS l Difference of opinion on need to increase limits beyond 2003 levels l Agreement to Protocol establishing an ‘opt-in’ Supplementary Fund (‘third tier’) l Only apply in States that ratify Protocol l Operation of 1992 Conventions unaffected l Maximum limit to be decided by Diplomatic Conference, probably in 2003

18. BALANCE OF RESPONSIBILITIES l Purpose of CLC & FC to provide compensation, not to be punitive l Victims indifferent to source of compensation l Preserve existing balance of measures to facilitate compensation l Industry supportive of Supplementary Fund l To maintain equitable sharing, P&I Clubs have proposed voluntary increase in small ships limit in States party to Supplementary Fund

19. ENVIRONMENTAL DAMAGE l Continued strong opposition to use of ‘theoretical models’ as outside of definition of ‘Pollution Damage’ in Conventions l Emphasis remains on actual restoration/ reinstatement of damaged resources l Encouragement of innovative measures and post-spill studies - must be ‘reasonable’ l Little enthusiasm for expanding provisions to allow acquisition of equivalent components to those damaged or destroyed

20. COMPENSATION CONVENTIONS the record : the future l Successful formula adopted by 74 countries: >2,000 CLC cases & >100 FC cases settled l IOPCF WG’s mandate extended to consider: –shipowners’ right to limit (CLC 69 test?) –limit of liability under 1992 CLC –channelling (exposure of charterer to claims?) –environmental damage l Fundamental changes to 1992 CLC and Fund would require further Protocol

21. CLC 92 & Fund 92CLC 92 only Parties to Civil Liability and Fund Conventions at 1 December 2001 CLC 69 onlyCLC 69 & Fund 71