Annual Report INTERNATIONAL OIL POLLUTION COMPENSATION FUNDS

Transcription

1 Annual Report 2010 INTERNATIONAL OIL POLLUTION COMPENSATION FUNDS

2 ANNUAL REPORT 2010

3 International Oil Pollution Compensation Funds ANNUAL REPORT 2010 INTRODUCTION Director s Review 2 Chairman s Statement 3 Funds Overview 4 Legal Framework 6 OPERATIONAL REVIEW 10 Secretariat 12 Administration 14 External Relations 16 Contributions 19 Incidents Involving the IOPC Funds 22 GOVERNING BODIES Fund 26 Supplementary Fund Fund 32 FINANCIAL REVIEW 34 Certificate 36 Extracts from 2009 Financial Statements 37 Key Financial Figures for 2010 (Unaudited) 43 International Oil Pollution Compensation Funds Portland House Bressenden Place London SW1E 5PN United Kingdom Telephone: +44 (0) Fax: +44 (0) (for all enquiries): info@iopcfund.org Website: Opposite: Oil removal operations after the Aegean Sea incident, La Coruña, Spain, December Cover: Clean up of heavily oiled rocks along the French coastline following the Erika incident. 1

4 INTRODUCTION Director s Review Chairman s Statement Funds Overview Legal Framework Director s Review I am delighted to present the IOPC Funds Annual Report for the year The new shorter form, which was introduced in 2009, was a real success and the positive feedback received from our readers encouraged us to continue with the new format. A detailed report on incidents involving the IOPC Funds is available as a separate publication, both in hard copy and on the Funds website. This year I would like to start with a heartfelt thank-you to all who sent cards and letters wishing me well during my absence and expressing hope that I would make a speedy and full recovery. That heartfelt thank-you must be extended to all my staff and, in particular, to the Acting Director, Mr José Maura, for their help and support in the difficult circumstances created by my absence from the office towards the latter part of Secondly, the most important thing that I would like to highlight is that no new big oil spills have occurred during 2010 and so the Secretariat has been able to focus on other issues. The Hebei Spirit is without a doubt the biggest spill in terms of workload for the Secretariat and continues to present us with major challenges. Having to deal with some claims, mainly from the Korean fishing and shellfish sector, is unheard of in other incidents in which the IOPC Funds have been involved. Together with the Korean authorities, we are working on getting compensation to the victims as quickly as possible. One of the issues we have come up against is how to make quick payments of realistic compensation in a situation where proof of damage is not available. The sixth intersessional Working Group, under the chairmanship of Mr Volker Schöfisch (Germany), started its important work on this difficult question. The first meeting of the Working Group was held in June 2010 and it will be followed up by a second meeting in the spring of Another incident that has been proving difficult to resolve is the Volgoneft 139. However, we are now more hopeful because the Russian courts have decided that the claim for environmental damage ( Metodika claim) was not valid and neither was the defence of the shipowner with respect to the concept of force majeure due to bad weather. So, notwithstanding the possibility that these Russian court rulings can be overturned by appeal, the only issue that remains open is the insurance gap problem. The Protocol of 2010 to amend the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996 was adopted by an International Conference held in April This Conference came up with solutions to overcome the difficulty that States had encountered in finding a system of contributions for packaged substances, for the loophole that seemed to exist for LNG, and for the fact that most States did not report when ratifying. A lot of work is still required before the Protocol can enter into force and both IMO and the 1992 Fund Secretariats are actively working together to facilitate its wider ratification. The IOPC Funds have also taken some other major steps. In 2010 the full transition to the International Public Sector Accounting Standards (IPSAS) took place, leading to greater transparency of the financial situation of the Funds. Furthermore, a well thoughtthrough tender process elaborated by the Funds joint Audit Body was used to appoint the Funds External Auditor to audit the Financial Statements for the financial years The Comptroller and Auditor-General of the United Kingdom was reappointed to this position. Finally I would like to express my sincere gratitude to all who helped to make 2010 another successful year for the IOPC Funds. In particular I would like to thank the Chairmen of the Funds governing bodies, as well as my staff, for their dedication and support to the Organisations during I hope that you will find this Annual Report both attractive and informative and that it will provide you with a clear understanding of the role of the IOPC Funds in the international community. Willem Oosterveen Director Together with the Korean authorities, we are working on getting compensation to the victims [of the Hebei Spirit] as quickly as possible Number of claims received in connection with the Hebei Spirit incident by 31 December

5 Chairman s Statement The year 2010 has been an eventful one for the IOPC Funds in many ways. In September we received the unfortunate news that Mr Willem Oosterveen, Director of the Funds, was in hospital and would be unable to act as Director of the IOPC Funds for the foreseeable future. Measures were immediately taken to manage the untoward situation and Mr José Maura, Head of Claims, agreed, in accordance with the Funds Internal Regulations, to act on the Director s behalf. At their October 2010 sessions, the governing bodies subsequently decided to appoint Mr Maura as Acting Director of all three Funds until such time as Mr Oosterveen was well enough to assume his responsibilities once again. I am pleased to report that Mr Oosterveen is making good progress and the hope is that he will be back at the helm of the Secretariat in the not too distant future. In early October we also received the sad news that Mr John Wren, former Head of the United Kingdom delegation to the sessions of the IOPC Funds governing bodies from , member of the IOPC Funds Audit Body and a good friend to many delegates, both past and present, and to members of the Secretariat had passed away. Tribute was paid to him with a one minute silence at the governing bodies October sessions also saw the postponement until June of the April meetings of the governing bodies due to the volcanic ash clouds from Iceland which caused severe disruption to air travel across western and northern Europe. This postponement was a first in the history of the IOPC Funds but fortunately it was possible to reschedule the meetings without any major problems. An International Conference on the revision of the HNS Convention did, however, still go ahead in late April at the International Maritime Organization (IMO) and the Protocol of 2010 to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996 (2010 HNS Protocol) was adopted. The 2010 HNS Protocol will remove obstacles that may have prevented the ratification of the earlier HNS Convention. Resolution 1 of the Conference requested the 1992 Fund Assembly to instruct the Director of the IOPC Funds to carry out tasks necessary for the setting up of the HNS Fund and to make preparations for the first session of the HNS Assembly. A number of tasks in this respect are already underway within the Secretariat in co-operation with IMO. I would like to take this opportunity to encourage States to carefully consider the potential implications of a pollution incident in their waters involving hazardous or noxious substances and to seriously consider ratification of the 2010 HNS Protocol. The IOPC Funds continue to face challenges in relation to various incidents: Plate Princess (Venezuela), Volgoneft 139 (Russian Federation) and Hebei Spirit (Republic of Korea), each of which has its specific problems. Efforts will need to be made by the Member States involved to resolve the outstanding issues but I am confident that the Secretariat will do its utmost to find satisfactory solutions with the States concerned. I am pleased to report that the 6th intersessional Working Group set up to look at ways of dealing with such problems made progress during its first meeting which was held from June 2010 and which focused on the main areas of concern in connection with the functioning in practice of the international liability and compensation regime. Its next meeting which will be held in spring 2011 will focus inter alia on the lack of evidence supporting small claims, the time taken to assess claims, the costs of assessing claims and the role of Member States. At their October 2010 sessions, the governing bodies confirmed their provisional decision which had been taken to accept the kind invitation of the Prime Minister of the Kingdom of Morocco to host the spring 2011 sessions of the Funds governing bodies in Marrakech. After Canada and Monaco, we are delighted to have been presented with an opportunity to hold the first Funds meetings on the African continent. In conclusion, I would like to express my sincerest thanks to all those who have chaired meetings of the IOPC Funds governing bodies during 2010: Captain David Bruce (Marshall Islands), Mr Daniel Kjellgren (Sweden), Ms Welmoed van der Velde (Netherlands) and Vice-Admiral Giancarlo Olimbo (Italy). I would also like to pay tribute to the members of the IOPC Funds Secretariat who have shown the ability to handle the difficult circumstances experienced since the autumn with competence and flexibility. Jerry Rysanek Chairman of the 1992 Fund Assembly I would encourage States to seriously consider ratification of the 2010 HNS Protocol 31 October 2011 The 2010 HNS Protocol is open for signature until this date and thereafter will remain open for accession 3

6 INTRODUCTION Director s Review Chairman s Statement Funds Overview Legal Framework Funds Overview The International Oil Pollution Compensation Funds (IOPC Funds) provide financial compensation for oil pollution damage that occurs in Member States resulting from spills of persistent oil from tankers. The 1992 Fund, established by the 1992 Fund Convention, provides compensation up to a fixed limit per incident where the amount of the admissible claims exceeds the liability of the shipowner. A higher limit is available to Member States that have also joined the Supplementary Fund, which was established in 2003 by a Protocol to the 1992 Fund Convention. The IOPC Funds are financed by contributions paid by entities that receive certain types of oil by sea transport. These contributions are based on the amount of oil received in the relevant calendar year, and are designed to cover expected claims, together with the costs of administering the Funds. The Funds operate within the framework of international Conventions enacted under the auspices of the International Maritime Organization (IMO), which is a specialized United Nations agency. However, the IOPC Funds are not UN agencies, but independent intergovernmental organisations. The history of the IOPC Funds begins with the oil spill from the Torrey Canyon, which ran aground near the Scilly Isles in 1967, fouling UK and French coastlines. This incident, the most expensive shipping disaster up to that time, exposed a number of serious shortcomings, in particular the absence of an international agreement on liability and compensation in the event of such a spill. It led the international community to establish, under the auspices of the IMO, a new regime for the compensation of victims of oil pollution. The framework for the new regime was the 1969 International Convention on Civil Liability for Oil Pollution Damage (1969 Civil Liability Convention) and the 1971 International Convention on the Establishment of an International Fund for Compensation for Oil Pollution (1971 Fund Convention). Over time, it became clear that the amount of compensation available for major incidents needed to be increased, and the scope of the regime widened. This resulted in two further instruments, known as the 1992 Civil Liability Convention and the 1992 Fund Convention. Following the Erika and Prestige incidents, a Protocol to the 1992 Fund Convention was adopted in 2003, providing (for those Member States who chose to make additional contributions) a much higher limit of compensation (Supplementary Fund Protocol). Since their establishment, the 1992 Fund and the preceding 1971 Fund have been involved in some 140 incidents (including two joint incidents) of varying sizes all over the world. In the great majority of cases, all claims have been settled out of court. No incidents have occurred so far which have involved or are likely to involve the Supplementary Fund. States Parties to the 1992 Fund Convention States Parties to the Supplementary Fund Protocol States Parties to the 1992 Civil Liability Convention States Parties to the 1969 Civil Liability Convention 105 Member States of the 1992 Fund Albania Algeria Angola Antigua and Barbuda Argentina Australia Bahamas Bahrain Barbados Belgium Belize Benin <1> Brunei Darussalam <1> From 5 February Bulgaria Cambodia Cameroon Canada Cape Verde China <2> Colombia Comoros Congo Cook Islands Croatia Cyprus Denmark Djibouti Dominica Dominican Republic Ecuador Estonia Fiji Finland France Gabon Georgia Germany Ghana Greece Grenada Guinea <2> The 1992 Fund Convention applies to the Hong Kong Special Administrative Region only. Major Incidents Involving the IOPC Funds Hebei Spirit (Republic of Korea, 2007) (estimated losses) 197 Nakhodka (Japan, 1997) 142 Prestige (Spain, France and Portugal, 2002) (to date) 98 Erika (France, 1999) (to date) 85 Braer (United Kingdom, 1993) Amount paid in claims/estimated losses including the shipowner s contribution under the 1992 Civil Liability Convention ( millions) as at 31 December 2010 NB For comparison, amounts are given in pounds sterling, which is not necessarily the currency actually paid. 4

7 Map copyright ITOPF. All rights reserved Member States of the Supplementary Fund Hungary Iceland India Ireland Islamic Republic of Iran Israel Italy Jamaica Japan Kenya Kiribati Latvia Liberia Lithuania Luxembourg Madagascar Malaysia Maldives Malta Marshall Islands Mauritius Mexico Monaco Morocco Mozambique Namibia Netherlands New Zealand Nigeria Norway Oman Panama Papua New Guinea Philippines Poland Portugal Qatar Republic of Korea Russian Federation Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines Samoa Seychelles Sierra Leone Singapore Slovenia South Africa Spain Sri Lanka Sweden Switzerland Syrian Arab Republic Tonga Trinidad and Tobago Tunisia Turkey Tuvalu United Arab Emirates United Kingdom United Republic of Tanzania Uruguay Vanuatu Venezuela (Bolivarian Republic of) Australia Barbados Belgium Canada Croatia Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Japan Latvia Lithuania Morocco Netherlands Norway Poland Portugal Republic of Korea Slovenia Spain Sweden United Kingdom Number of Member States Membership of the Funds 1971 Fund 1992 Fund Supplementary Fund

8 INTRODUCTION Director s Review Chairman s Statement Funds Overview Legal Framework Legal Framework The current international compensation regime is based on two Conventions: the International Convention on Civil Liability for Oil Pollution Damage, 1992 (1992 Civil Liability Convention) and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992 (1992 Fund Convention), together with the Protocol of 2003 to the 1992 Fund Convention (Supplementary Fund Protocol). The texts of the 1992 Conventions and the Supplementary Fund Protocol may be obtained from the Publications page of the Funds website: Ship s tonnage Ship not exceeding units of gross tonnage Ship between and units of gross tonnage Ship of units of gross tonnage or over CLC Limit SDR * SDR plus SDR 631 for each additional unit of tonnage SDR The 1992 Civil Liability Convention, the 1992 Fund Convention and the Supplementary Fund Protocol all apply to spills of persistent oil from tankers that cause pollution damage in the territory (including the territorial sea) or the exclusive economic zone (EEZ) or equivalent area of a State Party to the respective treaty instrument. The 1992 Civil Liability Convention The 1992 Civil Liability Convention (CLC) governs the liability of shipowners for oil pollution damage. Under this Convention, the registered shipowner has strict liability for pollution damage caused by the escape or discharge of persistent oil from his ship. This means that he is liable even in the absence of fault on his part. He is exempt from liability only if he proves that: the damage resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character, or the damage was wholly caused by an act or omission done with the intent to cause damage by a third party, or the damage was wholly caused by the negligence or other wrongful act of any Government or other authority responsible for the maintenance of lights or other navigational aids, in the exercise of that function. The shipowner is normally entitled to limit his liability to an amount determined by the size of the ship, as set out in the following table. * The unit of account in the Conventions is the Special Drawing Right (SDR) as defined by the International Monetary Fund. For ships carrying more than tonnes of oil as cargo in bulk, the shipowner is obliged to maintain insurance to cover his liability under the 1992 Civil Liability Convention, and claimants have a right of direct action against the insurer. Any claims for pollution damage under the 1992 Civil Liability Convention can be made only against the registered owner of the ship concerned. This does not, in principle, preclude victims from claiming compensation outside the Conventions from persons other than the shipowner. However, the 1992 Civil Liability Convention prohibits claims against the servants or agents of the shipowner, the members of the crew, the pilot, the charterer (including a bareboat charterer), manager or operator of the ship, or any person carrying out salvage operations or taking preventive measures, unless the pollution damage resulted from the personal act or omission of the person concerned, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result. The 1992 Fund Convention The 1992 Fund Convention, which is supplementary to the 1992 Civil Liability Convention, establishes a regime for compensating victims when compensation under the 1992 Civil Liability Convention is not available or is inadequate. The International Oil Pollution Compensation Fund, 1992 (1992 Fund) was set up under the 1992 Fund Convention. Major Events in the History of the IOPC Funds 1960s 1967 Torrey Canyon incident Civil Liability Convention adopted 1970s Fund Convention adopted Civil Liability Convention entered into force Fund Convention entered into force Fund established with 14 Member States Fund limit set at SDR 30 million Fund limit increased to SDR 45 million 1980s 1980 Tanio incident Fund limit increased to SDR 52.5 million Fund limit increased to SDR 60 million 6

9 The 1992 Fund pays compensation when: the damage exceeds the limit of the shipowner s liability under the 1992 Civil Liability Convention, or the shipowner is exempt from liability under the 1992 Civil Liability Convention, or the shipowner is financially incapable of meeting his obligations in full under the 1992 Civil Liability Convention and the insurance is insufficient to pay valid compensation claims. 800 The maximum compensation payable by the 1992 Fund is SDR 203 million for incidents occurring on or after 1 November 2003, irrespective of the size of the ship. For incidents occurring before that date, the maximum amount payable is SDR 135 million. These maximum amounts include the sums actually paid by the shipowner under the 1992 Civil Liability Convention. The 1992 Fund is financed by contributions levied on any person who has received in one calendar year more than tonnes of crude oil and/or heavy fuel oil (contributing oil) in a Member State of the 1992 Fund. SDR (millions) SUPPLEMENTARY FUND The Supplementary Fund Protocol The Supplementary Fund Protocol, which was adopted in 2003, entered into force in 2005, thereby establishing the International Oil Pollution Compensation Supplementary Fund, 2003 (Supplementary Fund). The Supplementary Fund provides additional compensation beyond that available under the 1992 Fund Convention for pollution damage in 1992 Fund Member States which are Parties to the Protocol. The total amount available for compensation for each incident is SDR 750 million, including the amounts payable under the 1992 Conventions FUND 1992 CLC Tonnage of ship (x units) Maximum limits laid down in respect of the 1992 Civil Liability and Fund Conventions and the Supplementary Fund Protocol Annual contributions to the Supplementary Fund are made on the same basis as contributions to the 1992 Fund. However, the contribution system for the Supplementary Fund differs from that of the 1992 Fund in that, for the purpose of paying contributions, at least 1 million tonnes of contributing oil are deemed to have been received each year in each Member State. STOPIA 2006 and TOPIA 2006 STOPIA 2006 and TOPIA 2006 are two voluntary agreements which were set up to indemnify the 1992 Fund and Supplementary Fund, respectively, for compensation paid above the shipowner s limit of liability under the 1992 Civil Liability Convention, up to certain amounts. The 1992 Fund and Supplementary Fund are not parties to these agreements, which nevertheless confer legally enforceable rights on the Funds to indemnification from the shipowner in States for which the 1992 Fund Convention or Supplementary Fund Protocol is in force. 1990s 1991 Haven incident Protocols adopted 1993 Braer incident 1996 HNS Convention adopted 1996 Sea Empress incident Civil Liability Convention entered into force Fund Convention entered into force 1997 Nakhodka incident 1999 Erika incident 2000s Fund Convention ceased to be in force 2002 Prestige incident 2003 Supplementary Fund Protocol adopted Fund limit increased to SDR 203 million 2005 Supplementary Fund Protocol entered into force with 8 Member States 2007 Hebei Spirit incident 2008 Membership of the 1992 Fund exceeds 100 Member States 2010s 2010 HNS Protocol adopted 7

10 INTRODUCTION Director s Review Chairman s Statement Funds Overview Legal Framework The Small Tanker Oil Pollution Indemnification Agreement 2006 (STOPIA 2006) is a voluntary agreement between owners of small (ie GT or less) tankers and their insurers, under which the maximum amount of compensation payable by owners of small tankers is increased to SDR 20 million. It applies to all small tankers entered in a P&I Club that is a member of the International Group, and reinsured through the pooling arrangements of the Group. The first incident involving a vessel entered in STOPIA 2006 was the Solar 1 spill that occurred in the Philippines in The Tanker Oil Pollution Indemnification Agreement 2006 (TOPIA 2006) is another voluntary agreement, which applies to all tankers entered in P&I Clubs that are members of the International Group and reinsured through the pooling arrangements of the Group. Under TOPIA 2006, the Supplementary Fund is indemnified for 50% of any amounts paid in compensation in respect of incidents involving tankers entered in the agreement. The Old Regime: the 1969 Civil Liability Convention and the 1971 Fund Convention The international compensation regime for oil pollution was originally set up some four decades ago by the 1969 Civil Liability Convention and the 1971 Fund Convention. The 1969 Civil Liability Convention entered into force in The main features of the Convention are the same as those of the 1992 Civil Liability Convention, but there are differences on specific points. Most importantly, under the 1969 Civil Liability Convention, the limit of the shipowner s liability is much lower than under the 1992 Civil Liability Convention (up to a maximum of SDR 14 million). As at 31 December 2010, 37 States were Parties to the 1969 Civil Liability Convention, although 21 of those States were also Parties to the 1992 Civil Liability Convention. In such cases, States are advised to denounce the 1969 Civil Liability Convention as it can lead to confusion in national law. The International Oil Pollution Compensation Fund, 1971 (1971 Fund) was set up under the 1971 Fund Convention, when the latter entered into force in The 1971 Fund Convention ceased to be in force on 24 May 2002 and consequently does not apply to incidents occurring after that date. The maximum amount of compensation payable by the 1971 Fund per incident was SDR 60 million, including the amount paid under the 1969 Civil Liability Convention. The HNS Convention The International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996 (HNS Convention) is largely modelled on the 1992 Civil Liability and Fund Conventions, and aims to ensure adequate, prompt and effective compensation for personal injury, damage to property, costs of clean up and reinstatement measures and economic losses resulting from the maritime transport of hazardous and noxious substances (HNS). Pollution damage caused by persistent oils already covered by the Civil Liability and Fund Conventions is excluded, as is damage caused by radioactive materials. The Convention was adopted at an International Conference held by the IMO in May 1996, but has not yet entered into force. One of the obstacles has been the requirement for States to report to the Secretary-General of the IMO the quantities of hazardous and noxious substances received by sea in packaged form, which has proved problematic, owing to the very wide range of substances that will be governed by the HNS Convention. An International Conference, held in April 2010, adopted a Protocol to the HNS Convention (2010 HNS Protocol), that was designed to address practical problems that had prevented many States from ratifying the original Convention. The Protocol is open for signature until 31 October 2011 and thereafter will remain open for accession. The definition of HNS set out in the HNS Convention is based on lists of individual substances identified in a number of IMO Conventions and Codes, designed to ensure maritime safety and prevention of pollution. HNS represent a wide array of chemical substances of varying properties and hazards, which include both bulk cargoes and packaged goods. Bulk cargoes can be solids, liquids, including both persistent and non-persistent oils, and liquefied gases, such as liquefied natural gas (LNG) or liquefied petroleum gas (LPG). Low hazard substances, such as coal and iron, are generally excluded from the HNS Convention. There are a large number of substances covered by the Convention, such as, the International Maritime Dangerous Goods Code (IMDG Code), which represents only one of the Codes covered by the Convention and lists hundreds of substances which can be dangerous when shipped in packaged form. Maximum compensation available per incident (SDR) 1992 Fund Convention 203 million Supplementary Fund 750 million 2010 HNS Protocol 250 million Further information on the 2010 HNS Protocol is available on the HNS website: 8

11 As with the Civil Liability and Fund Conventions, the shipowner is strictly liable to pay the first tier of compensation, while the second tier is provided by a Fund generated from a levy on cargo receivers in all Member States. The shipowner s liability varies for bulk HNS and packaged HNS. Limitation for damage caused by bulk HNS ranges from SDR 10 million for ships up to GT, rising linearly through SDR 82 million for ships of GT, to a maximum of SDR 100 million for ships over GT. Limitation for damage caused by packaged HNS ranges from SDR 11.5 million for ships up to GT, to a maximum of SDR 115 million for ships over GT. It is compulsory for all ships to have insurance to cover their liability, and claimants have a right of direct action against the insurer. 300 The HNS Fund will provide the second tier of compensation up to a total of SDR 250 million, including the amount payable by the shipowner under the first tier, irrespective of ship size, and will comprise three separate accounts for oil, Liquefied Petroleum Gas (LPG) and Liquefied Natural Gas (LNG), as well as a general account comprising of bulk solids and other HNS substances. Each separate account will meet claims attributable to the respective cargo and will be funded in proportion to total receipts of relevant cargoes in Member States. Contributions by individual receivers will be based on the thresholds shown in the following table. Establishment of account General Account 40 million tonnes * Contributions to account/ sector SDR (millions) Tonnage of ship (x units) Shipowners liability and Fund limit laid down in the HNS Convention Shipowner s liability Shipowner s liability for packaged HNS HNS Fund HNS FUND SHIPOWNER Bulk solids Other HNS Oil Account Persistent oil Non-persistent oil LNG Account 350 million tonnes 20 million tonnes tonnes tonnes tonnes tonnes no minimum quantity LPG Account 15 million tonnes tonnes * condition for entry into force of HNS Convention Given its long experience in managing the oil pollution compensation system and, as instructed by the 1992 Fund Assembly on request from the International Conference that adopted the HNS Convention, and again, after the adoption of the 2010 Protocol, the IOPC Funds Secretariat has been tasked with assisting the IMO Secretariat in setting up the HNS Fund, facilitating the entry into force of the Protocol and making preparations for the first session of the HNS Fund Assembly. The container ship, Hyundai Fortune, burning in the Gulf of Aden off the coast of Yemen, March

12 OPERATIONAL REVIEW Clean-up operations following the Prestige incident, Spain 10

13 Operational Review Secretariat 12 Administration 14 External Relations 16 Contributions 19 Incidents Involving the IOPC Funds 22 In this section In this section, the administration and organisational structure of the IOPC Funds during 2010 are described. Information is provided regarding the Secretariat (pages 12-13), which is responsible for the management of the Organisations, and other bodies involved in their proper functioning, such as the Audit Body and the Investment Advisory Body. Key information regarding the running costs of the Secretariat, as well as the contributions levied by the various Funds, is also provided (pages 14-15). The Secretariat is based in London and has 33 established posts. The Director, with the help of the Secretariat, is responsible for the overall management of the Funds. This includes the handling of incidents and the assessment and payment of admissible claims, the proper administration and protection of the Organisations assets, the collection of contributions, the organisation of meetings of the Funds governing bodies, the production of the necessary documentation for those meetings, as well as the production of the Financial Statements and Annual Report of the Organisations. The Funds also engage in a variety of outreach activities (pages 16-18). These include maintaining a website in the official languages of the 1992 Fund (English, French and Spanish), which provides up-to-date information about the Organisations and includes a document server where users can download all documents for past and forthcoming meetings. Activities designed to increase awareness of the Funds role in the international oil pollution compensation regime, such as presentations at conferences, the organisation of workshops, and meetings with interested parties are described under External Relations, which also includes lists of States and organisations that hold observer status with the Funds. A summary of the total quantities of contributing oil received by Member States is reported under Contributions, together with an outline of how the levy is calculated (pages 19-21). Finally in this section, a summary is given of the incidents currently being dealt with by the Funds as well as an overview of the claims handling process (pages 22-23). The Headquarters of the IOPC Funds Secretariat is located in London. Local claims offices are also established in connection with major incidents. English, French & Spanish The official working languages of the IOPC Funds 11

14 OPERATIONAL REVIEW Secretariat Administration External Relations Contributions Incidents Involving the IOPC Funds Secretariat The 1992 Fund, the Supplementary Fund and the 1971 Fund, share a joint Secretariat, based in London. As at 31 December 2010, the Secretariat had 33 established posts. The Director is the chief administrative officer and is responsible for the overall management of the Funds, including maintaining a sound system of internal control that supports the achievement of the Funds policies, aims and objectives and safeguards its assets. The system of internal control is based on procedures designed to ensure conformity with the Funds Financial Regulations, Internal Regulations and decisions of the respective governing bodies. The Director is assisted by a Management Team, comprising the Head of the Claims Department, the Head of the Finance and Administration Department, the Head of the External Relations and Conference Department, the Legal Counsel and the Technical Adviser/Claims Manager for the strategic running of the Secretariat. The Funds use external consultants to provide advice on legal and technical matters, as well as on other matters relating to the management of the Funds, where necessary. In connection with a number of major incidents, the Funds and the shipowner s thirdparty liability insurer have jointly established local claims offices to provide more efficient handling of claims, and to assist claimants. Since September 2010 the Director, Mr Willem Oosterveen, was, for medical reasons, unfortunately unable to act as Director. At their October 2010 sessions, the governing bodies decided to appoint Mr José Maura as Acting Director with full responsibilities and powers as set out in Article 29 of the 1992 Fund Convention and of the 1971 Fund Convention and Article 16.2 of the Supplementary Fund Protocol, until an extraordinary session of the 1992 Fund Assembly to be held in spring IOPC Funds Secretariat as at 1 May 2011 Director s Office Willem Oosterveen Director Akiko Yoshida Legal Counsel Matthew Sommerville Technical Adviser/ Claims Manager Jill Martinez Personal Assistant to the Director Astrid Richardson Administrative Assistant Claims Department José Maura Head of Department (Acting director since september 2010) Chiara Della Mea Claims Manager Mark Homan Claims Manager Ana Cuesta Claims Administrator Chrystelle Clément Claims Administrator Zuhal Georgiades Claims Assistant Staff who left in 2010 Nobuhiro Tsuyuki legal counsel until JULY 2010 Katharina Stanzel Technical Adviser/ Claims Manager until october 2010 Roy Livermore senior information officer until october

15 Finance & Administration Department Ranjit Pillai Head of Department Robert Owen IT Manager Latha Srinivasan Finance Manager Miriam Blugh Human Resources Manager Modesto Zotti Office Manager Stuart Colman IT Administrator Elisabeth Galobardes Finance Assistant Paloma Scolari de Oliveira Finance Assistant Kathy McBride Finance Assistant Paul Davis Office Assistant Alexandra Hardman Receptionist/ Travel Assistant External Relations & Conference Department Thomas Liebert HEAD OF DEPARTMENT Katrin Park external relations Officer Constanze Rimensberger Information Officer Victoria Turner External Relations & Conference Co-ordinator Christine Galvin Conference Administrator Ellen Leishman AdministratIVE ASSISTANT (Temporary contract) Natalia Ormrod Translation Administrator (Spanish) Françoise Ploux Translation Administrator (French) Andrea Lenis Translation Administrator (Spanish) (Temporary contract) Carl Brunet Translation Administrator (French) (Temporary appointment) Left: Staff at the Hebei Spirit Centre, the 1992 Fund s Claims Office in Seoul, Republic of Korea Right: Members of the Secretariat deploying a boom at a training event run by Oil Spill Reponse Limited, Southampton 13

16 OPERATIONAL REVIEW Secretariat Administration External Relations Contributions Incidents Involving the IOPC Funds Administration Audit Body The joint Audit Body, established by the IOPC Funds governing bodies, meets normally three times a year to review the adequacy and effectiveness of the Organisations regarding key issues of management and financial systems, financial reporting, internal controls, operational procedures and risk management, and to review the Organisations Financial Statements and reports. It also considers all relevant reports by the External Auditor, including reports on the Organisations Financial Statements. The Audit Body reports to the governing bodies at their regular autumn session. Investment Advisory Body The joint Investment Advisory Body, established by the IOPC Funds governing bodies, advises the Director on procedures for investment and cash management controls. This Body also reviews the IOPC Funds investments and foreign exchange requirements, to ensure that reasonable investment returns are achieved without compromising the safety of the IOPC Funds assets. The Body normally meets four times a year with the Secretariat. It also meets with the Audit Body and External Auditor once a year to share information, and reports to the governing bodies at their regular autumn session. Risk Management The Secretariat has a full risk management system in place, which is regularly reviewed and updated. In close cooperation with the Audit Body and the External Auditor, five areas of risk have been identified, namely, reputation risk, claims handling process, financial risk, human resource management and business continuity. During 2010, the Director continued to review these risks. On the basis of this, a Key Risk Register is maintained and reviewed annually by the Secretariat and the Audit Body. Joint Secretariat Expenses The joint administrative expenses (excluding the External Auditor s fees which are paid directly by each of the Funds) for the Secretariat, administered by the 1992 Fund are set out below. The 2008 and 2009 Financial Statements were prepared in compliance with the United Nations Accounting Standards (UNSAS) and show expenses accounted for on a modified cash basis, ie cash expenses and obligations incurred. The 2010 Financial Statements will be prepared in compliance with the International Public Sector Accounting Standards (IPSAS) and as such the expenses will be shown on a full accrual basis, ie cost of goods and services received in the period (see Financial Review page 34). Commentary on the joint Secretariat expenditure is provided in Annex I of the 1992 Fund s Financial Statements for the financial periods 2009 and 2008, which are available on the Publications page of the Funds website: Fund Financial Statements for 2009 (audited, prepared under UNSAS) Contributions of some 10 million were levied in 2008 for payment in 2009 in respect of the General Fund. Interest on investments 2010 unaudited Under IPSAS 2009 audited Under UNSAS 2008 audited Under UNSAS Expenditure Budget Expenditure as % of budget 92% 92% 78% External Auditor s fees 1992 Fund Fund Supplementary Fund Management fees received by 1992 Fund Joint Audit Body Mr Thomas Kaevergaard (Sweden) Mr Nigel Macdonald (United Kingdom) Mr Emile Di Sanza (Canada) Mr Wayne Stuart (Australia) Professor Seiichi Ochiai (Japan) Mr Mendim Me Nko o (Cameroon) Mr John Wren Former Head of the United Kingdom delegation to the sessions of the IOPC Funds governing bodies from and member of the IOPC Funds Joint Audit Body, who sadly passed away on 6 October

17 amounted to some 5.3 million. Claims and claims-related expenditure during the period was some 8.3 million. The payments related mainly to the Erika, Prestige, and Hebei Spirit incidents. Financial Information for 2010 (unaudited, prepared under IPSAS) No new levies of contributions were levied for payment in 2010 in relation to the General Fund or the three established Major Claims Funds during the period. Prior years contributions were levied for payment during the year due to late receipt or adjustments to oil reports received. Interest on investments amounted to some 1.4 million. Claims and claims-related expenditure during the period was some 9 million. The payments related mainly to the Erika, Prestige and Hebei Spirit incidents. Supplementary Fund Financial Statements for 2009 (audited, prepared under UNSAS) No contributions were due during Interest on investments amounted to some The total obligations incurred by the Supplementary Fund in 2009 amounted to , comprising mainly the management fee payable to the 1992 Fund of Financial Information for 2010 (unaudited, prepared under IPSAS) No contributions were levied for payment in Interest on investments amounted to some Total obligations incurred by the Supplementary Fund amounted to of which was in respect of the management fee payable to the 1992 Fund Fund Financial Statements for 2009 (audited, prepared under UNSAS) Since the 1971 Fund Convention ceased to be in force it is no longer possible to levy contributions to the General Fund. No contributions were levied for payment in 2009 in respect of the two remaining Major Claims Funds. Interest on investments amounted to some Total obligations incurred by the 1971 Fund in respect of administrative expenses, amounted to , comprising mainly the management fee payable to the 1992 Fund of Claims and claims-related expenditure amounted to some Financial Information for 2010 (unaudited, prepared under IPSAS) No contributions were levied for payment in 2010 in relation to the two remaining Major Claims Funds. Interest on investments amounted to some Total obligations incurred by the 1971 Fund in respect of administrative expenses amounted to , of which was in respect of the management fee payable to the 1992 Fund. Claims and claims-related expenditure amounted to some Balances in the General Funds and Major Claims Funds at the Year End 2010 unaudited Under IPSAS 2009 audited Under UNSAS 1992 Fund General Fund Erika Major Claims Fund Prestige Major Claims Fund Hebei Spirit Major Claims Fund Supplementary Fund General Fund Fund General Fund Nissos Amorgos Major Claims Fund Vistabella Major Claims Fund Total IOPC Funds Investment Advisory Body Mr Brian Turner Mr David Jude Mr Simon Whitney-Long 15

18 OPERATIONAL REVIEW Secretariat Administration External Relations Contributions Incidents Involving the IOPC Funds External Relations The Secretariat of the IOPC Funds undertakes a wide variety of activities aimed at strengthening the IOPC Funds relationship with Member States and other international, intergovernmental or non-governmental organisations. From time to time, members of staff organise or participate in events such as national and regional workshops or give presentations, to enhance understanding of the international regime for oil pollution compensation and to assist potential claimants. The main activities in 2010 are outlined below. Conferences, Meetings and Workshops Tehran, Islamic Republic of Iran, January The Director, Mr Oosterveen, the Head of the Claims Department, Mr Maura, and a Claims Administrator, Ms Cuesta, visited the Islamic Republic of Iran to conduct a claims workshop on the international compensation regime for oil pollution. The workshop was attended by some 25 participants from the maritime authorities in Iran, fishery associations and various students. It consisted of a general overview of the legal framework of the international compensation regime, followed by several presentations covering the different types of claims that the IOPC Funds have to deal with. Tokyo, Japan, January and March The Director, Mr Oosterveen, and the Legal Counsel, Mr Tsuyuki, visited Japan. The last time a Director of the IOPC Funds had visited Japan for any length of time was in 2006, the main purpose of this visit was therefore to renew important contacts with the Japanese Government and relevant industries and organisations. With this in mind Mr Oosterveen met with representatives of the Japanese Shipowners Association, the Petroleum Association of Japan (PAJ), the Japan P&I Club and various Government authorities. Mr Tsuyuki returned to Tokyo in March to attend the PAJ Oil Spill Symposium 2010 where he made a presentation entitled International Regime for Compensation for Oil Pollution Damage and the Draft Protocol to the HNS Convention to around 150 representatives from the oil industry, governments and others. Melbourne, Australia, April The Director, Mr Oosterveen, and the Technical Adviser, Ms Stanzel, travelled to Australia and assisted IMO during an awareness seminar on Regional Cooperation for Preparedness for and Response to Maritime Pollution Incidents and the Bunker Convention for Pacific island countries, organised through the South Pacific Regional Environment Programme (SPREP). They went on to attend Spillcon 2010, Asia-Pacific s International Oil Spill Prevention & Preparedness Conference, where the Director gave a presentation. Opatija, Croatia, May Ms Della Mea, Claims Manager, attended the First Adriatic Oil Spill Conference held in Opatija, Croatia. The Conference covered topics such as: preparedness for response and contingency planning; legal aspects and relevant international regulations; and practical, technical and scientific aspects of oil spill response. It also highlighted the importance of the protection of the Adriatic Sea against oil pollution incidents. Ms Della Mea represented the IOPC Funds and gave a presentation on the international regime on liability and compensation for oil pollution damage. The Conference was attended by approximately 130 delegates including six neighbouring countries and relevant international organisations and institutions such as IMO, REMPEC, EMSA, Cedre and ITOPF. Algiers, Algeria, May The Head of the Claims Department, Mr Maura, attended an international seminar on marine oil pollution in Algiers, Algeria. The two-day meeting was attended by representatives from 14 member countries of the Association of African oil producing countries (APPA) including Algeria, and many experts, lawyers, academics and representatives of UN agencies and oil companies. The seminar was organised around three themes: maritime law on oil pollution, the experience of APPA member countries in the field of prevention, intervention, and protection against marine pollution by oil. Mr Maura gave a presentation on the general framework of the international compensation regime for oil pollution and a further presentation on the Volgoneft 139 and the Hebei Spirit incidents. Doha, Qatar, May The Legal Counsel, Mr Tsuyuki, attended and gave a presentation at the OPRC-HNS/ HNS Conventions and Protocols Regional Legal and Technical Meeting of MEMAC (Marine Emergency Mutual Aid Centre), which was held in Doha, State of Qatar. Ankara, Turkey, June The Head of the Claims Department, Mr Maura, attended a workshop on the improvement of administrative capacity on using compensation rights in oil incidents, held in Ankara, Turkey. The workshop was organised in cooperation with the Turkish Under Secretariat for Maritime Affairs and included participation Students from the University of Barcelona attending a lecture given by Mr José Maura in April

19 from the UK Maritime and Coastguard Agency, and the Spanish Maritime Safety Agency (SASEMAR). The aim of the workshop was to establish the necessary legal and organisational framework for the use of compensation. Mr Maura gave a presentation on the international compensation regime for oil pollution, based on the 1992 Civil Liability and Fund Conventions, and conducted a claims management exercise. Madrid, Spain, July The Head of the Claims Department, Mr Maura, and a Claims Administrator, Ms Cuesta, attended a conference at REPSOL in Madrid, Spain. Mr Maura gave a presentation on the general framework of the international compensation regime for oil pollution followed by a presentation by Ms Cuesta, detailing the IOPC Funds claims and assessment processes. The meeting provided an opportunity to discuss issues relating to the compensation regime and claims handling, and around 50 REPSOL participants attended. Mexico City, Mexico, November The Acting Director, Mr Maura, participated in the National Congress of the Merchant Marine Expo Mar at the World Trade Center in Mexico City, Mexico. During the Conference Mr Maura gave a lecture on oil spill management. He also attended a meeting with PEMEX (Petróleos Mexicanos). He gave a presentation to PEMEX and PMI (the commercial arm of PEMEX), where the importance of Mexico joining the Supplementary Fund was discussed. Pusan, Republic of Korea, November The Acting Director, Mr Maura, attended the opening of the new Oil Spill Training Facility in Pusan, Republic of Korea, which is managed and operated by the Korea Marine Environment Management Corporation. Mr Maura was invited to say a few words on behalf of the International Oil Pollution Compensation Funds during the opening address for this new facility. He congratulated the Korean Government on its achievement, which he said was a significant step forward within the framework of the International Convention on Oil Pollution Preparedness, Response and Co-operation, 1990 (the OPRC Convention). The opening was attended by representatives from the International Maritime Organization, the International Tanker Owners Pollution Federation (ITOPF), many Korean experts, international lawyers and academics. Visits to other locations During the course of 2010 members of the Secretariat also participated in: a visit to Marrakech, Morocco to identify a possible venue for the spring 2011 sessions of the governing bodies; an EMSA meeting in Lisbon, Portugal; meetings with members of the Marine Department in Bangkok, Thailand; an AMOP Technical Seminar on Environmental Contamination and Response in Halifax, Canada; meetings in connection with the Deep Water Horizon incident in the United States; an UNCTAD meeting on Transport and Trade facilitation in Geneva, Switzerland; and a number of maritime pollution related conferences and seminars in the United Kingdom. Throughout the year In addition to these activities, members of the Secretariat gave presentations at a number of London- based events related to compensation for oil spill damage and to delegations from a variety of organisations and universities visiting the Funds offices. The IOPC Funds were represented at a number of relevant IMO conferences and the Funds Secretariat also held several productive meetings with the IMO Secretariat to make preparations towards the entry into force of the 2010 HNS Protocol. Regional Lunch Meetings The Secretariat of the IOPC Funds regularly organises informal lunch meetings for London-based representatives of Member and non-member States at the IOPC Funds London office. These meetings are organised according to geographical regions and provide an opportunity for the Secretariat to improve contacts with Member States and to deal with queries relating to membership, oil reporting and contributions. During 2010, lunch meetings were held for States in the regions of Europe and of the Caribbean. In addition, a lunch meeting was held for representatives from a number of Intergovernmental and Non-Governmental Organisations which have responsibilities or activities in fields related to those of the 1992 Fund or which are of concern or interest to the 1992 Fund. Further events are planned for Regional lunch meeting held in July 2010 at the IOPC Funds offices 17

20 OPERATIONAL REVIEW Secretariat Administration External Relations Contributions Incidents Involving the IOPC Funds Website Information on the Funds, what they do and how they operate, can be found on the IOPC Funds website ( together with access to the document server, news items, vacancy notices, etc. The development of a new website is underway which will incorporate a number of additional facilities. As with the current website, this will be maintained in all three official languages of the Funds, ie English, French and Spanish. Relations with Non-Member States and International Organisations Former Member States of the 1971 Fund automatically have observer status with the 1992 Fund. In addition, the 1992 Fund Assembly has granted observer status to a number of States that have never been party to either Fund Convention. At 31 December 2010, the following non-member States had observer status with the 1992 Fund. Observer States of the 1992 Fund and Supplementary Fund Benin* Bolivia (Plurinational State of) Brazil Chile Côte d Ivoire Democratic People s Republic of Korea Egypt Gambia Guatemala Guyana Indonesia Kuwait Lebanon Mauritania Pakistan Peru Saudi Arabia Syrian Arab Republic Ukraine United States * The 1992 Fund Convention will enter into force for Benin on 5 February A number of interested intergovernmental and non-governmental organisations also have observer status with one or more of the Funds, enabling them to participate in discussions at meetings of the governing bodies. These are listed in the following table. Intergovernmental organisations granted observer status Baltic Marine Environment Protection Commission (Helsinki Commission) Central Commission for Navigation on the Rhine (CCNR) European Commission International Institute for the Unification of Private Law (UNIDROIT) International Maritime Organization (IMO) Maritime Organisation of West and Central Africa (MOWCA) Regional Marine Pollution Emergency Response Centre for the Mediterranean Sea (REMPEC) United Nations (UN) United Nations Environment Programme (UNEP) Non-governmental organisations granted observer status BIMCO Comité Maritime International (CMI) Conference of Peripheral Maritime Regions (CPMR) European Chemical Industry Council (CEFIC) International Association of Classification Societies Ltd (IACS) International Association of Independent Tanker Owners (INTERTANKO) International Chamber of Shipping (ICS) International Group of Liquefied Natural Gas Importers (GIIGNL) International Group of P&I Clubs International Salvage Union (ISU) International Tanker Owners Pollution Federation Ltd (ITOPF) International Union of Marine Insurance (IUMI) Oil Companies International Marine Forum (OCIMF) World LP Gas Association (WLPGA) The observer delegation of Comité Maritime International (CMI) participating in the October 2010 meetings 18

21 Contributions The IOPC Funds are financed by contributions levied on any entity that has received in the relevant calendar year more than tonnes of contributing oil (ie crude and/or heavy fuel oil) in ports or terminal installations in a Member State, after carriage by sea. Contributions are paid by the individual contributors directly to the Funds in respect of the General Funds and Major Claims Funds (see section Financial Review ). The levy of contributions depends on reports of the amounts of oil received by individual contributors, which the Governments of Member States are obliged to submit annually to the joint Secretariat. These amounts are used as the basis of the levy, calculated to provide sufficient monies to administer the Funds and to pay claims approved by the governing bodies. A system of deferred invoicing exists whereby the total amount to be levied in contributions for a given calendar year is fixed, but only a specific lower total amount is invoiced for payment by 1 March, and the remaining amount or a part thereof, is invoiced later in the year if necessary. Annual Process January October November March Offical request sent to all Member States for the submission of oil reports for the preceding calendar year to be received by 30 April. The governing bodies assess the required contributions in respect of both the relevant General Funds and Major Claims Funds, and decide whether and how much to levy, as appropriate. Invoices are issued to contributors levying contributions in accordance with the decisions of the governing bodies. Payment of contributions are due, except in the case of deferred levies Fund At the October 2010 meetings of the governing bodies, the 1992 Fund Administrative Council decided to levy a total of 3.8 million in respect of the General Fund, based on oil received in the calendar year The total quantity of oil received consisted of the amount reported as well as the amount estimated to have been received by contributors whose reports were pending at the time of invoicing. Since the total amount, both reported and estimated, added up to tonnes of oil received, contributions of per tonne were levied. The ten largest contributing Member States to the 1992 Fund are shown at the bottom of page 20. The 1992 Fund Administrative Council decided to raise 2010 contributions to the Prestige and Volgoneft 139 Major Claims Funds of 5 million and 40 million, respectively, but to defer these levies. The latter is subject to a decision by the 1992 Fund Executive Committee authorising the Director to make payments of compensation with respect to this incident. The Administrative Council also decided to levy 70 million in respect of the Hebei Spirit Major Claims Fund, with 50 million payable by 1 March 2011 and 20 million to be deferred. Contributing oil received in the calendar year 2009 in the territories of States, which were Members of the 1992 Fund on 31 December 2010 is listed overleaf (as reported by 31 December 2010). No contributing oil was received during 2009 in the following 25 Member States: Albania, Antigua and Barbuda, Brunei Darussalam, Cook Islands, Dominica, Ecuador, Fiji, Gabon, Georgia, Iceland, Kenya, Latvia, Luxembourg, Madagascar, Marshall Islands, Monaco, Namibia, Nigeria, Qatar, Samoa, Sierra Leone, Slovenia, Switzerland, United Arab Emirates, Vanuatu As of 31 December 2010, oil reports had not been received from the following 31 Member States: Angola, Argentina, Bahrain, Belize, Cambodia, Cape Verde, Colombia, Comoros, Congo, Djibouti, Dominican Republic, Grenada, Guinea, Hungary, Islamic Republic of Iran, Kiribati, Maldives, Mozambique, Oman, Panama, Papua New Guinea, Russian Federation, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Seychelles, Syrian Arab Republic, Tonga, United Republic of Tanzania, Tuvalu, Bolivarian Republic of Venezuela 99.7% Percentage of contributions levied to the 1992 Fund over the years ( million) which had been received (as at 31 December 2010) 100% Percentage of the only levy of contributions ( 1.4 million) to the Supplementary Fund which had been received (as at 31 December 2010) 99.92% Percentage of contributions levied to the 1971 Fund over the years ( 386 million) which had been received (as at 31 December 2010) 19

22 OPERATIONAL REVIEW Secretariat Administration External Relations Contributions Incidents Involving the IOPC Funds Member State Contributing oil reported in 2009 (tonnes) % of Total Japan India* Republic of Korea Italy Netherlands Singapore France Canada United Kingdom Spain Malaysia Germany Australia Sweden Greece South Africa Turkey Bahamas Norway Finland Israel Portugal Lithuania Philippines Mexico China ** Bulgaria Member State Contributing oil reported in 2009 (tonnes) % of Total Denmark Belgium Trinidad and Tobago New Zealand Morocco Malta Croatia Tunisia Ireland Sri Lanka Uruguay Jamaica Poland Estonia Cameroon Cyprus Algeria Ghana Mauritius Barbados Liberia Total % * Oil Report for 2009 was received in January 2011 ** Only applicable to Hong Kong Special Administrative Region Contributions to the 1992 Fund by Member State Figures shown are General Fund contributions for 2010 (based on 2009 oil receipts), the most recent year for which contributions were levied. Japan 16% India 11% Republic of Korea 8.5% Italy 8.5% Netherlands 6% Singapore 6% France 6% Canada 5% United Kingdom 5% Spain 4% Others 24% 20

23 Supplementary Fund At the October 2010 meetings of the governing bodies, the Supplementary Fund Assembly decided not to levy 2010 contributions, since there had been no incidents involving the Supplementary Fund. The Supplementary Fund Protocol contains a provision for socalled capping of contributions, ie that no single State should pay more than 20% of the total amount of contributions for each levy until the total quantity of contributing oil received in all Member States has exceeded 1 million tonnes. The amount deducted for contributors in capped States are borne by all other contributors to the Fund by way of a capping levy. At the time of the only levy to the Supplementary Fund, the capping provision was applicable. The contributions from the Member States are shown below. In 2009, the total quantity of contributing oil received in all Member States to the Supplementary Fund exceeded million tonnes and the capping levy provision ceased to apply. Contributing oil received in the calendar year 2009 in the territories of States which were Members of the Supplementary Fund on 31 December 2010 (as reported by 31 December 2010). Member State Contributing oil reported in 2009 (tonnes) % of Total Japan Republic of Korea Italy Netherlands France Canada United Kingdom Spain Germany Australia Sweden Member State Contributing oil reported in 2009 (tonnes) % of Total Greece Norway Finland Portugal Lithuania Denmark Belgium Morocco Croatia Ireland Poland Estonia Barbados* Latvia* Slovenia* Total % * Deemed to have received tonnes for the purposes of contributions to the Supplementary Fund. As of 31 December 2010, oil reports had not been received from Hungary Fund The 1971 Fund Convention ceased to be in force on 24 May 2002 and so it has not been possible to levy further contributions to the General Fund since At the October 2010 meetings of the governing bodies, the 1971 Fund Administrative Council decided not to levy contributions for payment in respect of the two remaining Major Claims Funds, ie Vistabella and Nissos Amorgos. Contributions to the Supplementary Fund by Member State Figures shown are General Fund contributions for 2006 (based on 2005 oil receipts), the most recent year for which contributions were levied. Japan 20% Italy 19% Netherlands 15% France 15% Spain 9% Germany 6% United Kingdom 3% Sweden 3% Norway 3% Portugal 2% Others 5% 21

24 OPERATIONAL REVIEW Secretariat Administration External Relations Contributions Incidents Involving the IOPC Funds Incidents Involving the IOPC Funds Since their establishment in October 1978, the IOPC Funds have been involved in 140 incidents (including two joint incidents). The IOPC Funds were not involved in any new oil spills during The Secretariat continued to deal with a record number of claims relating to the Hebei Spirit incident, as well as eight other incidents under the 1992 Fund, and a further seven incidents under the 1971 Fund. These are summarised opposite. Claims Management The principal role of the IOPC Funds is to pay compensation to anyone having suffered oil pollution damage in Member States who cannot obtain full compensation for the damage under the relevant Civil Liability Convention. Claimants may be private individuals, partnerships, companies, private organisations or public bodies, including States or local authorities. Claims settlement In the great majority of cases, claims are settled out of court. The Director has the authority to settle claims and pay compensation up to predetermined levels. However, for incidents involving larger claims or where a specific claim gives rise to a question of principle which has not previously been decided by the governing bodies, the Director needs approval from the relevant governing body of the Fund in question. The Director is further permitted, in certain circumstances, and within certain limits, to make provisional payment of compensation before a claim is settled if this is necessary to mitigate undue financial hardship to victims of pollution incidents. Under the Fund Conventions, the Funds are obliged to ensure that all claimants are given equal treatment so if the total amount of the established claims exceeds the total amount of compensation available under the Civil Liability and Fund Conventions, the compensation paid to each claimant will be reduced proportionately. When there is a risk that this situation will arise, the Funds may have to restrict compensation payments to ensure that all claimants are given equal treatment. The payment level may increase at a later stage if the uncertainty about the total amount of the established claims is reduced. One important effect of the establishment of the Supplementary Fund is that, in practically all cases, it should be possible from the outset to pay compensation for pollution damage in Supplementary Fund Member States at 100% of the amount of damage agreed between the Fund and the claimant. Admissibility of claims for compensation To be entitled to compensation, the damage must result from oil pollution and have caused a quantifiable economic loss. The claimant must be able to show the amount of his loss or damage by producing accounting records or other appropriate evidence. An oil pollution incident can generally give rise to claims for five types of damage: Property damage Costs of clean-up operations at sea and on shore Economic losses by fishermen or those engaged in mariculture Economic losses in the tourism sector Costs for reinstatement of the environment Claims against the 1992 Fund are assessed according to criteria established by representatives of the Governments of Member States. These criteria, which also apply to claims against the Supplementary Fund, are set out in the 1992 Fund s Claims Manual, which is a practical guide on how to present claims for compensation. The Claims Manual is available on the Publications page of the Funds website: The Funds, normally in co-operation with the shipowner s insurer, usually appoint experts to monitor clean-up operations, to investigate the technical merits of claims and to make independent assessments of the losses. Claimants ultimately lose their right to compensation under the 1992 Fund Convention unless they bring court action against the 1992 Fund within three years of the date on which the damage occurred, or make formal notification to the 1992 Fund of a court action against the shipowner or his insurer within the three-year period. Similarly, claimants lose their right to compensation from the shipowner and his insurer under the 1992 Civil Liability Convention unless they bring court action against them within three years from the date when the damage occurred. Although damage may occur some time after an incident takes place, court action must in both cases in any event be brought within six years of the date of the incident. Oiled mangroves following pollution from the Solar 1 incident (Philippines) 22

25 1992 Fund During 2010, the 1992 Fund dealt with claims outstanding and/or recovery actions in respect of nine incidents involving the 1992 Fund. Ship Place of Incident Year Outstanding Actions Erika France 1999 Claims pending. Al Jaziah 1 United Arab Emirates 2000 Incident closed during Prestige Spain 2002 Claims pending. N 7 Kwang Min Republic of Korea 2005 Incident closed during Solar 1 Philippines 2006 Claims pending. Volgoneft 139 Russian Federation 2007 Claims pending. Hebei Spirit Republic of Korea 2007 Claims and recourse action pending. Incident in Argentina Argentina 2007 Claims pending. King Darwin Canada 2008 Claims pending. Supplementary Fund During 2010, there were no incidents involving the Supplementary Fund Fund During 2010, the 1971 Fund dealt with claims outstanding and/or recovery actions in respect of seven incidents involving the 1971 Fund. Ship Place of Incident Year Outstanding Actions Vistabella Caribbean 1991 Recourse action pending. Aegean Sea Spain 1992 Claims pending. Iliad Greece 1993 Claims pending. Nissos Amorgos Plate Princess Venezuela (Bolivarian Republic of) Venezuela (Bolivarian Republic of) 1997 Claims pending Claims pending. Evoikos Singapore 1997 Incident closed during Al Jaziah 1 United Arab Emirates 2000 Incident closed during Detailed information on the incidents listed above can be found in a separate publication (Incidents Involving the IOPC Funds 2010) which is available on the Publications page of the IOPC Funds website: It sets out the developments in the various cases during the course of the year and the position taken by the governing bodies in respect of claims Fund incident, November 1990, skimming barge operating alongside the partially sunken Portfield 23

26 GOVERNING BODIES The Chairmen of the governing bodies and the Acting Director leading the discussion at the October 2010 meetings 24

27 Governing Bodies 1992 Fund 26 Supplementary Fund Fund 32 In this section In this section, information is provided on the composition and main functions of the governing bodies of the IOPC Funds in The 48th session of the 1992 Fund Executive Committee and the first meeting of the 1992 Fund 6th intersessional Working Group, set up in October 2009 to explore and develop possible measures to enhance the functioning in practice of the international liability and compensation regime, were held in June. The 7th session of the 1992 Fund Administrative Council, acting on behalf of the 1992 Fund Assembly, the 49th and 50th sessions of the 1992 Fund Executive Committee, the 6th session of the Supplementary Fund Assembly, and the 25th session of the 1971 Fund Administrative Council were held in October. The main issues discussed and decisions taken by the governing bodies at all these sessions are summarised on pages In October 2009, a new structure for the running of meetings was adopted whereby meetings of the respective Funds were held simultaneously and remained in session until they had dealt with all their agenda items. Common issues could thus be discussed by all relevant Funds without adjourning and re-opening sessions. A unified agenda and Record of Decisions were also introduced, thereby reducing the number of separate documents and saving paper. The new structure worked well and has continued to be applied to meetings of the Funds governing bodies in Complete Records of Decisions for all meetings may be accessed via the IOPC Funds document server ( 50 The number of sessions held by the 1992 Fund Executive Committee since its establishment in

28 GOVERNING BODIES 1992 Fund Supplementary Fund 1971 Fund 1992 Fund Governance The 1992 Fund has an Assembly composed of all Contracting States to the 1992 Fund Convention and an Executive Committee composed of 15 Member States elected by the Assembly. The Assembly is the supreme organ of the Organisation and, inter alia, decides on the annual budget and contributions to the Organisation, approves its Financial Statements, appoints the External Auditor, adopts the Internal and Financial Regulations of the 1992 Fund, determines which entities have observer status with the Organisation, and generally performs such tasks as are necessary for its proper functioning. The Assembly holds one regular session each year, normally in October. Extraordinary sessions may be held as and when required. Attendance of a simple majority of Member States constitutes a quorum for the Assembly. In cases where a quorum is not achieved, an Administrative Council is convened to act on behalf of the Assembly. The quorum requirement for the Administrative Council is 25 Member States. Due to the growth of the membership of the 1992 Fund and the lack of attendance of many Member States, the Administrative Council has had to act on behalf of the Assembly in a number of instances in recent years, including at the October 2010 sessions. For this reason, all decisions reported below for this session are referred to as decisions of the 1992 Fund Administrative Council. The Assembly has the right to establish any temporary or permanent subsidiary body it may consider to be necessary, to define its terms of reference and to give it the authority needed to perform the functions entrusted to it. One such subsidiary body is the Executive Committee. Its main function is to take policy decisions concerning the admissibility of claims for compensation for oil pollution damage. It holds its meetings as and when required, but in practice two to three times a year, during the week of the regular annual session of the Assembly in October, in the spring and, if necessary, in early summer. Other such subsidiary bodies are the various intersessional Working Groups which have been set up over the years to consider specific areas of interest to the 1992 Fund. The 6th intersessional Working Group, which was set up by the Assembly in October 2009 to explore and develop possible measures to enhance the functioning in practice of the international liability and compensation regime, held its first meeting in June Meetings The main issues discussed and decisions taken by the 1992 Fund governing bodies during 2010 are summarised below Fund Executive Committee (48th Session, June 2010) The Executive Committee noted the developments concerning the Erika, Prestige, Solar 1, Incident in Argentina (Presidente Illia) and King Darwin incidents. With respect to the Vologneft 139 incident, the 1992 Fund Executive Committee considered a proposal by the Director that he be authorised to make payments to those claimants who: (a) had claimed in accordance with the 1992 Civil Liability and Fund Conventions and the Fund s criteria; (b) had duly cooperated with the 1992 Fund, which had led to settlements having been reached between them and the Fund; and (c) were not a (central) government body or agency. The Committee noted that the Director considered that a decision to authorise him to make any other payments should only be taken once a satisfactory solution had been reached to two issues of principle, namely those relating to the insurance gap and the Metodika claim. The Executive Committee decided, however, not to endorse the Director s proposal and that the 1992 Fund should not, for the time being, make any payments in respect of this incident until the uncertainties in this case had been resolved. Mr Daniel Kjellgren Chairman of the 1992 Fund Executive Committee from October 2008 to October 2010 and member of the Swedish delegation since Mr Kjellgren is Director, Office of the Chancellor of Justice, Sweden. Vice-Chairman: Mr Francisco Noel R Fernández III (Philippines) October 2009 October

29 In respect of the Hebei Spirit incident, the Executive Committee noted that the Secretariat and the Republic of Korea had reached a mutual understanding on the reasonable dates for lifting the fisheries restrictions within the 1992 Fund s policy on admissibility, as laid down in the Claims Manual, and on the basis of the instructions given by the Committee in June The Executive Committee decided to instruct the Director to develop, in conjunction with the experts engaged by the P&I Club and the Fund and taking into account any input from Member States, guidelines addressing principles of reasonable fishery restrictions, possibly in the form of amendments to the Claims Manual. The 1992 Fund Executive Committee decided to maintain the level of the 1992 Fund s payments at 35% of the amount of the loss or damage as assessed by the insurer s and the Fund s experts, to be reviewed at the Committee s next session. The Committee also decided to endorse the Korean delegation s proposal to explore, together with the Director, the possibilities of increasing the level of payments to 100% and to submit a proposal to the Committee at its October 2010 session. Document IOPC/JUN10/6/ Fund 6th intersessional Working Group (First meeting, June 2010) In the light of the general nature of the discussions at its first meeting, the Working Group agreed that its future work should focus in particular on the following issues: lack of evidence, time to assess claims, costs of assessing claims, the role of Member States as well as the issue of the problems associated with interim payments as raised by the International Group of P&I Clubs. The Working Group agreed to hold its next meeting during the spring 2011 sessions of the governing bodies. Document IOPC/OCT10/4/ Fund Executive Committee (49th Session, October 2010) With respect to the Al Jaziah 1 incident, the Executive Committee noted that, in accordance with the authorisation given to him by the Committee in October 2009, the Director had decided to discontinue the execution of the judgement against the registered owner of the vessel when it was clear that the costs would exceed the recoverable amount and had written off the debt. The Committee further noted that the incident was now closed. The Executive Committee noted with satisfaction that the N o 7 Kwang Min incident could now be closed as the motion for a re-trial of their legal action from two seaweed culturists to the Busan High Court had been dismissed. The Executive Committee welcomed the latest developments with respect to the Volgoneft 139 incident, in particular the rejection by the Arbitration Court of Saint Petersburg and Leningrad Region of the Metodika claim and of the shipowner s insurer s defence of force majeure. The Committee noted, however, that it had not authorised the Director to make any payments in respect of this incident yet. The Executive Committee decided to maintain the level of payments in respect of the Hebei Spirit incident at 35% of the amount of the loss or damage as assessed by the Club s experts and the 1992 Fund s experts. The Committee also decided to endorse the proposal by the Korean delegation to continue exploring, together with the Director, the possibility of increasing the level of payments to 100% and to submit a proposal to the Executive Committee at its next session. Document IOPC/OCT10/11/1 Mr Volker Schöfisch Chairman of the 1992 Fund 6th intersessional Working Group and member of the German delegation to the IOPC Funds meetings since Mr Schöfisch is Head of Division, Federal Ministry of Justice, Germany. 27

30 GOVERNING BODIES 1992 Fund Supplementary Fund 1971 Fund 1992 Fund Executive Committee (50th Session, October 2010) The 1992 Fund Executive Committee elected Ms Welmoed van der Velde (Netherlands) as Chairman and Miss Judith Francis (Bahamas) as Vice-Chairman to hold office until the end of the next regular session of the 1992 Fund Assembly. The Committee decided to hold its 51st session during the week of 28 March 2011 and its autumn session during the week of 24 October Document IOPC/OCT10/11/1/1 Executive Committee Composition At each regular session, the 1992 Fund Assembly elects 15 States as members of the Executive Committee, to hold office until the end of the next regular session of the Assembly. When electing the Committee members, the Assembly must first elect seven from among the eleven Member States in the territory of which the largest quantities of oil were received during the preceding calendar year. The remaining eight members are elected from the other Member States, taking into account an equitable geographical distribution and the extent to which a particular State has fulfilled its obligation to submit reports on receipts of contributing oil. No State may serve on the Executive Committee for more than two consecutive terms Fund Executive Committee Members (from October 2009 to October 2010) Cameroon Germany Singapore Canada Japan Spain China Liberia Sweden Cyprus Netherlands Trinidad and Tobago France Philippines Uruguay 1992 Fund Executive Committee Members (from October 2010 to October 2011) Bahamas Japan Nigeria Cameroon Malaysia Norway Germany Mexico Republic of Korea Greece Morocco Singapore Italy Netherlands Turkey Ms Welmoed van der Velde Chairman of the 1992 Fund Executive Committee since October 2010 and member of the Netherlands delegation to the meetings of the IOPC Funds since Ms Van der Velde is Legal Advisor for the Legislation Department of the Ministry of Security and Justice, Netherlands. Vice-Chairman: Ms Judith Francis (Bahamas) since October

31 1992 Fund Administrative Council (7th session, October 2010) A quorum was not reached for the 15th extraordinary session of the 1992 Fund Assembly so the Administrative Council was convened to act on behalf of the Assembly. Under the unified meeting procedure adopted in October 2010, this session was opened in conjunction with the Executive Committee (49th session), Supplementary Fund Assembly (6th session) and 1971 Fund Administrative Council (25th session) with all four Chairmen present on the podium. The Administrative Council noted that unfortunately Mr Willem Oosterveen, Director of the IOPC Funds, had been taken ill in September 2010 and would be unable to act as Director of the IOPC Funds for the foreseeable future. It decided on 22 October 2010 to appoint Mr José Maura as Acting Director of the IOPC Funds, until the Director returned to perform his duties or until the extraordinary session of the 1992 Fund Assembly, which would be held from 28 March to 1 April 2011 in Marrakech, Morocco, whichever occurred first. The Chairman of the 1992 Fund Assembly was authorised to sign, on behalf of the 1992 Fund, the contract with the Acting Director. The Administrative Council decided to amend the formal requirements as regards credentials to allow for the receipt of credentials not only in the form of an original signed letter, a telefax thereof but also a scanned copy of the original credentials transmitted from a recognised address. The 1992 Fund Administrative Council decided to grant observer status to Thailand. In accordance with 1992 Fund Resolution N 5, the 1992 Fund Administrative Council elected 15 States as members of the 1992 Fund Executive Committee to hold office until the end of the next regular session of the 1992 Fund Assembly. The Administrative Council noted the Report of the first meeting of the 6th intersessional Working Group which had taken place in June The Administrative Council decided inter alia that it was worth looking into the methods used for handling the mass claims submitted in connection with the Gulf War ( ) and invited the delegation of the Philippines to do so and to submit a document on this matter to the next meeting of the Working Group which was scheduled to take place in the spring of The Administrative Council decided that the Secretariat should, at the next session of the 1992 Fund Assembly, provide a legal analysis of the extent to which the interpretation of the definition of ship within Article 1.1 of the 1992 CLC, might include floating storage units (FSUs), and that this analysis should be considered solely in relation to the 1992 CLC and 1992 Fund Convention, and not by reference to other international Conventions. In relation to a further issue, namely whether vessels involved in extended ship-to-ship (STS) or floating storage operations were to be considered ships under the Conventions, it was decided that such mother vessels did fall within the interpretation of the definition of ship under Article 1.1 of the 1992 CLC. However, following an inconclusive debate in respect of whether to levy contributions for oil carried by mother vessels, it was decided that the Director should add this issue to the legal study on the definition of ship, and report back to the 1992 Fund Assembly at its next session. The Administrative Council approved the Financial Statements of the 1992 Fund for the financial year The Administrative Council endorsed the Director s proposal to continue the on-line oil reporting system trial and to prepare a detailed analysis of the feedback and a proposal for future development of the system for consideration at a future session. The Administrative Council decided to re-appoint the Comptroller and Auditor-General of the United Kingdom as External Auditor for the 1992 Fund for a further period of four years (ie to audit the Financial Statements for the financial years ). Mr Jerry Rysanek Chairman of the 1992 Fund Assembly since March 2005 and member of the Canadian delegation to the IOPC Funds meetings for 16 years. Mr Rysanek is Executive Director, International Marine Policy, for the Department of Transport, Canada. First Vice-Chairman: Professor Tomotaka Fujita (Japan) since October 2009 Second Vice-Chairman: Mr Mohammed Said Oualid (Morocco) since October

32 GOVERNING BODIES 1992 Fund Supplementary Fund 1971 Fund The Administrative Council instructed the Audit Body to consider the issue of succession planning with the Secretariat and to formulate recommendations for consideration by the 1992 Fund Assembly at a future regular session. The Administrative Council also decided that the issue of the interim arrangements put in place for the duration of the Director s absence would be reviewed at an extraordinary session of the 1992 Fund Assembly to be held in spring The Administrative Council requested the Head of the Finance and Administration Department to form a small consultation group consisting of the Chairmen of the governing bodies, the Chairman of the Audit Body and its external expert and a representative to review current practices in intergovernmental organisations and to ensure that any future contract with the Director of the IOPC Funds was consistent with contemporary business and management practices. The Administrative Council decided to endorse the Director s suggestion regarding the content and format of a pilot internship programme. It further decided that nominations for a maximum of ten candidates were to be submitted through Member States and that participants should be self-funded. The Administrative Council appointed Ms Odile Roussel (France) and Mr Tetsuto Igarashi (Japan) as members of the Appeals Board to hold office until the 16th session of the 1992 Fund Assembly. With respect to the HNS Protocol which had been adopted by an International Conference on the revision of the HNS Convention held in April 2010, the Administrative Council instructed the Director to carry out the administrative tasks necessary for setting up the HNS Fund, in accordance with the provisions of the 2010 HNS Protocol, on condition that this did not unduly prejudice the interests of the Parties to the 1992 Fund Convention, to give all necessary assistance for setting up the HNS Fund and to make the necessary preparations for the first session of the Assembly of the HNS Fund. The Administrative Council adopted an administrative budget for the 1992 Fund of for It approved the Director s proposal that the 1971 Fund and the Supplementary Fund should pay flat management fees of and respectively to the 1992 Fund for the financial year 2011 to cover the costs of administering the 1971 Fund and the Supplementary Fund. The Administrative Council decided to levy 2010 contributions of 3.8 million to the General Fund, payable by 1 March It also decided to levy 5 million to the Prestige Major Claims Fund, the entire levy to be deferred. It further decided to levy 40 million in respect of the Volgoneft 139 Major Claims Fund, the entire levy to be deferred, but subject to a decision by the 1992 Fund Executive Committee authorising the Director to make payments in respect of this incident. The Council also decided to levy 70 million in respect of the Hebei Spirit incident, with 50 million payable by 1 March 2011 and 20 million to be deferred. The Administrative Council decided to hold the next regular session of the 1992 Fund Assembly during the week of 24 October The Council confirmed the decision made in October 2009 and accepted the offer by the Government of Morocco to host the spring 2011 session of the IOPC Funds governing bodies during the week of 28 March in Marrakech, Morocco. Document IOPC/OCT10/11/1 The October 2010 meetings of the governing bodies at IMO 30

33 Supplementary Fund Governance The Supplementary Fund has an Assembly composed of all Contracting States to the Supplementary Fund Protocol. The Assembly is the supreme organ of the Organisation and, inter alia, decides on the annual budget and contributions to the Organisation, approves its Financial Statements, appoints the External Auditor, adopts the Internal and Financial Regulations of the Supplementary Fund, determines which entities have observer status with the Organisation, and generally performs such functions as are necessary for its proper functioning. The Assembly holds one regular session each year, normally in October. Extraordinary sessions may be held as and when required. Attendance of a simple majority of Member States constitutes a quorum for the Assembly. The main issues and decisions taken by the Supplementary Fund Assembly are summarised below. Supplementary Fund Assembly (6th session, October 2010) The Supplementary Fund Assembly endorsed the decisions taken by the 1992 Fund Administrative Council in respect of: the appointment of Mr José Maura as Acting Director of the IOPC Funds, until the Director returned to perform his duties or until the extraordinary session of the 1992 Fund Assembly, which would be held from 28 March to 1 April 2011 in Marrakech, Morocco, whichever occurred first; the amendment of the formal requirements as regards credentials to allow for the receipt of credentials not only in the form of an original signed letter, a telefax thereof but also a scanned copy of the original credentials transmitted from a recognised address; the granting of observer status to Thailand; and the provision of a legal analysis of the extent to which the interpretation of the definition of ship within Article 1.1 of the 1992 CLC, might include FSUs. The Assembly approved the Financial Statements of the Supplementary Fund for the financial year The Assembly decided to re-appoint the Comptroller and Auditor-General of the United Kingdom as the External Auditor for the Supplementary Fund for a further period of four years (ie to audit the Financial Statements for the financial years ). The Assembly adopted an administrative budget for the Supplementary Fund of (including the cost of the external audit) for 2011, and decided to pay a flat management fee of to the 1992 Fund to cover the cost of administering the Supplementary Fund. The Assembly decided not to levy 2010 contributions to the General Fund. The Assembly noted that there had been no incidents which would or might require the Supplementary Fund to pay compensation or claims-related expenses and that there was therefore no need to make contributions to any Claims Funds. Document IOPC/OCT10/11/1 Vice-Admiral Giancarlo Olimbo Chairman of the Supplementary Fund Assembly since March 2007 and member of the Italian delegation to the meetings of the IOPC Funds since Vice-Admiral Olimbo is the Maritime Attaché at the Embassy of Italy in London. First Vice-Chairman: Mrs Birgit Sølling Olsen (Denmark) since October 2007 Second Vice-Chairman: Mr Isao Yoshikane (Japan) since October

34 GOVERNING BODIES 1992 Fund Supplementary Fund 1971 Fund 1971 Fund Governance Under the 1971 Fund Convention, the 1971 Fund had an Assembly composed of all Contracting States to the 1971 Fund Convention and an Executive Committee composed of 15 Member States elected by the Assembly. Since 1998, in cases where a quorum was not achieved, an Administrative Council was convened to act on behalf of the Assembly. The Administrative Council does not have any quorum requirement. In 2002 the 1971 Fund Convention ceased to be in force and as a result the 1971 Fund no longer has Member States. Therefore, in recent years, the Administrative Council, which now consists of all States having at any time been a Member State of the 1971 Fund, has fulfilled the roles of both the Assembly and the Executive Committee and has dealt with both administrative and incident-related matters. For this reason, all decisions reported below for meetings of the 1971 Fund are referred to as decisions of the 1971 Fund Administrative Council. Before the 1971 Fund can be wound up it has to fulfil any obligations under the 1971 Fund Convention to pay compensation to victims of incidents that occurred when the 1971 Fund Convention was in force. As at 31 December 2010, there were five such incidents pending (see page 23). The main issues and decisions taken by the 1971 Fund Administrative Council are summarised below Fund Administrative Council (25th session, October 2010) The 1971 Fund Administrative Council endorsed the decisions taken by the 1992 Fund Administrative Council in respect of the appointment of Mr José Maura as Acting Director of the IOPC Funds, until the Director returned to perform his duties or until the extraordinary session of the 1992 Fund Assembly, which would be held from 28 March to 1 April 2011 in Marrakech, Morocco, whichever occurred first. In respect of the Nissos Amorgos incident, the Administrative Council noted that in a judgement rendered in February 2010, the Criminal Court of First Instance in Maracaibo had held that the Master, the shipowner and the Gard Club had incurred a civil liability derived from criminal action and had ordered them to pay the Venezuelan State the amount claimed, namely US$ It also noted that these three parties had appealed against the judgement and that the 1971 Fund, although not notified of the judgement, had also appealed. It was further noted that a hearing at the Court of Appeal in Maracaibo was expected in the near future. The Administrative Council noted that the legal actions taken against the 1971 Fund by the insurer of the Evoikos to protect its rights against the 1971 Fund had been discontinued and that the case was therefore now closed. In respect of the Plate Princess incident, the Administrative Council recalled that the 1971 Fund had appealed the Maritime Court of Appeal judgement to the Supreme Tribunal in the Bolivarian Republic of Venezuela on the grounds of the applicability of the time-bar principle, that a link of causation had not been demonstrated, and that there was a lack of evidence relating to the quantum of loss of income. The Council noted, however, that in October 2010, the Supreme Tribunal had rendered its judgement confirming the judgement of the Maritime Court of Appeal. The Administrative Council endorsed the Secretariat s decision to investigate whether there was a possibility to appeal for judicial review of that judgement to the Constitutional Court in Venezuela. The Administrative Council noted that the Venezuelan delegation had reiterated their intention to submit a document on the incident to the next session of the Council, as requested by a number of delegations. Captain David Bruce Chairman of the 1971 Fund Administrative Council since October 2008 and member of the Marshall Islands delegation to the meetings of the IOPC Funds since January Captain Bruce is Senior Deputy Commissioner of Maritime Affairs and Permanent Maritime Representative of the Republic of the Marshall Islands to IMO. Vice-Chairman: Mr Andrzej Kossowski (Poland) since October

35 With respect to the Al Jaziah 1 incident, the Administrative Council noted that, in accordance with the authorisation given to him by the Committee in October 2009, the Director had decided to discontinue the execution of the judgement against the registered owner of the vessel when it was clear that the costs would exceed the recoverable amount and had written off the debt. The Council further noted that the incident was now closed. The Administrative Council approved the Financial Statements of the 1971 Fund for the financial year The Administrative Council decided to re-appoint the Comptroller and Auditor-General of the United Kingdom as External Auditor for the 1971 Fund for a further period of four years (ie to audit the Financial Statements for the financial years ). The Administrative Council noted the developments towards the winding up of the 1971 Fund, in particular as regards the outstanding incidents and the financial situation in respect of these incidents. The Administrative Council noted in particular that with regards to the Plate Princess incident, should any payments need to be made in excess of 1 million SDR, a Major Claims Fund would need to be established. The Administrative Council adopted an administrative budget for the 1971 Fund of (including the cost of the external audit) for 2010, and decided to pay a flat management fee of to the 1992 Fund to cover the cost of administering the 1971 Fund. The 1971 Fund Administrative Council decided that there should be no levy of 2009 contributions in respect of either the Vistabella or the Nissos Amorgos Major Claims Funds. Document 1971 Fund timeline IOPC/0CT10/11/ Fund Convention enters into force Fund Convention ceases to be in force As at 31 December 2010, there were five incidents for which there are issues to be resolved, before the winding up of the 1971 Fund can be accomplished. The delegation of Nigeria, Member of the 1992 Fund and former 1971 Fund Member State, at the October 2010 sessions of the governing bodies 33

36 FINANCIAL REVIEW The governing bodies addressing financial matters at their October 2010 sessions with the External Auditor and Chairman of the Audit Body 34

37 Financial Review Certificate 36 Extracts from 2009 Financial Statements 37 Key Financial Figures for 2010 (Unaudited) 43 In this section As in previous years, the Financial Statements of the 1992 Fund, the Supplementary Fund, and 1971 Fund were audited by the External Auditor of the IOPC Funds, the Comptroller and Auditor General of the United Kingdom. The Financial Statements for 2009 are prepared in accordance with the Financial Regulations of the respective Funds that were applicable in 2009 and in compliance with United Nations System Accounting Standards (UNSAS), where appropriate. At their October 2009 sessions, the governing bodies approved the adoption of the International Public Sector Accounting Standards (IPSAS) to be used from the financial year 2010 which resulted in changes to the IOPC Funds Financial Regulations with effect from 1 January The Key Financial Figures for 2010 (unaudited) have been arrived at in conformity with the requirements of IPSAS. The Financial Statements of the IOPC Funds for the period 1 January to 31 December 2009 were approved by the respective governing bodies during their sessions in October The full set of audited Financial Statements can be found on the Funds website ( along with the External Auditor s opinions on each statement, and the Auditor s Reports on the Financial Statements of the 1992 Fund and the 1971 Fund. Audited summary Income and Expenditure statements and summary Balance Sheets for the financial year 2009 (pages 37-42) and key financial highlights for 2010 (unaudited, pages 43-44) are presented in this Financial Review. There are separate income and expenditure accounts for the General Fund and for each Major Claims Fund. The General Fund covers the administration expenses of the respective Funds, including the costs of running the joint Secretariat and, in respect of the 1971 Fund and 1992 Fund, for compensation payments and claims-related expenditure, up to a maximum amount defined by the sterling equivalent of SDR 1 million (1971 Fund) and SDR 4 million (1992 Fund) per incident. Separate Major Claims Funds are established for incidents for which the total amounts payable exceed SDR 1 million (1971 Fund) or SDR 4 million (1992 Fund), and a Claims Fund for any incident for which the Supplementary Fund has to pay compensation. Since there have been no incidents involving the Supplementary Fund, no Claims Funds have been established. The 1992 Fund administers the Supplementary Fund and the 1971 Fund, for which a management fee is received from each Fund. Detailed Financial Statements are available on the Publications page of the IOPC Funds website: 35