Agenda Item 3 Date 16 March 2018 Original English 1992 Fund Assembly 92AES22 1992 Fund Executive Committee 92EC70 Supplementary Fund Assembly SAES6 INCIDENTS INVOLVING THE IOPC FUNDS 1992 FUND DOUBLE JOY Note by the Secretariat Objective of document: Summary: To report on new developments regarding the Double Joy incident. In July 2017, the 1992 Fund was notified of an oil pollution incident that took place on 5 August 2014 involving the tanker Double Joy (3 434 GT). The pollution occurred due to overflow when the Double Joy was loading cargo at the ATT Tanjung Bin oil terminal (ATB), Port of Tanjung Pelepas, Johor, Malaysia. A large area in the Port of Tanjung Pelepas (PTP) container terminal was heavily affected by the oil spill including more than 2 kilometres of wharfs/berths and the shoreline. Malaysia is party to the 1992 Civil Liability Convention (1992 CLC) and the 1992 Fund Convention. The Double Joy incident occurred in 2014 but there has not, until 2017, been any indication that claims could exceed the 1992 CLC limit. A new claim received in June 2017 brings the total claimed damage over the 1992 CLC limit. It is therefore possible that the 1992 Fund might be required to pay compensation in respect of this incident. The ship is insured with The Shipowners Mutual Protection and Indemnity Association (Luxembourg) (Shipowners Club), which is part of the International Group of P&I Associations (International Group). The limitation amount applicable to the Double Joy in accordance with the 1992 CLC is SDR 4.51 million. However, the owner of the Double Joy is a party to the Small Tanker Oil Pollution Indemnification Agreement 2006 (STOPIA 2006) whereby the shipowner will indemnify the 1992 Fund for the difference between the 1992 CLC limit and the amount of compensation paid by the 1992 Fund, up to a limit of SDR 20 million. Claims in relation to the spill have been submitted to the Shipowner s Club. The shipowner s insurer has paid US$ 1 million and RM 3.8 million (US$ 970 758) <1>. A claim for US$ 6.9 million is pending in Court. Recent developments: In November 2017 the Director signed an agreement on interim payments with the Shipowners Club in respect of the Double Joy incident. There is one claim in Court against the shipowner, its insurer the Shipowners Club and the 1992 Fund exceeding the CLC limit. The claimant has not yet provided supporting documentation. <1> The currency exchange rates at 15 February 2018 were as follows: US$ 1 = SDR 0.6851 / RM 3.8925.
- 2 - Relevant documents: Action to be taken: The online Double Joy incident report can be found via the Incidents section of the IOPC Funds website. 1992 Fund Executive Committee Information to be noted. 1 Summary of incident Ship Double Joy Date of incident 5 August 2014 Place of incident Malaysia Cause of incident Overflow Quantity of oil spilled Unconfirmed Flag State of ship Singapore Gross tonnage 3 434 GT P&I insurer The Shipowners Mutual Protection and Indemnity Association (Luxembourg) (Shipowners' Club) CLC limit SDR 4.51 million (US$ 6.6 million) STOPIA/TOPIA applicable Yes (STOPIA 2006) SDR 20 million (US$ 29.2 million) CLC + Fund limit SDR 203 million (US$ 296.3 million) Legal proceedings One legal action Claims situation The shipowner s insurer has paid US$ 1 million and RM 3.8 million (US$ 970 758). A claim for the amount of US$ 6.9 million is pending in Court. 2 Background information 2.1 In July 2017, the 1992 Fund was notified of an oil pollution incident that took place in Malaysia on 5 August 2014 involving the tanker Double Joy (3 434 GT). 2.2 On 5 August 2014, the Double Joy was loading a cargo of about 5 000 mt of marine fuel oil 500 CST (i.e. a persistent oil) at a petroleum product terminal, ATT Tanjung Bin oil terminal (ATB), Port of Tanjung Pelepas, Johor, Malaysia. During loading operation, a crew member on duty noticed oil overflowing onto the upper deck and ordered for the operation to stop. The oil had overflowed through cargo tank No 5S hatch opening and flowed onto the upper deck, and from there to the starboard side of the ship and overboard into the sea. The spillage and the spread of the oil was exacerbated by weather conditions at the time. Up to 30 40 tons of oil was lost overboard. The oil appears to have drifted across the Pulai River mouth to the Port of Tanjung Pelepas (PTP) container terminal. 3 Response operations 3.1 A large area in the PTP container terminal, including more than 2 kilometres of wharfs/berths and 200 meters of shoreline, was heavily affected by the oil spill. The operator of the container terminal engaged their oil spill response service provider in order to combat the spread of fuel oil. 3.2 The second stage of the pollution response consisted of the clean-up of a stretch of over 1.5 kilometres underneath a wharf (involving over 6 000 pillars) at the container terminal.
- 3-4 Applicability of the Conventions 4.1 Malaysia is party to the 1992 Civil Liability Convention (1992 CLC) and the 1992 Fund Convention. The Double Joy incident occurred in 2014 but there has not, until 2017, been any indication that claims could exceed the 1992 CLC limit. A new claim received in June 2017 brings the total claimed damage over the 1992 CLC limit. It is therefore possible that the 1992 Fund might be required to pay compensation in respect of this incident. Details of the insurance and STOPIA 2006 4.2 The ship is insured with The Shipowners Mutual Protection and Indemnity Association (Luxembourg) (Shipowners Club), which is a member of the International Group of P&I Associations (International Group). The limitation amount applicable to the Double Joy in accordance with the 1992 CLC is SDR 4.51 million, but the owner of the Double Joy is a party to the Small Tanker Oil Pollution Indemnification Agreement 2006 (STOPIA 2006) whereby the shipowner will indemnify, on a voluntary basis, the 1992 Fund for the difference between the limitation amount applicable to the Double Joy under the 1992 CLC and the amount of compensation paid by the 1992 Fund, up to a limit of SDR 20 million. 5 Claims for compensation 5.1 A claim submitted by the clean-up contractor engaged by the operator of the container terminal for the first stage in the clean-up response was finally settled at RM 3.6 million. The claim for the second stage was settled at US$ 1 million. 5.2 The above clean-up contractor also submitted a claim for costs incurred in hull clean up for two vessels, which was settled at RM 130 944. 5.3 Claims submitted by 43 fishermen for damage to their nets and loss of earnings were settled at RM 47 730. 5.4 The 1992 Fund has had the opportunity to examine the assessment and related documents in relation with the settled claims and agrees with the settled amounts. 5.5 A claim submitted by the operator of the container terminal, totalling some US$ 185 000, for their administrative costs in dealing with the pollution was rejected on the basis that it was unsubstantiated and unreasonable. 5.6 In June 2017, a shipping company contacted the Shipowner s Club indicating that 19 of its vessels had been affected by the oil spill and claiming US$ 8.1 million. The claimant has not provided supporting documents. The claim is for hull cleaning, bunkers consumed during cleaning and increased bunker consumption to speed up in an effort to remain on schedule and loss of income associated with delays. The shipping company has brought legal proceedings (see section 7), quantifying their claim in US$ 6.9 million.
- 4-5.7 The claims situation in relation to this incident is summarised in the following table: Claimant Claimed (US$) Paid by Club (RM) Paid by Club (US$) Clean-up contractor (1st phase clean up) 3 600 000 Clean-up contractor (2nd phase clean up) 1 050 000 Property damage for 2 vessels 130 944 Fishermen 47 730 PTP terminal (administration costs) 185 000 Claim rejected Shipping company property 6 899 266 <2> damage and economic losses in respect of 19 vessels TOTAL US$ 7 084 266 RM 3 778 674 (US$ 970 758) US$ 1 050 000 6 Interim payments 6.1 At its October 2017 session, the 1992 Fund Executive Committee decided to authorise the Director to sign an agreement on interim payments with the Shipowners Club in respect of the Double Joy incident, to be applied retrospectively to the amounts paid by the Club and agreed by the 1992 Fund before the signature of the agreement (see document IOPC/OCT17/11/1, paragraph 3.14.13). 6.2 The agreement on interim payments with the Shipowners Club in respect of the Double Joy incident was signed in November 2017. 7 Civil proceedings 7.1 In July 2017, a shipping company (see paragraph 5.6 above) brought an action in the High Court of Malaya in Kuala Lumpur, on behalf of eight plaintiffs, against the owners of the Double Joy, the Shipowner s Club and the 1992 Fund. The claimants have not yet provided supporting documents. 7.2 The claim includes costs incurred in hull cleaning of the ships owned by the claimants. 7.3 The claim also includes costs incurred from bunkers consumed whilst the vessels were undergoing hull cleaning, as well as the increased bunker consumption to speed up while trying to remain on schedule. 7.4 The claimants also argue that they suffered a loss of revenue, since at the time of the incident the vessels were carrying containers to other ports, and as a result of the delay caused by the incident and subsequent hull cleaning of the vessels, they lost the income which they would have earned from using the containers on board the vessels during the period of the delay. <2> The claimant initially alleged to have suffered losses in the region of US$ 8.1 million. However, in the limitation proceedings the claimant had provisionally quantified their claim in US$ 6 899 266.
- 5-7.5 The claimant has quantified the claim as follows: Concept Claimed (US$) Hull cleaning costs 1 621 155 Cleaning bunker consumption 458 283 Speeding-up bunker consumption 2 955 828 Lost revenue in respect of one of the vessels 1 864 000 TOTAL US$ 6 899 266 7.6 The claimants have not yet submitted any supporting documentation. The Club and the Fund will assess the claim once the claimant has provided the required evidence of their losses. 8 Director s considerations 8.1 A legal action has been brought by a shipping company against the shipowner, its insurer and the 1992 Fund. The amount potentially awarded or settled in respect of this claim may cause the total pollution damage arising from this incident to exceed the 1992 CLC limit applicable to the Double Joy. In that case, the 1992 Fund would be liable to pay compensation. 8.2 The total amount of all claims is, including the claim by the shipping company, and the amounts already settled, some US$ 9 million. This amount exceeds the 1992 CLC limit but is well within the STOPIA 2006 limit of SDR 20 million. Any compensation paid by the 1992 Fund will therefore be reimbursed in full by the Shipowners Club under STOPIA 2006. 8.3 The Director will continue monitoring developments in this case. 9 Action to be taken The 1992 Fund Executive Committee The 1992 Fund Executive Committee is invited to take note of the information contained in this document.