POLLUTION LIABILITIES

POLLUTION LIABILITIES

INTRODUCTION To pollute: to make offensive or harmful to human, animal or plant life Types of pollution Legislation governing prevention and compensation: The World The United States P&I Cover for pollution liabilities 2

TYPES OF POLLUTION Oil cargo and bunkers Noxious liquids Harmful substances Other cargo Sewage Garbage Ballast Water Air? 3

TYPES OF POLLUTION Oil cargo and bunkers Noxious liquids Harmful substances Other cargo Sewage Garbage Ballast Water Air Noise 4

LEGISLATION Prevention and Response Compensation 5

PREVENTION AND RESPONSE International Pollution Conventions Shipboard - MARPOL International Convention for the Prevention of Pollution from Ships 1973/1978 ( Marpol ) Shoreside-OPRC International Convention on Oil Pollution Preparedness and Response 1991 ( OPRC ) Domestic legislation of coastal states USA - Oil Pollution Act 1990 ( OPA 90 ) 6

MARPOL (1) - INTENTION AND METHOD Convention: A comprehensive regime resulting in the complete elimination of intentional pollution of the marine environment and the minimisation of accidental discharges Annexes: I II III IV V VI Oil Pollution Noxious Liquids Harmful Substances Sewage Garbage Air 7

MARPOL (2) INTENTION AND METHOD Shipboard Oil Pollution Emergency Plan ( SOPEP ) for all ships over 400 GT & all tankers over 150 GT Shipboard Marine Pollution Emergency Plan ( SMPEP ) for all chemical tankers over 150 GT Mandatory requirements on reporting communicating containing plus non-mandatory guidance 8

OPRC INTENTION AND METHOD Convention: To encourage States to develop and maintain an adequate capability to deal with oil pollution emergencies and to facilitate international cooperation and mutual assistance in preparing for and responding to major oil pollution incidents Method: Applies to oil and HNS pollution Requires: International Co-operation Response Plans Equipment Exercises 9

DOMESTIC LEGISLATION Ships need to comply with requirements of the states where they trade: Eg: China MSA and SPRO Regulations Ships also need to comply with requirements of Flag State 10

THE UNITED STATES OF AMERICA OPA 90 Exxon Valdez 1989 1 1

OPA 90 INTENTION AND METHOD The USA s response to the Exxon Valdez (1989) Applies to all ships in the USA s EEZ(200nm) Prevention via licensing, manning + equipment requirements Strict liability on owner, operator or bareboat charterer for an actual or threatened discharge Pollution Response National Response Team ( NRT ) Environmental Protection Agency ( EPA ) Liabilities include: Removal costs under the National Contingency Plan, and Compensation for a wide range of damage, including damage to natural resources 1 2

OIL POLLUTION COMPENSATION Torrey Canyon 1967 1 3

COMPENSATION (1) THE BEGINNING The problems identified by Torrey Canyon The supertanker a different scale of risk Title to sue who can claim for pollution at sea? The basis of liability under what law? The duty of care for what breach? Calculation of damages how do you value environmental damage? Limitation of liability does it apply?

THE CIVIL LIABILITY CONVENTION ( CLC ) AND THE IOPC FUND Amoco Cadiz 1978 15

COMPENSATION (2) THE SOLUTION THE POLLUTER PAYS Civil Liability Convention 1992 ( CLC92 ): met by the P&I Clubs International Fund for Compensation for Oil Pollution Damage 1992 ( IOPC Fund ): funded by importers of fuel and oil Universal application except Iran and The United States of America 1 6

CLC 92 & IOPC FUND 92: THE 2000 AMENDMENTS 760 US $1140million 740 260 240 220 US $330million 200 92 FUND 2000 Amendments SDR (Millions) 180 160 140 120 100 92 FUND 80 US $120million 60 71 FUND 40 CLC 92 20 20 40 60 80 100 120 140 160 Gross Tons (thousands) CLC 69 17

CLC 1969 AND 1992 METHOD Application Ships carrying persistent oil in bulk as cargo Over 2,000 tonnes must carry CLC Cert The P&I Club confirms entry by issue of a Blue Card. The Flag State then issues the CLC Certificate Liability Strict liability (subject to limitation) for pollution caused by both oil cargo and by bunkers Defences: Act of God or Act of War The deliberate act of a third party (terrorism) An authority cannot claim on the limitation fund if the pollution was caused by their failure to maintain navigational aids 1 8

INCREASED COMPENSATION Sea Empress 1996 1 9

THE 2000 AMENDMENTS AND THE 2003 PROTOCOL Up-rating of CLCand the IOPCFund in light of recent casualties and international concern over limitation levels CLClimit increased to SDR89.77 million Introduced a minimum CLClimit of SDR4.51 million Increased the Fund limit to SDR203 million Introduced an optional Supplementary Fund. funded by the global oil industry with a limit of SDR750 million Coverage extended to the voyage immediately following any loaded passage 2 0

THE 2000 AMENDMENTS AND THE 2003 PROTOCOL 760 US $1140million 740 Supplementary Fund 2003 260 240 220 US $330million 200 92 FUND 2000 Amendments SDR (Millions) 180 160 140 120 100 92 FUND 80 US $120million 60 71 FUND 40 CLC 92 20 STOPIA 20 40 60 80 100 120 140 160 Gross Tons (thousands) CLC 69 21

STOPIA AND TOPIA Erika 1999 22

STOPIA AND TOPIA To ease the burden on oil receivers, the International Group of P&I Clubs entered two agreements to indemnify the IOPCFund Small Tanker Oil Pollution Indemnification Agreement ( STOPIA ) The minimum limit for vessels is increased to SDR20 million Tanker Oil Pollution Indemnification Agreement ( TOPIA ) Shipowners contribute 50% to claims on the Supplementary Fund Owners are automatically party to these agreements via their P&I entry 2 3

STOPIA 760 US $1140million 740 260 240 220 US $330million 200 92 FUND 2000 Amendments SDR (Millions) 180 160 140 120 100 92 FUND 80 US $120million 60 71 FUND 40 CLC 92 20 STOPIA 20 40 60 80 100 120 140 160 Gross Tons (thousands) CLC 69 24

TOPIA AND THE SUPPLEMENTARY FUND 760 US $1140million 740 Supplementary Fund 2003 260 240 220 US $330million 200 92 FUND 2000 Amendments SDR (Millions) 180 160 140 120 100 92 FUND 80 US $120million 60 71 FUND 40 CLC 92 20 STOPIA 20 40 60 80 100 120 140 160 Gross Tons (thousands) CLC 69 25

OTHER POLLUTION (1): BUNKERS The Bunker Convention 2001 Entered into force on 21 November 2008 Applies to bunker pollution from all vessels except those to which CLC applies Liability and defences as for CLC 92 Owners may limit liability in accordance with applicable national or international regimes eg. LLMC 1976 Convention 2 6

OTHER POLLUTION (2): HNS Hazardous and Noxious Substances Convention 1996 Modelled on CLC and Fund Conventions Shipowner liable for first tier claims HNS Fund pays second tier to maximum of 250 million SDR Not yet in force 2 7

HNS 1996 28

COMPENSATION THE UNITED STATES OF AMERICA Exxon Valdez 1989 2 9

OPA 90 (1): METHOD United States Oil Pollution Act 1990 The Responsible Party (as identified by USCG) is liable for costs and damages for oil pollution in US waters Strict but limited liability 3 0

OPA 90 (2): NON-TANKER LIMITS OF LIABILITY Limit of liability for vessels other than tankers $1,100 per gross ton or $939,800, whichever is greater Example 50,000 GT cargo vessel 50,000 x $1,100 = $55,000,000 3 1

OPA 90 (3): TANKER LIMITS OF LIABILITY Limit of liability for double-hull tanker 3,000 GT or smaller: $2,200 per gross ton or $4,699,200 whichever is greater Larger than 3,000 GT: $2,200 per gross ton or $18,796,800 whichever is greater Example 50,000 GT tanker 50,000 x $2,200 = $110,000,000 3 2

OPA 90 (4): CERTIFICATION Certificate of Financial Responsibility ( COFR ) Required by all vessels over 300 gt Issued by US Coastguard Shipowner must prove the required level of cover Shipowner makes arrangements with an approved guarantor Shipowners P&I Club provides undertakings to that guarantor 3 3

OPA 90 (5): OTHER REQUIREMENTS OPA 90 requires Shipowners to have pre-approved: Vessel Response Plans ( VRPS ) Vessel specific There can be separate state requirements eg. California Contracts with approved Clean-up Contractors ( OSRO ) Qualified Individual ( QI ) 3 4

USA: JURISDICTION OF INDIVIDUAL STATES United States Oil Pollution Act 1990 Individual states are allowed to impose additional liabilities and/or response requirements California, Washington and Alaska have done so Theoretically, state liability could be unlimited, but The Supreme Court has ruled that individual states cannot legislate contrary to OPA90 3 5

P&I COVER 3 6

INTERNATIONAL TANKER OWNERS POLLUTION FEDERATION (ITOPF) An independent, not-for-profit consultancy 90% funded by P&I insurers The maritime industry s primary source of objective, technical advice All vessels entered with North are members of ITOPF and have access to their full range of technical and information services. ITOPFwill attend on-site at casualties to give independent advice on all types of pollution 37

ITOPF RESPONSE (1): THE SPILL 38

ITOPF RESPONSE (2): THE BEACH 39

ITOPF RESPONSE (3): THE RESPONSE 40

ITOPF RESPONSE (4): THE RESULT 41

DAMAGES Rule 19(13)(a) Damages or compensation payable to any person arising from or in respect of pollution CLC and the IOPC Fund apply uniform definitions and common understandings of admissible claims: Direct, physical damage to property Economic losses which are the direct result of pollution damage: e.g. closed fishing grounds Environmental reinstatement and restoration 4 2

CLAIM TYPES 43

CLEAN UP Rule 19(13)(b) -Costs, losses & damages Measures reasonably taken for the purpose of preventing, minimising or cleaning up any pollution BUT NOTmeasures taken in the ordinary course of business 4 4

CLEAN UP TECHNIQUES 4 5

AGREEMENTS & CONTRACTS Rule 19(13)(c) - Liabilities, costs & expenses Incurred as a party to any agreement relating to oil pollution 4 6

GOVERNMENT ORDER Rule 19(13)(d)- Costs or liabilities incurred by: Complying with a Government order for Preventing or reducing pollution Preventing or reducing the risk of pollution 4 7

SALVORS EXPENSES AND SPECIAL COMPENSATION Rule 19(13)(e): in order to encourage salvorsto minimise pollution, P&I will indemnify: Reasonably incurred expenses under LOF 80 Special Compensation awarded under Article 14 of the 1989 Salvage Convention SCOPIC awarded under LOF 2000 onwards 4 8

FINES Rule 19(13)(f)- Fines incurred for accidental pollution 4 9

LIMIT OF P&I COVER P&I Cover for an oil pollution claim is limited to US $1,000 million 5 0

THANK YOU 5 1