Introduction Marine pollution by ships The extent of compensation by the polluter The consequences when not fully compensated Four areas of discussion and cases

a. Limitation of liability Available under the following: Civil Liability Conventions on oil pollution 1976 Limitations of Liability Convention 2001 Bunker Oil Convention National Acts on limitations of liability

Limitation of liability Nature of limitation of liability conventions Privity rule Personnel act The reasons behind

Limitation of liability How the liabilities can be limited Who will be liable for the balance State funds What is included and excluded

tax to safeguard the environment Cleaning – economic infrastructure Fishermen’s income - welfare Damages to beaches – economic infrastructure Losses to Hotel – economic infrastructure Loss of fish stocks – economic infrastructure Disturbance to shipping – economic infrastructure

Limitation of liability usage statistics Convention on Limitation of Liability for Maritime Claims (LLMC), 1976 – Shipping tonnage covered 49.94% Protocol of Tonnage covered 42.18%. CLC Protocol shipping tonnage 96.7%. (Oil pollution)

(b). Marine insurance covers Insurance cover and insurance acts Limitation under the insurance cover Negligence of the owner and servant Provision for direct action against insurer if the owner is not capable of paying the claim in full. Eg. Insolvency

Insolvency Traditional methods of registering ships Single ship owner Insolvency cases and fate of pollution damages

Taxes to safeguard the environment When: Ship owner’s ability meet only part of the claim Ship owner not able to meet the full amount of the claim. Affected areas (similar to limitations)

(c). Conventions on Marine Pollutions (MARPOL) What is MARPOL Annex I - Annex Vl Regulations for the Prevention of Pollution by Oil; Regulations for the Control of Pollution by Noxious Liquid Substances in Bulk … ; Prevention of Air Pollution from Ships.

MARPOL Enforcements In port Coastal International waters Methods of enforcements Are they effective

MARPOL non compliance and impact on taxes Area of tax affected: When non compliance When improvements required

(d) Lengthy maritime claim process and other means of evading liabilities Time Cross border issues Jurisdiction Conflict of laws Parallel hearing

Time taken Torrey Canyon : Year of accident: 1967, time taken 2 years for settlement agreement by the parties Amoco Cadiz : Year of accident 1978, time taken 12 years by US courts. Exxon Valdiz: Year of accident 24 March 1989 Time taken 19 years by US courts Prestige : Year of accident: 2002,Time taken 5 year by US courts.

Other means of evading liabilities and their effect on taxes Flag of convenience Change of ships name or ownership after the accident or oil pollution

Case studies Torrey Canyon Torrey Canyon accident 1967, US owners, BP time charterer, registered in Liberia (flag of convenience), At least 3 billion USD however there were no liability convention in place at that time and therefore a settlement agreement was reached an amount of 6 million USD. Claim amount 0.2% Balance amount 99.8%

Case Studies Amoco Cadiz Year of accident: 1978 Owners Amoco Oil Company, Indiana, USA Registered in Liberia (flag of convenience), 219, 719 MT of crude oil. Damaged claims by French government 2 billion USD, inclusive of USD 250 million fisheries and tourist amenities. Awarded only 120 Million USD. 6% of the claim recovered. Balance 94 %

Exxon Valdiz: Date of pollution: 24 March 1989, spilled about MT of crude oil Owners Exxon Shipping Company, USA. Reason for accident is human error and negligence. Claim 5 billion and Final settlement 0.5 billion USD. 10 % of the actual claim awarded. Balance 90 % but… Exxon also claimed to have spent $2 billion cleaning up the spill and a further $1 billion to settle related civil and criminal charges.

Prestige Prestige was a Greek-operated, single-hulled oil tanker, officially registered in the Bahamas, but with a Libeian -registered single-purpose corporation as the owner.(flag of convenience) About MT of fuel oil spilled. In 2003, Spain brought civil suit in the Southern District of New York against the American Bureau of Shipping (ABS). No sign of a possible settlement. Spain's damage claim $700 million. Balance 100% liabilities cannot be established

Marine Environmental Damages and Burden on Taxpayer Summary and Conclusion Economic developments and limitations Individual responsibilities Industrial responsibility Long term effect Trans boundary effect Tax to protect the environment but what is considered fair to tax payers ………… Thank you ………………..