Key liability issues for tanker operators CLC/FC - Succesfully protecting and compensating the victims of oil spills CLC/FC - Succesfully protecting and compensating the victims of oil spills Criminalising accidental oil spills – International law disregarded Criminalising accidental oil spills – International law disregarded Presented by John C. Fawcett-Ellis General Counsel & Regional Manager Asia-Pacific London, 1 June 2005

Anti-trust Compliance Statement INTERTANKO is firmly committed to maintaining a fair and competitive environment in the world tanker trade, and to adhering to all applicable laws which regulate INTERTANKO’s and its members’ activities in this market. These laws include the anti-trust and competition laws, which the US, the European Union and many nations of the world have adopted to preserve the free enterprise system, promote competition and protect the public from monopolistic and other restrictive trade practices. This meeting will be conducted in compliance with INTERTANKO’s anti-trust and competition law guidelines.

International oil spill liability and compensation regime CLC 92 CLC 92 FC 92 FC 92 Supplementary Fund 2003 – entered into force - 3 March 2005 Supplementary Fund 2003 – entered into force - 3 March 2005

Key features: - Channeling of liability to reg’d owner - Strict but limited liability - Owner’s liability insured through P&I cover - If cost of spill exceeds CLC limits then Fund set up by receivers - Owner’s right to limit liability is lost if it is proved that the spill was caused by “his personal act or omission, committed with intent to cause such damage, or recklessly and with knowledge that such damage would probably result”

IOPC Compensation Limits (as revised 2003 & 2005) SDR Millions ,057 1,209 USD Millions '000 GT 1992 Fund, SDR 203 m, USD 307 m 1992 CLC pre STOPIA Supplementary Fund (as from ) SDR 750 m, USD 1,133 m)

How the regime has already been revised/updated: 50% increase in limits under CLC and FC 50% increase in limits under CLC and FC Third tier of compensation introduced ”The Supplementary Fund” – will enter into force on 3 March 2005 Third tier of compensation introduced ”The Supplementary Fund” – will enter into force on 3 March 2005 STOPIA – voluntary increase in small ships limit under CLC STOPIA – voluntary increase in small ships limit under CLC

Success of the current regime: Some 90 states signed up to CLC/FC – truly international Some 90 states signed up to CLC/FC – truly international Protects the victims of oil spills Protects the victims of oil spills Merit of simplicity Merit of simplicity 90% of claims paid out by owners irrespective of fault 90% of claims paid out by owners irrespective of fault Sharing of the cost of spills equally between owners and receivers Sharing of the cost of spills equally between owners and receivers

The current debate A. Should a new regime be devised? B. The perception that the SF will upset the equitable sharing in the cost of spills C. Addressing the issue of sub-standard shipping

INTERTANKO’s Position NO REVISION - Current regime operates well from the perspective of oil spill victims NO REVISION - Current regime operates well from the perspective of oil spill victims The dangers of revision: Any new regime would result in increases in liability for owners and also possibly receivers, charterers? Producers? The dangers of revision: Any new regime would result in increases in liability for owners and also possibly receivers, charterers? Producers? Sub-standard shipping - Support the IG’s initiatives Sub-standard shipping - Support the IG’s initiatives

INTERTANKO’s position (cont.) Sharing: recent reforms must be allowed time to settle otherwise it is pure speculation that there is an imbalance Sharing: recent reforms must be allowed time to settle otherwise it is pure speculation that there is an imbalance Understand the need for a regular review Understand the need for a regular review

IOPCF – Working Group October 04 – states divided October 04 – states divided March 05 – more states than ever spoke out but still they remained equally divided March 05 – more states than ever spoke out but still they remained equally divided

IOPC Fund Working Group STATES AGAINST REVISION OF THE CLC/FC REGIME ALGERIA ALGERIA BAHAMAS BAHAMAS CHINA CHINA CYPRUS CYPRUS DENMARK DENMARK GABON GABON GHANA GHANA GREECE GREECE LIBERIA LIBERIA MALAYSIA MALAYSIA MALTA MALTA MARSHALL ISLANDS MARSHALL ISLANDS NIGERIA NIGERIA NORWAY NORWAY PANAMA PANAMA PHILLIPINES PHILLIPINES POLAND POLAND RUSSIAN FEDERATION RUSSIAN FEDERATION REPUBLIC OF KOREA REPUBLIC OF KOREA SINGAPORE SINGAPORE TUNISIA TUNISIA UAE UAE VANUATU VANUATU

STATES FOR REVISION OF THE CLC/FC REGIME AUSTRALIA AUSTRALIA BELGIUM BELGIUM CANADA CANADA FINLAND FINLAND FRANCE FRANCE GERMANY GERMANY IRELAND IRELAND ITALY ITALY JAPAN JAPAN LATVIA LATVIA MEXICO MEXICO MONACO MONACO NETHERLANDS NETHERLANDS NEW ZEALAND NEW ZEALAND PORTUGAL PORTUGAL SPAIN SPAIN SWEDEN SWEDEN TURKEY TURKEY UK UK VENEZUELA VENEZUELA

The tanker industry today: 1. Vital to the global economy 2. Provides a flexible, cost efficient and environmental safe transportation system to meet the world’s energy needs 3. Invested billions of USD in renewing its fleet 4. Despite an increase in tonne miles accidents and spills have decreased

AS AN INDUSTRY WE MAY NOT BE LOVED BUT WE ARE NEEDED World Oil Consumption 3.6 billion ts World Oil Consumption 3.6 billion ts Transported by sea 2.2 billion ts Transported by sea 2.2 billion ts 60% transported by sea. 60% transported by sea.

Oil pollution into the sea Maritime sources

The world expects us to have 0 accidents. Even though % of oil is delivered safely It takes only one accident to change the industry therefore we must have continuous impovement

Tanker incidents: Source: LMIS, Informa, press, INTERTANKO Number

Accidental oil pollution from tankers and tanker trade Source: ITOPF, Fearnleys 1000 bn tm m ts spilt

The CLC/FC regime fulfulls its objectives by providing: Adequate compensation Adequate compensation Prompt compensation Prompt compensation Truly international in scope Truly international in scope No fault based regime No fault based regime

Who pays under the regime: The first call is always on owners The first call is always on owners 90% of all claims paid without any call on the Fund 90% of all claims paid without any call on the Fund Overall equal sharing in the cost of spills between owners and recievers Overall equal sharing in the cost of spills between owners and recievers

The IOPCF Assembly – October 05 It is crucial that as many states as possible say ”We support the existing regime - no further revision”

Criminalising accidental oil spills – International is being disregarded EU Draft Directive EU Draft Directive Canadian Bill C-15 Canadian Bill C-15

EU Directive - summary EU Directive - summary Accidental pollution occurring in the territorial sea and internal waters will be regarded as a criminal offence Accidental pollution occurring in the territorial sea and internal waters will be regarded as a criminal offence Suspects of ship-source pollution should be granted a fair and impartial hearing. Sanctions must be proportional Suspects of ship-source pollution should be granted a fair and impartial hearing. Sanctions must be proportional Ship-source pollution to be prosecuted if committed with intent, recklessly or serious negligence Ship-source pollution to be prosecuted if committed with intent, recklessly or serious negligence

Cont. Sanctions (fines etc) to be dealt with by member states Sanctions (fines etc) to be dealt with by member states Directive targeted at anyone eg s/o, crew, charterers, etc except local authorities Directive targeted at anyone eg s/o, crew, charterers, etc except local authorities

Canadian Bill C-15: Strict liability offence for pollution unless accused proves they took all reasonable steps to avoid the pollution Strict liability offence for pollution unless accused proves they took all reasonable steps to avoid the pollution Includes pollution within EEZ Includes pollution within EEZ Includes crew, managers ashore Includes crew, managers ashore Contrary to MARPOL and UNCLOS Contrary to MARPOL and UNCLOS

INTERTANKO’s action Clear and coordinated lobbying stategy Clear and coordinated lobbying stategy Maintain a regular dialogue with our industry counterparts Maintain a regular dialogue with our industry counterparts Backed up by a strong Insurance & Legal Committee and mandate from our Council Backed up by a strong Insurance & Legal Committee and mandate from our Council

The IOPCF Assembly – October 05 It is crucial that as many states as possible say ”We support the existing regime - no further revision”

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