INTERTANKO ATHENS TANKER EVENT THE REGULATORY ENVIRONMENT Jonathan Hare Skuld Colin de la Rue Ince & Co April 2005

OIL POLLUTION FROM TANKERS - COMPENSATION

INTERNATIONAL CONVENTIONS Civil Liability and Fund Conventions 1992 – 86 states

INTERNATIONAL CONVENTIONS Civil Liability and Fund Conventions 1992 – 86 states CLC 92 alone – 9 states

INTERNATIONAL CONVENTIONS Civil Liability and Fund Conventions 1992 – 86 states CLC 92 alone – 9 states CLC 69 – 45 states

INTERNATIONAL CONVENTIONS Civil Liability and Fund Conventions 1992 – 86 states CLC 92 alone – 9 states CLC 69 – 45 states  Total 140 states

COMPENSATION LIMITS UNDER CLC 92 AND FC 92 Fund limit now 203m SDR (approx US$300m)

COMPENSATION LIMITS UNDER CLC 92 AND FC 92 Fund limit now 203m SDR (approx US$300m) Owner’s limit -  Max limit nearly 90m SDR (approx US$130m)  Min limit for small ships

FC Nov m 135m FC CLC Nov 2003 CLC GT 203m 135m 90m 60m Stage One 50% INCREASE IN CONVENTION LIMITS 4.5m 203m SDR

Stage two - SUPPLEMENTARY FUND Raises total compensation to 750m SDR Optional third tier – only in Protocol states Funded by levies on oil receipts

REVIEW OF REGIME IOPC Fund Working Group Apportionment of compensation Substandard ships

REVIEW OF REGIME P&I Clubs & apportionment STOPIA  minimum contribution SDR 20 m.  in force from 3 March 2005  a binding agreement  TOPIA as an alternative

REVIEW OF REGIME P&I Clubs & substandard ships OECD Report International Group response

REVIEW OF REGIME Proposals by International Group include: a common checklist to be completed by underwriters harmonised criteria for targeting ships to be surveyed the establishment of a database a double retention for a Club which insures a ship which another Group Club has declined to insure on the grounds of the unfit condition of the ship.

REVIEW OF REGIME Proposal - IMO Working Group consolidation of surveys improved sharing of information collaboration by all interested parties ” chain of responsibility”

REVIEW OF REGIME 9th Meeting of IOPC Fund Working Group in March  - inconclusive Fund Assembly in October 2005 The danger of fragmentation

REVIEW OF REGIME “ The success of the current regime has been due in part to a satisfactory balance being struck between political and technical factors, and this balance needs to be kept if the regime is to maintain its widespread appeal.…A marginal decision to proceed with a revision is a recipe for fragmenting the system”

REVIEW OF REGIME Compensation not punishment DESIRING to adopt uniform international rules and procedures for determining questions of liability and providing adequate compensation in such cases…….

PREVENTION OF POLLUTION AND CRIMINAL LIABILITY

PROPOSALS POST-ERIKA and PRESTIGE MARPOL amendments  Accelerated phase-out of single hull tankers EU laws  Criminal liability

CRIMINAL LIABILITY MARPOL Operational discharges and accidental pollution

CRIMINAL LIABILITY Operational Discharges Lack of reception facilities Deliberate discharges permissible within strict controls  Distance from land  Rate of discharge and degree of dilution  Special areas

CRIMINAL LIABILITY Accidental Discharges Casualties: spills resulting from damage to ship or equipment Other pollution:  Accidents in handling cargo or bunkers  Leakages (e.g. due to wear and tear)

CRIMINAL LIABILITY Accidental Discharges P&I Cover: ”the accidental escape or discharge of oil or any other polluting substance”

CRIMINAL LIABILITY Non-accidental Discharges discretionary cover proviso that the member took all reasonable steps to prevent the infringement giving rise to the fine insurability

CRIMINAL LIABILITY MARPOL Strict liability for:  Operational discharges in breach of controls (even if breach accidental)  Accidental spills other than casualties

CRIMINAL LIABILITY MARPOL No liability for pollution resulting from damage to ship Unless caused by  i) lack of response to incident, or  ii) deliberate or reckless misconduct

CRIMINAL LIABILITY EU Directive I llegal discharges Test of serious negligence Relationship with MARPOL  effect within and beyond territorial seas

EU DIRECTIVE Legal and industry concerns Test of liability for accidental spills is  subjective and unsuitable

PRESTIGE Master detained 2 years (83 days in jail)

PRESTIGE BMA Report No clear cause of damage No evidence of wrongdoing Ship ordered to sea without regard to her condition Treatment of master criticised

Tasman Spirit

EU DIRECTIVE Legal and industry concerns Test of liability for accidental spills is  subjective and unsuitable  contrary to accepted global regime

THE FUTURE Global or regional laws? Effective in preventing pollution? Balance of political and technical factors?