POLLUTION FROM SHIPS Legal Developments and Handling of Incidents Colin de la Rue Stephen Askins Ince & Co January 2004

CIVIL LIABILITY AND COMPENSATION

INTERNATIONAL CONVENTIONS Civil Liability Convention 1992 (CLC 92) Fund Convention 1992

CLC 92 Strict liability on tanker owner for oil pollution damage “Channelling” of liability to owner Liability of insurer Limitation of liability

FUND CONVENTION International Oil Pollution Compensation Fund (IOPC Fund) Damage not adequately compensated by shipowner

HANDLING OF INCIDENTS

POLLUTION Media Politicians Emotion Multiple claims Misconceptions and mistrust I want to focus on the interface between the legal and PR issues because there are many ways in which the problems can be made worse both by lawyers paying insufficient attention to publicity aspects, as well as by media consultants issuing statements without due regard for the legal implications. Today we will focus on the importance of being clear about the owner’s priorities, and on some of the ways in which legal and PR efforts can and should be combined in a common strategy to serve the main objectives. From the viewpoint of the shipowner, his liabilities may be insured, but there may well be a risk of uninsured losses which are high on his agenda. In practice we have seen a wide variety of attitudes to reputation risks, ranging from a relative lack of concern on the part of some of the smaller or lower profile operators, to the top priority with which the oil majors seek to safeguard their public image. Arrest or detention of the ship involved in an incident may also have consequences for the shipowner which are not necessarily insured. The problems are often aggravated by public outrage or a sheer multiplicity of claims, with the result that a PR element may be involved in arranging her release. Normally the Owners’ P&I Club is at one remove from the glare of publicity, but all insurers know that the ultimate cost of settling claims can easily be affected by public perceptions of the way in which the claims are being handled.

EXPOSURE Pollution claims Detention of ship/crew Reputation I want to focus on the interface between the legal and PR issues because there are many ways in which the problems can be made worse both by lawyers paying insufficient attention to publicity aspects, as well as by media consultants issuing statements without due regard for the legal implications. Today we will focus on the importance of being clear about the owner’s priorities, and on some of the ways in which legal and PR efforts can and should be combined in a common strategy to serve the main objectives. From the viewpoint of the shipowner, his liabilities may be insured, but there may well be a risk of uninsured losses which are high on his agenda. In practice we have seen a wide variety of attitudes to reputation risks, ranging from a relative lack of concern on the part of some of the smaller or lower profile operators, to the top priority with which the oil majors seek to safeguard their public image. Arrest or detention of the ship involved in an incident may also have consequences for the shipowner which are not necessarily insured. The problems are often aggravated by public outrage or a sheer multiplicity of claims, with the result that a PR element may be involved in arranging her release. Normally the Owners’ P&I Club is at one remove from the glare of publicity, but all insurers know that the ultimate cost of settling claims can easily be affected by public perceptions of the way in which the claims are being handled.

WHAT IS BEING DONE TO COMPENSATE VICTIMS? Contact with claimants Explaining compensation arrangements Interim payments Making quick payments is not always easy In practice one of the biggest problems is that compensation is not easily paid until, at least, claims have been filed. Claimants commonly take a good deal of time to calculate the loss they think they have suffered, and to gather together at least an initial batch of supporting documents. To help them with this task a claims office has sometimes been set up in the location of the spill. This can speed up the process, but there are still many other problems to solve. One of these concerns the extent to which claims are actually allowable. P&I Clubs have leeway to enter compromise settlements, but do not want to set adverse precedents which the industry has been resisting for years. If a claim is agreed, or accepted as valid in principle, difficult decisions remain necessary about the proportion to be paid on an interim basis, taking into account the risk that the total might finally exceed liability limits and result in scaling down. However, this is just the tip of an iceberg of technicalities which we do not have time for now. Suffice it to say that often it has been one of our major objectives to overcome as quickly as possible the many legal complexities involved in making interim payments, in order to boost the PR response and thereby mitigate some of the problems we have discussed.

Braer

Sea Empress

Nissos Amorgos Settlements for 100% of approved amounts might have been paid long ago, but as it is, 2½ years after the spill, payments are still capped at 25%. This is all because of a few claims which appear to be highly speculative but are for vast sums of money. 48

Amorgos

TASMAN SPIRIT Tasman Spirit

THE ERIKA, PRESTIGE AND PROPOSALS FOR CHANGE

COMPENSATION Review of Conventions IOPC Fund Third Intersessional Working Group

COMPENSATION Shipowner’s liability Proposed extra incentives higher limit breaking limitation liability of charterers

Amoco Cadiz

COMPENSATION Keep it simple Keep to original purpose

PREVENTION OF POLLUTION AND CRIMINAL LIABILITY

PREVENTION Proposals Post-Prestige MARPOL amendments Accelerated phase-out of single hull tankers EU laws Criminal liability

CRIMINAL LIABILITY Operational Discharges MARPOL Annex I Problems of enforcement

CRIMINAL LIABILITY Accidental Discharges 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 Draft Directive “Illegal” discharges Covers accidental spills Including spills excluded by MARPOL Current position

CRIMINAL LIABILITY EU Draft Directive Operational discharges Enforcing existing laws

CRIMINAL LIABILITY EU Draft Directive Accidental spills Gross negligence Safeguards

Dealing with the media The PR battle – is it still worth doing? When The Worst Happens Dealing with the media The PR battle – is it still worth doing?

NUNCIA MAIS

IS IT STILL WORTH DEALING WITH THE MEDIA ?

JUPITER

ARGOMER 1

Prestige

The media spotlight

Alternative ways to deal with press Say Nothing Take positive steps to manage the media and public perception

NORDLAND

Prestige 13th November 2002

The Questions Most Asked During A Crisis what happened? who is to blame? what are you doing? does the vessel fly a ‘flag of convenience’? Is the crew ‘third world’? who owns the vessel? compensation - who will pay?