The International Convention on Civil Liability For Bunker Oil Pollution Damage, 2001(See full pdf file)
In March 2001, the International Maritime Organization adopted a new International
Convention on Liability for Bunker Oil Pollution Damage. The Convention, once
ratified, will impose various burdens on non-tanker vessel operators, without, it
must be stated, bringing any substantial or significant benefit to the victims of
bunker oil spills.
What is the International Convention on Civil Liability for Bunker Oil Pollution
Damage, 2001, about?
Objectives - The International Convention on Civil Liability for Bunker Oil Pollution
Damage, 2001, was adopted to ensure that adequate, prompt, and effective
compensation is available to persons who suffer damage caused by spills of oil,
when carried as fuel in non-tanker vessels.
Geographical scope - The Convention applies to damage caused on the territory,
including the territorial sea, of State Parties, and in the exclusive economic zones
of States Parties, or if a State Party has not established such a zone, in an area
beyond and adjacent to the territorial sea of that State determined by that State in
accordance with international law and extending not more than 200 nautical miles
from the baselines from which the breadth of its territorial sea is measured.
Application - The Bunkers Convention covers liability and compensation for
pollution damage caused by oil spills, when carried as fuel in non-tanker vessels.
“Pollution damage” means:
a. loss or damage caused outside the ship by contamination resulting from the
escape or discharge of bunker oil from the ship, wherever such escape or
discharge may occur, provided that compensation for impairment of the
environment other than loss of profit from such impairment shall be limited to
costs of reasonable measures of reinstatement actually undertaken or to be
undertaken; and
b. the costs of preventive measures and further loss and damage caused by
preventive measures.
The convention is modelled on the International Convention on Civil Liability for Oil
Pollution Damage, 1969, as amended, which was adopted to ensure that adequate
compensation is available to persons who suffer oil pollution damage resulting from
maritime casualties involving oil-carrying ships. As with that Convention, a key
requirement in the Bunkers Convention is the need for the registered owner of a
vessel to maintain compulsory insurance cover.
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Another key provision is the requirement for direct action - this would allow a claim
for compensation for pollution damage to be brought directly against an insurer.
The Convention requires ships over 1,000 gross tonnage to maintain insurance
(presumably in a form similar to a COFR), or other financial security, such as the
guarantee of a bank or similar financial institution, to cover the liability of the
registered owner for pollution damage in an amount equal to the limits of liability
under the applicable national or international limitation regime, but in all cases, not
exceeding an amount calculated in accordance with the Convention on Limitation of
Liability for Maritime Claims, 1976, as amended.
Resolutions of the Conference - The Conference which adopted the Convention
also adopted three additional resolutions:
i. Resolution on limitation of liability - the resolution urges all States that
have not yet done so, to ratify, or accede to the Protocol of 1996 to amend
the Convention on Limitation of Liability for Maritime Claims, 1976. The 1996
LLMC Protocol raises the limits of liability and therefore amounts of
compensation payable in the event of an incident, compared to the 1976
Convention.
For ships not exceeding 2,000 gt, liability is limited to 2 million SDR (US$2.56
million) for loss of life or personal injury and 1 million SDR (US$1.28 million)
for other claims. Liability increases with tonnage to a maximum above 70,000
gt of 2 million SDR (US$2.56 million) + 400 SDR (US$512) per ton for loss of
life or personal injury, and 1 million SDR (US$1.28 million) + 200 SDR
(US$256) per ton for other claims.
The LLMC Protocol will enter into force 90 days after being accepted by 10
States;
ii. Resolution on promotion of technical co-operation - the resolution urges
all IMO Member States, in co-operation with IMO, other interested States,
competent international or regional organizations and industry programs, to
promote and provide directly, or through IMO, support to States that request
technical assistance for:
a. the assessment of the implications of ratifying, accepting, approving, or
acceding to and complying with the Convention;
b. the development of national legislation to give effect to the Convention;
c. the introduction of other measures for, and the training of personnel
charged with, the effective implementation and enforcement of the
Convention;
iii. Resolution on protection for persons taking measures to prevent or
minimize the effects of oil pollution - the resolution urges States, when
implementing the Convention, to consider the need to introduce national
legislation for protection for persons taking measures to prevent or minimize
the effects of bunker oil pollution.1 It recommends that persons taking
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reasonable measures to prevent or minimize the effects of oil pollution be
exempt from liability unless the liability in question resulted from their
personal act or omission, committed with the intent to cause damage, or
recklessly and with knowledge that such damage, would probably result. It
also recommends that States consider the relevant provisions of the
International Convention on Liability and Compensation for Damage in
Connection with the Carriage of Hazardous and Noxious Substances by Sea,
1996, as a model for their legislation.
Entry into force - The Convention is set to enter into force, twelve (12) months
following the date on which eighteen (18) States, including five (5) States each with
ships whose combined gross tonnage is not less than one (1) million gt have either
signed it without reservation as to ratification, acceptance or approval or have
deposited instruments of ratification, acceptance, approval or accession with the
IMO Secretary-General. The unusually high number of states required to ratify the
Convention may mean it will not come into force in the foreseeable future.
The Protocol of 1996 to amend the Convention for Maritime Claims, which
formulated the limits of liability and the amounts of compensation payable in the
event of pollution, required only 10 signatories and is still to be ratified. In fact, so
far, only four States have adopted that Convention.
Does the Bunker Convention apply to oil tankers?
No. Oil spills from tankers, including bunker spills, are covered by the International
Convention on Civil Liability for Oil Pollution Damage, 1969, as amended. This
Convention was adopted to ensure that adequate compensation is available to
persons who suffer oil pollution damage resulting from maritime casualties involving
oil-carrying ships. The Convention applies to all seagoing vessels actually carrying
oil in bulk as cargo, but only ships carrying more than 2,000 tons of oil are required
to maintain insurance in respect of oil pollution damage.
The Convention covers pollution damage resulting from spills of persistent oils
suffered in the territory (including the territorial sea) of a State Party to the
Convention. The Protocol of 1992 extended the scope of the 1969 Convention to
also cover the exclusive economic zones (EEZ) of the State Parties. It is applicable
to ships which actually carry oil in bulk as cargo, i.e. generally laden tankers, but
the Protocol of 1992 also extended the 1969 Convention to cover spills from seagoing
vessels constructed or adapted to carry oil in bulk as cargo so that it now
applies to both laden and unladen tankers, including spills of bunker oil from such
ships. However, bunker spills from ships other than tankers are not covered by the
Convention or Protocol.
You should also be aware, that there are year 2000 Amendments to the
International Convention on Civil Liability for Oil Pollution Damage, 1969, which
have raised the compensation limits for persons who suffer oil pollution damage, as
follows:
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For a ship not exceeding 5,000 gross tonnage, liability is limited to 4.51 million SDR
(US$5.78 million). Under the 1992 Protocol, the limit was 3 million SDR (US$3.8
million).
For a ship 5,000 to 140,000 gross tonnage, liability is limited to 4.51 million SDR
(US$5.78 million) plus 631 SDR (US$807) for each additional gross ton over 5,000.
Under the 1992 Protocol, the limit was 3 million SDR (US$3.8 million) plus 420
SDR (US$537.6) for each additional gross ton).
For a ship over 140,000 gross tonnage, liability is limited to 89.77 SDR (US$115
million). Under the 1992 Protocol, the limit was 59.7 million SDR (US$76.5 million).
What is the Bunkers Convention’s affect on companies operating vessels other
than tankers?
The Bunkers Convention came about because the current regimes covering oil
spills did not include bunker oil spills from vessels other than tankers. In this regard,
the need for a Bunkers Convention was highlighted in 1996 in a joint submission to
the 75th session of the Legal Committee by Australia, Canada, Finland, Norway,
South Africa, Sweden and the United Kingdom. It referred to the UK P&I Club’s
Analysis of Major Claims 1993 which had stated that “…half of the total number of
pollution claims arose from incidents involving ships not carrying oil cargo.”
In addition, Oil Spill Intelligence Report data confirmed that even for larger spills the
number of non-tanker vessel spills was significantly greater than the number of
tanker spills. Dealing with bunker spills from non-tankers was made more difficult
by the lack of a liability and compensation regime, while the nature of fuel oil itself
made spills of such oils more difficult and more costly to clean up.
Effects on companies operating non-tankers - As stated earlier, the Bunkers
Convention requires the registered owner of a non-tanker vessel to maintain
compulsory insurance cover.
In addition, under the Convention, a claim for compensation for pollution damage
can be brought directly against an insurer. The Convention requires ships over
1,000 gross tonnage to maintain insurance or other financial security, such as the
guarantee of a bank or similar financial institution, to cover the liability of the
registered owner for pollution damage in an amount equal to the limits of liability
under the applicable national or international limitation regime, but in all cases, not
exceeding an amount calculated in accordance with the Convention on Limitation of
Liability for Maritime Claims, 1976, as amended.
Conclusion - The Bunkers Convention came about after many discussions, having
first being mooted during debates on the 1992 Protocols to the International
Convention on Civil Liability for Oil Pollution Damage, 1969 and the 1971 IOPC
(FUND). The main reason for its re-introduction was that general cargo ships carry
more oil as bunkers than tankers carry as cargo, and there was no uniform
international legislation covering spills from vessels other than tankers.
The Bunkers Convention was brought about, therefore, to fill the last significant gap
in the international regime for compensating victims of oil spills from vessels. The
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Convention establishes a liability and compensation regime for spills of oil when
carried as fuel in non-tanker vessels’ bunkers.
Although the International Convention on Civil Liability for Oil Pollution Damage,
1969, as amended, covered spills, including spills of bunker oil, from vessels
constructed or adapted to carry oil in bulk as cargo, there were no provisions for
bunker spills involving vessels other than tankers. In this regard, and confirming
your presumption, the Bunkers Convention only applies to vessels other than
tankers.
As to the effects of the Convention on companies operating vessels other than
tankers, the Bunkers Convention is very much based on the International
Convention on Civil Liability for Oil Pollution Damage, 1969, as amended, and will
have similar effects. As stated earlier, however, it is important to note that although
the Bunkers Convention has now been adopted by the International Maritime
Organization, the unusually high number of states required to ratify the Convention
(18 states, including five (5) each with ships whose combined tonnage is not less
than 1m gt), may mean that it will not come into force in the foreseeable future.
It is also noteworthy that a major issue at the adoption meeting of the Convention
was the threshold for compulsory insurance. The U.K., Australia and Canada
delegations promoted the view that vessel of 300 gt and above should be included,
on the basis that the widest range of vessels should be addressed. However, due
to what one delegate characterized as “pressure from the flag states wanting to
limit the burden on shipowners” and the “desire to arrive at a convention by the end
of the meeting”, the higher 1,000 gt starting point was agreed. In addition, last-ditch
efforts to limit preventing or minimizing the affects of salvor exposure to claims,
should they cause pollution while trying to assist in oil spills, and to include a clause
protecting those taking preventive measures (“responder immunity”), failed.
Instead, the new Convention adopted a resolution that member states can develop
national legislation to exempt salvors from liability “unless the liability in questions
resulted from their personal act or omission.”
1. This resolution is aimed mainly to protect Salvors and was written in at their insistence when the
delegates refused to grant Salvors immunity in the Convention, as had been demanded by Salvors’
interests. However, national legislation can grant immunity and/or limited liability to any party taking
measures to prevent or minimize the effects of bunker pollution as such nation deems fit, consistent
with the mandates of the Convention, if such country becomes a signatory thereto.
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