Oil pollution from tankers

In most parts of the world liability to pay compensation for oil spills from tankers is governed by laws based on an international system established by the Civil Liability and Fund Conventions 1992.

Under the Civil Liability Convention (CLC 92), responsibility for pollution damage is borne by the owner of the ship on a strict liability basis (i.e., regardless of fault), up to a limit calculated by reference to the tonnage of the ship.

If the established claims exceed that limit, supplemental compensation is available under the 1992 Fund Convention from the International Oil Pollution Compensation Fund (the 1992 Fund), an intergovernmental body with its headquarters in London.  This brings the total compensation payable under both Conventions to an all-inclusive limit of SDR 203 million (currently approx. US$320 million).

This two tier system of compensation is now in force in 114 states, being the majority of coastal nations, with the United States as the most notable exception.

In 31 of these states a third tier of compensation is available up to SDR 750 million/US$1.1 billion from the Supplementary Fund.  This is a sister organisation administered by the same secretariat as the 1992 Fund.

In practice the main issue of concern to shipowners and their insurers have fallen within the following general areas:

  • Applicability of the regime to the particular vessel
  • Compulsory insurance and certification
  • Validity of claims
  • Limitation of liability
  • Funding of payments.

Liability for oil pollution from tankers is examined in Chapter 2 of Shipping and the Environment, which deals with compensation from the shipowner under the Civil Liability Conventions, and in Chapter 3, which deals with compensation from the IOPC Funds.