liability

1

BSc(Hons)InternationalSupplyChainandShipping

Management

MAR316HKInternationalShipping

StudentName:LeungKamYuen

StudentID:10298848

Date:July2010

WordsCount:1,976

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Content

Introduction...............................................................................................................................3

CivilLiabilityConvention............................................................................................................4

FundConvention........................................................................................................................4

ContributionofFundConvention..............................................................................................5

2003SupplementaryFund.........................................................................................................5

LimitationofLiability.................................................................................................................6

TheProcedureofClaim..............................................................................................................6

IdentificationofLiability............................................................................................................7

TheextensionofCLCandFund..................................................................................................7

Behaviorofshipowner...............................................................................................................8

Influencetotheshipsize...........................................................................................................8

Behaviorofoilreceiver..............................................................................................................9

RelevantMaritimeparty...........................................................................................................9

TheConsiderationofPublicImage..........................................................................................10

Simplifiedadministrationprocedureforgovernment.............................................................10

ThelackofresponsibilityinthecompensationofCLC&Fund................................................10

Bibliography.............................................................................................................................11

Appendix..................................................................................................................................12

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Introduction

llcreateunbelievableimpact

tothelifecycleincaofoilspill(ascargo,bulkorbunker).AfterTorrey

Canyonincidentin1967,thecompensationscheme(twovoluntary

agreementsandtwointernationalConventions)wasbeingdeveloped,inorder

todefinethecompensationtorelevantpartieswhoarebeingsufferedbythe

incident,andalsoidentifyandforcethepartywhoneedstoundertakethe

untary

agreementswereterminatedin1997,whiletheConventionswere1969

InternationalConventiononCivilLiabilityforOilPollutionDamage(1969CLC)

andthe1971InternationalConventionontheEstablishmentofaninternational

FundforCompensationforOilPollutionDamage(1971FundConvention).In

1992,theoldregimewasamendedbytwoProtocolsthatwasaimtoincrea

thelimitationofcompensationandextendthescopeofapplicableareafrom

ndedConventionisknownasthe1992Civil

LiabilityConvention(1992CLC)andthe1992FundConvention(1992Fund).

1969CLC&1971Fundonlyapplytoterritory,includingTerritorySeaof

contractingstate,whilein1992CLC&FundarecoveringExclusiveEconomic

Zoneofstate,andalsoprovidingtheexpenforthethreatofpollution

damageinadvance.

Further1992protocol,avoluntaryagreementwasintroducedasInternational

SupplementaryFundProtocolforCompensationforOilPollutionDamage

2003(SupplementaryFund),inordertofurtherincreathelimitationof

compensationandcoverthecompensationwhen1992CLCand1992Fund

arenotsufficient.

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CivilLiabilityConvention

CLCistheprimarytierofcompensationthatthetankerownersareforcedto

takethefirstlegalliabilityonpollutiondamagecaudbyanyincidents,no

matterthatthetankerisladenornot,andalsonomattertheincidentoccurring

bytheownerhimlfornot(exceptfewcircumstances,suchasactofwar).

However,meanwhile,underCLC,theowner'sliabilityislimitedtoanamount,

badonthegrosstonnageoftanker.(Thelimitationisnotapplytothe

incidentisprovidebyownomission,orpersonalact.).Inordertoachievethe

potentialfinancialobligationunderCLC,ownersofthetankercarryingmore

than2000tonsofpersistentoilasbulkarerequiredtobeinsuredorsuch

financialcurity,commonknownProtectionandIndemnityAssociation

(P&IClub),non-profitable&mutualassociationsinsuretheirshipowner

suretheownershavesufficient

isapplyingtoall

agoingship,exceptthewarshipsandanygovernmentaloperating,

tificateisissuedbytheState

toprovetheship'heless,United

State,asthemajoroilimportcounty,isnotthememberofCLCsincethe

protocolof1984,andtheyprefertoestablishanunlimitedliabilityagreement.

FundConvention

Incathecompensationexceedsthelimitationorinadequateorunobtainable

againstCLC(suchastheshipownerescapetheliability,shipownernotmeet

theCLCobligation,amountofcompensationoverCLClimitation),theFund

Conventionbecomesthetiertwoincompensationschemeforthepollution

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distocompensatetheincident

suffe

FundisalsoprovidingtheassistancetotheStatefortreatingthethreatof

r,thefundisnotobligedtopersonifthedamageiscaud

byhisdeliberatedmisconduct.

ContributionofFundConvention

Thecostof1992FundConventioniscontributedbytheprivatecompanyor

otherentityin1992FundStateinwhichreceivesanannualquantityofmore

than150,000tonnesofoilcarriagebya(Table1).TheAsmblyofthe1992

Fundcontrolstheamountthatshouldbeleviedeachyearforthe

administrationcostandthecompensationexpen.

2003SupplementaryFund

2003SupplementaryFundistablishedbyinter-governmentalorganizations

plementaryFundis

additionalcompensationincatheamountoftheFundstillnotbeingcovered.

ThecontributionoftheSupplementaryFundisfromtheoilreceiverofthe

theupgradefromthe1992Fund,butanoptional.

Diagram2isshowingtherelationshipofmembershipbetweentheFundand

the2003SupplementaryFund.

ThefollowingistheoverallfeatureofbothCLC,FundandSupplementary

Fund:

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LimitationofLiability

Therearelimitedamountforthecompensationof1992CLC,1992Fundand

imisdefinedtothecompensationfor:

Preventivemeasures(includingclean-upcost)

Damagetoproperty

Economicalloss;and

Reinstatementofimpairedenvironments

TheProcedureofClaim

Theclaimsarerequiredtoprentwithintimeframe,theclaimantsshouldhave

imantswill

lotheirrightofcompensationafterthreeyearsofthedateincident

occurrenceandinanyeventwithinsixyearsofthedateoftheincident,unless

theyobtaintheCourtpermitagainstthetankerownerandrelevantinsurers.

Theprocessofclaimsisdependedonhowlongittakesclaimantstoprovide

therequiredinformationofP&ICluband1992Fundandhoweasytoanalysis

thatinformation.

Theindividualgroupisformednormallytobeaddresdtheclaimsofsignal

accident,associatedwiththeP&ICluband1992Fund,actsasthetechnical

experts(oftenmembersoftechnicalstafffromInternationalTankerOwners

PollutionFederation).Meanwhile,claimantshavetoprovidethedetailof

,eachofclaim

mustbesupportedbytheevidencesuchasinvoice,explanatorynotes.

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ThefollowingarethediscussionhowtheCLCandFundinfluenceto

internationalshipping:

IdentificationofLiability

UndertheCLC,thetankerownersintheContractStatesareprotectedby

kerownersareableto

i,thepollution

damageandaffectedeconomiclosswillnotbecompensatedduetothe

ile,theownerisnowbeingidentifiedas

thefirstpartytoundertaketheliabilityofaccident,sothattheclaimantsdonot

addition,theinsurancecompanycanreleathecompensationtothe

claimantsdirectlyoncetheincidentisjudgedasreasonableclaim(purely

politicalandpublicrelationsreasonswillnotbevalidasreasonableclaim).

TheextensionofCLCandFund

TheCLCandFundareprovidingtheskeletonofthecompensationnotonlythe

erfundandconventionwere

extended,consideringthesimilarcircumstancesintheotheraspectsorother

ce,duetotheshipsizeexpand,thecontainedbunkerof

shipwillbecomesignificantonthedamageofenvironmentincaoftheship

ore,theBunkerConventionisforcedtoentryin2008,fortho

tentofthisConventionisreferringtheexperience

erexampleistheHNSConventionadoptedbyIMOin

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1996,inwhichthecompensationforshipincidentthattheresultofthe

nventionistablished

intotwotiersystem,thocontentandformationarereferringboththeCLC

andtheFund.

Behaviorofshipowner

Theshipownerisprotectedintermoffinancialincaoftheaccident

pensationcostisfinancedduetothecompulsoryinsurance

nerbusinessdoesnotbeinfluencedriously

duetosingleincident,andtheycancontinuouslyrunthebusinesswithout

entrybarrierisdissolved,thenewplayerwillnottakethisuncertainfactors.

Influencetotheshipsize

Inaddition,thereisafactorthattheshipistrendedtomaximizethetonnageof

tanker,becautheamounttopayfromtankerownerisfixedoncethe

tonnageisover140,000(undertheschemeofCLC).AccordingtoAjoint

IPIECA/ITOPFPublication2007,“Underthe1992CLC,themaximumpaidby

theownerofalargetankerofover140,000GTisSDR89.77million(about

US$135million)”.

Thecostwillnormallybethesameeventheshiptonnageis140,000,150,000

ormore,unlessthememberstatesapplytheotheragreementsuchas

(STOPIA2006)[4]

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Behaviorofoilreceiver

TheFund,asthefinancialpooloftheoilreceiver,

annualcontributedamountisnormallybadontheestimatedcostofincident.

Therefore,asoilreceiver,theywilldoallthebesttopreventanincidentwhich

rtofurtherprotectthefund,

thesame

time,improvingtherviceleveloftankerownersandoperators,toavoidthe

accidentoccurring.

RelevantMaritimeparty

Generally,duringexecutionoftheConventionortheFund,somecostwillbe

generated,suchasinsurancecost,administrationcost,surveyand

ndsoffunctioncostsarecontributingalargeamount

inglobalbusiness(SeeTable4astheexampleoftheexpenof1992Fund).

Hence,thatisgeneratinganumberofcareersinshippingindustry,whichisa

gleincidentofficeforhandlingclaims,asactuallya

specialistgroupwhichisnotonlytreatingtheclaimoftheincident,butalsoas

anexpertitaskforcetostudywhytheincidentoccurring,andhowtoavoid

preventionduringthetechnicalexpandonship,

buttheshipbuildersandshipownersmayignorecertainissuewhenthey

decidetoexpandthesizeofship.

Thebusinessregardtoinsurancewasactivatedduetothecompulsoryof

lementationofinsuranceistoimprovethestandardand

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qualityofshipsimultaneously,sincetheinsurersareundertakingtheriskin

caoftheoilspill,therefore,theyarethepartytomonitorandsurveytheship.

1992Fundassiststofacilitateandencouragetheinformationsharingamong

theinsurers,thattheyrealizethispracticecouldimprovethequalityofshipping

sincethetransparentoftheinformationamongtheinsurerscouldidentifythe

r,thecoordinationofFundisdependingonhow

insurers,tankerowner,andcargoreceiversreleatheirinformation.

TheConsiderationofPublicImage

TheConventionandtheFundarebearingthesocietyresponsibility,providing

is

compensation,oilrelevantparties(includingtankerowner)willnotbeattacked

hinvironmentalresponsibilitybythesociety,particulartomanythepollution

protectionorganizationsareestablishedinrecentyear,likeGreenPeace.

Simplifiedadministrationprocedureforgovernment

Thetankerwithqualifiedshipowner&oilreceiverundertheCLCandFund,will

beissuedthecertificates,

governmentcansimplyidentifywhichtankerisgrantedtoentryherjurisdiction.

ThelackofresponsibilityinthecompensationofCLC&Fund

Nowadays,theshipownerisnotthepersonwhooperatestheshipnormally.

Theoperationofshipmaybeindividualpersonorothershipmanagement

heConventionorFund,theoperatorisnot

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gh,theoperatorisunder

supervidbycertainsurveyorbenchmark,theyarenotundertakingthe

havenotbeenguidedduringthecompensation,ingeneral,theyeasilyescape

awayanyliabilitiesbutthetankerowneroroilreceiverswillfullysufferinstead.

Bibliography

[1]TheInternationalTankerOwnersPollutionFederationLimited,AJointIpieca/itopfPublication

(February2007),"OILSPILLCOMPENSATION",AGUIDETOTHEINTERNATIONALCONVENTIONSON

LIABILITYANDCOMPENSATIONFOROILPOLLUTIONDAMAGE

[2]InternationalOilPollutionCompensationFunds(2010),REPORTONTHEACTIVITIESOFTHE

INTERNATIONALOILPOLLUTIONCOMPENSATIONFUNDSIN2009

[3]InternationalOilPollutionCompensationFunds(2009),REPORTONTHEACTIVITIESOFTHE

INTERNATIONALOILPOLLUTIONCOMPENSATIONFUNDSIN2008

[4]TheInternationalTankerOwnersPollutionFederationLimited,AJointIpieca/itopfPublication

(2007),"OILSPILLCOMPENSATION",AGUIDETOTHEINTERNATIONALCONVENTIONSONLIABILITY

ANDCOMPENSATIONFOROILPOLLUTIONDAMAGE,Feb,p.18,“Howmuchdoesthetankerowner

pay?”

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Appendix

Diagram1:ThethreelevelsofcompensationestablishedbytheinternationalConventions[1]

Table1–Contributionstothe1992FundbyMemberState[2]

Diagram2–Annualmembershipofthe1971,1992andSupplementaryFund

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Table2–Thelimitliabilityagainstshipsizeofthe1992CLC[2]

Table3–ThelimitedliabilityoftheCLC,FundandSupplementaryFund[3]

Table4-1992FundKeyFinancialFiguresfor2009[2]