CODES AND CONVENTIONS QUESTIONS & ANSWERS PART-9

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Q. Describe the background & relevance of the international convention on civil liability for the bunker oil pollution damage, 2001. Define Pollution damage, Bunker oil, Time limits of claims & Exclusions under Bunker Conventions & explain how they differ from CLC 92 convention.

Answer:-

Background:

  • Initially previous civil liability on the pollution was drawn to only cover pollution damage from tanker ships (ships carrying oil in bulk) which are more than(>) 2000 GT & above including Bunker spills.
  • There was no system in place to cover liability arising from the bunker spills from other ships. Thus it was deemed essential to work out a new convention dealing with Liability for the Bunker Oil Pollution, which could provide compensation & limit the liability of ship owners & cargo owners as required.
  • This gave birth to the International Convention on Civil Liability for the Bunker Oil Pollution Damage, 2001. The Convention was accepted to assure that adequate, prompt, & effective compensation is available to persons who suffer damage caused by spills of the oil, when carried as fuel in ships bunkers. The Convention applies to the damage caused on the territory, including the territorial sea, & in exclusive economic zones of the States Parties.
  • The convention is modelled on the International Convention on the Civil Liability for Oil Pollution Damage, 1969 (CLC69). As with that convention, a key factor in the bunkers convention is the need for the registered owner of a vessel to maintain compulsory insurance cover.
  • Another key provision is the need for the direct action – this would allow a claim for the compensation for pollution damage to be brought directly against an insurer.
  • The Convention need ships over 1,000 gross tonnage(GT) to maintain insurance or other financial security, such as the guarantee of a bank, to cover the liability of the registered owner for the pollution damage in an amount equal to the limits of liability under the probable national or international limitation regime, but in all cases, not exceeding an amount calculated in compliance with the Convention on Limitation of Liability for the Maritime Claims, 1976, as modified.

Under the 1996 LLMC Protocol, the limitation of liability for the property claims for ships not exceeding 2,000 gross tonnage(GT) is 1 million SDR (US$1.5 million).

For the larger ships, the following additional amounts are used in calculating the limitation amount:

  • For each ton from 2,001 to 30,000 tons, 400 SDR (US$600)
  • For each ton from 30,001 to 70,000 tons, 300 SDR (US$450)
  • For each ton in excess of 70,000, 200 SDR (US$300)

The problems related with the cost & damages recovery following a bunker pollution incident had to do with one or more of the following reasons:

i. claimants should prove  the faults where a spill involved a persistent oil;

ii. the vessel was flagged in another State & it might have been difficult to enforce a judgement;

iii. there was no automatic right to get a claim in the State where the spill occurred;

iv. the legal costs of getting a claim could be prohibitive;

v. the shipowner, generally a single-ship company having a valueless ship, had no other assets (and was generally insolvent);

vi. the registered shipowner had no insurance; &

vii. the vessel was insured but the insurer, with an insolvent shipowner not able to pay, was sheltered behind the “pay to paid” clause and/or any other policy coverage defences to avoid payment.

In reply to the above problems & with the desire to fill the gap in a uniform way at international level, the IMO accepted the “International Convention on Civil Liability for the Bunker Oil Pollution Damage 2001” (the “Bunker Convention”).

Relevance:

A). Pollution Damage:

“Pollution Damage” is defined as:

(a) The loss occurred outside the ship by the contamination resulting from the discharge of the bunker oil from the ship, wherever such discharge may happen, provided that the compensation for the impairment of the environment other than loss of profit from such an impairment shall be limited to costs of reasonable measures of reinstatement actually undertaken or to be undertaken; &

(b) the costs of preventive measures & further loss or damage caused by preventive measures.”

Bunker Oil – Bunker Oil is defined as “any hydrocarbon mineral oil, including lubricating oil, used or intended to be used for the propulsion of the ship, & any residues of such oil”.

Apart from the substitution of the word “oil” with “bunker oil”, the definition is same to that in the CLC 1992.

Time Limits For Claims:

Art. 8 of the Bunker Convention is identical with the Art. VIII of the CLC 1992 & provides for a time limit for action under the convention of 3 years from the date when the damage occurred &, in any event, 6 years from the date of the incident which caused the damage. Where the incident consists of a series of the occurrences, the 6 years‟ periods shall run from the date of the first such occurrence.

Exclusions:

  • Art.4 (1) provides that the Bunker Convention does “not apply to the pollution damage as defined in the Civil Liability Convention, whether or not compensation is payable in respect of it under that Convention”.
  • Also, the Bunker Convention does not apply to warships, naval auxiliary or other ships owned or operated by a State & used, for the time being, only on Government non-commercial service unless a State Party decides otherwise
  • Pollution damage caused by the tankers (either from their cargoes of “persistent” oil or their bunkers) where the CLC/Fund regime is applicable is covered by the CLC/Fund scheme only. Claimants cannot look at the Bunker Convention for recovery of the damages caused by oil pollution from such ships because sufficient compensation (or compensation at all) cannot be retrieved under the CLC/Fund scheme