INTERTANKO ATHENS TANKER EVENT THE REGULATORY ENVIRONMENT

1. INTERTANKO ATHENS TANKER EVENT THE REGULATORY ENVIRONMENT Jonathan Hare Skuld Colin de la Rue Ince & Co April 2005

2. OIL POLLUTION FROM TANKERS - COMPENSATION

3. INTERNATIONAL CONVENTIONS • Civil Liability and Fund Conventions 1992 – 86 states

4. INTERNATIONAL CONVENTIONS • Civil Liability and Fund Conventions 1992 – 86 states • CLC 92 alone – 9 states

5. INTERNATIONAL CONVENTIONS • Civil Liability and Fund Conventions 1992 – 86 states • CLC 92 alone – 9 states • CLC 69 – 45 states

6. INTERNATIONAL CONVENTIONS • Civil Liability and Fund Conventions 1992 – 86 states • CLC 92 alone – 9 states • CLC 69 – 45 states • Total 140 states

8. COMPENSATION LIMITS UNDER CLC 92 AND FC 92 • Fund limit now 203m SDR (approx US$300m)

9. COMPENSATION LIMITS UNDER CLC 92 AND FC 92 • Fund limit now 203m SDR (approx US$300m) • Owner’s limit - • Max limit nearly 90m SDR (approx US$130m) • Min limit for small ships

10. Stage One 50% INCREASE IN CONVENTION LIMITS SDR FC Nov 2003 203m 203m FC 135m 135m CLC Nov 2003 90m CLC 60m 4.5m 3m GT

11. Stage two - SUPPLEMENTARY FUND • Raises total compensation to 750m SDR • Optional third tier – only in Protocol states • Funded by levies on oil receipts

12. REVIEW OF REGIME IOPC Fund Working Group • Apportionment of compensation • Substandard ships

15. REVIEW OF REGIME P&I Clubs & apportionment • STOPIA • minimum contribution SDR 20 m. • in force from 3 March 2005 • a binding agreement • TOPIA as an alternative

16. REVIEW OF REGIME P&I Clubs & substandard ships • OECD Report • International Group response

17. REVIEW OF REGIME Proposals by International Group include: • a common checklist to be completed by underwriters • harmonised criteria for targeting ships to be surveyed • the establishment of a database • a double retention for a Club which insures a ship which another Group Club has declined to insure on the grounds of the unfit condition of the ship.

18. REVIEW OF REGIME Proposal - IMO Working Group • consolidation of surveys • improved sharing of information • collaboration by all interested parties ” chain of responsibility”

19. REVIEW OF REGIME • 9th Meeting of IOPC Fund Working Group in March • - inconclusive • Fund Assembly in October 2005 • The danger of fragmentation

20. REVIEW OF REGIME “The success of the current regime has been due in part to a satisfactory balance being struck between political and technical factors, and this balance needs to be kept if the regime is to maintain its widespread appeal.…A marginal decision to proceed with a revision is a recipe for fragmenting the system”

21. REVIEW OF REGIME DESIRING to adopt uniform international rules and procedures for determining questions of liability and providing adequate compensation in such cases……. Compensation not punishment

22. PREVENTION OF POLLUTION AND CRIMINAL LIABILITY

25. PROPOSALS POST-ERIKA and PRESTIGE • MARPOL amendments • Accelerated phase-out of single hull tankers • EU laws • Criminal liability

26. CRIMINAL LIABILITYMARPOL • Operational discharges and accidental pollution

27. CRIMINAL LIABILITYOperational Discharges • Lack of reception facilities • Deliberate discharges permissible within strict controls • Distance from land • Rate of discharge and degree of dilution • Special areas

28. CRIMINAL LIABILITYAccidental Discharges • Casualties: spills resulting from damage to ship or equipment • Other pollution: • Accidents in handling cargo or bunkers • Leakages (e.g. due to wear and tear)

29. CRIMINAL LIABILITYAccidental Discharges P&I Cover: • ”the accidental escape or discharge of oil or any other polluting substance”

30. CRIMINAL LIABILITYNon-accidental Discharges • discretionary cover • proviso that the member took all reasonable steps to prevent the infringement giving rise to the fine • insurability

31. CRIMINAL LIABILITYMARPOL • Strict liability for: • Operational discharges in breach of controls (even if breach accidental) • Accidental spills other than casualties

32. CRIMINAL LIABILITYMARPOL • No liability for pollution resulting from damage to ship • Unless caused by • i) lack of response to incident, or • ii) deliberate or reckless misconduct

33. CRIMINAL LIABILITYEU Directive • Illegal discharges • Test of serious negligence • Relationship with MARPOL • effect within and beyond territorial seas

34. EU DIRECTIVELegal and industry concerns • Test of liability for accidental spills is • subjective and unsuitable

35. PRESTIGE Master detained 2 years (83 days in jail)

36. PRESTIGEBMA Report • No clear cause of damage • No evidence of wrongdoing • Ship ordered to sea without regard to her condition • Treatment of master criticised

37. Tasman Spirit

38. EU DIRECTIVELegal and industry concerns • Test of liability for accidental spills is • subjective and unsuitable • contrary to accepted global regime

39. THE FUTURE • Global or regional laws? • Effective in preventing pollution? • Balance of political and technical factors?