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CRITICAL ANALYSIS OF CONVENTION ON CIVIL LIABILITY FOR OIL POLLUTION DAMAGE, 1969

INTRODUCTION

The International Maritime Organization (IMO) treaties serve as the primary regulatory framework for the global system addressing the concerns of ship-source oil spill responsibility and compensation. Constructing on the principle that “polluters must pay”, the IMO regulation holds the shipping industry liable.[1]The civil liability treaties provide a system of required liability insurance as well as the concept of strict liability for ship owners. Two conventions, namely the International Convention of Civil Liability for Oil Pollution Damage, 1969 and the International Convention on the Establishment of an International Fund for Oil Pollution Damage, were created to provide a comprehensive two-tier system of damages for those who suffered loss as a result of oil spills within the jurisdictions of member states. Later, these conventions were clubbed together as the Civil Liability conventions, 1992 (CLC).[2]

WHY DO WE NEED SUCH A CONVENTION?

Due to the extremely enormous volumes of oil leaked, oil pollution is currently one of the primary causes of marine environmental harm, which is the major cause of worry. Oil leaks are typically brought on by shipping mishaps, fatalities, and vessel cleaning activities.[3]

When it comes to assessing and quantifying damages, the effects of an oil spill may present significant challenges. Damage may take many different forms, such as bodily harm and monetary loss. Both specific people and society at large are impacted. It has an impact on commercial organizations and, most significantly, the environment. For instance, a catastrophic oil leak would have a significant negative effect on the fishing and tourist industries. If insufficient damages were awarded, the impact on the local economy may cause the State to incur significant indirect costs through decreased tax income, additional welfare programs, and even the societal responsibility for the cost of clean-up. Therefore, it is important to examine the legislation pertaining to responsibility and compensation for oil pollution harm.

Liability under CLC

The ship’s owner, operator, charterer, or the owner of the oil that caused the damage are the possible parties held accountable for the harm. According to the convention, only the owner may be held accountable for the responsibility, which is attributable to him or her.[4] No other party may be held accountable unless they intentionally or carelessly cause harm. The 1969 CLC assigns responsibility for the damage to the ship owner at the time of the disaster. The proprietor of the vessel from which the harmful oil spilled or was discharged is strictly liable, with a few limited exceptions.[5] The burden of proof falls on the owner to establish the validity of each exception.

If the ship owner can demonstrate that the damage was caused by a conflict, hostilities, civil war, revolt, or rare, unavoidable, and unstoppable natural phenomena, he may be exempt from accountability. Or it was entirely brought on by a third party’s intentional damage-causing act or omission. Or it was entirely the result of any government or authority that was in charge of maintaining lights or other navigational aids acting wrongly or negligently while performing its duties. Any warships or ships that were currently being employed for non-commercial purposes by the government of any State were likewise exempt from liability. It is impossible to divide up the damage caused by an oil leak from two or more ships among the owners. Each owner is subject to joint several responsibilities under the CLC.[6]

Jurisdiction

The Exclusive Economic Zone (EEZ) and territorial sea of a state signatory to the agreement are the only places where pollution damage is covered under the convention[7].  If a country does not have a clearly demarcated EEZ boundaries then this convention will not be applied to an area further than 200 nautical miles, measured from the territorial sea of that particular state. In other words, if a particular State does not have an EEZ, that area should be interpreted to be an area beyond and adjacent to that State’s territorial sea, as determined by that country in consonance with international law. The geographical focus has been widened to increase coastal state intervention authority in the regions outside the EEZ to protect the environment. 

Compensation Claim

Any natural or legal person who has been harmed may file a claim for compensation, including state authorities who carry out cleanup operations or preventive measures, businesses, and private individuals who sustain a personal injury, property damage, or loss of income or profit due to pollution damage. Instead of the earlier technique of exchanging gold and converting it to the currency of that particular country, Special Drawing Rights (SDRs) were used for IMF transactions to pay out compensation to the parties.

Compulsory insurance

According to the Convention, every ship transporting 2000 tonnes or more of oil must be insured or have some kind of financial security equal to the ship’s liability limit, or mandatory insurance. The ship will not be allowed to trade, enter, or leave the ports of Contracting States if an insurance document is not carried on board at all times.[8]

The relevant authority of the Contracting State awards a certificate to the vessel if it is satisfied that adequate insurance or other security seems to be in place. P&I clubs often provide this type of insurance,[9] which typically covers third-party liability and oil spills to the degree and the maximum extent permissible by the Convention’s criteria.

Conclusion

The Fund Convention was successful in establishing swift procedures for the payment of compensation, and the number of governments that have ratified the Conventions is increasing, and the legal framework for accountability and compensation for damage from oil contamination will be harmonized through the process. The claims for damages made by the states that ratified both conventions were appropriately compensated.

The responsibility and damages system established by IMO Conventions must be followed by States in a completely uniform and reciprocal manner. Until now, States are willing to give up some of their sovereign rights in exchange for a stronger guarantee of protection for their interests under the control of another State and because of that the liability and compensation system has performed quite successfully.

Author(s) Name: Khushi Nigam (Symbiosis Law School, Pune)

References:

[1] R. Bhanu Krishna Kiran, Liability and Compensation for Oil Pollution Damage: An Examination of IMO Conventions, 3 NUJS LAW REVIEW, (2010).

[2] Id.

[3]National Oceanic and Atmospheric Administration, https://www.noaa.gov/education/resource-collections/ocean-coasts/oil-spills (last visited Dec. 27, 2022).

[4] Convention on Civil Liability for Oil Pollution Damage 1969, art IV, ILO (1969).

[5] Ellerbe J M, Strict Liability for oil spills in Wyoming, 18 LAND WATER LAW REVIEW.

[6] Convention on Civil Liability for Oil Pollution Damage 1969, art. III (2), ILO (1969).

[7] Convention on Civil Liability for Oil Pollution Damage 1969, art. IV (1), ILO (1969).

[8] Convention on Civil Liability for Oil Pollution Damage 1969, art. VII, ILO (1969).

[9] Anish, The Importance of P&I club in shipping, MARINE INSIGHT (Dec. 27, 2022, 23:10 PM), https://www.marineinsight.com/marine-safety/the-importance-of-p-i-club-in-shipping/.