IOPC Funds

About IOPC Funds

The IOPC Funds are two intergovernmental organisations (the 1992 Fund and the Supplementary Fund) which provide compensation for oil pollution damage resulting from spills of persistent oil from tankers.

The IOPC Funds have been involved in 150 incidents since 1978 and have paid some £600 million in compensation. The 1992 Fund has 114 Member States, 31 of those are also Supplementary Fund Member States.

Status

Originally established in 1978, the international liability and compensation regime is now based on two IMO Conventions which ensure the sharing of the cost of oil spill incidents at sea between the shipowner and the oil receivers.

The relevant Conventions are:

• the 1992 International Convention on Civil Liability for Oil Pollution Damage (1992 Civil Liability Convention); and
• the 1992 International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (1992 Fund Convention).

A Protocol to the 1992 Fund Convention was adopted in 2003, which established a Supplementary Fund (Supplementary Fund Protocol).

The IOPC Funds are funded by the oil industry and managed by Governments. Its objectives and functions are defined by the Contracting Parties to the 1992 Fund Convention and Supplementary Fund Protocol.

Obligations/responsibilities

1992 Civil Liability Convention, Article II

The 1992 Civil Liability Convention applies (a) to pollution damage caused:

(i) in the territory, including the territorial sea, of a Contracting State, and
(ii) in the exclusive economic zone of a Contracting State, established in accordance with international law, or, if a Contracting State has not established such a zone, in an area beyond and adjacent to the territorial sea of that State determined by that State in accordance with international law and extending not more than 200 nautical miles from the baselines from which the breadth of its territorial sea is measured;

(b) to preventive measures, wherever taken, to prevent or minimize such damage.

1992 Fund Convention, Article 2

The aim of the 1992 Fund is to provide compensation for pollution damage to the extent that the protection afforded by the 1992 Civil Liability Convention is inadequate.

Supplementary Fund Protocol, Article 4

The Supplementary Fund shall pay compensation to any person suffering pollution damage if such person has been unable to obtain full and adequate compensation for an established claim for such damage under the terms of the 1992 Fund Convention, because the total damage exceeds, or there is a risk that it will exceed, the applicable limit of compensation laid down in article 4, paragraph 4, of the 1992 Fund Convention in respect of any one incident.

Role and/or Services

Under the 1992 Civil Liability Convention, which provides the first tier of compensation, the shipowner has strict liability for any pollution damage caused by the oil, i.e. the owner is liable even if there was no fault on the part of the ship or its crew. However, the shipowner can normally limit his financial liability to an amount that is determined by the tonnage of the ship. This amount is guaranteed by the shipowner’s liability insurer.

The 1992 Fund Convention provides a second tier of compensation which is financed by receivers of oil in 1992 Fund Member States after sea transport. An extra layer of compensation is available to Supplementary Fund Member States.

The international liability and compensation regime can provide up to 203 million SDR ($US 285.6 million) to 1992 Fund Member States and 750 million SDR ($US 1 055 million) to Supplementary Fund Member States.

The 1992 Fund Convention also applies to spills of persistent oil even if the ship from which the oil came cannot be identified, provided that it is shown to the satisfaction of the 1992 Fund, or in the case of dispute to the satisfaction of a competent court, that the oil originated from a ship as defined in the 1992 Fund Convention.

Resources

(if applicable)

The 1992 Fund normally prepares claim forms for each incident<4>. The form will be available to download from www.iopcfunds.org or can be requested from the 1992 Fund/shipowner’s insurer. Claimants are advised to use the claim form and submit it together with all the documentation necessary to support their claim.

The IOPC Funds has published a Claims Information Pack to assist claimants in a Member State following an oil spill incident. The pack includes the 1992 Fund Claims Manual, which is practical guide to presenting claims against the IOPC Funds, as well as a number of sector  specific guidelines. These documents are available electronically via the Funds’ website (www.iopcfunds.org) and hard copies are available from the Secretariat upon request.

Occasionally, when an incident gives rise to a large number of claims, the 1992 Fund and the P&I Club jointly set up a local claims office so that claims may be processed more easily.

It is recommended that authorities in an IOPC Funds Member State affected by an incident involving a tanker carrying persistent oil should contact the IOPC Funds’ Secretariat as soon as possible following the incident. Prompt notification will enable the IOPC Funds to consider taking appropriate action that could prove beneficial for the efficient processing of future claims.

Procedure

The 1992 Fund should be notified of any significant oil pollution incident involving a tanker carrying persistent oil as soon as possible to enable it to engage experts and closely monitor the situation.

Since in most cases the 1992 Fund only pays compensation once the shipowner/insurer has paid up to the limit applicable to the ship involved, claims should first be submitted to the shipowner or his P&I Club.

In practice, claims are often channeled through the office of the P&I Club’s correspondent closest to the incident location. Because of the close co-operation between the Fund and the insurer, claims, including supporting documentation, need only be sent to either the P&I Club/correspondent or the Fund.

The 1992 Fund and the P&I Clubs try to reach agreement with claimants and pay compensation as promptly as possible. They may make provisional payments before a final agreement can be reached if a claimant would otherwise suffer undue financial hardship. Within one month of receipt of a completed claim form and registration of a claim, the Secretariat will aim to provide claimants with an acknowledgement of receipt of the claim together with an explanation of the assessment procedure which will be followed thereafter.

Additionally within six months of registration of the claim, the Secretariat will aim to provide the claimant with an initial view in the form of a letter notifying the claimant.

If it is not possible to reach an agreement on the assessment of the claim, the claimant has the right to bring his or her claim before the competent court in the State in which the damage occurred. However, since the international compensation regime was established in 1978, court actions by claimants have not proved necessary in the majority of incidents involving the 1992 Fund and its predecessor.

Claimants will ultimately lose their right to compensation under the 1992 Fund Convention unless they bring court action against the 1992 Fund within three years of the date on which the damage occurred, or make formal notification to the 1992 Fund of a court action against the shipowner or his insurer within the three-year period. Although damage may occur some time after an incident takes place, court action must in any event be brought within six years of the date of the incident.

Conditions

Only those affected by pollution damage within a State Party to the 1992 Fund Convention can submit a claim for compensation against the 1992 Fund. The criteria for admissibility is set out in the Claims Manual. Asking the following questions may help a claimant to establish whether or not they should submit a claim.

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