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THE COMPENSATION REGIME

1.1.1 The compensation regime was originally established in 1978 and is now based
on two Conventions: the 1992 International Convention on Civil Liability or !il
"oll#tion $amage %1992 Civil Liability Convention& and the 1992 International
Convention on the 'stablishment o an International (#nd or Compensation or !il
"oll#tion $amage %1992 (#nd Convention&. ) "rotocol to the 1992 (#nd Convention
was adopted in 2**+, which established a -#pplementary (#nd %-#pplementary
(#nd "rotocol&.
The 1992 Civil Liability Convention
1.1.2 .nder the 1992 Civil Liability Convention, claims or compensation or oil
poll#tion damage ca#sed by persistent oil may be made against the registered owner
o the ship rom which the oil that ca#sed the damage originated %or his ins#rer&.
/owever, the ship owner can normally limit his inancial liability to an amo#nt
determined by the si0e %tonnage& o the partic#lar ship involved. The ship owner is
obliged to maintain ins#rance to cover his liability #nder the Convention, altho#gh
this obligation does not apply to ships carrying less than 2 *** tons o oil as cargo.
1.1.+ The ship owner is liable to pay compensation or poll#tion damage ca#sed by
the escape or discharge o persistent oil rom his ship even i the poll#tion was not
d#e to any a#lt on his part. The ship owner is e1empt rom this liability only in very
special circ#mstances.
The 1992 Fun Convention
1.1.2 The 1992 (#nd was established in 1993 #nder the 1992 (#nd Convention and
is inanced by companies and other entities in 4ember -tates that receive certain
types o oil carried by sea. The (#nd is an intergovernmental organi0ation set #p and
governed by -tates.
1.1.5 The 1992 (#nd is governed by two bodies: the )ssembly and the '1ec#tive
Committee. The )ssembly is composed o representatives o the governments o all
4ember -tates. The '1ec#tive Committee, composed o 15 4ember -tates, is a
s#bsidiary body elected by the )ssembly. The main #nction o this Committee is to
approve claims. /owever, the '1ec#tive Committee normally gives the (#nd6s
$irector very e1tensive a#thority to approve and pay claims.
1.1.3 .nder the 1992 (#nd Convention additional compensation is made available
by the 1992 (#nd when claimants do not obtain #ll compensation #nder the 1992
Civil Liability Convention. This can happen in the ollowing cases:
7 The damage e1ceeds the limit o the ship owner6s liability #nder the 1992
Civil Liability Convention.
7 The ship owner is not liable #nder the 1992 Civil Liability Convention
beca#se the damage was ca#sed either by a grave nat#ral disaster, or wholly
ca#sed intentionally by a third party, or wholly ca#sed as a res#lt o the
negligence o p#blic a#thorities in maintaining lights or other navigational aids.
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7 The ship owner is inancially incapable o meeting his obligations #nder the
1992 Civil Liability Convention in #ll, and the ins#rance is ins#icient to pay
valid compensation claims.
1.1.7 The 1992 (#nd does not pay compensation i:
7 the poll#tion damage res#lted rom an act o war, hostilities, civil war or
ins#rrection, or was ca#sed by a spill rom a warship %in which case the ship
owner is also not liable #nder the 1992 Civil Liability Convention&, or
7 the claimant cannot prove that the damage res#lted rom an incident
involving one or more ships as deined in the Conventions %that is, a laden, or,
#nder certain circ#mstances, #nladen sea8going vessel or seaborne crat
constr#cted or adapted to carry oil in b#l9 as cargo&.
!ne" the 1992 Civil Liability Convention # the $hi% o&ne" %ay$
1.2.1 The ship owner is normally entitled to limit his liability to an amo#nt calc#lated
on the basis o the tonnage o the ship. (or a ship not e1ceeding 5 *** #nits o gross
tonnage, the limit is 2.51 million -pecial $rawing :ights %-$:&1 %.-;3.95 million&<
or a ship with a tonnage between 5 *** and 12* *** #nits o tonnage, the limit is
2.51 million -$: %.-;3.95 million& pl#s 3+1 -$: %.-;972& or each additional #nit
o tonnage< and or a ship o 12* *** #nits o tonnage or over, the limit is 89.77
million -$: %.-;1+8 million&2.The ship owner is deprived o the right to limit his
liability, however, i it is proved that the poll#tion damage res#lted rom his personal
act or omission, committed with the intent to ca#se poll#tion damage, or rec9lessly
and with 9nowledge that s#ch damage wo#ld probably occ#r.
'HAT T(PES OF INCI)ENT ARE CO*ERE)+
1.+.1 The 1992 Civil Liability and (#nd Conventions cover incidents in which
persistent mineral oil is spilled rom a sea8going vessel constr#cted or adapted to
carry oil in b#l9 as cargo %normally a tan9er&. The 1992 Conventions cover not only
spills o cargo and b#n9er oil %the vessel6s own #el& rom laden tan9ers, b#t also in
certain circ#mstances spills o b#n9er oil rom #nladen tan9ers.
1.+.2 '1amples o persistent mineral oil are cr#de oil, #el oil, heavy diesel oil and
l#bricating oil. -#ch oils are #s#ally slow to dissipate nat#rally when spilled into the
sea and are thereore li9ely to spread and re=#ire cleaning #p. $amage ca#sed by
spills o non8persistent mineral oil, s#ch as gasoline, light diesel oil and 9erosene, is
not compensated #nder the Conventions. -#ch oils tend to evaporate =#ic9ly when
spilled and do not normally re=#ire cleaning #p.
1,- 'HAT T(PES OF )AMAGE ARE CO*ERE)+
1.2.1 The 1992 Conventions cover poll#tion damage, which is deined as: >loss or
damage ca#sed o#tside the ship by contamination res#lting rom the escape or
discharge o oil rom the ship, wherever s#ch escape or discharge may occ#r,
provided that compensation or impairment o the environment other than loss o
proit rom s#ch impairment shall be limited to costs o reasonable meas#res o
reinstatement act#ally #nderta9en or to be #nderta9en.6
1.2.2 "oll#tion damage incl#des preventive meas#res, which are deined in the 1992
Conventions as: >any a reasonable meas#re ta9en by any person ater an incident
has occ#rred to prevent or minimi0e poll#tion damage.6
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'HO CAN MA.E A CLAIM+
2.1.1 )nyone who has s#ered poll#tion damage in a -tate that is "arty to the 1992
Conventions may ma9e a claim or compensation. I the damage is ca#sed in a -tate
that is only "arty to the 1992 Civil Liability Convention, claims can only be made
against the ship owner and his ins#rer. Claims or damage in -tates that are "arties
to both the 1992 Civil Liability Convention and the 1992 (#nd Convention, however,
may be made against the ship owner and his ins#rer and the 1992 (#nd. )s
mentioned earlier, lists o -tates "arties to these Conventions and to the
-#pplementary (#nd "rotocol may be obtained rom the (#nd -ecretariat or rom
the !rgani0ation6s website.
2.1.2 Claimants may be private individ#als, partnerships, companies, private
organi0ations or p#blic bodies, incl#ding -tates or local a#thorities. I several
claimants s#er similar damage, they may ind it more convenient to s#bmit
coordinated claims, which will also acilitate the processing and assessment o the
claims.
2,2 TO 'HOM SHO!L) A CLAIM /E S!/MITTE)+
2.2.1 ?hen an incident occ#rs the 1992 (#nd co8operates closely with the ship
owner6s ins#rer, which will normally be one o the "rotection and Indemnity
)ssociations %"@I Cl#bs& that ins#re the third8party liabilities o ship owners,
incl#ding liability or oil poll#tion damage. The "@I Cl#b concerned and the 1992
(#nd #s#ally co8operate in the handling o claims, partic#larly when it is clear rom
the o#tset that compensation will be paid #nder both Conventions. -ince in most
cases the 1992 (#nd only pays compensation once the ship ownerAins#rer has paid
#p to the limit applicable to the ship involved, claims sho#ld irst be s#bmitted to the
ship owner or his "@I Cl#b. In practice, claims are oten channeled thro#gh the oice
o the "@I Cl#b6s correspondent closest to the incident location. Beca#se o the close
co8operation between the (#nd and the ins#rer, claims, incl#ding s#pporting
doc#mentation, need only be sent to either the "@I Cl#bAcorrespondent or the (#nd.
2.2.2 !ccasionally, when an incident gives rise to a large n#mber o claims, the 1992
(#nd and the "@I Cl#b Cointly set #p a local claims oice so that claims may be
processed more easily. Claimants sho#ld then s#bmit their claims to that local claims
oice. $etails o claims oices are given in the local press
.
2.2.+ I claimants s#er damage in a -tate that is "arty to the -#pplementary (#nd
"rotocol, their claims will a#tomatically be considered or compensation rom the
-#pplementary (#nd, i the amo#nt available rom the ship ownerAins#rer and the
1992 (#nd is ins#icient to pay #ll compensation or proven losses.
2,0 HO' SHO!L) A CLAIM /E PRESENTE)+
2.+.1 Claims sho#ld be made in writing %incl#ding telea1 or electronic mail&. I
appropriate, the "@I Cl#b andAor the (#nd will iss#e claims orms to assist claimants
in the presentation o claims.
2.+.2 ) claim sho#ld be presented clearly and with s#icient inormation and
s#pporting doc#mentation to enable the amo#nt o the damage to be assessed.
'ach item o a claim m#st be s#bstantiated by an invoice or other relevant
s#pporting doc#mentation, s#ch as wor9 sheets, e1planatory notes, acco#nts and
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photographs. It is the responsibility o claimants to s#bmit s#icient evidence to
s#pport their claims. It is important that the doc#mentation is complete and acc#rate.
I the doc#mentation in s#pport o a claim is li9ely to be considerable, claimants
sho#ld contact the 1992 (#nd %or where appropriate the designated s#rveyor or local
claims oice& as soon as possible ater the incident to disc#ss claim presentation.
2,1 'ITHIN 'HAT PERIO) SHO!L) A CLAIM /E MA)E+
2.5.1 Claimants sho#ld s#bmit their claims as soon as possible ater the damage has
occ#rred. I a ormal claim cannot be made shortly ater an incident, the 1992 (#nd
wo#ld appreciate being notiied as soon as possible o a claimant6s intention to
present a claim at a later stage. The claimants sho#ld provide as m#ch o the
inormation detailed above as possible.
2.5.2 Claimants will #ltimately lose their right to compensation #nder the 1992 (#nd
Convention #nless they bring co#rt action against the 1992 (#nd within three years
o the date on which the damage occ#rred, or ma9e ormal notiication to the 1992
(#nd o a co#rt action against the ship owner or his ins#rer within the three year
period. -imilarly, claimants will lose their right to compensation rom the -hip owner
and his ins#rer #nder the 1992 Civil Liability Convention #nless they bring co#rt
action against them within three years rom the date when the damage occ#rred.
)ltho#gh damage may occ#r sometime ater an incident ta9es place, co#rt action
m#st in both cases in any event be bro#ght within si1 years o the date o the
incident. Claimants are recommended to see9 legal advice i they have not been
able to settle their claims to avoid their claims becoming time8barred. I steps have
been ta9en to protect the claim against the 1992 (#nd, any rights to additional
compensation rom the -#pplementary (#nd will be a#tomatically protected.
2,2 CLAIMS ASSESSMENT AN) PA(MENT
2.3.1 The 1992 (#nd, normally in co8operation with the ship owner6s ins#rer, #s#ally
appoints e1perts to monitor clean8#p operations, to investigate the technical merits o
claims and to ma9e independent assessments o the losses.
2.3.2 The 1992 (#nd and the "@I Cl#bs have developed a worldwide networ9 o
e1perts with e1pertise in the vario#s sectors li9ely to be aected by oil poll#tion. It
also draws on the advice o the International Tan9er !wners "oll#tion (ederation Ltd
%IT!"(&,a non8proit ma9ing organi0ation #nded primarily by ship owners thro#gh
their ins#rers. IT!"(6s technical sta has ac=#ired considerable e1perience in spill
response and are very amiliar with the (#nd6s criteria or accepting claims. $#ring
the clean8#p phase o an incident members o IT!"(6s technical sta #s#ally attend
on site where they are able to oer technical advice on the most appropriate
response meas#res consistent with the (#nd6s admissibility criteria.
2.3.+ )ltho#gh the 1992 (#nd and the "@I Cl#bs rely on e1perts to assist in the
assessment o claims, the decision as to whether to approve or reCect a partic#lar
claim rests entirely with the Cl#b concerned and the (#nd.
2.3.2 !nce the (#nd and the "@I Cl#b have made their decision regarding a claim,
the claimant is contacted, #s#ally in writing, to e1plain the basis o the assessment. I
the claimant decides to accept an oer o compensation, he or she will be as9ed to
sign a receipt #pon payment o the amo#nt d#e. In the event that the claimant does
not agree with the assessment o the claim, he or she may provide additional
inormation and re=#est a #rther eval#ation.
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2.3.5 The 1992 (#nd6s $irector is normally given e1tensive a#thority to approve and
pay or reCect claims. /owever, in certain sit#ations, or e1ample i a claim gives rise
to =#estions o principle, the $irector m#st reer the claim to the '1ec#tive
Committee or decision %see paragraph 1.5.1&. The '1ec#tive Committee normally
meets two or three times a year.
'HAT IF A CLAIMANT )OES NOT AGREE 'ITH THE F!N)3S
)ECISION+
2.8.1 I it is not possible to reach an agreement on the assessment o the claim, the
claimant has the right to bring his or her claim beore the competent co#rt in the
-tate in which the damage occ#rred. /owever, since the international compensation
regime was established in 1978, co#rt actions by claimants have not proved
necessary in the maCority o incidents involving the 1992 (#nd and its predecessor.
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