International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (FUND)

Although the 1969 Civil Liability Convention provided a useful mechanism for ensuring the payment of compensation for oil pollution damage, it did not deal satisfactorily with all the legal, financial and other questions raised during the Conference adopting the CLC Convention. The 1969 Brussels Conference considered a compromise proposal to establish an international fund, to be subscribed to by the cargo interests, which would be available for the dual purpose of, on the one hand, relieving the shipowner of the burden by the requirements of the new convention and, on the other hand, providing additional compensation to the victims of pollution damage in cases where compensation under the 1969 Civil Liability Convention was either inadequate or unobtainable.

 

The Conference recommended that IMO should prepare such a scheme and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage was adopted at a Conference held in Brussels in 1971.  It is supplementary to the  Civil Liability Convention.

 

The purposes of the Fund Convention are:

To provide compensation for pollution damage to the extent that the protection afforded by the 1969 Civil Liability Convention is inadequate.

To give relief to shipowners in respect of the additional financial burden imposed on them by the 1969 Civil Liability Convention, such relief being subject to conditions designed to ensure compliance with safety at sea and other conventions.

To give effect to the related purposes set out in the Convention.

 

Under the first of its purposes, the Fund is under an obligation to pay compensation to States and persons who suffer pollution damage, if such persons are unable to obtain compensation from the owner of the ship from which the oil escaped or if the compensation due from such owner is not sufficient to cover the damage suffered.

 

Under the Fund Convention, victims of oil pollution damage may be compensated beyond the level of the shipowner's liability.  However, the Fund's obligations are limited.  Where, however, there is no shipowner liable or the shipowner liable is unable to meet their liability, the Fund will be required to pay the whole amount of compensation due.  Under certain circumstances, the Fund's maximum liability may increase.

 

With the exception of a few cases, the Fund is obliged to pay compensation to the victims of oil pollution damage who are unable to obtain adequate or any compensation from the shipowner or his guarantor under the CLC Convention.

 

The Fund's obligation to pay compensation is confined to pollution damage suffered in the territories including the territorial sea of Contracting States.  The Fund is also obliged to pay compensation in respect of measures taken by a Contracting State outside its territory.

 

The Fund can also provide assistance to Contracting States which are threatened or affected by pollution and wish to take measures against it. This may take the form of personnel, material, credit facilities or other aid.

In connection with its second main function, the Fund is obliged to indemnify the shipowner or his insurer for a portion of the shipowner's liability under the Liability Convention. 

 

The Fund is not obliged to indemnify the owner if damage is caused by his wilful misconduct or if the accident was caused, even partially, because the ship did not comply with certain international conventions.

 

The Convention contains provisions on the procedure for claims, rights and obligations, and jurisdiction.

 

Contributions to the Fund should be made by all persons who receive oil by sea in Contracting States. 

 

As was the case with the 1992 Protocol to the CLC Convention, the main purpose of the Protocol was to modify the entry into force requirements and increase compensation amounts. The scope of coverage was extended in line with the 1992 CLC Protocol.

 

The 1992 Protocol established a separate, 1992 International Oil Pollution Compensation (IOPC) Fund, known as the 1992 Fund, which is managed in London by a Secretariat.

 

Under the 1992 Protocol, the maximum amount of compensation payable from the Fund for a single incident, including the limit established under the 1992 CLC Protocol, is 135 million SDR.

 

However, if three States contributing to the Fund receive more than 600 million tonnes of oil per annum, the maximum amount is raised to 200 million SDR.

 

 

The purpose of the 2000 Protocol has been to terminate the 1971 Fund Convention.

According to the Protocol, the 1971 Fund Convention ceases to be in force on the date when the number of Contracting States falls below twenty-five.
This happened on 24 May 2002, because of the denunciations by States Parties to Fund 1971 in favour of their membership of  Fund 1992.

  

 

The 2003 Protocol establishing an International Oil Pollution Compensation Supplementary Fund was adopted by a diplomatic conference held at IMO Headquarters in London.

 

The aim of the established Fund is to supplement the compensation available under the 1992 Civil Liability and Fund Conventions with an additional, third tier of compensation. The Protocol is optional and participation is open to all States Parties to the 1992 Fund Convention.

 

The total amount of compensation payable for any one incident will be limited to a combined total of 750 million Special Drawing Rights (SDR)  including the amount of compensation paid under the existing CLC/Fund Convention.

 

The supplementary fund will apply to damage in the territory, including the territorial sea, of a Contracting State and in the exclusive economic zone of a Contracting State.

 

Annual contributions to the Fund will be made in respect of each Contracting State by any person who, in any calendar year, has received total quantities of oil exceeding 150,000 tons. However, for the purposes of the Protocol, there is a minimum aggregate receipt of 1,000,000 tons of contributing oil in each Contracting State.

 

The Assembly of the Supplementary Fund will assess the level of contributions based on estimates of expenditure (including administrative costs and payments to be made under the Fund as a result of claims) and income (including surplus funds from previous years, annual contributions and any other income).

 

Amendments to the compensation limits established under the Protocol can be adopted by a tacit acceptance procedure, so that an amendment adopted in the Legal Committee of IMO by a two-thirds majority of Contracting States present and voting, can enter into force 24 months after its adoption.

 

Although the  Funds were established under Conventions adopted under the auspices of IMO, they are completely independent legal entities.

 

Unlike IMO, the IOPC Funds are not United Nations (UN) agencies and are not part of the UN system. They are intergovernmental organisations outside the UN, but follow procedures which are similar to those of the UN.

Only States can become Members of the IOPC Funds.

 

To become a member of the Fund, a State must accede to the 1992 Civil Liability Convention and to the 1992 Fund Convention by depositing a formal instrument of accession with the Secretary-General of IMO. These Conventions should be incorporated into the national law of the State concerned.

 

See the IOPC Funds website at http://www.iopcfund.org/

Special drawing rights
The daily conversion rates for Special Drawing Rights (SDRs) can be found on the International Monetary Fund website at http://www.imf.org/