Ship-source Oil Pollution. The Liability and Compensation Regime in Canada

Transcription

1 Ship-source Oil Pollution The Liability and Compensation Regime in Canada

2 Statement attributed to the Dutch delegation at the Brussels Conference in 1969 The Torrey Canyon incident [in 1967] has shown that pollution caused by the escape of crude oil affects many interests, not only causing material damage but also creating the necessity for public authorities to take preventive measures at very high cost. The parties affected do not take part in maritime traffic and cannot be expected to bear the risks inherent in this traffic.

3 The Players The ship-owner the registered owner in the case of a Convention ship, CLC or Bunkers Convention and, for other ships, the person who has, for the time being, either by law or by contract, the rights of the ship-owner with respect to the use and possession of the ship. The P&I Club today, most of the world s tonnage is insured against third party liabilities, such as pollution, through mutual, non-profit making associations of shipowners known as Protection and Indemnity Associations.

4 The Players The International Oil Pollution Compensation Fund (IOPC) is an intergovernmental organization based in London, England created by international convention (the FUND Convention of 1971) under the auspices of the International Maritime Organization (IMO), a specialized agency of the United Nations. The Ship-source Oil Pollution Fund (SSOPF) is a creation of Part 6 of the Marine Liability Act Canada s domestic fund is based in Ottawa and provides an additional level of compensation over that created by the Civil Liability Convention 1969 and the FUND Convention 1971.

5 The historical background Those who don t know it, are doomed to repeat it Before statute, we had to rely on the common law, which had flaws. Introduction of a statutory regime here in Canada after the Arrow incident in February 1970.

6 The historical background Part XX of the Canada Shipping Act was Canada s response to the Brussels Conference in 1969, which adopted both the Civil Liability Convention and the Intervention Convention. Canada was not comfortable with either Convention and accepted neither Convention at the time.

7 The historical background There are, however, distinct disadvantages with being outside the international system. Most oil spills are caused by ships which have an international character. Oil spreads and can cross international boundaries. Often the ship is registered in a country other than the coastal state. Ownership, chartering, management and operation of the ship may be in the hands of companies located in a number of different countries. Crew may represent many different nationalities.

8 The historical background So, on April 24 th, 1989 Canada joined the international system for liability and compensation for ship-source oil pollution. Part XVI, of the Canada Shipping Act.

9 The historical background Canada s first claim to the IOPC Fund was initiated on October 16, 1990 after the asphalt tanker, the Rio Orinoco, grounded on the south shore of Anticosti Island in the Gulf of St. Lawrence. The ship was eventually refloated on August 7, The first part of Canada s claim was settled by the Fund in October 1991, while the second part was settled in June Can be contrasted with the claim for the Kurdistan incident in 1979 which took 5 years to resolve with the ship interests and the claim for the Nestucca incident in 1988 which took 4 years to resolve.

10 The US system In contrast, the grounding of the tanker Exxon Valdez in Prince William Sound in Alaska, in 1989 caused the United States of America to adopt the Oil Pollution Act of The Act put an end to any efforts in the US, at least for the foreseeable future, for that country to become a party to the international system. In short, Canada and the US have chosen different paths to deal with the subject of oil pollution damage caused by ships.

11 The Canadian legislation The old Canada Shipping Act, Part XVI, included 2 regimes. One for oil tankers based on the Civil Liability Convention and one for all other ships causing oil pollution damage. Today, Canada s scheme for liability and compensation can be found in Part 6 of the Marine Liability Act, S.C. 2001, c.6 (August 8, 2001). The current scheme has 3 regimes one for oil tankers, one for ships caught by the Bunkers Convention and one for all other ships. Today, the scheme for tankers is based on the text of the Convention, not paraphrased terminology.

12 The Canadian legislation Recent amendments to the Marine Liability Act (Bill C-7) which became law on January 2 nd, 2010 form the legislative basis for Canada s accession to the 2001 Bunker Convention and to the 2003 Protocol to FUND 1992, that sets up the Supplementary Fund. The Supplementary Fund significantly increases the compensation available for oil pollution caused by tankers.

13 The details A tanker is defined by the legislation as a sea-going ship, wherever registered, carrying, in bulk as cargo, crude oil, fuel oil, heavy diesel oil, lubricating oil or any other persistent hydrocarbon mineral oil, or on a voyage following any such carriage of such oil, unless it is proved that there is no residue of oil on board.

14 The details Under the Civil Liability Convention 1969 liability for oil pollution damage and for clean-up costs and expenses lies with the registered ship-owner. Channeled to Liability is strict. There is no requirement to prove fault or negligence. Victims of oil pollution damage need only prove the origins of the spill and the extent of their damage.

15 The details Defences do exist for the ship-owner. Acts of war, natural phenomena of an exceptional, inevitable and irresistible character, wrongful acts of third parties. Situations wholly caused by the negligence or other wrongful act of any government or other authority responsible for the maintenance of lights or other navigational aids.

16 The details A ship-owner may limit its liability. A calculation based upon the ship s tonnage. Provided that the actual or anticipated oil pollution damage did not result from the ship-owner s personal act or omission, committed with intent to cause the oil pollution damage or recklessly and with knowledge that the oil pollution damage would probably result. This test, introduced in 1992, makes it practically impossible to break the ship-owner s right to limit liability.

17 The details The Civil Liability Convention also requires that ships be covered by insurance or some other financial security. That they carry evidence of such, And that allows claims to be brought directly against an insurer or other person providing financial security. Direct access is a departure from basic insurance principles. This lack of direct access was a flaw in Part XX of the Canada Shipping Act. An advantage to joining the international system in 1989.

18 The FUND Convention A dissatisfaction with the financial limits proposed by the Civil Liability Convention 1969 caused the international community to consider FUND This international convention established a fund financed by levies on persons importing or receiving oil shipments in the contracting states. The participation of the cargo interests. A way of providing supplementary compensation for oil pollution damage which was not adequately compensated under CLC 1969.

19 The Fund Convention The 1992 Protocol to both CLC 69 and FUND 71 entered into force internationally in May 1986 Became part of Canadian law on May 29, 1999 The 2 protocols increased the amount of compensation available. Also expanded the geographic scope of the two conventions to include the exclusive economic zone (EEZ) and also spills from empty tankers, under certain restrictive conditions.

20 Ship-owner s Liability The owner of a ship is liable, under the Marine Liability Act for Oil pollution damage from the ship Costs and expenses incurred by the Minister of Fisheries & Oceans, by a response organization (such as WCMRC/Burrard Clean Operations) and/or by any other person in Canada in respect of measures taken to prevent, repair, remedy or minimize the oil pollution damage from the ship For monitoring costs incurred by the Minister.

21 Ship-owner s Liability To the extent that the measures taken are reasonable and to the extent that the costs and expenses incurred are also reasonable. A subjective test. No definition of the term reasonable. If the oil pollution damage from the ship results in impairment to the environment, the owner of the ship is also liable for the costs of reasonable measures of reinstatement actually undertaken or to be undertaken.

22 Ship-owner s Liability These rights are exercisable in the first instance against the ship-owner If the ship-owner is successful in maintaining the limit of liability and the damage and/or costs and expenses exceed that limit. Recourse is to the IOPC Fund and/or Canada s own SSOPF.

23 Current Limits of Liability & Compensation for Oil Tanker Spills in Canada

24 Ship-source Oil Pollution Fund The Fund has its origins in Part XX of the Canada Shipping Act. The 1971 amendments to the legislation established the Maritime Pollution Claims Fund (MPCF). Financed by a levy on every ton of oil imported or exported from Canada. In 1989, the MPCF became the SSOPF.

25 Ship-source Oil Pollution Fund The SSOPF provides an additional level of compensation over that of CLC 69 and FUND 71/1992. It is, in effect, a fund of last resort. It is also a fund of first resort. The SSOPF meets claims that are not covered by the conventions, such as mystery spills and damage caused by ships other than tankers.

26 Ship-source Oil Pollution Fund The SSOPF is also available for fisherman s claims for loss of income not associated with damage to their property. As in all civil suits for damages, the onus is on the claimant to show that it has suffered loss or damage as a result of the oil pollution that is quantifiable or assessable.

27 Questions? Simon Barker Barrister & Solicitor 243 Hunter Street West, Peterborough, Ontario K9H 2L4 Tel: Fax: