he International Oil Pollution Compensation Funds (IOPC Funds) are part of an international regime of liability and compensation for oil pollution damage caused by oil spills from tankers. Under the regime the owner of a tanker is liable to pay compensation up to a certain limit for oil pollution damage following an escape of persistent oil from his ship. If that amount does not cover all the admissible claims, further compensation is available from the 1992 Fund if the damage occurs in a State which is a Member of that Fund.

The compensation regime was originally established in 1978 and is now based on two Conventions: 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). The Philippines is a signatory to these two conventions.

The 1992 Fund was established in 1996 under the 1992 Fund Convention and is financed by companies and other entities in Member States that receive certain types of oil carried by sea. The Fund is an intergovernmental organisation set up and governed by States.

The 1992 Civil Liability and Fund Conventions cover incidents in which persistent mineral oil is spilled from a sea-going vessel constructed or adapted to carry oil in bulk as cargo (normally a tanker). The 1992 Conventions cover not only spills of cargo and bunker oil (the vessel’s own fuel) from laden tankers, but also in certain circumstances spills of bunker oil from unladen tankers.

Examples of persistent mineral oil are crude oil, fuel oil, heavy diesel oil and lubricating oil. Such oils are usually slow to dissipate naturally when spilled into the sea and are therefore likely to spread and require cleaning up. Damage caused by spills of non-persistent mineral oil, such as gasoline, light diesel oil and kerosene, is not compensated under the Conventions. Such oils tend to evaporate quickly when spilled and do not normally require cleaning up.

The main types of pollution damage covered are described below.

Clean-up and preventive measures

Compensation is payable for the cost of reasonable clean-up measures and other measures taken to prevent or minimise pollution damage in a State Party, wherever these measures are taken. For example, if a response were undertaken on the high seas or within the territorial waters of a State that is not a Party to the Conventions in order to prevent or reduce pollution damage within the territorial sea or EEZ of a State Party, the cost of the response would in principle qualify for compensation. Expenses for preventive measures are recoverable even if no spill of oil occurs, provided that there was a grave and imminent threat of pollution damage.

Compensation is also payable for reasonable costs associated with the capture, cleaning and rehabilitation of wildlife, in particular birds, mammals and reptiles.

Compensation is payable for reasonable costs of cleaning, repairing or replacing property that has been contaminated by oil.

Compensation is payable for loss of earnings suffered by the owners of property contaminated by oil as a result of a spill (consequential loss). One example of consequential loss is a fisherman's loss of income as a result of his nets becoming oiled, which prevents him from fishing until his nets are either cleaned or replaced.

Under certain circumstances compensation is also payable for loss of earnings caused by oil pollution suffered by persons whose property has not been polluted (pure economic loss). For example, a fisherman whose nets have not been contaminated may nevertheless be prevented from fishing because the area of the sea where he normally fishes is polluted and he cannot fish elsewhere. Similarly, an owner of a hotel or a restaurant located close to a contaminated public beach may suffer losses because the number of guests falls during the period of the pollution.

Compensation may also be payable for the costs of reasonable measures, such as marketing campaigns, which are intended to prevent or reduce economic losses by countering the negative effects which can result from a major pollution incident.

Compensation is payable for the costs of reasonable reinstatement measures aimed at accelerating natural recovery of environmental damage. Contributions may be made to the costs of post-spill studies provided that they relate to damage which falls within the definition of pollution damage under the Conventions, including studies to establish the nature and extent of environmental damage caused by an oil spill and to determine whether or not reinstatement measures are necessary and feasible.

The following general criteria apply to all claims:

• Any expense, loss or damage must actually have been incurred.
• Any expense must relate to measures that are considered reasonable and justifiable.
• Any expense, loss or damage is compensated only if and to the extent that it can be considered as caused by contamination resulting from the spill.
• There must be a reasonably close link of causation between the expense, loss or damage covered by the claim and the contamination caused by the spill.
• A claimant is entitled to compensation only if he or she has suffered a quantifiable economic loss.
• A claimant has to prove the amount of his or her expense, loss or damage by producing appropriate documents or other evidence.

A claim therefore qualifies for compensation only to the extent that the amount of the loss or damage is actually demonstrated. All elements of proof are considered, but sufficient evidence must be provided to give the shipowner, his insurer and the 1992 Fund the possibility of making their own judgement as to the amount of the expense, loss or damage actually suffered.

The extent to which claimants are able to reduce their losses is taken into account. However, each claim has its own particular characteristics, and it is therefore necessary to consider each claim on the basis of its own merits. The criteria therefore allow for some degree of flexibility depending on the particular circumstances of the claimant, industry or country concerned, for example, in respect of the requirement to present documents.

Claimants may be private individuals, partnerships, companies, private organisations or public bodies, including States or local authorities. If several claimants suffer similar damage, they may find it more convenient to submit co-ordinated claims, which will also facilitate the processing and assessment of the claims.

Claims should be made in writing (including telefax or electronic mail). A claim should be presented clearly and with sufficient information and supporting documentation to enable the amount of the damage to be assessed. Each item of a claim must be substantiated by an invoice or other relevant supporting documentation, such as work sheets, explanatory notes, accounts and photographs. It is the responsibility of claimants to submit sufficient evidence to support their claims. It is important that the documentation is complete and accurate.

Each claim should contain the following basic information:

• The name and address of the claimant, and of any representative.
• The identity of the ship involved in the incident.
• The date, place and specific details of the incident, if known to the claimant, unless this information is already available to the 1992 Fund.
• The type of pollution damage sustained.
• The amount of compensation claimed.

Source: IOPC Funds