Limits on Civil Liabilities

A presentation brought to you by:

D/C Epalan, Jechel Anne
D/C Escala, John Rey
D/C Filasol, Christian Jay
International Convention on Civil Liability
for Oil Pollution Damage (CLC)

• Adoption: 29 November 1969; Entry into force: 19

June 1975; Being replaced by 1992 Protocol:
Adoption: 27 November 1992; Entry into force: 30
May 1996
 International Convention on Civil Liability for
Oil Pollution Damage (CLC)

• The Civil Liability Convention was adopted to

ensure that adequate compensation is
available to persons who suffer oil pollution
damage resulting from maritime casualties
involving oil-carrying ships.
 Story
• A ship loaded a cargo of crude oil from Mina-
Al-Ahmadi and was bound for Wales. On the
way, it got aground outside territorial waters
of any country.
• 119000 T of crude oil spilled and found its way
on the coastal waters of two countries, UK and
France. Millions of Dollars were spent for
clean up operation.
 Story
• Apart from the money required for clean up
operation, there were number of people who
lost their source of income.
• For example, fishermen could no more go for
fishing. People who earn their living from
tourism, were also hit by this incident.
 Story
• Apart from all this there is damage to the
ecology which no one can measure in
monetary values.
 Question.

• Now who would pay for all these damages ?

• Ship owners ? The incident did not take place
in the territorial waters of any country. Even if
it did take place, the local laws for these cases
are never so detailed to easily recover the
money from ship owners.
• Now even if ship owner had to pay the money,
the money may be so big that a ship owner
could loose entire business because of one
incident.
• What is the solution then ? CLC
convention aims to bring a solution to this
situation.
• In fact the story I told you above is the real
story of the vessel “Torrey Canyon”.
• CLC convention was the result of the incident
of grounding and oil pollution of the vessel
“Torrey Canyon“.
 CLC Convention
• CLC convention first came into existence in
1969 and was called CLC 69. This convention
was later amended in 1992. CLC 92 was
amended in the year 2000 to increase the
amount of compensation.
CLC convention can be summarised in
four points
1. Ship owner is liable for the oil spills originating
from his ship
2. There are very few exceptions to this liability to
the ship owners in case of oil spills from their
ships
3. There is a maximum limit of liability set out in
CLC according to the tonnage of the ship. This
limit will not be applicable if owner is at fault
4. It is compulsory for the ship owners to take
insurance to cover his liability in case of oil
pollution from his ships
 When would CLC Convention apply?
• The applicability of any convention is the most
important thing. After all if a convention is not
applicable in some situation then all other
articles of the convention would not apply.
• This is the reason that the article detailing the
application of a convention is one of the initial
article of any convention.
 Type of oil
• First thing we should know that CLC deals with oil
pollution only. Which kind of oils ? It deals with
pollutions from persistent oil only.
• Persistent oils, as the name suggest are the one
that persists longer in the
environment. Whereas Non-persistent oils either
evaporate easily or disperse easily.
• The pollution from persistent oil is more serious
when compared to non-persistent oils. Persistent
oils require more resources and money for clean
up operation.
 Area of application
• The area to which CLC convention would apply
is covered under annex II of the
convention. The CLC convention applies to any
pollution incident that occurred either in the
– Territory and Territorial waters of a contracting
state. In simple words territorials waters is the
area of 12 NM radius from the baseline of the
contracting state.
 Area of Application
-Exclusive economic zone (EEZ) of the
contracting state. In simple words EEZ is the
area of 200NM radius from the baseline of the
contracting state.
• The CLC 92 does not cover the pollution
incidents in the high seas. High seas pollutions
were not included in the CLC convention
because the pollution in high seas were
considered to cause lesser damages.
Damages because of pollution incident
• Even though the CLC convention deals with the
pollution incidents, damage can be much more
than the pollution itself.
• The compensation and liability of the owner of
the polluting ship does not limit to the pollution
alone.
• Damages include physical injury, psychological
conditions and loss of income resulting from the
pollution. CLC convention covers the expenses for
all of these damages.
 Who need to pay in case of pollution
incident
• In any case, as per article III, para 4, no claim
can be made against
– the servants or agents of the owners or crew
members. If you read the footer of the emails sent
by the ship management employees, it would
read “as agents to the owners only”. This is to
stress upon the point that they are acting on
behalf of owners as agents.
– pilot, charterers, a person performing salvage or a
person taking preventive actions
 How much ship owner need to pay in
case of a pollution incident
• Ship owners need not pay anything if he proves
that
– Pollution resulted from the act of war or natural
phenomenon of exceptional, inevitable or irresistible
nature. One example of natural phenomenon could
include the pollution if a tanker gets aground because
of tsunami.
– Pollution resulted because a third party delibrately
wanted to cause the damage to the ship
– Pollution resulted because of negligence of
government or other authority who failed to maintain
the lights or other navigational aid.
• Ship owner need to pay the full
amount whatever damages are claimed by
various claimants if it is proved that
– damages were the result of acts of ship owner
committed with the intent to cause this damage
– damages were because of the acts of ship owners
who knew that his acts would result in these
damages
• If a ship owner do not fall in above two
categories, his liability in any one pollution
incident would be limited to
– 4,510,000 SDR for vessels up to 5000 GRT
– For vessels over 5000 GRT, the maximum liability
will be 4,510,000 SDR + 631 SDR per additional
GRT above 5000 GRT. So for a vessel with 10000
GRT, maximum liability would be SDR 7,665,000
(4,510,000 + 631 x 5000)
– Maximum liability in any case will not be more
than SDR 89,770,000
 What a ship owner need to do to
ensure that his ships are not arrested
by the claimant
• In the case of Torrey canyon incident, the
claimant arrested a sister ship of the owners
in Singapore. The ship could only be released
upon payment of USD 3 millions to the
claimants.
• This was the times before the CLC convention.
• But to take the advantage of CLC convention
and to ensure that his ships are not arrested
after a pollution incident, a ship owner need
to constitute a fund equal to his liability as per
CLC convention.
• The idea here is that, after the investigation if
ship owner is liable to pay the amount equal
to his limit of liability, the claimant need not
be chasing the ship owners for money.
 Where the action for compensation
can be brought
• Again in the case of Torrey Canyon, the pollution
resulted in the territorial waters of UK and France. This
could be very common situation in the present
scenario too.
• So where the action for compensation can be brought
against the ship owner ?
• As per article IX of CLC 92, action can be brought in any
of the country that was affected by the pollution.
• Article X also states that the judgment given by the
court in which action is brought will have to be
recognised by other states.
 Insurance required as per CLC 92
• As per article VII of CLC 92, all ships that carry
more than 2000 T of oil as cargo need to
maintain insurance equal to the ship owner’s
liability as per CLC 92.
• This certificate is issued by the flag of the ship
after the ship owner provides proof of the
insurance to the flag.