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50% RISE IN COMPENSATION FOR VICTIMS OF OIL SPILLS

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A new regime offering greater compensation to victims of oil spills ...
A new regime offering greater compensation to victims of oil spills

completed its passage through the House of Commons today.

Shipping minister David Jamieson announced that from 1

November the level of compensation available to victims of oil

pollution from tankers such as the Braer and Sea Empress is set to

rise by just over 50 per cent.

Coastal communities, local businesses and many others who incur costs

and losses as a result of oil spills will be able to claim up to

£180m from the International Oil Pollution Compensation Fund ('the

1992 Fund'). The new regime will give greater financial protection,

faster settlements and reduce the risk of claims not being paid in

full.

Moves to increase the level of compensation available were first

proposed by the UK in 2000, and were subsequently agreed by eighty

five states at the International Maritime Organization (IMO) in 2000.

The two conventions which govern the oil pollution compensation

regime require a three year period to complete the process to

increase the limit.

Mr Jamieson said:

'The government has worked hard for this increase and I'm delighted

that at last we are able to provide coastal communities with much

stronger financial protection against damaging oil tanker spills.

'The compensation regime will be now be able to respond much better

to clean-up costs and the economic losses that can arise out of a

major oil tanker disaster and ensure that claimants have a better

prospect of being paid quicker and in full.

'It is worth reflecting that this new overall limit of compensation

is 330% more than was available to meet the claims generated by the

Braer in Shetland in 1993 and the Sea Empress in South Wales in 1996.

'This increase in compensation is an important first step in the

current review of liability for pollution from oil tankers.'

Notes

1. The increase to the limits of compensation available under t he

Civil Liability Convention (CLC) and the IOPC Fund Convention were

agreed at the International Maritime Organization (IMO) in April 2000

under the 'tacit acceptance' procedure provided in the 1992 Protocols

to the CLC and Fund Conventions which govern the regime.

2. The regime provides compensation for oil pollution damage

resulting from spills of persistent oil carried in bulk as cargo by

tankers.

3. On the basis of the amendments, the amount which the 1992 CLC and

Fund regime can use to provide compensation for any single oil spill

from a tanker has risen from about £120m to approximately £180m

with effect from October 2003.

4. For the purposes of the 1992 Civil Liability Convention and the

1992 Fund Convention, compensation limits are calculated in Special

Drawing Rights of the International Monetary Fund - ie amounts are,

in effect, made up of a 'basket' of currencies.

5. Since the 1992 regime came into force in mid-1996, the maximum

amount which the 1992 Fund has been able to pay in respect of any one

oil spill has been 135 million Special Drawing Rights (at the current

exchange rate, equivalent to approximately £120m). The

amendments to the 1992 CLC and the 1992 Fund Convention, have

increased the maximum amount for any one oil spill to 203 million

Special Drawing Rights (ie approximately £180m). These

amendments have increased by 50.36% the limits of liability for both

ship owners and cargo interests.

6. Since this increase was agreed we have seen significant damage

arise from the Prestige incident. In a further move to address the

need to overhaul the compensation regime the IMO adopted a Protocol

to the Fund Convention in May this year to provide an optional

additional layer of compensation to the present regime through a

supplementary fund to the IOPC Fund. Once in force this will allow

for claims up to an overall total of 750 million SDRs for those

states which opt into the Supplementary Fund. A working group that

has been set up by the IOPC Fund developed this Protocol as part of

an ongoing review of the CLC and Fund 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).

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