Civil Liability for oil pollution damage (CLC)

International Convention on Civil Liability for Oil Pollution Damage (CLC), 1969

Adoption: 29 November 1969
Entry into force: 19 June 1975

Note: The 1969 Convention is being replaced by its 1992 Protocol as amended in 2000

Introduction
The Protocol of 1976
The Protocol of 1984
The Protocol of 1992
The 2000 Amendments
Special Drawing Rights Conversion Rates

Introduction

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.

The Convention places the liability for such damage on the owner of the ship from which the polluting oil escaped or was discharged.

Subject to a number of specific exceptions, this liability is strict; it is the duty of the owner to prove in each case that any of the exceptions should in fact operate. 

However, except where the owner has been guilty of actual fault, they may limit liability in respect of any one incident to 133 Special Drawing Rights (SDR) for each ton of the ship's gross tonnage, with a maximum liability of 14 million SDR (around US$18 million) for each incident. (1 SDR is approximately US$1.28 - exchange rates fluctuate daily).

The Convention requires ships covered by it to maintain insurance or other financial security in sums equivalent to the owner's total liability for one incident.

The Convention applies to all seagoing vessels actually carrying oil in bulk as cargo, but only ships carrying more than 2,000 tons of oil are required to maintain insurance in respect of oil pollution damage.

This does not apply to warships or other vessels owned or operated by a State and used for the time being for Government non-commercial service. The Convention, however, applies in respect of the liability and jurisdiction provisions, to ships owned by a State and used for commercial purposes.  The only exception as regards such ships is that they are not required to carry insurance.  Instead they must carry a certificate issued by the appropriate authority of the State of their registry stating that the ship's liability under the Convention is covered.

The Convention covers pollution damage resulting from spills of persistent oils suffered in the territory (including the territorial sea) of a State Party to the Convention. It is applicable to ships which actually carry oil in bulk as cargo, i.e. generally laden tankers. Spills from tankers in ballast or bunker spills from ships other than other than tankers are not covered, nor is it possible to recover costs when preventive measures are so successful that no actual spill occurs. The shipowner cannot limit liability if the incident occurred as a result of the owner's personal fault.

The Protocol of 1976

Adoption: 9 November 1976

Entry into force: 8 April 1981

The 1969 Civil Liability Convention used the "Poincaré franc", based on the "official" value of gold, as the applicable unit of account.  However, experience showed that the conversion of this gold-franc into national currencies was becoming increasingly difficult. The 1976 Protocol therefore provided for provides for a new unit of account, based on the Special Drawing Rights (SDR) as used by the International Monetary Fund (IMF). The exchange rate for currencies versus the SDR fluctuates daily.  However, in order to cater for those countries which are not members of the IMF and whose laws do not permit the use of the SDR, the Protocol provides for an alternate monetary unit - based, as before, on gold.

The Protocol of 1984
Adoption: 25 May 1984

Entry into force: 12 months after being accepted by 10 States, including six with tanker fleets of at least 1 million gross tons.

Status:  Superseded by 1992 Protocol

While the compensation system established by the 1969 CLC and 1971 Fund Convention had proved very useful, by the mid-1980s it was generally agreed that the limits of liability were too low to provide adequate compensation in the event of a major pollution incident.

The 1984 Protocol set increased limits of liability, but it gradually became clear that the Protocol would never secure the acceptance required for entry into force and it was superseded by the 1992 version.

A major factor in the 1984 Protocol not entering into force was the reluctance of the United States, a major oil importer, to accept the Protocol.  The United States preferred a system of unlimited liability, introduced in its Oil Pollution Act of 1990. As a result, the 1992 Protocol was drawn up in such a way that the ratification of the United States was not needed in order to secure entry into force conditions.

The Protocol of 1992
Adoption: 27 November 1992
Entry into force: 30 May 1996

The Protocol changed the entry into force requirements by reducing from six to four the number of large tanker-owning countries that are needed. The compensation limits are those originally agreed in 1984:

- For a ship not exceeding 5,000 gross tonnage, liability is limited to  3 million SDR (about US$3.8 million)

-  For a ship  5,000 to 140,000 gross tonnage:  liability is limited to 3 million SDR plus 420 SDR (about US$538) for each additional unit of tonnage

-  For a ship over 140,000 gross tonnage: liability is limited to  59.7 million SDR (about US$76.5 million)

The 1992 protocol also widened the scope of the Convention to cover pollution damage caused in the exclusive economic zone (EEZ) or equivalent area of a State Party. The Protocol covers pollution damage as before but environmental damage compensation is limited to costs incurred for reasonable measures to reinstate the contaminated environment. It also allows expenses incurred for preventive measures to be recovered even when no spill of oil occurs, provided there was grave and imminent threat of pollution damage.

The Protocol also extended the Convention to cover spills from sea-going vessels constructed or adapted to carry oil in bulk as cargo so that it applies apply to both laden and unladen tankers, including spills of bunker oil from such ships.

Under the 1992 Protocol, a shipowner cannot limit liability if it is proved that the pollution damage resulted from the shipowner's personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result.

From 16 May 1998, Parties to the 1992 Protocol ceased to be Parties to the 1969 CLC due to a mechanism for compulsory denunciation of the "old" regime established in the 1992 Protocol. However, for the time being, the two regimes are co-existing, since there are a number of States which are Party to the 1969 CLC and have not yet ratified the 1992 regime - which is intended to eventually replace the 1969 CLC.

The 1992 Protocol allows for States Party to the 1992 Protocol to issue certificates to ships registered in States which are not Party to the 1992 Protocol, so that a shipowner can obtain certificates to both the 1969 and 1992 CLC, even when the ship is registered in a country which has not yet ratified the 1992 Protocol. This is important because a ship which has only a 1969 CLC may find it difficult to trade to a country which has ratified the 1992 Protocol, since it establishes higher limits of liability.

The 2000 Amendments
Adoption: 18 October 2000
Entry into force: 1 November 2003 (under tacit acceptance)

The amendments raised the compensation limits by 50 percent compared to the limits set in the 1992 Protocol, as follows:

-  For a ship not exceeding 5,000 gross tonnage, liability is limited to  4.51 million SDR (US$5.78 million)

(Under the 1992 Protocol, the limit was 3 million SDR (US$3.8 million)

-  For a ship  5,000 to 140,000 gross tonnage:  liability is limited to 4.51 million SDR (US$5.78 million) plus 631 SDR  (US$807) for each additional gross tonne over 5,000

(Under the 1992 Protocol, the limit was 3 million SDR (US$3.8 million) plus 420 SDR (US$537.6) for each additional gross tonne)

- For a ship over 140,000 gross tonnage: liability is limited to  89.77 million SDR (US$115 million)

    (Under the 1992 Protocol, the limit was 59.7 million SDR (US$76.5 million)

Special Drawing Rights Conversion Rates

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