Basic elements of compensation for oil pollution damage caused by ships

This article will analyze somebasic elements - these elements are the most basic and important keypoints to improve the legislations of civil liability for ships’ oil pollution damage compensation.

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Journal of Marine Science and Technology No 56 – November 2018 47

BASIC ELEMENTS OF COMPENSATION FOR OIL POLLUTION DAMAGE CAUSED BY SHIPS PHAM VAN TAN 1 , BUI DANG KHOA 1 , NGUYEN THANH LE 1 , NGUYEN VAN TRUONG 2

1 Faculty of Navigation, Vietnam Maritime University

2 PhD student, School of Law, Dalian Maritime University

Abstract

The satisfactory calculation of such claim for compensation for damage is difficult, complex and involving many people Therefore, we need to further analyze and understand thebasic elements in calculating oil pollution compensation This article will analyze somebasic elements - these elements are the most basic and important keypoints to improve the legislations of civil liability for ships’ oil pollution damage compensation

Keywords: Compensation for oil pollution damage, civil liability, maritime law

Tóm tắt

Việc tính toán thỏa đáng cho yêu cầu bồi thường thiệt hại ô nhiễm dầu tàu là khó, phức tạp và liên quan đến nhiều người Do đó chúng ta cần phải xác định được các yếu tố trong việc tính toán bồi thường thiệt hại ô nhiễm dầu Trong bài viết này các tác giả phân tích một số yếu tố cơ bản - những điểm then chốt và quan trọng nhất trong việc xác định trách nhiệm và đòi bồi thường thiệt hại do ô nhiễm dầu

Từ khóa: Luật hàng hải; trách nhiệm pháp lý; bồi thường thiệt hại

1 Introduction

Oil pollution from ships causes damage to the environment, assets, and human And according to the statistics of ITOPF of 10,000 incidents, the vast majority of which (81%) fall into the small spills (<7 tons):

Table 1 Annual number of oil spills (7 tons and over) from 1970 - 2016

Source: www.itopf.org

Year 7 -700 tons > 700 tons Year 7 -700 tons > 700 tons

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48 Journal of Marine Science and Technology No 56 – November 2018

Figure 1 Number of large spills (>700 tons) from 1970 to 2016

Source: www.itopf.org

From the oil spill statistics from 1970 to 2016, we can see that from 1970 to now, the oil spill caused by ships also occur every year, especially in 1973, more than 30 large spills occurred, however, in recent years the large spill has decreased significantly The spill per years on average

of the last decade (2000 - 2009) is less than 8 times the 1970s, 2012 did not have the large spill,

2015 occurred two large spills, and 2016 occurred one large spill

The compensation for oil pollution damage caused by ships is a complex issue and usually involves many victims In the field of marine environment tort law, the basic elements of civil liability regime for compensation for oil pollution damage caused by ships includes the liable party, the basis of responsibility for the liable party, the compensation scope of ships’ oil pollution damage, the limitation of liability of the liable party, etc These basic elements are stipulated by international

conventions, including the CLC, theFund Convention, theBunker Convention National laws

embodied these contents as well For Vietnam, these elements are the most basic and important keypoints to improve the legislations of civil liability for ships’ oil pollution damage compensation

2 Liable party for oil pollution damage

The subject who is responsible for compensation for victims of oil pollution damage is regulated in the international conventions The determination of the liable party will help victims of oil pollution to find the right persons to bring the claim against However, in different international conventions, there are ununified provisions of the problem of the liable party identification

According to the Bunker Convention 2001, the registered owner, operator and bareboat charterer

of ships are considered as the shipowners While, according to the CLC regime, the registered

owner of ships is considered as the shipowners Moreover,in all conventions related to liability for pollution damage caused by ships, the liable party is the shipowners As a result, according to the

Bunker Convention 2001, the liable party has a broader sense Therefore, its scope of application

for the person who may be sued by the victims for pollution damage is wider

There are different opinions on the issue of the liable party, some scholars argue that cargo owners are responsible for compensation for oil pollution damage, with the argument that the cause of oil pollution damage is not from ships but from the cargo (oil), therefore, the compensation should be the responsibility of the cargo owner or the person who have interests related to such cargo However, some scholars maintain that the goods is wholly under the control of the shipowners, employee or agent of the shipowners, pollution accidents involving the ships or cargo

on board can only arise from a fault in the handling of the cargo or operation of ships Therefore, the shipowners must be responsible for pollution damage Besides, the identification of the shipowners in the present oil shipping business is easier than the identification of the cargo owner

It is also appropriate with the principle of “the polluter pays” The principle of “the polluter pays” is considered as an important principle in the compensation for oil pollution damage, it shows that polluter must refund the victims of pollution damage Under the principle of “the polluter pays”, it is required that the costs of pollution should be borne by the entity who profits from the process that causes pollution More importantly, in order to satisfy the principle of “the polluter pays”, the entity - who causes pollutes should provide full compensation to those who have suffered the pollution damage caused by it Likewise, the principle is considered to have relevance to types of damage

covered by the CLC regime and the Bunker Convention, specifically on compensation to persons

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Journal of Marine Science and Technology No 56 – November 2018 49

and governments for clean-up costs and victims of oil pollution who have suffered property damage

or economic loss

Another reason for such liable party identification is the issues related to the issuance of insurance or financial security When issuing the insurance certificate, the name of the insured person will be displayed on the insurance certificate And if it is not the shipowners, this name will

be constantly changed This means that the competent bodies constantly have to cancel and promulgate the insurance certificate Thus, identifying the liable party as the shipowners avoids the complexity of identification of liable party, as well as the diversity of liable parties This is appropriate with the intent of the convention to ensure maximum protection for victims of oil pollution damage

3 Compensation scope of oil pollution damage

In the world, there are two different connotations about damage caused by environmental pollution or degradation Firstly, damage caused by environment pollution or degradation only includes damage to natural factors of the environment, such as fauna, flora, water, air, etc., without damage to the lives; health of human Secondly, damage caused by environment pollution not only includes damage to the quality of the environment but also damage to the health or property of individual that caused by environment pollution However, at present, most countries in the world consider that damage caused by oil pollution at the sea includes natural and environment damage, such as damage to direct, indirect values of marine ecosystems and economic activities, as well as damage to public health Moreover, the cost of remedyingoil spills and restoration of the environment; ecosystems are also calculated for the total economic loss caused by oil pollution These types of losses or damage are clearly explained in the Claims Manual of International Oil Pollution Compensation Fund 1992, namely:

Clean-up and prevention measures: Compensation is paid for the costs of clean-up operations and measures to prevent or minimize pollution in the Member States Compensation is also paid for efforts are taken to clean polluted animals, especially oiled birds, reptiles, and mammals 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 exclusive economic zone of a State Party, the cost of the response would in principle qualify for compensation Expenses for prevention measures are recoverable even if no spill of oil occurs, provided that there was a grave and imminent threat of pollution damage

Property damage: Compensation is paid for appropriate costs to clean, replace or repair the property has been affected by oil pollution

Pure economic loss: In the certain cases, compensation is also paid for loss of earnings of persons whose property, due to oil pollution Example, a fisherman be prevented from fishing because the area of the sea where he normally fishes is polluted and he cannot fish elsewhere, or economic loss in the tourist areas and marine aquaculture 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

Environment damage: Compensation is paid for the costs of appropriate restoration measures with the purpose of accelerating natural recovery, and the costs of research after occurring oil spill Compensation is not paid in respect of claims for environmental damage based

on an abstract quantification calculated in accordance with theoretical models Nor is compensation paid for damages of a punitive nature on the basis of the degree of the fault of the wrong-doer Use of advisers: Claimants may use advisers to assist them in the claim for compensation Therefore, compensation is paid for appropriate costs of work made by advisers The question of whether such costs will be compensated is assessed in connection with the examination of the particular claim for compensation Account is taken of the necessity for the claimant to use an adviser, the usefulness and quality of the work carried out by the adviser, the time reasonably needed and the normal rate in the country concerned for work of that kind

4 Limitation of liability of the shipowners

In the process of operating a ship, the shipowners shall be responsible for the risks and losses caused to others At the same time, the shipownersareresponsible for compensation for damage arising from his ships

Concerning institution of civil liability, in the maritime field, there is a rather special regime,

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that is the rule that allows the liable parties to limit their responsibilities according to the certain limit levels for the loss or damage caused by severe maritime accidents This regime is called limitation

of liability of maritime claims That allows the liable parties in the case of their ships causing damage to human or property are not necessarily to compensate full damage for the victims, they

are entitled to limit liability under the related legislation In the CLC, the Bunker Convention 2001

and national laws, there is also limitation of liability for the shipowners for compensation for ships’ oil pollution damage

There are two methods of limitation of liability: Limit civil liability of the shipowner saccording

to the value of the ships and limit civil liability of the shipowners according to the tonnage of the ships.For the first method,it would not be beneficial to the complainant, especially for the old ships, poor maintenance of the shipsor the ships sank after a collision.The second method overcomes this disadvantage when determining limitation of liability based on the tonnage of the ships

5 Compulsory insurance or financial security

Under current law, compulsory insurance is understood that the persons who are stipulated

by law must have insurance to cover their potential responsibility And it includes two main specificities It is mandatory and it is more the public interest than the commercial gain The nature

of compulsory insurance for civil liability for oil pollution damage is to ensure that the persons who have suffered loss from oil pollution will be compensated It always guarantees the availability of indemnification to the victim of oil pollution

TheCLC 1969 is the first convention to apply compulsory insurance for civil liability for oil pollution damage caused by ships The Torrey Canyon is the main reason for establishing the CLC

1969, namely on March 1967, the Torrey Canyon tanker was grounded in the southeast coast of

England, the consequence was about 110,000 tons of crude oil spilled out around the coast of England and France, this is the largest oil spill in history until that time This disaster showed certain concerns about the rights of nations under international laws for accidents on the high seas Especially request coastal states can implement the necessary measures to protect their territorial avoiding the oil pollution when accidents occur; measures affect the attention of all foreign shipowners, shippers, and the nations that a ship carries their flag

6 Concluding remarks

In order to study the issue about civil liability for oil pollution damage caused by ships, we must study basic elements of compensation for oil pollution damage caused by ships.These basic elements play an important role in determining liability and compensation foroil pollution damage caused by ships

REFERENCES

[1] IMO, International Convention on Civil Liability for Oil Pollution Damage

[2] IMO, International Convention on Civil Liability for Bunker Oil Pollution Damage (Bunker Convention), 2001

[3] Tumaini Shabani Gurumo, Review of implementation of international civil liability and compensation regime for ships’ oil pollution damage, PhD Dissertation, Dalian Maritime

University, 2012

[4] Muhammad MasumBillah, The Role of Insurance in Providing Adequate Compensation and in Reducing Pollution Incidents: the Case of the International Oil Pollution Liability Regime, Sultan

Qaboos University, Oman, 2011

[5] Hongyu Wu and Lixin Han, ‘Legal issues arising under the direct action framework in relation to

oil pollution damage’, Maritime Law in China, Edited by Johanna Hjalmarsson and Jingbo

Zhang, 2016

Received: 09 January 2018

Revised: 08 February 2018

Accepted: 02 March 2018