Influence of the Torrey Canyon incident on the liability and compensation regimes developed under the auspices of the IMO

Influence of the Torrey Canyon incident on the liability and compensation regimes developed under the auspices of the IMO

Gaetano Librando*
Deputy Director, Head, Treaties and Rules Section,
Legal Affairs and External Relations Division, IMO

To my dear friend David J. Attard, renowned Professor of International Law, outstanding Director of IMLI, a very useful institution for the dissemination of maritime law and legal drafting, indispensable for the proper understanding and implementation of IMO’s instruments.

Historical background

On the morning of 18 March 1967, the super tanker Torrey Canyon1 ran aground off the south-west coast of the UK, on Seven Stones Reef, between the Scilly Isles and Land’s End.2 During the following days, its entire cargo of 120,000 tonnes of crude oil spilled into the sea, polluting hundreds of miles of coastline and beaches of England and Normandy and causing great damage to the fishing, tourism and related industries as well as to the marine environment and wildlife.

The Governments of the UK and France brought the incident to the attention of the Council of the IMO,3 where there was general recognition of the need for

* The views expressed in this article are those of the author personally and do not necessarily reflect those of the Organization.

1 Built in 1959, 974-ft long (297m), with a cargo capacity of 60,000 tons, later expanded to twice that capacity, the Torrey Canyon was the first of the big super tankers.

2 The navigation in these seas is dangerous, due to reefs all round Land’s End and the Isles of Scilly. Seven Stones is particularly dangerous and is marked by a lightship.

3 At the time called IMCO. The name was changed to IMO in 1982, to reflect that it was no longer a consultative body, but an international body with a clear mandate of its own. IMO is the UN Specialized Agency competent to regulate matters regarding the safety and security of navigation, the prevention of marine pollution from ships and the legal matters relating thereto. As of 19 December 2008, IMO has 168 Member States. In 2008 the Organization celebrated a number of milestones, including commemorating 60 years since the adoption of the IMO Convention and 50 years since that Convention entered into force, hosting the 100th session of the IMO Council and marking the 25th and 20th anniversaries of the WMU (based in Sweden) and the IMLI (based in Malta). The latter is directed by Professor David Attard and enjoys an excellent academic reputation in the legal field, as witnessed by the outstanding performance of its graduates and the high-level posts many of them have been entrtusted in their native countries. Since its inception, almost 500 students from more than 100 States have successfully graduated from IMLI, making the Institute an outstanding example of a useful institution for the dissemination of maritime law and legal drafting, indispensable for the proper implementation of IMO’s instruments, particularly in developing States.

concerted action, supported by changes to existing international law. The legal and technical4 issues generated by that incident were to form the basis of IMO’s work for years to come and determined the adoption by IMO of comprehensive international liability and compensation regimes regulating not only damage caused by spills of oil and other Hazardous and Noxious Substances (HNS) at sea, but also claims for death of, personal injury to, and loss of or damage to baggage in respect of passengers carried by sea, and, recently, claims for compensation for removal of wrecks posing a hazard to the safety of navigation, or to the environment of coastal States.

First there was the adoption of the Intervention Convention 1969,5 which established the right of a coastal State to take reasonable and proportionate measures to counteract a maritime casualty posing a grave and imminent danger of oil pollution to its coastline or related interests. Thereafter, an ad hoc Legal Committee6 developed the legal bases to resolve issues of liability and to compensate the innocent victims of oil pollution incidents by the adoption of the 1969 CLC7 and, two years later, the 1971 Fund Convention.8 These successful treaties addressed the civil liability of the ship and cargo owners for oil pollution damage. In particular, the 1969 CLC made the shipowner liable and insurance compulsory and the 1971 Fund Convention substantially increased the amount of compensation available for oil tanker spills, with an additional tier of compensation funded by contributions from oil receivers.

4 In 1969 the International Convention for the Prevention of Pollution of the Sea by Oil, 1954 was amended and in 1973 an international Conference convened by IMO adopted the International Convention for the Prevention of Pollution from Ships, which covers not only accidental but also operational oil pollution from ships, as well as other forms of pollution from chemicals, harmful substances carried in packaged form, sewage and garbage. This contribution focuses on the legal issues.

5 The International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties, 1969 entered into force on 6 May 1975; as at 19 December 2008, 86 states are Party to it. A Protocol adopted in 1973 extended the provisions of the Convention to substances other than oil. This Protocol entered into force on 30 March l983; as at 19 December 2008, 53 states are Party to it.

6 The Committee had been especially established for the purpose. It was elevated to the status of a permanent organ of the Organization in 1975, together with the MEPC.

7 International Convention on Civil Liability for Oil Pollution Damage, 1969.

8 International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971.

The 1992 Civil Liability Convention and 1992 Fund Convention: main features

The 1969 CLC and 1971 Fund Convention were updated by Protocols adopted in 1992, known as the 1992 CLC9 and the 1992 Fund Convention.10 Together, they form the current international regime for sharing the cost of liability for oil pollution damage between shipowners and cargo owners.11

Both treaties apply to oil pollution damage resulting from spills of persistent oil from tankers and cover damage suffered in the territory, the territorial sea or the EEZ, or equivalent sea area,12 of a State Party. Spills of bunker oil from tankers and from unladen tankers are also covered under this regime.

It should be noted that, apart from the notion of limitation of liability, which was not new to shipping, the international regime for liability and compensation for oil pollution damage constituted by the CLC and Fund Convention contains the following elements, which at the time of the original treaties were of an innovative character:

(a) Strict liability of the shipowner, that is, liability independent of fault. The shipowner is exonerated from liability only in limited circumstances set out in the CLC.13

(b) Channelling of liability. These provisions preclude claims for compensation being brought against individuals other than the shipowner. By requiring claims to be pursued against the shipowner, who must also take out insurance to cover such claims, it is clear who is the person responsible for pollution damage.

(c) Compulsory insurance. This requirement is aimed at ensuring that the shipowner has available, at all times, the necessary financial resources to pay for compensation. By making insurance compulsory, the CLC achieves the protection of potential victims and a more equitable playing field for shipowners.

(d) Insurance certificate. The CLC requires the shipowner to obtain a certificate attesting that insurance or other financial security is in force in accordance

9 Protocol of 1992 to amend the International Convention on Civil Liability for Oil Pollution Damage, 1969.

10 Protocol of 1992 to amend the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971.

11 As at 19 December 2008, 121 States are Parties to the 1992 CLC and 103 States are Parties to the 1992 Fund Convention.

12 The scope of application of the original treaties was limited to the territory, including the territorial sea of a State Party.

13 (a) The damage resulted from an act of war, hostilities, civil war, insurrection or a grave natural disaster, or

(b) the damage was wholly caused by sabotage by third party, or

(c) the damage was wholly caused by the negligence of public authorities in maintaining lights or other navigational aids.

Pollution damage is defined as loss or damage caused outside a ship by contamination resulting from escape or discharge of oil from the ship. The cost of reasonable preventative measures is recoverable under the Conventions, even if no spill of oil occurs, provided that there was a grave and imminent threat of pollution damage. Compensation is available to the victims who have suffered damage as a result of the pollution, including loss of revenue, and to public and private bodies who have suffered such damages, or have incurred in expenses for the clean-up operations. However, compensation for impairment of the environment, other than loss of profit for such impairment, is limited to costs of reasonable measures of reinstatement actually undertaken or to be undertaken.

The 1992 CLC contains the principle of strict liability of the shipowner for oil pollution damage and a system of compulsory insurance to cover such liability. The shipowner may be exempted from liability only in a few specific cases,14 and is normally entitled to limit liability according to limitation amounts15 linked to the tonnage of the ship.

The Convention applies to all seagoing ships actually carrying oil in bulk as cargo. Ships carrying more than 2,000 tons of oil as cargo are required to maintain insurance in respect of oil pollution damage, and must carry on board a certificate attesting such insurance coverage.

The scope of the 1992 Fund Convention is to pay compensation to those States and persons who have suffered pollution damage, if such States and persons are unable to obtain compensation from the owner of the ship from which the oil escaped, or if the owner is financially incapable of meeting his obligations in full, or if the damage exceeds the limit of the shipowner’s liability under the 1992 CLC. Compensation is administered by the 1992 IOPC Fund, an intergovernmental organization financed from contributions levied on individuals receiving more than 150,000 tonnes of crude oil and heavy fuel oil in a State Party to the Convention, after sea transport.

The maximum amount of compensation payable under the 1992 Fund Convention for a single incident is 203 million SDR, including the sum actually paid by the shipowner or his insurer under the 1992 CLC.

14 See above, fn 13.

15 The limitation amounts of the 1992 CLC as amended by IMO Legal Council Resolution Leg.1(82) are as follows:

– for a ship not exceeding 5,000 units of gross tonnage, 4.51 million SDR;

– for a ship with a tonnage between 5,000 and 140,000 units of gross tonnage, 4.51 million SDR plus 631 SDR for each additional unit of tonnage; and

– for a ship of 140,000 units of gross tonnage or over, 89.77 million SDR.

This unique system has been working effectively for more than three decades, simplifying and expediting the process of recovery of damages, in most cases, without the need to resort to the lengthy and costly litigation. Over the years it has evolved in the light of the experience gained from the incidents and in order to respond to the changing perception of the society vis-à-vis the consequences of oil spills. However, its key elements have, so far, remained constant and – with or without modifications – have formed the backbone of the other liability and compensation regimes subsequently developed by the Organization.