International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001

International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001

1 Introduction

Pollution damage caused by bunker oil is covered by the CLC 1992 only where it is caused by bunker oil of tankers, whether loaded or in ballast. The compensatory regime ensured by the CLC 1992 and the Fund Convention, extended generally to hazardous and noxious substances by the HNS Convention 1996 as amended by the Protocol of 2010, left a gap in respect of damage caused by bunker of dry cargo ships, that was excluded from their scope of application, even though bunker oil of dry cargo ships as well as of passenger ships, that in large ships can be of thousands of tons,¹ can cause considerable pollution damage. That gap has been filled by the International Convention on Civil Liability for Bunker Oil Pollution Damage, adopted on 23 March 2001 and entered into force on 21 November 2008. As of July 2014, there were 77 States Parties to this Convention.²

The structure of this Convention³ differs from that of the CLC because there are no provisions on the limitation of liability of the owner, nor is it complemented by a Fund Convention.

2 Scope of Application

2.1 Geographical scope

Art. 2 so provides:

This Convention shall apply exclusively:

(a) to pollution damage caused:

(i) in the territory, including the territorial sea, of a State Party, and

(ii) in the exclusive economic zone of a State Party, established in accordance with international law, or, if a State Party has not established such a zone, in an area beyond and adjacent to the territorial sea of that State determined by that State in accordance with international law and extending not more than 200 nautical miles from the baselines from which the breadth of its territorial sea is measured;

(b) to preventive measures, wherever taken, to prevent or minimize such damage.

This provision is identical to that in art. II of the CLC and therefore reference is made to the comments made thereunder.⁴

2.2 The notion of pollution damage

Pollution damage is so defined in art. 1(9) of the Convention:

9 ‘Pollution damage’ means:

(a) loss or damage caused outside the ship by contamination resulting from the escape or discharge of bunker oil from the ship, wherever such escape or discharge may occur, provided that compensation for impairment of the environment other than loss of profit from such impairment shall be limited to costs of reasonable measures of reinstatement actually undertaken or to be undertaken; and

(b) the costs of preventive measures and further loss or damage caused by preventive measures.

Although this definition is identical to that in art. 2(4) of the CLC, the pollution damage to which the Bunker Oil Convention applies differs. Art. 4(1) in fact provides:

This Convention shall not apply to pollution damage as defined in the Civil Liability Convention, whether or not compensation is payable in respect of it under that Convention.

This provision may be misleading, since the definition of pollution damage is the same in both conventions. What differs are the combined definitions of ‘ship’ and of ‘oil’. Whilst under the CLC ‘ship’ is only a sea-going vessel or seaborne craft constructed or adapted for the carriage of oil as cargo and actually carrying oil in bulk as cargo or during any following voyage, under the Bunker Oil Convention ‘ship’ is generally a sea-going vessel or seaborne craft; and whilst under the CLC ‘oil’ is generally any persistent hydrocarbon mineral oil whether carried on board a ship as cargo or in the bunkers of such ship, under the Bunker Oil Convention ‘oil’ is only ‘bunker oil’, so defined in art. 1.5:

5 ‘Bunker oil’ means any hydrocarbon mineral oil, including lubricating oil, used or intended to be used for the operation or propulsion of the ship, and any residues of such oil.

Oil carried in the bunkers of ships as defined in art. I.1 of the CLC 1992 is excluded by art. 4.1, which provides:

1. This Convention shall not apply to pollution damage as defined in the Civil Liability Convention, whether or not compensation is payable in respect of it under that Convention.

However the term ‘bunker oil’, which suggests that the oil to which the Convention applies is only the oil carried in the bunker of a ship, does not cover all the oils to which the Convention applies, since in the definition reference is made both to oil used for the propulsion and operation (as is the case for the oil used for the generators) of the ship and to lubricating oil, that is not normally carried in the bunkers of the ship. Therefore, the word ‘bunker’ has been used in order to draw a distinction between the oil carried on board for the use of the ship and the oil carried as cargo: oil carried in barrels and intended to be used as lubricating oil is therefore covered by the Convention, whereas oil carried in barrels as cargo is not.⁵

2.3 Ships subject to the Convention

The following definition of ship is given in art. 1(1):

’ship’ means any seagoing vessel and seaborne craft, of any type whatsoever.

Except that there is no reference to the cargo, this definition is identical to that in the CLC and also that in the HNS Convention. The qualification of the ship or craft as ‘seagoing’ does not, also in this case, refer to the type of register in which the ship or craft is registered, but rather to the requirement that the ship or craft must be ‘going’ at sea at the relevant time. The (standard) qualification of the craft as ‘seaborne’ (and not ‘seagoing’) also aims at including non self-propelled craft. The words used in all conventions in their French text is ‘engin marin’ which also suggests a very general description of the craft, that only requires the ‘engin’ to be employed at sea.⁶

Size is not relevant; nor is there any provision in the Convention, as there is in some other conventions, such as the LLMC Convention in its art. 15(2)(b), allowing States to exclude from the scope of its application ships below a specified tonnage (e.g. 300 tons).

2.4 Ships excluded from the scope of application of the Convention

Art. 4 so provides in paragraphs 2, 3 and 4:

1. Except as provided in paragraph 3, the provisions of this Convention shall not apply to warships, naval auxiliary or other ships owned or operated by a State and used, for the time being, only on Government non-commercial service.
   
2. A State Party may decide to apply this Convention to its warships or other ships described in paragraph 2, in which case it shall notify the Secretary-General thereof specifying the terms and conditions of such application.⁷
   
3. With respect to ships owned by a State Party and used for commercial purposes, each State shall be subject to suit in the jurisdictions set forth in article 9 and shall waive all defences based on its status as a sovereign State.

Article 4(2) differs from art. XI(1) of the CLC in that, in addition to warships, reference is made to naval auxiliaries. An addition has also been made in art. 4(4) of the HNS Convention and originates from art. 3(1) of the Immunity Convention 1926 in which the terminology slightly differed, since reference was made therein to ‘fleet auxiliaries’. That addition is difficult to understand, considering also that in its provisions on immunity of Government ships UNCLOS refers to ‘warships and other government ships’.⁸

3 The Person(s) Liable for the Pollution Damage

Arts 3(1) and (2) provide:

1. Except as provided in paragraphs 3 and 4, the shipowner at the time of an incident shall be liable for pollution damage caused by any bunker oil on board or originating from the ship, provided that, if an incident consists of a series of occurrences having the same origin, the liability shall attach to the shipowner at the time of the first of such occurrences.
   
2. Where more than one person is liable in accordance with paragraph 1, their liability shall be joint and several.

The definition of shipowner in art. 1(3) is as follows:

’shipowner’ means the owner, including the registered owner, bareboat charterer, manager and operator of the ship.

When the need for the adoption of an international regime for liability and compensation for damage caused by oil from ships’ bunkers was first considered by the IMO Legal Committee one of the issues requiring analysis had been that of the possibility of attaching liability not only to the shipowner but also to parties responsible for the day-to-day operation of the ship.⁹ Although the original draft submitted to the IMO Legal Committee by Australia, Canada, Norway, South Africa and the United Kingdom reproduced that adopted in art.1(2) of the CLC and in art. 1(2) of the HNS Convention,¹⁰ in a subsequent draft submitted two years later to the Legal Committee by Australia, Canada, Finland, Norway, South Africa and the United Kingdom¹¹ there were included four alternative options for such definition, in all of which persons other than the owner of the ship were included. The first of these options was worded as follows: ‘“Shipowner” means the owner [, charterer, manager and operator] of the ship’.¹² A very similar definition, followed by an alternative one, was included, this time without square brackets, in a draft of the Bunker Oil Convention submitted three years later by Australia, Canada, Finland, Ireland, Malta, the Netherlands, Norway, South Africa, Sweden and the United Kingdom. It was worded:

’shipowner’ means the owner, including the registered owner, bareboat and demise charterer, manager and operator of the ship.

In the comment that followed it was stated that such definition was based on that in art. 1(2) of the LLMC Convention.¹³ That indeed was correct, but, besides the addition of the words ‘including the registered owner’, the purpose of the extended definition was very different: in the LLMC Convention it was the extension of the benefit of limitation to other persons involved in the operation of the vessel and in the draft Bunker Oil Convention it was the extension of the liability for damage by bunker oil to persons other than the (registered) owner. Instead the reason why in the CLC and in the HNS Convention the definition is restricted to the registered owner is that of channelling the liability to the registered owner only.

From the standpoint of the wording, the definition in the Bunker Oil Convention is peculiar, because it is on two different levels: it provides first that ‘shipowner’ means ‘owner’ and secondly that ‘owner’ includes ‘the registered owner, bareboat charterer, manager and operator of the ship’. The primary term appears, therefore, to be ‘owner’ and the secondary or subordinate term appears to be ‘registered owner’: exactly the opposite of the CLC.

Finally, at a subsequent session of the Legal Committee (the 81st session) a new draft convention was submitted by Australia, Canada, Finland, Ireland, Malta, the Netherlands, Norway, South Africa, Sweden and the United Kingdom in which only the definition of ‘shipowner’ previously quoted was included, albeit with a minor change, the words ‘bareboat and demise charterer’ being quite rightly linked also by the conjunction ‘or’.¹⁴

From the standpoint of the substance of the definition, from the travaux préparatoires it appears that the reason for the extension was, albeit with significant opposition, that of increasing the number of the persons that could be held liable, for better protection of the victims. This was the interpretation, apparently unchallenged, of the International Group of P&I Clubs which suggested that the other parties in the definition should be liable only when it had not been possible to obtain compensation from the registered owner or his insurer.¹⁵ The same interpretation was given to art. 3(1) by the International Chamber of Shipping, which suggested that proper channelling provisions should be included, stating that even though the requirement in art. 7(1) for the registered owner to insure his potential liability should result, in practice, in claims being channelled to him, the joint and several liability provision would invite claimants to sue the range of parties in the ‘shipowner’ definition.¹⁶

If the term ‘shipowner’ in art. 3(1) is replaced by the definition in art. 1.3, art. 3(1) would read: ‘Except as provided in paragraphs 3 and 4, the owner, registered owner, bareboat charterer, manager and operator at the time of the incident shall be liable for pollution damage.’ If at the time of the incident there is no bareboat charterer, manager or operator, since the ship is directly operated by the registered owner, of course the only person liable is the registered owner. And this is impliedly recognised by art. 3(2), which provides:

1. Where more than one person is liable in accordance with paragraph 1, their liability shall be joint and several.

Although that is not entirely clear, it must be assumed that the situation covered by art. 3(2) is that in which the ship is bareboat chartered or where the owner (or the bareboat charterer — the co-existence of a bareboat charterer and an operator is difficult to conceive) has appointed a manager, in which event the registered owner would continue to be liable. This provision, however, gives rise to some problems. First, while the identity of the registered owner is easy to establish, that is not the case for the bareboat charterer or the manager. And the burden of proof would lie on the claimant.

Secondly, if, for example, the ship is bareboat chartered and pursuant to the charter party the owner is liable for bunker oil pollution damage — which would make sense, since the owner is required to maintain insurance or other financial security to cover liability for pollution damage — claimants would nevertheless be entitled to bring a claim against the bareboat charterer, who apparently¹⁷ is not required to maintain insurance or financial security. In any event, if he does, the claimants may not have a direct action against the insurer or provider of security, unless a direct action is provided by the applicable law. In addition, it is conceivable that under the applicable national liability regime (on the assumption that neither the 1957 limitation convention nor the LLMC Convention are in force in the relevant jurisdiction) the bareboat charterer may not enjoy the benefit of limitation. The result could be that where the ship is bareboat chartered and its management is entrusted by the charterer to a manager, there would be three persons who should maintain insurance or other financial security, thereby tripling the insurance costs: a result that under the CLC has been avoided by channelling the liability to the registered owner.

Thirdly, whether, on the assumption that the ship whose bunker oil has caused pollution damage is bareboat chartered and the persons who have suffered pollution damage claim compensation from the registered owner, the registered owner, in the event that under the applicable law or under the contract the person liable is the bareboat charterer, would have a right of recourse against him under the Convention or under that law or the contract. That situation is probably governed by art. 3(6) which provides:

6 Nothing in this Convention shall prejudice any right of recourse of the shipowner which exists independently of this Convention.

This is another reason for which the bareboat charterer, the manager and the operator (if a distinction between bareboat charterer and operator is conceivable in practice) would be compelled to insure their liability.

4 The Basis of Liability and the Exclusions from Liability

Art. 3 so provides in paragraphs 3 and 4:

3 No liability for pollution damage shall attach to the shipowner if the shipowner proves that:

(a) the damage resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character; or

(b) the damage was wholly caused by an act or omission done with the intent to cause damage by a third party; or

(c) the damage was wholly caused by the negligence or other wrongful act of any Government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function.

4 If the shipowner proves that the pollution damage resulted wholly or partially either from an act or omission done with intent to cause damage by the person who suffered the damage or from the negligence of that person, the shipowner may be exonerated wholly or partially from liability to such person.

The combination of the rules on the liability of the shipowner under art. 3(1) and on the exclusions from liability under art. 3(3) and (4), identical to those under the CLC, indicates that his liability is strict. But, as the liability of the owner for pollution damage under the CLC, it is governed exclusively by the provisions of this Convention. Art.3(5) provides:

1. No claim for compensation for pollution damage shall be made against the shipowner otherwise than in accordance with this Convention.

5 Limitation of Liability

Art. 6 so provides:

Nothing in this Convention shall affect the right of the shipowner and the person or persons providing insurance or other financial security to limit liability under any applicable national or international regime, such as the Convention on Limitation of Liability for Maritime Claims, 1976, as amended.

It is worth summarising the history of this provision in order to understand its purpose and its meaning.

In a paper submitted to the 76th session of the Legal Committee by Australia, the Netherlands, Norway, Sweden and the United Kingdom¹⁸ the attached draft convention text included the following provision on limitation of liability:

The shipowner shall be entitled to limit liability in accordance with the applicable international convention or the national law of the State the courts of which have jurisdiction in accordance with article 9, paragraph 5.

Another paper was submitted at the 77th session of the Legal Committee by Australia, Canada, Norway, South Africa and the United Kingdom¹⁹ in which, in view of a number of delegations being of the opinion that the draft convention should contain its own limitation figures, two options were submitted, the first providing for the right of the shipowner to limit liability in accordance with the LLMC Convention as amended by the Protocol of 1996 and the second providing independent limitation rules.²⁰ However, the suggestion to include independent rules on limitation of liability was subsequently withdrawn and in the revised draft of the convention submitted by several delegations at the 80th session of the Legal Committee the provision on limitation of liability (art. 6) was worded as follows:²¹

Nothing in this Convention shall affect the right of the shipowner to limit liability under any applicable national or international regime, such as the Convention on Limitation of Liability for Maritime Claims, 1976, as amended.²²

At the subsequent session of the Legal Committee the delegation of the United Kingdom on behalf of all six sponsoring delegations, introduced document LEG 81/4/3 containing a draft conference resolution urging States to become Party to the 1996 Protocol to the LLMC 1976 and to denounce the 1924, 1956 or 1976 liability Conventions, as appropriate, with effect from the entry into force of the 1996 Protocol to the LLMC Convention.²³ The draft resolution, introduced again at the 82nd session,²⁴ was approved by the Conference.²⁵

Since it has been stated to be strongly arguable that the LLMC may give no general right of limitation for bunker pollution claims,²⁶