Compulsory Insurance and Compensation for Bunker Oil Pollution Damage Book

Abbreviations     XV
Introduction     1
The aim of the research     3
The scope of the research     3
Methods used for the research     5
Pollution from Ships' Bunkers and the Advent of the Bunkers Convention     7
A brief history of the development of the oil spill civil liability system     7
Tovalop and Cristal     8
International Conventions     10
The need for the Bunkers Convention     13
The scope of earlier conventions     13
National legislation and the background work on the Bunkers Convention     14
Risk and technical considerations     18
The birth of the Bunkers Convention     20
Overview of the Bunkers Convention     20
Categories of ships     20
"Ship"     20
Does the Bunkers Convention apply to oil tankers?     20
"Warships"     21
"Oil"     22
Scope of application     23
Liability established by the Bunkers Convention     26
Liable parties     26
Channelling of liability     27
Shipowners' liability is joint and several     29
The basis of liability and exonerating circumstances     30
Limitation of Liability     32
Compulsory insurance and direct recourse     33
Three prerequisite factors     34
"Registered owner of a ship"     34
"Gross tonnage" - insurance threshold     35
"In an amount equal to the limits of liability..." amount of limitation     38
Insurance certificate and its recognition     39
Direct action against the insurer     40
Time limit for bringing an action     41
Jurisdiction, recognition and enforcement     42
Other matters     44
Adopted resolutions     45
Concluding remarks     47
The Birth of Compulsory Insurance for Oil Pollution Liability     49
Introduction     49
The concept of compulsory insurance     50
Development of the concept of compulsory insurance     50
The system of insurance     52
Compulsory insurance as defined in international civil liability conventions     52
Insurance or other financial securities     53
The need for compulsory insurance for bunker-oil pollution liability     53
Possible insurers     55
The types of marine insurance and their coverage     55
Cargo insurance and its coverage     56
Hull insurance and its coverage     57
Freight insurance and its coverage     59
Protection and Indemnity Insurance     59
Brief introduction     59
The main risks covered by the P&I Club     60
Insurance contract between the shipowner and the Club     62
The International Group of P&I Clubs     64
The insurers offering coverage for oil-pollution liability     65
The P&I Clubs     65
Pollution liability clause     66
Limitation of liability terms     67
The role of the P&I Club with regard to an oil-pollution incident     68
Oil-pollution liability insurer     68
Measures for an oil-pollution incident taken by the Clubs     69
Clean-up or salvage operation     69
Source of funding     70
Providing legal advice     70
Interaction with other international organisations     71
The legal framework of the IMO conventions     71
Cooperation with the IOPC Fund     72
Technical assistance from the ITOPF     72
Other insurers offering OPA insurance     73
Financial responsibility requirement in the OPA 90     74
The concerns of the P&I Clubs to be the guarantors     76
Some alternative ways of meeting financial responsibility requirements     77
Concluding remarks     79
Strict Liability and Insurance     81
Introduction     81
The basis of liability in the Bunkers Convention     82
The difficulties in applying the common law of torts     82
Trespass     83
Nuisance     83
Negligence     84
Fault-based liability leads to unfair results for pollution victims     86
Strict liability and its application     88
The main reasons for introducing strict liability     90
Ensuring protection of and compensation for victims     90
The impact on the industry     91
The industry bears the cost of pollution damage     91
Incentive to improve prevention of marine pollution     92
Distribution of liability and exceptions to liability     93
Who shall be liable?     93
Provisions in the CLCs     94
Liability of the cargo interest     94
Liability of the ship     95
The second-tier liability of the cargo-owner     96
Liability rule under the Bunkers Convention      97
Exceptions to liability     97
Types of exceptions in general     98
Exceptions available to the shipowner in the Bunkers Convention     99
Channelling of liability     103
Implementation of liability: insurance     105
Proposals during the preparatory work of the Convention     105
Two alternative means     107
Separate insurance policies     107
Co-assurance under one policy     108
Concluding remarks     109
Insurance and the Quest for Adequate Compensation     111
Introduction     111
Certification of insurance     111
Basic requirements in the Bunkers Convention     111
Administrative burden corollary to the issuance of the certificate     112
The administrative burden of the flag States     113
Port State control regarding the certificate     118
Electronic means for the certificate     118
The validity of the certificate     119
Availability and capacity of insurance for bunker-oil spill liability     121
Other related issues     123
"Polluter pays" principle     123
The significance of Art. 7(8) and financial standing of providers of insurance or financial security      125
Mutuality     128
The meaning of mutuality     128
Role of mutuality     129
The ability to absorb large claims     129
Possible motivation for risk minimisation     130
Liability insurance and compensation fund     131
Adequacyand other types of compensation     132
The willingness of P&I Clubs to increase their coverage limit     133
The compensation paid by the cargo interests     134
Compensation paid by other jointly liable persons     136
"Joint and several liability" rule in relation to the compensation purpose     136
Bareboat charterer     137
"Demise charterer" or "bareboat charterer"?     137
The insurance of the bareboat charterer     137
Operator and manager     139
Liability as the time or voyage charterer     140
Definitions     140
Compensation paid by the time or voyage charterer     140
State liability and contributions     141
Concluding remarks     143
Limitation of Liability and the Limit of Insurance     145
Introduction     145
The global limitation of liability system in relation to ships     146
Limitation of liability rule in general     146
The 1957 Convention, 1976 LLMC and its 1996 Protocol relating to tanker-oil pollution liability     150
Limitation rules in the Bunkers Convention     152
Pollution damage eligible for limitation     153
Pollution damage arising from a bunker-oil spill     153
The claims subject to limitation under the 1976 LLMC and its Protocol     154
The amount of the funds available under the LLMCs     157
Other aspects relevant to claims for bunker-oil spill liability under the 1976 LLMC and its Protocol     159
Conduct barring the right to limit     159
Constitution and distribution of the limitation fund     160
The right to limit liability     161
The reasons for maintaining the right to limit     161
Unsatisfactory outcome of the limitation regime     162
The relation of limitation of liability and insurance     164
The insurability and limitation of liability     164
The possibility to have a unlimited liability     166
Concluding remarks     169
Direct Action against the Insurer and its Limited Effect     171
Introduction     171
Rights of a third party to claim on the insurance policy     172
Assignment      172
Direct-action statutes     174
English law     175
United States legislation     177
The limited effect of direct action under P&I insurance     178
Coverage and exclusions of P&I insurance     179
P&I insurance is one of indemnity     179
"Pay to be paid" rule     181
Other defences of a Club against the claim from a third party     182
Direct-action right under the Bunkers Convention     182
"The defences...which the shipowner would have been entitled to invoke"     184
Meaning of the phrase "wilful misconduct of the shipowner"     185
Interpretation of "wilful misconduct" in relation to limitation of liability     185
Interpretation of "wilful misconduct" in insurance law     188
The determination of a competent court     188
"Wilful misconduct in P&I insurance     188
"Wilful misconduct" in Article 7(10)     189
Scope of the claim: pollution damage     190
The uncertain nature of liability for pollution     190
"Pollution damage" in tanker-oil spill incidents     191
CMI guidelines on oil-pollution damage     192
The policy adopted by the IOPC Fund     193
Viewpoint of the P&I Clubs      195
Pollution damage under the Bunkers Convention     195
Recourse action     196
Concluding remarks     198
Outlook on Insurance and Compensation for Bunker-Oil Pollution Liability     199
Introduction     199
Main interests in the insurance system     200
Victims: "Loss of cover" and full compensation     200
Loss of cover     200
"Small ship" issue     201
Adequate compensation     201
The P&I Clubs: maintaining their sustainable development     203
Shipowners: the central actor     203
The comparison of the insurer's exposure to the CLCs and the Convention     204
The types of ships involved     205
The number of ships involved     205
The limitation of liability     205
Concluding remarks     206
Summary of Study     209
The concept of compulsory insurance and its compensation purpose     211
Other features of the Bunkers Convention and their interrelations with compulsory insurance     213
Bibliography     215
Literature     215
Documents     223
Text of the Bunkers Convention     227
Index      239