CLC and Fund Convention: Objectives

CLC and Fund Convention
Objectives:
1. Ensure adequate compensation is available to persons who suffer from oil pollution by
ships even if the owner is unable to pay the same.
2. Adopt uniform international rules & produces to determine civil liability etc., for losses
due to pollution of oil from ships. (Note: civil liability means responsibility to
compensation etc. in money. It does not include criminal liability may be finalized by
fines and / or imprisonment etc.)
3. To encourage government and others to feel more confident in taking early and
decisive action in containing / minimizing the adverse effects of oil pollution.
Salient features of this convention:
The owner of every tanker is liable for pollution damage caused by his tanker (even
though he may have taken all possible care and precautions) unless the damage is
caused by reasons external to (i.e., not connected with) the ownership and operation of
the tanker) This strict liability is based on the principle "polluter may pay”.
The owner of every tanker may limit his total liability in the following manner. For a
ship not exceeding 500 gt liability is limited to 4.51 million SDR.
For a ship 5000 to 140,000 gt liability is limited to 4.51 million SDR plus 631 SDR for
each additional gross tonnage over 5000.
For a ship over 140,000 gt liability is limited to 89.77 million SDR (1 SDR = 15 GF, 1
GF = 65.5 mg of Gold of 900 fineness).
No claim can be made against the charter include Bare boat, master, pilot crew, salver
or agent of the ship.
After a pollution incident, if owner wishes to avail of the benefit of limitation as
described above, he deposits a run equal to its maximum liability either with the court
or with any other competent authority of the country.
If the owner incurs any expenses to prevent or minimize pollution damage, then such
expenses are deductible from the amount deposited by the owner in the same ratio as
other claims on the fund. The object of this provision is to encourage immediate
measures by the owner to minimize / contain damage and be willing to spend money
therefore.
Every tanker of 2000 GT and above has to maintain an insurance or other financial
security (such as a bank guarantor) to ensure that the tanker can meet her pollution
damage liabilities to the extent indicated above.
The flag state shall issue a certificate to each ship after she has complied with the
above condition regarding financial security.
The certificate must be carried on the ship and must show the name of the insurer etc.,
giving security in respect of the ship certificates by all countries that have ratified the
convention.
The liability insurer (P & I clubs) of the ship owner usually provides the proof of
insurance policy / financial security. On the basis of this document the flag state issues
the "certificate of civil liability of oil pollution damage" (CLC certificate)
The certificate shall not be valid beyond the validity of the insurance policy.
Any one who suffers loss due to oil pollution from a ship may she either the owner of
the V/L or even the insurer who has issued the policy within three years of the loss.
Ever if the owner goes into liquidation, the insurer continuous to be liable to those who
may have suffered a loss.
Fund Convention was first adopted in 1971. This was amended and renamed in 1992.
Entered into force 30-5-96. Aim of this convention is to provide compensation for losses
due to pollution where the security provided by the 1992 CLC convention is inadequate.
Fund provides supplementary compensation to oil pollution disasters. The fund
convention is an attempt to ensure that losses due to oil pollution damage are borne not
only by the shipping industry, but in part also borne by the cargo interests.
Salient features: 1. all persons / companies in any country importing more than
150,000 tons of oil in any year shall make contributions to the fund. This fund is
managed as an independent entity under the overall supervision of al director who is
appointed by and responsible to IMO.
2. October 2000 amendments which entered into force in 1-11-2003 raised the max.
amount of compensation to 203 million SDR as compared to 135 million SDR.
However, if three states contribute to the fund receive more than 600 million tones of
oil per annum, the maximum amount is raised to 300, 740,000 SDR.
Effects of CLC and fund convention in ship operation:
1. After the implementation of CLC convention every tanker of 2000 GT and above has to
maintain an insurance or other financial security and obtain a certificate of CLC for
oil pollution damage based on that.
2. CLC convention fixed an upper limit to liability of ship owners in case of oil pollution
from tankers so, ship owners were encouraged to invest in high risk venture like oil
transportation.
3. Both CLC & fund convention ensured adequate compensation is available to parties
who suffer from oil pollution by ships even if the owner is located in a country for away
from the scene of disaster or he may not have sufficient financial resources to meet all
the claims.
4. These conventions encourage government and others to take early and decisive action
in containing or minimizing the adverse effects of oil pollution, because these
conventions ensure adequate compensation. If owner in case any expenses to prevent
of minimize pollution damage, then such expenses are deductible from his total
liability.
==============================================================

CLC and Fund Convention: Objectives

Uploaded by

Copyright:

Available Formats

CLC and Fund Convention: Objectives

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CLC and Fund Convention: Objectives

Uploaded by

Copyright:

Available Formats

CLC and Fund Convention

You might also like