Pollution from the Carriage of Oil by Sea: Liability and Compensation

by Dr. Wu Chao

A guide to marine oil pollution, awarded the British Insurance Law Book Prize 1997 by the British Insurance Law Association

A comprehensive book on liability and compensation for marine oil pollution that was published in 1996 with support from the UK P&I Club.

Subtitled Liability and Compensation, this book sets out and analyses the legal regimes for oil pollution liability and compensation. It describes the system put in place by international conventions and voluntary agreements, particularly the IOPC Fund compensation policy; and the unilateral approach adopted by the United States.

Dr. Wu Chao is environmental law adviser for Thomas Miller (Americas) Inc. The work emanates from her doctoral thesis completed at the University of Nanterre, Paris. Compiled from 3½ years' research in Paris, London, Oxford, Newark and Washington, it also earned her the 1994 prize of the Monaco-based Institut du Droit Economique de la Mer.

The book draws on some of the best known tanker incidents, including the Torrey Canyon (1967), the Amoco Cadiz (1978), the Exxon Valdez (1989) and the Braer.

It examines how responsibility is divided between shipowners and oil companies and which claims for pollution damage are admissible according to the conventions. It covers the origins and content of the 1969 Civil Liability and 1971 Fund Conventions and the industry compensation schemes TOVALOP and CRISTAL. A separate chapter deals with the 1992 amendments to the Conventions which are just coming into force.

"Given that society as a whole profits from the carriage of oil by sea, it is natural that the risk in excess of the profit of the liable party should be borne by society as a whole, on a national or regional basis through taxation."

There is a survey of the rules relating to claims by individuals for direct and indirect losses in French, British and American jurisdictions, and the difficult environmental damage compensation issues which arise from variations between jurisdictions.

It also deals with the difficulties of implementing international instruments, most particularly in relation to the United States, which is not a party to the conventions. Dr Wu goes into great depth on the history and impact of the Americans' Oil Pollution Act of 1990, which she feels imposes an excessive burden on ship and cargo owners.

Dr. Wu feels that despite significant progress in the apportionment of liability in respect of oil pollution, the search for a balance between various interests must continue. At present, the victims of pollution are not fully compensated in catastrophic cases and the liable parties feel the financial burdens are too onerous.

She believes that an improvement might well lay in a third level of compensation to complement those stages established by shipowners and oil companies.

Luke Readman, deputy chairman of Thomas Miller P&I Ltd, said that Pollution from the Carriage of Oil by Sea "provides a keen historical insight into the development of legislation, both in the international conventions and in the divergent approach adopted in the United States.

"Dr Wu does not shirk the difficult questions and brings to them a sense of balance between apparently conflicting interests not commonly found amongst industry commentators on the subject. This book will provide rewarding reading for anyone professing a serious interest in the issues."

Pollution from the Carriage of Oil by Sea, 433pages, hardbound, is published by

Kluwer Law International,
PO Box 85889,
2508 CN The Hague,
The Netherlands.

Tel: +31 (0) 70 308 1560
Fax: +31 (0) 70 308 1555