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Circular 15/04: Small Tanker Oil Pollution Indemnification Agreement (STOPIA)
- A proposed Rule change included in the papers for the annual general meeting of the Association includes a reference to the Small Tanker Oil Pollution Indemnification Agreement (STOPIA).
- This circular provides additional information about that Agreement.
TO THE MEMBERS
SMALL TANKER OIL POLLUTION INDEMNIFICATION AGREEMENT
Members will be aware that following the oil spill from the tanker 'ERIKA' in 2000, a process was begun of reviewing the international liability and compensation regime (1992 CLC and Fund Convention) relating to persistent oil spills from tankers. The review process, which is ongoing, was reported to Members in Annual Reports of the Directors of the Association for the 2002/3 and 2003/4 years.
One outcome of the process has been the adoption of a Protocol to the 1992 Fund to establish a Supplementary Fund. This Supplementary Fund will provide a third tier of compensation paid for by cargo receivers in those States which choose to ratify the Protocol. In order to maintain an equitable balance between contributions of shipowners and oil companies, a proposal was made to raise voluntarily the minimum limit for small tankers under CLC from SDR 4.5 million to SDR 20 million, for claims for damage in States parties to the Protocol, under an agreement known as STOPIA (Small Tanker Oil Pollution Indemnification Agreement).
The Supplementary Fund Protocol is expected to come into force early in 2005. Proposed amendments to the Association's Rules for the 2005 policy year therefore include an amendment to enable and ensure participation in the STOPIA scheme by tanker owners. Members may find it helpful in that connection to be reminded of the note that was included in the most recent report of the Directors, in the following terms:
"As in the previous year, much of the time spent by the Board on pollution matters during 2003 was occupied with reports on the work being undertaken to improve the international liability and compensation regime for pollution damage caused by tankers. The issue of adequacy of compensation was addressed by a Diplomatic Conference held under the auspices of IMO in May, 2003, which adopted a Protocol establishing a Supplementary Fund. This optional third tier of compensation will provide, for pollution damage in those States which become parties to it, an amount of SDR 547 million (about $750 million) funded by cargo receivers, in addition to the amount of SDR 203 million already available under the 1992 CLC and Fund Conventions. The Protocol is expected to come into force by early 2005, perhaps even sooner.
Members may recall that, in 2002, the Board approved in principle a proposed agreement amongst shipowners (known as STOPIA - Small Tanker Owners’ Pollution Indemnification Agreement), to increase voluntarily the minimum limit of liability for small ships under CLC in States which become parties to the Supplementary Fund. The object of the agreement is to maintain equitable sharing of the financial burden of oil spills between cargo receivers and shipowners. A submission to the Diplomatic Conference, on behalf of the International Group, set out further details of the proposed agreement, which would raise the minimum limit from SDR 4.5 million to SDR 20 million and would affect tankers up to 29,548 gross tons, comprising about 75 percent by number of the world tanker fleet. The submission confirmed that the clubs would guarantee their members’ contractual liabilities under STOPIA to the 1992 Fund, subject only to the defences available to shipowners and insurers under 1992 CLC, but reserved the right of shipowners and their clubs to withdraw the scheme if any essential element of the 1992 Conventions affecting tanker owners’ liabilities were amended. "
THOMAS MILLER (BERMUDA) LTD.
If any Members require further information they are requested to contact Nigel Carden on telephone +44 7204 2147.