TO THE MEMBERS

Dear Sirs

TOVALOP

The members of the International Tanker Owners Pollution Federation Limited voted at their Annual General Meeting on 6 November in favour of a Special Resolution to terminate the TOVALOP Standing Agreement with effect from 20 February 1997. The Board of Directors of both ITOPF and CRISTAL Limited had previously agreed not to extend the TOVALOP Supplement and CRISTAL Contract when their current three year terms end on 20 February 1997.

Whilst the TOVALOP Agreement will end next February, ITOPF will remain in existence as a provider of a broad range of technical services to and on behalf of its tanker owner members and their P&I Clubs. Access to ITOPF's technical staff, who are available to attend at the site of oil spills anywhere in the world, will continue to be one of the principal benefits of ITOPF membership. Existing ITOPF members will remain members after TOVALOP ends in 1997, without any action on their part.

The ending of the voluntary agreements will result in changes from 20 February next in a number of areas:

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a. TOVALOP Certificates

ITOPF will no longer be issuing TOVALOP certificates after the current policy year since TOVALOP will, of course, no longer exist. Some port authorities, and others, have in the past required sight of such certificates before allowing tankers to load or discharge. Such authorities will need to amend their procedures and look instead to the Civil Liability Convention certificates issued by the flag state. There may be authorities which will request sight of TOVALOP certificates after 20 February 1997 and we recommend that Members place a copy of this circular on their tankers so that it can be shown to anyone who makes such a request as an explanation as to why TOVALOP certificates no longer exist. It is understood that ITOPF are planning to issue their own circular on the subject and to publicise in other ways the ending of TOVALOP certificates.

b. Club Certificates of Entry

These will no longer contain the TOVALOP extension clause.

c. TOVALOP Charterparty Clause

Under the standard P&I Club recommended TOVALOP charterparty clause, owners warrant that their vessels are participating tankers in TOVALOP and give charterers the right in certain circumstances to take measures at the owner's expense in response to a spill or threat of a spill from the tanker. Such a clause is no longer appropriate and will not be recommended by the Clubs from 20 February next. We understand that some charterers are considering replacing the present clause with a requirement that the owner remains a member of ITOPF, and there is no objection to such a requirement. Others may be proposing to amend the present clause merely by deleting the requirement that the tanker should be a participating tanker in TOVALOP, but retaining the right of charterers in certain circumstances to conduct clean-up operations or threat removal measures at the tanker owner's expense. We do not believe that such an express right is appropriate any more since, while the granting of such a right was consistent with the whole voluntary compensation system set up by the TOVALOP and CRISTAL agreements, it is incompatible with a number of the provisions of the legal regimes of the 1969 Civil Liability Convention, 1971 Fund Convention and 1992 Protocols.

In the event that such clauses are agreed the member may be committing himself to pay clean-up expenses or threat removal expenses which are not recoverable from the Club.

d. Membership of ITOPF

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i. Existing Members

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Existing members of ITOPF will remain members after TOVALOP expires, unless they take positive steps to withdraw. The Clubs strongly support ITOPF and its technical services and believe that the benefits of continued membership are very great.

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ii. The Clubs will enter all new tanker owner and bareboat charterer Members into ITOPF unless any such owner or charterer specifically requests otherwise. A procedure will be introduced by Clubs as part of their entry formalities to facilitate this process. The cost of membership in ITOPF for 1997/98 will be 0.8 of a UK penny per gross ton. This has for a long time been included in a tanker owner's overall premium with his P&I Club and paid by the Club to ITOPF. This will continue to be the case.

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ITOPF is in direct contact with all the Clubs as regards revised membership application procedures and meetings will be held in the next couple of months to resolve any outstanding issues. ITOPF will also be issuing a circular to all of its members explaining the changes and drawing their attention to the new terms and conditions of ITOPF membership. These terms and conditions will be contained in an ITOPF members' handbook, along with other useful information, that will be issued to all ITOPF members around 20 February 1997.

Yours faithfully