• The Bunkers Convention will enter into force in States Parties on 21st November 2008.
• All vessels over 1000 gross tons are required to maintain on board a Bunkers Convention certificate
• Clubs have agreed to provide "Blue Cards" and to pool liabilities under the certificate, including otherwise excluded liabilities.
• Members are reminded to maintain P&I war risks cover on standard terms with a separate limit for P&I liabilities.
• A follow-up circular will be issued to give further information on issuance of certificates in due course.

Dear Sirs

The International Convention on Civil Liability for Bunker Oil Pollution 2001 (the "Bunkers Convention") has now been ratified by the required number of States, with the requisite combined gross tonnage and will enter into force in State Parties on 21st November 2008.

The Convention provides a liability, compensation and compulsory insurance system for the victims of oil pollution damage caused by spills of bunker oil. The Convention will make the shipowner liable to pay compensation for pollution damage (including the costs of preventive measures) caused in the territory, including the territorial sea of a State Party, as well as its exclusive economic zone or equivalent area.

Registered owners of any sea going vessel and seaborne craft over 1000 gross tonnage, of any type whatsoever, and registered in a State party or entering or leaving a port in the territory of a State party, will be required to maintain insurance which meets the requirements of the Convention and to obtain a certificate issued by a State party attesting that such insurance is in force. The State issued certificate must be carried on board at all times.

The regime closely follows the well established liability and insurance provisions which apply to oil tankers under the Civil Liability Convention (CLC).

Following consideration by all club Boards, it has been agreed that clubs in the International Group will issue the required Bunkers Convention "Blue Cards" to enable signatory States to issue certificates from August 2008. Notwithstanding that clubs do not currently provide shipowners with primary P&I war risks cover, it has been further agreed that clubs will pool all liabilities incurred under certificates issued, including otherwise excluded liabilities, up to, but not exceeding, the amount of the liability so certified. Exclusions will continue to apply in the usual way in respect of liabilities arising otherwise than under Certificates. The Convention provides that liability under Certificates shall not exceed limits calculated in accordance with LLMC 1976 as amended and also contains an exclusion of liability for acts of war (although the definition of war does not include terrorism) and for damage wholly caused by the intentional act of a third-party.

The Club will issue Blue Cards on condition that the Member agrees that where any payment by the Club under the certificate is in respect of war risks, the Member shall indemnify the Club to the extent that such payment is recoverable under the Member's P&I war risks policy or would have been recoverable if the Member had maintained and complied with the terms and conditions of a standard P&I war risks insurance policy, and that there shall be assigned to the Club all the rights of the Member under such insurance and against any third party. By requesting a "Blue Card", the Member will be deemed to have agreed this condition.

It is therefore necessary that all Members requesting "Blue Cards" ensure that they have in place P&I war risks cover on standard terms with a separate limit for P&I liabilities.

The International Group submitted a paper in February to the Executive Committee of the IOPC Funds pointing out that States needed to put in place administrative procedures for the issue of a substantial number of Certificates.

With regard to State issued certificates attesting that the required insurance cover is in force, vessels registered in a State party need only obtain a State issued certificate from that State. This will be treated as evidence of insurance when calling at any port or terminal in a State party.

Vessels registered in a State which is not party to the Convention should obtain a State issued certificate from a State party to the Convention. Ideally, if calling at a port or terminal in a State party, this should be obtained from the issuing authority of that particular State. Alternatively, in the event that this is not possible, a State issued certificate may be obtained from the issuing authority of another State party. The Secretariat of the International Group is in contact with the administrations in a number of party States to identify those willing to issue Certificates for vessels which do not fly their flag and will provide further information in due course.

States have already been informed that there is a growing practice amongst Clubs in the International Group to issue "Blue Cards" in electronic format. Electronic "Blue Cards" can be forwarded by Members in electronic format to the relevant authority of the State issuing the State certificate. If the issuing authority deems this to be unacceptable, and requires the "Blue Card" in a hard copy format, then a hard copy version can be provided on request.

Additional advice on how and when to request a Bunkers Convention "Blue Card" from the Club will be provided in a further circular once the position and administrative procedure of States for issuing certificates are clarified.

Bahamas, Bulgaria, Croatia, Cyprus, Estonia, Germany, Greece, Jamaica, Latvia, Lithuania, Hungary, Luxembourg, Norway, Poland, Samoa, Sierra Leone, Singapore, Slovenia, Spain, Tonga and the United Kingdom.

A similar circular is being sent by the other members of the International Group of P&I clubs.

Yours faithfully

.

• Members requiring further information should contact chao.wu@thomasmiller.com or on telephone +44 20 7204 2157