China Oil Pollution Compensation Fund

China Oil Pollution Compensation FundChina adopted the Civil Liability Convention 1992 ("CLC") in 1999 but its accession to  the 1992 Fund Convention is restricted to the HK Administrative Region . the Chinese Oil Pollution Compensation Fund (the "Chinese Domestic Fund") was established in 2012 and is administered by the Committee of China Oil Pollution Compensation Fund ("Committee") which was established on 18th June 2015. The Committee will shortly publish the protocols for the submission of claims, thus launching a new compensation regime for oil pollution incidents caused by ships within Chinese waters .

Fund Administration

The Committee is based in Beijing with claims administered from a newly established Claims Centre in Shanghai. The Committee is drawn from Ministries most affected by pollution incidents (Transport, Finance, Agriculture, Environmental Protection); the State Oceanic and National Tourism Administrations; together with three para-statal oil majors (China National Petroleum Corporation, Sinopec Corporation and China Offshore Oil Corporation).  The Committee considers for approval claims referred to it by the Shanghai Claims Centre. 

Claims Submission

All claims against the Fund must first have been pursued through the local courts against the responsible ship (or her insurer or guarantor ). The Fund responds to damages awarded by the court, but unrecoverable from the ship, such as when an owner is insolvent; when the responsible ship cannot be identified; or when the damages claimed exceed any limitation or exemption available to the owner. 

Any claims must be submitted within three years from the date of the damage; but always within six years from the polluting incident. 

A limit of RMB 30 million applies for any one incident (article 18 of the 2012 Administrative Measures ) with an proportionate apportionment of all claims should the damages exceed this limit.

The Committee determines which claims are eligible for payment by the Fund. The timetable of the committee meetings will be announced later this year

Fund

The Fund is maintained by contributions from oil cargo owners in China (pursuant to the 2010 Regulation of PRC on the Prevention and Control of Marine Pollution from Ships). A levy of RMB 0.3 per ton is applied against cargoes of persistent oil substances (article 6 of the 2012 Administrative Measures) and collected from receivers of persistent oil in Chinese waters (article 56 of the 2010 Regulation). "Persistent oil" includes crude oil, fuel oil, heavy diesel oil, lubricating oil and other persistent hydrocarbon mineral oil.

It is understood that between 1st July 2012 and 30th May 2015 the Fund built-up reserves of approximately RMB 318.16 million for claim payments.  It is believed that claims from 14 oil pollution incidents, amounting to RMB 165.65 million  have been notified to the Committee and will be processed shortly pending the publishing of protocols.

Conclusion

The Fund provides a second tier compensation for claimants who may suffer oil pollution damages at Chinese waters. All claims, however, will have to be referred to a competent local court before being submitted to the Claims Centre.

The protocol for claims submission and reimbursement will be revealed later this year. In the interim, if Members have any questions concerning the China Oil Pollution Compensation Fund, please contact your usual contact at your local Managers' office.

Staff Author

UK P&I

Date06/10/2015

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