The IOPCFunds: Meeting of the Governing Bodies (October 2022)

The meeting of the Governing Bodies took place at IMO Headquarters between October 25^th and 28^th 2022.  The Chair of the ‘92 Fund Assembly was Ambassador Antonio Bandini (Italy), the Chair of the Executive Committee was Mr. Samuel Soo (Singapore) and of the Supplementary Fund Assembly Mr. Sungbum Kim (Republic of Korea). The meeting was attended by a quorum of signatory states to the ’92 Fund and to the Supplementary Fund and by numerous Observer Delegations.

In opening the meeting, the Chair of the ’92 Fund Assembly welcomed the opportunity of seeing delegates face to face after five “remote” meetings during the Covid 19 Pandemic.[1]

Ambassador Bandini welcomed Mr. Gaute Sivertsen to his first “live” meeting as Director of the IOPCFunds.

Format of meetings. (IOPC/OCT22/1/4).

Whilst there was a general welcome for the return of “in-person” meetings one delegation suggested that meetings might, in future, be hybrid, in-person but with remote attendance available. An interesting debate took place as to whether this was feasible (or desirable). The Director reported that the cost of staging hybrid meetings would be considerable. It was agreed that the matter should be kept under review.

Incidents involving the IOPC Funds.

Prestige. (IOPC/OCT22/3/2)

This 2002 case involving the break-up and sinking of the Prestige off the coast of Spain with the loss of 63,000 tonnes of heavy fuel oil needs no introduction.

In January 2016 the Spanish Supreme Court found that the Master of the Prestige had criminal and civil liablity for damage to the environment. It also found that the shipowner had civil liability and could not limit liability and that the London P.& I. Club had civil liability up to the policy limit of USD1,000 million. The 1992 Fund was found liable within the limit prescribed by the 1992 Fund Convention.

In December 2019 the Spanish Supreme Court awarded damages in the amount of EUR 1,439.08 million (to include pollution and environmental damage) but concluded that moral and pure environmental damages were not recoverable from the 1992 Fund.

The Fund has paid the sum of EUR 27.2 million into the Court in La Coruna, which is payable under the Fund Convention less sums already paid, together with EUR 804,800 which is set aside to cover potential liabilities to France and Portugal. The 1992 Fund supplied to the Court a schedule of amounts due to Spanish claimants prorated at 15.22%. This percentage is calculated by dividing the amount awarded by the Court by the amount available for compensation. Distribution of these funds took place in November 2019.

In the action by the French Government against the Classification Society, ABS, it has been held by the Court of Cassation that ABS cannot rely on the defence of “sovereign immunity” and the action before the Court of First Instance in Bordeaux has been reinstated.

Alfa 1. (IOPC/OCT22/3/7).

On March 5^th 2012 the Alpha 1, laden with 1,800 tonnes of oil struck the wreck of the City of Mykonos in Elefsis Bay near Piraeus and subsequently sank causing pollution to 13 kms of shoreline. As the Alpha 1 was less than 5,000 tons the limitation fund under 1992 CLC is calculated to be EUR 5.77 million. The owners of the tanker had in place an insurance policy for EUR 2 million but the policy contained a provision that only non-persistent oils would be covered.

Claims for clean-up were submitted by contractors in the amount of EUR 16.15 million and a claim for EUR 222,000 was made by the Greek State. The 1992 Fund has settled the main contractor’s claim for EUR12 million and is claiming back from the ship’s insurers the 1992 CLC limit of EUR 5.77 million. However, in February 2018 the Bank of Greece revoked the insurers’ licence and placed the company in liquidation for breach of the Greek solvency requirements. The Fund filed a claim in the liquidation proceedings which was dismissed though without any reasons being given. The Fund’s appeal from this decision by the Liquidator was heard in July 2021 and judgment has since been given in the Fund’s favour. The Fund’s lawyers have now sent the Liquidator an “extrajudicial declaration” requesting a full list of claims and calling on him to justify his dismissal of the Fund’s claims in the liquidation. This request was refused and the Fund lodged an appeal which resulted in an order from the Court to the Liquidator to include the Fund’s claim in the list of claims to be settled in the liquidation.

The attempt by the Fund to secure its claim by filing for “pre-notated mortgages” on property belonging to the insurers has been successful which will have the effect of lifting the Fund’s claims up the list of creditors.

This decision is, itself, now subject to an appeal due to be heard before the end of the year.

In proceedings before the Piraeus Court of First Instance the Court held that since no limitation fund had been established the insurers were liable for the full amount of the contractors’ claims. The insurers lodged an appeal against this decision and the Fund joined the action to establish that the compulsory insurance provisions contained in Article VII of the 1992 CLC apply. In July 2021 the Supreme Court dismissed all the insurers’ grounds of appeal and determined that the issuance by state authorities of a certificate (based on the blue card issued by the insurers) was deemed to signify that there was insurance in place in accordance with the CLC 1992 obligatory insurance requirements. It followed that the insurers were liable for the claims arising under the CLC. The court further decided that the wording of Article VII (1) of CLC 1992 “carrying more than 2,000 tons of oil in bulk as cargo” meant capable of carrying more than 2,000 tonnes.

Trident Star. (IOPC/OCT22/).

On August 24^th 2016 the 3,177 G.T. tanker Trident Star spilled marine fuel oil at the oil terminal at the Port of Tanjung Pelepas, Malaysia during loading operations. The adjacent container terminal became oiled as a result and activities at the terminal were disrupted for about three weeks. The ship was entered with the Shipowners’ Mutual P. & I. Club and the owner is a party to STOPIA 2006 which requires the shipowner to indemnify the 1992 Fund for the difference between the 1992 CLC limit and the amount of compensation paid by the 1992 Fund up to a limit of SDR 20 million(USD 27.5 million). It was anticipated that claims would not exceed SDR 20 million. The Fund, which had started making payments to claimants, has been reimbursed by the Club.

Nine actions, involving 19 claimants (the operator of the container terminal, and 18 shipping companies), were filed in the limitation action which had been commenced and the Fund intervened to protect its rights. These claims have been assessed by the Club and settled in the sum of USD 3.3 million. This means that the Fund will not have paid out any compensation in relation to this incident.

This matter is now regarded as closed.

Agia Zoni II. (IOPC/MAR22/3/4).

Regular readers of these reports will recall that this small and very old tanker sank in mysterious circumstances in the northern part of Piraeus anchorage area.  Serious pollution was caused by the 500 tonnes of oil which escaped from the wreck. Since then the wreck has been raised and placed in drydock. Two local investigations have reached different conclusions as to the cause of the sinking. One concluded that there had been an explosion on board but the other found that water had been deliberately introduced by opening ballast valves. This scuttling was planned, it is suggested, by the shipowner working in conjunction with the salvors and/or one of the clean-up contracting companies.

The ASNA report concluded that the accident should be attributed to the deliberate and negligent actions of the shipowner, two crew members who were on board at the crucial time, the shipowner’s General Manager and representatives of the Salvage/clean-up companies.

An investigation by the Piraeus Public Prosecutor into the causes of the sinking is still ongoing and until his report is published no further steps can be taken. It is understood that, depending on the outcome of this investigation, the District Attorney may seek to prosecute the owner and the clean-up contactor.

Against this background the IOPC Funds had to decide whether they were obliged to pay for the clean-up operations. The advice from the Funds’ Greek lawyers was that Article 4(3) of the 92 CLC appeared to require that compensation be paid to innocent victims regardless of the cause of the spill. The lawyers further advised that the burden of proving that one of the clean-up contactors was complicit and therefore not entitled to be paid was a heavy one and that there was not enough evidence available at this stage to deny payment. Should there eventually be a finding of criminal activity by the shipowner or contractor recourse actions would be taken against them.

Proceedings have also been commenced on behalf of fisherfolk and fish traders. There are also claims outstanding from the tourism sector and from the Greek State. Of the 423 claims filed against the Fund, 415 have been approved and 189 settled totalling EUR 14.96 million.

The Agia Zoni II was insured for oil pollution risks by Lodestar Marine Ltd. which is not a member of the International Group of P.& I. Clubs and the policy has a limit of EUR 5 million. However, the insurers have said that they will honour the Blue Card which they issued with its limit of SDR 4.51 million. Limitation proceedings were commenced by the insurers and a guarantee in the amount of EUR 5.59 has been lodged with the court. Claims against the limitation fund, including a subrogation claim from the Fund, were filed and assessed by the Administrator. His assessments were the subject of review by the Court of First Instance in Piraeus in June 2022 and the decision of the Court is subject to further appeals with the Fund challenging the ruling that because of late submission of some of the subrogated claims they had no right to appeal against the Administrator’s assessment. Proceedings continue.

In view of the circumstances of the sinking and the on-going investigations the Funds’ Director has advised that it would not be appropriate to make any further payments to the Salvors or to the clean-up contractor who is thought to have been complicit.

Bow Jubail. (IOPC/OCT/3/11).

This remains one of the most significant cases involving the 1992 Fund. On June 23^rd 2018 the tanker Bow Jubail collided with a jetty at the LBC Terminal in Rotterdam resulting in a spill of bunker oil which caused pollution to property and to wildlife. At the time of the incident the tanker was unladen and the shipowner applied to the Rotterdam District Court for leave to limit liability under the provisions of LLMC 76/96 on the basis that the incident was covered by the Bunkers Convention 2001. The Court concluded that the shipowner had failed to prove the absence of oil cargo residues in the cargo tanks and that, for this reason, the tanker qualified as a “ship” under 1992 CLC. This decision was appealed to the Court of Appeal in the Hague where the judgment of the lower court was upheld on the ground that the shipowner had failed to established that the tanker did not contain any oil cargo residues – the onus in this respect being upon the shipowner.

The case is currently under appeal to the Supreme Court and discussions took place at the Funds meeting in 2020 as to whether the 1992 Fund should seek to intervene in the Supreme Court appeal. All delegations recognised that it is very important that there should be a determination by a senior court of the definition of “residues” under the Convention and a consideration of what constitutes adequate cleaning of tanks to eliminate such residues. The Director recommended that the 1992 Fund should apply to join the appeal to ensure that the Court had all the assistance possible in reaching its decision. This recommendation was accepted by the Committee and the Director was authorised to make that application.

At the meeting in November 2021 the International Group of P. and I Clubs confirmed that the Group would continue to support owners in their efforts to prove that there was an absence of residues with the result that the Bunkers Convention 2001 would apply in this case rather than the CLC. It further suggested that consideration should be given to developing a standard procedure or guidelines for determining when a ship, which can serve both as an oil tanker under the 1992 CLC and as a chemical tanker under the Bunkers Convention 2001, ceases to be a “ship” under the 1992 CLC.

In a ruling dated December 24^th 2021 the Supreme Court ruled that the Fund could not intervene in the limitation proceedings but admitted the Fund as “an interested party” with the right to present its views in writing to the court. The written submission filed by the Fund, supporting the owner’s case, was accompanied by a further request for the right to formally intervene in the proceedings.

The case has now been transferred to the Advocate General for his opinion. Once this has been delivered it is likely to be some months before the Supreme Court renders its judgment.

Legal proceedings have been commenced by 25 claimants before the District Court in Rotterdam against the shipowners, insurers and the Fund (in some only of the actions). These claims are being monitored by the Funds’ lawyers and they will be trying to obtain stays pending the determination by the Supreme Court on the issue of “residues”.

Incident in Israel (IOPC/OCT22/3/13).

In February 2021 the Israeli Government reported to the 1992 Fund that tar balls had been found washed up on the coast. The source of the oil was not established but it was thought likely that the oil had been discharged illegally from a passing tanker. This conclusion has since been endorsed by experts in the “fingerprinting” of petroleum products. Further investigations suggest that the likely source of the pollution was the MT Emerald, a tanker of 62,247 GRT, flying the Panamanian flag and registered in the Marshall Islands. However, it has been decided that the evidence is not conclusive and that the oil could have emanated from an earlier tank washing and discharge.

The estimated cost of clean-up is £12.2 million and 33 claims for clean-up expenses, property damage and losses suffered by coastal communities affected by the oil have been submitted. More claims are expected in the near future.  At its meeting in July 2021 the 1992 Executive decided that a “mystery spill” of this sort was covered by the CLC and Fund Conventions and that compensation would be payable. The Director was instructed to settle claims arising.

The Hebei Spirit (IOPC/OCT22/4/3)

On 15^th and 16^th June 2022 a “wash-up” meeting took place in Seoul at which all the parties involved in this complex case (involving thousands of individual claims) met to discuss the case and consider what lessons might  learned for the future. The meeting was described as very positive and constructive. A report covering this meeting has been published as IOPC/OCT22/4/3).

Solar I (IOPC/OCT22/3/3).

This small tanker (998 tons) sank on August 11^th 2006 in the Guimares Strait, Philippines spilling 2,000 tons of industrial fuel oil. She was insured by Shipowners’ Mutual P. and I. Assoc. with a combined  CLC/Fund limit of SDR limit of SDR 203 million (USD26.56 million).

There were three sets of claims lodged against the 1992 fund namely: Philippine Coast Guard (PCG), 967 fisherfolk and a group of municipal employees.

The claim from the Coast Guard covered the cost of clean-up and pumping operations. An offer of PHP 104.8 million was accepted but lengthy delays occurred whilst it was determined whether the approval of Congress and even the President might be required. After long delays the judge in charge of the case ordered that the case should continue in the absence of a settlement. The lawyer representing PCG advised the Court that his clients wished to reopen their claim and increase the amount claimed above the agreed settlement figure. This was move was rejected by the lawyer representing the Fund who insisted that the PHP104.8 settlement agreement was final. The matter was further complicated by the suspension of the PCG’s lawyer for abuse of authority. The case was then transferred to the Solicitor General. Covid-19 delays then occurred. In early 2022 the parties signed off on a revised settlement agreement. Finally in July 2022 the Court approved the compromise agreement and the 1992 Fund paid the agreed amount to the designated bank. The Fund will now invoice the P. & I. Club for its STOPIA contribution.

As to the claims of the 967 fisherfolk these drag on because none of the claimants has been able to produce evidence of loss despite several hearings. It became clear that the claimants were being fed false data by their lawyer. The Fund’s lawyer was instructed to file an application for a cease and desist order. At a hearing in June 2022 the judge denied a request for a further adjournment and ordered the claimants lawyer to pay the costs of the Fund’s lawyers.

The claims from the 97 municipal workers for their services have fared no better. Through a series of hearings the Fund’s lawyers were able to prove that the claims had no basis and that the claims were, essentially, false. The Fund’s lawyer was instructed to apply for a cease and desist order against all claimants. This application was refused by the judge on the grounds that facts warranted a full hearing. Further hearings are scheduled and the Director has been advised to expect that these claims could drag on for years.

Redffern (IOPC/OCT22/3/5).

This claim arises from the sinking of an inland-certified barge which sank in March 2009 at Tin Can Island, Lagos, Nigeria during a transhipment operation from the MT Concep. Approximately 100 tonnes of low pour fuel oil escaped. Claims totalling USD 26.25 million (since increased to USD 92.26 million) have been submitted.

The Fund rejected the resulting pollution claims on the grounds that the Redffern was not a ship within Art. 1 of the 1992 CLC, the claims submitted were full of discrepancies and that there was a lack of information about the identities of the claimants. An application by the Fund to the local court in 2013 to be removed from the proceedings was rejected. A series of appeals and preliminary hearings followed. In February 2022 the First Instance judge delivered a summary judgment awarding the claimants their full claims of USD 92.26 million plus USD 5 million general damages against the owners/charterers of the Redffern and the owners/charterers of the Concep.

This decision has been appealed on various grounds but in the meantime the claimants’ lawyer filed garnishee proceedings against the defendants and also against the Fund. The lawyer representing the Fund has applied to have the Fund removed from the proceedings on the grounds that the barge was not a ship.

The Fund’s lawyer has advised that there is a “range of scenarios which might occur” but he was unable to give any firm prediction of the eventual outcome.

Haekup Pacific.  (IOPC/OCT22/3/6).

On April 20^th 2010 the 1,087 GT asphalt carrier Haekup Pacific which was carrying 1,135 metric tons of cargo was in collision with the Zheng Hang in Yeosu, Republic of Korea. She subsequently sank. The quantity of oil spilled was minimal. The vessel was entered with the UK P.& I. Club and her CLC limit is SDR 4.51 million (USD 5.99 million) and her CLC + Fund limit is SDR 203 million (USD 269.54 million). Her STOPIA 2006 limit is SDR 20 million (USD 26.56).

The UK P. & I. Club has paid out USD 136,000 for clean-up of the minor oil spill.

Proceedings were issued between the two shipowners and their insurers to determine liability for the collision.

The City of Yeosu and the Marine Police immediately issued a wreck removal order. In order to protect their rights and before expiry of the time limit the shipowner/insurer issued proceedings against the Fund in the Seoul Central District court. These proceedings were subsequently withdrawn following agreement being reached between the parties that despite the fact that no wreck removal had yet taken place the potential cost would still be covered by Article 6 of the 1992 Fund Convention.

An environmental survey took place at the request of the shipowners which concluded that the ship and its cargo did not represent a hazard and that ship and cargo could be safely left where they lay. In 2016, and out of an abundance of caution the shipowner/insurer filed a claim against the Fund for USD 25.13 being the estimated cost of removal. The proceedings have been stayed with the approval of the court. The City of Yeosu and Marine Police did not renew their demand that the wreck should be removed but ordered removal of the bunkers on board the ship and this operation was completed at a cost of approximately USD 10 million.

In the proceedings between the two shipowners and their insurers the court has jurisdiction to determine whether the wreck should be removed or not. This issue has yet to be considered by the appellate court in Seoul but it is hoped that the wreck removal order will be revoked.

Nesa R3. (IOPC/oct22/3/8).

The 856 GT tanker Nesa R3 carrying a cargo of bitumen sank in 65 metres of water on June 19^th 2013 off Port Sultan Qaboos, Muscat. Some 250 tonnes of bitumen escaped and 40 kms of shoreline were reported to have been contaminated. The vessel carried less than 2,000 tons of persistent oil and was, therefore, not required to carry compulsory insurance against liabilities. Nonetheless she was insured against such liabilities by Indian Ocean Shipowners Mutual P.& I. Club, Sri Lanka. The CLC limit is SDR 4.51 million (£4.9 million) and the CLC + Fund limit is SDR 203 million (£258 million).

In October 2013 the Omani Government commenced proceedings against the owners/insurers who were refusing to meet their obligations under the 1992 CLC. The Fund joined in these proceedings. In December2017 the Court awarded OMR 4,154,842.80 (£3.8 million) to the Omani Government and BHD 8,419.35 (£16,000) to the 1992 Fund. Both the Government and the Fund appealed against these awards.

Of the 33 claims received by the Fund, 28 have been settled in the amount of OMR 3,521,364.39 (£6.7 million) and BHD 8,419.35 (£16,000). The remaining claims were rejected. Despite a settlement having been signed with the Omani government it has not withdrawn its proceedings and in May 2021 the Government advised the court that the settlement only covered part of its claim. The court appointed an expert to review the claim figures and in June 2022 his report confirmed the total amounts paid by the Fund and noted the Government had, indeed, agreed to withdraw its claims as part of the settlement. A hearing was expected in October 2022 but whilst there could be a further appeal it is expected that the case will be closed.

It is the Funds intention to seek to recover the amounts which it has paid out from the shipowner and its insurers by action in Sri Lanka and the UAE. However, to date the Fund’s lawyers have been unable to either the shipowner or the insurer. It now transpires that the insurers are insolvent and the owners have limited assets.

Nathan E. Stewart. (IOPC/OCT22/3/9).

This incident which occurred on October 13^th 2016 involved an articulated tug-barge consisting of the tug Nathan E. Stewart and the tank barge DBL55 (in ballast at the time) which ran aground west of Bella Bella, British Columbia, Canada. The tug subsequently sank. Approximately 110,000 litres of diesel oil escaped from the tug. A First Nation community which claims aboriginal title to the area affected by the spill commenced proceedings before the Federal Court of Canada against the owners, operators and crew of the two vessels and also against the Ship-source Oil Pollution Fund (SOPF) in Canada, the 1992 Fund and the Supplementary Fund. These actions have been stayed pending the outcome of limitation proceedings commenced by the owners of the tug and barge. In that context in July 2019 the Court ordered that a limitation fund be constituted pursuant to the Bunkers Convention 2001 and, therefore, the LLMC 76/96, on the basis of the joint tonnage of tug and barge. The court has also ruled that there is no factual basis on which the CLC 1992 can be involved – the barge is not a “ship” under CLC as at no time did it carry persistent oil and the tug and barge were separate entities and the tug was certainly not a ”ship” within CLC. Following completion of discovery in the action the Fund has anticipated being able to apply for an order dismissing it from the action. For unknown reasons no steps have been taken in the action since the Spring of 2020.

The 1992 Fund has not received any claims but these are estimated at CAD 3.5 million (£2.2 million).

MT Harcourt (IOPC/OCT22/3/12).

On November 2^nd 2020 an explosion occurred on board the 26,218 GT oil storage/tanker vessel MT Harcourt which was moored at the Elcrest Terminal in the Gbetiokun oil field near Koko, Nigeria. The explosion was caused by a leakage of oil cargo into a ballast tank and occurred during be-ballasting operations.

The explosion caused the deck and side plating to rupture and a maximum of 4.2 tonnes of the crude oil cargo escaped but was contained within the side channel in which the vessel was moored by the use of oil booms.

The vessel was entered with the West of England P. & I. Club. Her CLC limit is SDR 17.9 million (USD 23.77 million) with a STOPIA 2006/17 limit of SDR 20 million (USD 26.56 million). Her combined CLC + Fund limit is SDR 203 million (USD 269.54 million).

Discharge of the cargo was completed and clean-up was organised by the Terminal under supervision of the Club’s surveyor.

On February 26^th 2021 six Benin riverside communities commenced proceedings against the shipowners and the master claiming NGN 11.98 billion (USD29 million). Neither the Club nor the Fund has received any direct claims. The Club lodged a defence to the claim on behalf of the shipowners and the master and the judge struck out the claims as having no merit. The decision was appealed and a decision is till awaited.

The incident is now being handled by the Club and it is thought unlikely that the Fund will be involved either because the claims have no merit or because any claims that do succeed will be within the CLC /STOPIA limits. Water samples and other evidence collected at the time confirmed that the claims made were spurious.

The 2010 HNS Protocol (IOPC/OCT22/8/2 and IOPC/OCT22/8/2/1).

The Director confirmed that the Funds’ Secretariat continues preparing itself for running the HNS Secretariat when the Convention comes into force. Technical training for staff will continue. Since March 2022 no states have deposited instruments of accession which means that there are currently only 6 Contracting States to the Protocol.

Advice on the steps which need to be taken to implement the Protocol continue to be provided by the Fund Secretariat and states are encouraged to call for training sessions and  Workshops continue to be held.

The HNS Finder (the on-line database of HNS substances) continues to be updated on a regular basis. The latest update occurred in May 2022. Work continues on an HNS Claims Manual.

France has now been through two years of reporting imports and its experiences have been shared with the Secretariat. France hopes to ratify the Protocol in 2023. Greece is reporting its Government is taking active steps towards ratification.

Support for the Protocol comes from the World Liquefied Gas Assoc. which is keen to see the Protocol come into force.

Mr. Jose Maura.

Mr. Maura retired as Director during the Covid-19 Pandemic when it had not been possible to hold “in-person” meetings. This was the first meeting when delegates were present at IMO and the opportunity was taken to recognise his 25 years of service to the organisation both as a staff member and as Director. Tributes were paid by delegates and presentations made.

Status of the 1992 Fund Convention and the Supplementary Fund Protocol (IOPC/OCT22/8/1).

There are now 120 Member States of the 1992 Fund and 32 Members of the Supplementary Fund.

Patrick Griggs, Former President, Comite Maritime Int.