Civil Liability Convention (CLC) of 1992

• Civil Liability For Oil Pollution Damage is addressed in the CLC, 1969

Introduction

• Pollution is a major concern, resulting in one of the most important agreements in the shipping sector.
• There are several types of pollution at sea, including accidental grounding of vessels, which can cause reef damage. This can have an impact on the ecosystem of a region. Also, the discharge of fluids and hazardous materials from ships is another form of pollution that can affect the marine environment.
• Oil spills are a major concern for ship owners and operators. Oil spills are defined as the persistent leakage or discharge of oil and its products (or derivatives) into the ocean. Oil spills have caused irreparable harm throughout maritime voyages, requiring days to years to clean up.
• Oil spills have economic, floral, faunal, and livelihood consequences.
• The Exxon Valdez, Deepwater Horizon, Kuwaiti oil fires, and The Black Sea Spill have severely polluted the Earth.

Background - the Story of CLC

• The grounding of a vessel in 1967, loaded with crude oil from Mina-Al-Ahmadi bound for Wales, resulted in 100,000 tons of crude oil spilled in the coastal waters off the UK and France. Millions of dollars were spent on cleanup operations, and because of the incident, fishermen and tourism workers lost money. The ecology was also damaged beyond calculation.
• The local laws were too vague to collect funds from ship owners, the incident did not occur in any country's territory water, and the compensation amount could bankrupt the ship owner.

What is the Civil Liability Convention of 1992?

• The 1992 Civil Liability Convention, or CLC1992, regulates shipowner liability for oil pollution damages. Under the Convention, the registered shipowner is strictly liable for pollution damage resulting from the discharge or escape of persistent oil from their ship.
• The IMO administers it, ensuring adequate compensation for those who experience oil pollution damages due to maritime casualties involving oil-carrying ships.
• The Convention requires that covered ships have insurance or other financial security equal to the owner's total liability for each incident.
• The Convention covers all seagoing vessels that transport oil in bulk as cargo. However, ships carrying more than 2,000 tons of oil must maintain oil pollution damage insurance.
• The CLC does not apply to warships or other vessels owned or operated by a State Government for non-commercial service. However, ships owned and used by governments for commercial purposes are subject to the liability and jurisdiction provisions.
• The adoption date was on November 29, 1969, and the entry into force date was on June 19, 1975. The 1992 Protocol, adoptive date November 27, 1992, replaced it. Entry into force was on May 30, 1996.

Type of Oil

• The CLC only deals with persistent oil pollution.
• Persistent oils last longer in the environment while non-persistent oils disperse easily or evaporate rapidly.

Area of Application

• Annex II of the Convention specifies the geographic scope of the CLC convention:
• Territory and territorial waters of a contracting state with an area of 12 nautical miles from the baseline of the state, and the exclusive economic zone (EEZ) of the contracting state with an area of 200 nautical miles from the baseline.
• The CLC 92 does not cover the pollution incidents in the high seas. High seas pollutions were not included in the CLC convention because the pollution in high seas were considered to cause lesser damages.
• CLC 92 applies to territorial seas and exclusive economic zones that have persistent oil pollution.

Other Damages Because of Pollution Incident

• Under the CLC convention, pollution incidents may cause damages greater than just pollution itself.

• Compensation and liability for polluting ships extends beyond pollution.

• Damages include physical injury, psychological conditions, and loss of earnings caused by pollution.

• The liability of oil pollution lies only with ship owners per CLC Article III with no claim made possible against servants, agents, crew members, pilots, charterers, or anyone taking preventive measures.

• The shipowner is responsible for paying the total amount claimed by the various claimants, provided that damage was the result of a ship owner's action performed with the intention of causing the harm

• Damages were because of acts of omission performed by the ship owners who knew that these acts would cause the damages.

• The 1976 Protocol, which went into effect in 1981, stipulated that the applicable unit of account used in the convention would be the Special Drawing Rights (SDR) as used by the International Monetary Fund (IMF).

• In 1984, the Protocol raised liability limits, but the 1992 Protocol superseded It

What is Special Drawing Rights (SDR)?

• SDR, established by the IMF in 1969, supplements member countries' official reserves with an international reserve asset. To date, a total of SDR 660.7 billion or 943 billion USD, have been allocated.
• The most recent allocation was designed to address the long-term need for reserves, helping countries address the COVID-19 pandemic's impact.
• The SDR value relies on a basket of five currencies, the British pound sterling, the Japanese yen, the Chinese Renminbi, and the Euro.
• If a ship is not exceeding 5,000 gross tonnage the 1992 Protocols sets a liability limit as no more than 4.51 million SDR, or 5.78 million USD.
• Liability is limited to 4.51 million SDR plus 631 SDR for each additional gross tonne over 5,000 gross tonnage, on a ship between 5,000 and 140,000 gross tonnage.
• Liability is limited to 89.77 million SDR for ships over 140,000 gross tonnage.
• 0.717 SDR equals 1 USD, meaning that 3.585 SDR equals 5 USD.

Exemptions to Ship Owners under CLC 92

Exemptions to Ship Owners under CLC 92 if pollution resulted from:

• War or natural phenomenon
• Third party intentionally causing damage
• Negligence of government or other authority responsible for lights or navigational aids
• It can be challenging to prove the first point, and the other two are more complex. Owners of ships hardly ever face any exceptions to the liability. In the majority of oil pollution cases, ship owners must pay.

Summary

• The ship owner is ultimately liable for any oil spills originating from their ship.
• There are very few exceptions to ship owner's liability in the event of oil spills.
• The CLC establishes a maximum limit of liability based on the ship's tonnage. The owner is at fault, and this limit is not applicable.
• Ship owners must have insurance to cover liability for oil pollution from ships.
• Non-persistent oils are less harmful than persistent oils. For cleanup, persistent oils need greater resources and money.

Explore the Civil Liability Convention (CLC) of 1992, designed to ensure compensation for oil pollution damage. Learn about liability, coverage, and its impact on affected communities and the environment. Understand the conditions under which shipowners are liable for damages.