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Outcome of IOPC Funds’ Spring meetings

During the International Oil Pollution Compensation (IOPC) Funds’ Spring meetings last week in London, extensive deliberations took place, notably in the context of the 1971 Fund. Contrary to the 1992 Fund Convention and the Supplementary Fund Protocol, the 1971 Fund Convention has not been in force since 2002, when the number of states party to it fell below 25. The Fund, however, continues to meet its obligations in respect of incidents which occurred prior to its cessation.

Nissos Amorgos
At its last session, the 1971 Fund decided to instruct its Director to resolve as many outstanding issues as possible in order to dissolve itself at its October 2014 session. Amongst these issues is the Nissos Amorgos incident, which took place in Venezuela in 1997. In this case, the Gard Club has recently lodged two claims against the 1971 Fund in the High Court of London and in Venezuela, claiming that the Fund should be liable to pay any amounts that the Club is obliged to pay in excess of the ship owner’s limitation amount under the 1969 Civil Liability Convention.

The 1971 Fund decided to discuss the matter in a closed session involving only member states of the Fund at the time of the incident. The results of the deliberations, as reported in Plenary, were that the Fund should vigorously contest the action brought by the Gard Club; that the Fund should rely on immunity; and that the Fund Director should not attend a court meeting in Caracas that he would be requested to appear at. The Director was instructed to approach the Club to try to reach an amicable settlement within the limit available to the Fund before the Fund's October session.

Winding up the 1971 Fund
The broader issue of the winding up of the 1971 Fund was also discussed. Only states having been members of the 1971 Fund at any time could be present in this closed session. The result, as reported afterwards, was that the 1971 Fund decided to confirm its intention to dissolve itself at the next meeting of the governing bodies in October 2014.

On 7 May, the High Court of London decided that the Gard Club was entitled to a so-called freezing order relief requested against the 1971 Fund in support of its claim in England, while an injunction was not granted in support of the proceedings brought in Venezuela. The effect of the freezing order is that the Fund may not remove from England or dispose of its assets up to the sum of USD 58 million (effectively any of the Fund's assets), while it is not prevented from dealing with its assets in the ordinary course of its business. It is the Director's intention that the Fund should appeal against the judgement and, according to information on the IOPC Funds’ website, it has already applied to the High Court of London to set aside the claim, asserting immunity.

Definition of “ship”
A half-day session was also held in the intersessional Working Group established on issues related to the definition of “ship” under the 1992 Civil Liability and Fund Conventions. The Working Group continued its discussions, notably on the criteria to be applied by member states when considering an issue involving the definition of “ship” and on the question of whether oil discharged into permanently or semi-permanently anchored vessels engaged in ship-to-ship oil transfer operations should be considered as qualifying as contributing oil under the 1992 Fund Convention.

As regards the definition of “ship”, the Working Group was invited to consider two options, notably (i) that any situation where a vessel carries or stores oil on board and which can be considered as being part of the maritime transport chain should be included in the scope of the 1992 Civil Liability Convention, subject to clarification of what constituted maritime carriage of oil and its limits, and (ii) to develop a list of vessel types or scenarios which are clearly within or outside the Convention’s definition in order to have a set of interpretive criteria aimed at assisting the governing bodies of the 1992 Fund to decide on a case by case basis, whether the vessel in question is a “ship” under the Convention. Australia had submitted a paper ahead of the Working Group meeting clarifying the limits of the maritime transport chain in option (i). Canada, at the meeting, suggested that a way forward could also be a hybrid of options (i) and (ii). The discussions showed that some states favour option (i) as elaborated by the Australian paper, some option (ii), and some the Canadian hybrid proposal. A list of issues agreed, as well as other issues, will be developed.

With regards to the question of what constitutes contributing cargo, some states expressed the view that, as a matter of principle, all oil received in the territory of a member state should be considered contributing oil, while others mentioned the impossible situation they would be put in if that were the case. Discussions showed that states’ views are very divergent and it may not be possible for the Working Group to agree on these issues. The Working Group will hold another meeting this Spring in order to be able to report back to the 1992 Fund Assembly in October 2014.