THE SHARING OF THE FINANCIAL BURDEN BETWEEN THE SHIPPIING AND OIL INDUSTRIES UNDER THE INTERNATIONAL COMPENSATION REGIMES

Abstract

ABSTRACT The international regime on liability and compensation for oil pollution damage is based on international Conventions adopted under the auspices of the International Maritime Organization (IMO). When the international compensation Conventions were first elaborated over thirty years ago in the aftermath of the Torrey Canyon incident, it was decided to establish a two-tier system whereby the economic consequences of marine oil spills from tankers should be shared between the shipping industry and those industries who either owned or received the cargoes transported by sea. Although the limits of liability and compensation under the Conventions have been revised from time to time, the concept of sharing has been maintained. In 2004 the Secretariat of the International Oil Pollution Compensation Funds undertook a study of the costs of oil spills from tankers worldwide, except the United States, over the past 25 years. The purpose of the study was to examine the extent to which the economic consequences of oil spills had been shared by the shipping and oil sectors under the Conventions as envisaged when they were elaborated and under the voluntary industry schemes which coexisted and interacted with the Conventions for much of that time. The results of the study and their impact on any future revisions of the international Conventions, particularly as regards the sharing of the financial burden, are the subject of this paper.