Rotterdam law firm AKD partner Vivian van der Kuil highlights the importance of being aware of the liability inherent in different oil pollution conventions
The position of a party seeking to limit liability in the event of an oil spill at sea is not straightforward. The limits of liability, as well as the claims to which limitation may apply, can vary greatly, and it is important to be aware of the liability regime created by the applicable conventions.
The Convention on Limitation of Liability for Maritime Claims 1976 and protocol of 1996 (LLMC 1976) provides the general legal framework for limitation of liability. It allows a shipowner and certain other parties closely connected to the operation of the vessel to limit liability for a wide variety of claims, most importantly for claims in respect of loss of life or personal injury, or loss of or damage to property occurring on board or in direct connection with the operation of the ship, or with salvage operations, and consequential loss resulting therefrom.
In order to be able to rely on limitation of liability, a shipowner has to file a request and then constitute a so-called limitation fund, either by putting up a guarantee or cash payment, depending on the jurisdiction where the fund is established, for the amount of the limited liability, which is calculated on the basis of the gross tonnage of the vessel.
LLMC 1976 stipulates that the rules of the convention do not apply to claims for oil pollution damage within the meaning of the International Convention on Civil Liability for Oil Pollution Damage1969 (CLC), or of any amendment or protocol thereto. The Civil Liability Convention 1969 and subsequent 1976 and 1992 protocols introduced the system of strict liability for owners of seagoing vessels constructed or adapted for the carriage of oil in bulk as cargo, but only when the vessel is actually carrying oil in bulk as cargo, or following such carriage unless it has proved that it has no residues of such carriage of oil in bulk on board.
The International Convention on Civil Liability for Bunker Oil Pollution Damage (Bunker Convention) 2001, meanwhile, is modelled on the CLC Convention and deals with damage caused by spills of oil when carried as ships' bunkers. Both conventions determine that the registered owner of a vessel is to maintain compulsory insurance cover and have the possibility of direct action which allows a claim for compensation for pollution damage to be brought directly against an insurer.
A recent decision by the Rotterdam Court (9 November 2018, ECLI: RBROT:2018:9174) in a case involving a major oil spill in June 2018 in the port of Rotterdam, caused by the vessel Bow Jubail, emphasises the importance of assessing at an early stage which limitation regime applies.
The owner of the Bow Jubail, a seagoing vessel designed to carry oil and other cargoes in bulk, filed a request to limit liability on the basis of LLMC 1976 and the Bunker Convention. The Rotterdam Court asked the owner to clarify why the CLC Convention was not applicable, even though the vessel qualified as a ship as described under the CLC Convention, ie designed to carry oil in bulk as cargo.
According to the owner, the Bow Jubail was at the time of the incident not carrying oil and had no residues of oil in bulk on board. But the Rotterdam Court decided that, based on the information available, it could not be established that the Bow Jubail had no residues of oil in bulk on board, especially since the vessel’s previous cargo had consisted of various so-called persistent oils. In addition, the Court emphasised that, in procedures concerning limitation of liability, it is the responsibility of the party seeking to rely on limitation to provide all the information available at an early stage.
The result was that the request filed by the owner of the Bow Jubail was denied, resulting in unlimited liability, at least until a new request based on the CLC Convention was filed and decided upon. This could all have been avoided if an assessment had been made of the various limitation regimes and the differences between them.