International compensation limit for oil spills increases by half

The International Maritime Organisation (IMO) has approved a 50% increase in the funds available to compensate up to $260 million for pollution damage caused by a marine tanker oil spill.


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The compensation rise is being brought about through amendments by the IMO Legal Committee to the 1992 Civil Liability Convention and the 1992 Fund Convention. The increase will come into effect in October 2003 following formal acceptance, providing that there is not a significant number of objections from its 158 member states from around the world. According to the UK Department of the Environment, Transport and the Regions (DETR), however, the degree of consensus reached at the initial Legal Committee stage suggests that any significant level of objection is unlikely.

“This is a very positive step forward,” said UK Shipping Minister, Keith Hill. “When the increased limits come into force, the amount available in respect of a marine oil spill by a tanker will be more than two and a half times the amount which was available to meet the claims generated by the two major oil spills which the UK has suffered in recent years, the Braer and the Sea Empress.”

Compensation limits are calculated in ‘Special Drawing Rights’ of the International Monetary Fund, so that amounts are made up of a basket of currencies. The maximum compensation for any one oil spill is to be increased to 203 million Special Drawing Rights (approximately $260 million), an IMO spokesman told edie.

“This is a defining point in the development of international compensation,” said Hill. “In taking this decision, the IMO’s Legal Committee has done a great service to coastal communities the world over. The 1992 Fund has already been successfully used in many pollution incidents and increasing the limits of liability for both ship-owners and cargo interests under this regime further enhances the protection of the marine environment throughout the world. This decision demonstrates that member countries are intent on ensuring the limits of compensation do not become devalued through inflation.”

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