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Tropical Coasts Vol. 7 No. 1: Who Pays for the Damage? Oil and Chemical Spills

Tropical Coasts Vol. 7 No. 1: Who Pays for the Damage? Oil and Chemical Spills

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This issue presents various legal remedies both domestic and international on liability and compensation for damages that occur as a result of accidents, such as oil and chemical spills. Each regime has its own strengths and weaknesses.
This issue presents various legal remedies both domestic and international on liability and compensation for damages that occur as a result of accidents, such as oil and chemical spills. Each regime has its own strengths and weaknesses.

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01/29/2011

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 Who Paysfor the Damage?
T r o p i c a l C o a s t s2
c o n c e r n s a n d a n a l y s e s
   E   D    I   T   O    R    I   A    L   E   D    I   T   O    R    I   A    L   E   D    I   T   O    R    I   A    L   E   D    I   T   O    R    I   A    L   E   D    I   T   O    R    I   A    L
Ingrid Rosalie Gorre
T
his issue of the Tropical Coasts presents various legal re-medies both domestic and international on liability and compensation for damages that occur as a result of accidents, such as oiland chemical spills. Each regime has its own strengths and weaknesses.The Exxon Valdez story as described in this issue shows an exceptionalcase where the domestic legal system was applied to the benefit of theclaimants (see article on page 30). The liability of Exxon was not limited toactual damages but extended to billions of dollars in punitive damages aswell. Damage to the environment was likewise compensated.However, not all domestic cases can have a “rosy” ending. Do-mestic regimes often have certain limitations including the reliance on theprinciple of fault liability. In the absence of a party at fault, there is thepossibility that an injured party cannot be compensated for damages. Un-less there is a national law limiting liability, shipowners could face unlim-ited financial exposure if they are found to be at fault. Seventy-six percentof tankers world-wide are independently owned and unlimited financialexposure can be problematic for small independent shipowners. Shipown-ers themselves have realized the extent of the risk and have organizedthemselves to respond to this concern through organizations such as theInternational Tanker Owners Pollution Federation Limited (ITOPF) andINTERTANKO.The CLC and Fund Convention provide a system of liability andcompensation for damage from oil spills. It is a compromise for bothshipowners and claimants in the sense that shipowners are provided with amaximum limit of liability while claimants are provided with a two-tieredsystem for compensation. The first level is from the shipowner while the secondlevel is from the IOPC Fund. The international regime provides financialsafeguards for countries in the region. Ratification ensures that they havefinancial protection in case an accident occurs. This is a compelling issue in theregion because of the huge amount of oil tanker traffic, thus increasing thelikelihood of an oil spill.Some countries in the region, however, hesitate to ratify the CLC and FundConvention. One of the main objections of countries in the region is that pureenvironmental damage is excluded unless it can be related to economic loss.Under the conventions, assessment of compensation for damage to the envi-ronment using theoretical models is not acceptable. The Convention only allowreasonable claims for the restoration of the damaged environment to itsprevious state. Claims for restoration are subject to further requirements that:“1) costs of the measures should be ‘reasonable’; 2) costs of the measuresshould not be disproportionate to the results achieved or the results whichcould be expected; and 3) measures should be appropriate and offer a reason-able prospect of success (see article on page 3).”sembly or the Executive Committee. It is worthwhile to note that two out of thefifteen members of the Executive Committee of the 1992 Fund are from theregion. Hence, the better strategy for countries in the region is to ratify theconventions first and then unite to push for reforms within the IOPC. Countriesin the region should take their cue from countries in Europe, which havecollectively pushed for reforms within the Fund.There have been a number of successful claims in the region. Most of thesuccessful claims were filed by Japan and Republic of Korea. From 1971-1997,an estimated 25 % of total payments made by the 1971 Fund were recoveredby these two East Asian countries. However, oil spills in these two countriesonly represent 42 % of the total amount of oil spilled in the region (Oil SpillIntelligence Report, 1997). What about the damage caused by reported oilspills in other parts of the region, which amount to some 419,275 tonnes of oilspilled? Countries in the region will benefit from sharing of the lessons of Japan and Republic of Korea.In the East Asian Seas region, some governments only have ageneral knowledge of the benefits of the CLC and Fund Convention. Informa-tion on detailed claims procedure is not available in most developing coun-tries. More often than not, the general public is unaware of the availability offunds to compensate for their losses. Governments must take active steps ininforming the public of the proper documentation and claims procedure. Ex-perts from within the region must be developed and pooled to assist in thedocumentation and filing of claims. Help will not come from outside. It mustcome from within. If we are not going to help ourselves, nobody else will.What the countries in the East Asian Seas region fail torealize is that existing limitations under the conventions arenot cast in stone. Member-parties can modify these conven-tions by way of amendment or establishing a new protocol. Insome instances, solutions can also come from the Fund As-
Issue Editor
 
The Global Environment Facility/UnitedNations Development Programme/Inter-national Maritime Organization - Re-gional Programme on Partnerships in En-vironmental Management for the Seas ofEast Asia (GEF/UNDP/IMO PEMSEA),Sida Marine Science Programme, and theCoastal Management Center (CMC) islaunching the new magazine format ofthe Tropical Coasts. This publication isgeared towards stimulating an exchangeof information and sharing of experiencesand ideas with respect to environmentalprotection and the management ofcoastal and marine areas. This newsletteris published twice a year. Readers arestrongly encouraged to send their contrib-uted articles to:
Executive Editor
P.O. Box 2502,Quezon City 1165,Metro Manila, Philippines
The contents of this publication do not necessarily reflectthe views or policies of the Global Environment Facility(GEF), the United Nations Development Programme(UNDP), the International Maritime Organization (IMO),the Regional Programme on Partnerships in Environ-mental Management for the Seas of East Asia (PEMSEA),Sida Marine Science Program, Coastal ManagementCenter (CMC), other participating organizations, or theeditors, nor are they an official record. The designationemployed and the presentation do not imply the ex-pression of opinion whatsoever on the part of GEF, UNDP,IMO, PEMSEA, Sida Marine Science Program or CMCconcerning the legal status of any country, territory orcity or its authority, or concerning the delimitation of itsterritory or boundaries.
FFFFFacilitating the Speedy Pacilitating the Speedy Pacilitating the Speedy Pacilitating the Speedy Pacilitating the Speedy Payment ofayment ofayment ofayment ofayment ofOil Spill Compensation Claims UnderOil Spill Compensation Claims UnderOil Spill Compensation Claims UnderOil Spill Compensation Claims UnderOil Spill Compensation Claims Underthe CLC and FUND Convention (HNS)the CLC and FUND Convention (HNS)the CLC and FUND Convention (HNS)the CLC and FUND Convention (HNS)the CLC and FUND Convention (HNS)
Ian C. White
3
i n t h i s i s s u e
Who PWho PWho PWho PWho Pays for the Erika Spill inays for the Erika Spill inays for the Erika Spill inays for the Erika Spill inays for the Erika Spill inFrance?France?France?France?France?
Michel Girin
4444412121212122020202020303030303036363636364242424242
CLC and Fund Conventions in theCLC and Fund Conventions in theCLC and Fund Conventions in theCLC and Fund Conventions in theCLC and Fund Conventions in theEast Asian Seas RegionEast Asian Seas RegionEast Asian Seas RegionEast Asian Seas RegionEast Asian Seas Region
Stella Regina Bernad
OIl Spills in the UOIl Spills in the UOIl Spills in the UOIl Spills in the UOIl Spills in the U.S.S.S.S.S.:.:.:.:.:Response and Liability Response and Liability Response and Liability Response and Liability Response and Liability 
 Ari Nathan
Liability and Compensation for theLiability and Compensation for theLiability and Compensation for theLiability and Compensation for theLiability and Compensation for theMaritime TMaritime TMaritime TMaritime TMaritime Transport of Hazardousransport of Hazardousransport of Hazardousransport of Hazardousransport of Hazardousand Noxious Substances (HNS)and Noxious Substances (HNS)and Noxious Substances (HNS)and Noxious Substances (HNS)and Noxious Substances (HNS)
 Alfred Popp, QC
BASEL Protocol on Liability andBASEL Protocol on Liability andBASEL Protocol on Liability andBASEL Protocol on Liability andBASEL Protocol on Liability andCompensationCompensationCompensationCompensationCompensation
Ingrid Rosalie Gorre
Concerns and Analyses
22222
PEMSEA Publications
5252525252
Capacity Building
2727272727
Bulletin Board
5454545454
PEMSEA News
4646464646
Facts and Figures
5656565656
s p e c i a l f e a t u r e
PEMSEA CeremonialPEMSEA CeremonialPEMSEA CeremonialPEMSEA CeremonialPEMSEA CeremonialLaunchingLaunchingLaunchingLaunchingLaunching
2828282828
d e p a r t m e n t s
 J u l y 2 0 0 0
Tropical Coasts
 www.pemsea.org/tropicalcoasts
Manila BayManila BayManila BayManila BayManila Bay, victimof numerous spills.Two oil spills occurredMarch and July 1999.
Chua Thia-Eng
Executive Editor
Olof Linden andEdgardo D. Gomez
Editors
Ingrid Rosalie Gorre
Issue Editor
Ian WhiteMichel GirinStella Regina Bernad Ari Nathan Alfred Popp, QCIngrid Rosalie Gorre
Contributors
Jonel Dulay Manny IslaCasey Villarosa
Design/Illustration/DTP
Leo Rex Cayaban
Editorial Assistant
Danilo Bonga
Researcher
on the cover
V o l u m e 7 N o . 1 J u l y 2 0 0 0
Representatives of the Democratic People’s Republicof Korea call for unity and cooperation in the regionin the management of the coastal environment forthe present and future generations.

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