CIVIL LIABILITY CONVENTION: explaining with case study.

Case study. This incident belong to vessel “Torrey

Canyon”.

Torrey Canyon loaded a cargo of crude oil from Mina-Al-

Ahmadi and was bound for Wales. On the way, it got aground
in English Channel near Unilever.
About 119000 T of crude oil spilled and found its way on the
coastal waters of two countries, UK and France. Millions of
Dollars were spent for clean-up operation.
Apart from the money required for clean-up operation, there
were number of people who lost their source of income.
For example, fishermen could no more go for fishing. People
who earn their living from tourism, were also hit by this
incident.
Apart from all this there is damage to the ecology which no
one can measure in monetary values.
Now who would pay for all these damages?
Ship owners? The local laws for these cases are never
so detailed to easily recover the money from ship
owners.
Now even if ship owner had to pay the money, the
money may be so big that a ship owner
could loose entire business because of one incident.
What is the solution then? CLC convention aims to
bring a solution to this situation.
IMO came out for making the CLC convention as a
result of the incident of grounding and oil pollution by
the vessel “Torrey Canyon“.

And there have been many incidents of oil

pollution before and after Torrey Canyon.
Let us see how the CLC convention is helping to
solve the problem of paying for the damages and
at the same time not burdening the ship owners.
CLC convention
CLC convention first came into existence in 1969
and was called CLC 69. This convention was later
amended in 1992. CLC 92 was amended in the
year 2000 to increase the amount of
compensation. We will discuss the latest
amended convention i.e. Amended CLC 1992.
CLC is the short form for “International
Convention on Civil Liability for Oil Pollution
Damage”.
As the name suggests, it is the convention that
determines the liability of the parties in case of oil
pollution damages.
CLC convention can be summarized in four points
Ship owner is liable for the oil spills originating
from his ship
There are very few exceptions to this liability to
the ship owners in case of oil spills from their
ships (ie if pollution happened due to negligence
of coastal state).
There is a maximum limit of liability set out in CLC
according to the tonnage of the ship. This limit
will not be applicable if the owner is at fault
It is compulsory for the ship owners take
insurance to cover his liability in case of oil
pollution from his ships
These four points summarize the whole CLC 92 convention in
brief. Let us now discuss this convention in little detail.
1. When would CLC convention apply?
The applicability of any convention is the most important
thing. After all, if a convention is not applicable in some
situation, then all other articles of the convention would not
apply.
This is the reason that the article detailing the application of
a convention is one of the initial article of any convention.
So, let us see when and how the CLC convention applies.
Type of oil
The first thing we should know that CLC deals with oil
pollution only. Which kind of oils? It deals with pollution
from persistent oil only.
Persistent oils, as the name suggest are the one that persists
longer in the environment.  Whereas Non-persistent oils
either evaporate easily or disperse easily.
The pollution from persistence oil is more serious when
compared to non-persistent oils. Persistence oils require
more resources and money for the clean up operation.
So, the CLC convention applies to the pollution of persistent
oils.
For example, in July 2011, an abandoned oil tanker was
found an aground at Mumbai’s Juhu beach. The vessel was
abandoned near to Oman. The ship had drifted and got
aground on Mumbai’s Juhu beach.
Indian authorities filed a claim of 1.8 Million US dollars for
the various works like towing and removal of oil.
The claim was rejected because the oil carried by the ship
during the previous voyage was MGO which is non-persistent
oil.
Area of application
The area to which CLC convention would apply is covered
under annex II of CLC convention. The CLC convention applies
to any pollution incident that occurred either in the
Territory and Territorial waters of a contracting state. In
simple words territorials’ waters is the area of 12 NM radius
from the baseline of the contracting state.
Exclusive economic zone (EEZ) of the contracting state. In
simple words EEZ is the area of 200NM radius from the
baseline of the contracting state.
The CLC 92 does not cover the pollution incidents in the high
seas. High seas pollution was not included in the CLC
convention because the pollution in high seas were
considered to cause lesser damages.
Damages because of pollution incident
Even though the CLC convention deals with the
pollution incidents, damage can be much more than
the pollution itself.
The compensation and liability of the owner of the
polluting ship does not limit to the pollution alone.
Damages include physical injury, psychological
conditions and loss of income resulting from the
pollution. CLC convention covers the expenses for all of
these damages.
2. Who need to pay in case of pollution incident
Oil pollution incidents are costly affairs. It requires
great amount of money to clean oil spills and
somebody need to pay for it.
As I said, one of the principle of the CLC convention is
that ship owner is liable for pollution from their
ships. And as such, in most of the cases it would be
ship owner who need to pay for it.
In any case, as per article III, para 4, no claim can be
made against
the servants or agents of the owners or crew members.
If you read the footer of the emails sent by the ship
management employees, it would read “as agents to
the owners only”. This is to stress upon the point that
they are acting on behalf of owners as agents.
pilot, charterers, a person performing salvage or a
person taking preventive actions

So, it does not matter if the ship is on bareboat charter

or is being handled by a ship management company,
the claim can only be made against the owner of the
ship.
3. How much ship owner need to pay in case of a
pollution incident
Let us talk about the money part of the CLC
convention. We can talk about the money part by
talking about how much ship owner would pay in case
of a pollution incident.
This can be covered in 3 situations
1. Ship owners need not pay anything if he proves that
Pollution resulted from the act of war or natural
phenomenon of exceptional, inevitable or irresistible
nature. One example of natural phenomenon could
include the pollution if a tanker gets aground because
of tsunami.
Pollution resulted because a third party deliberately
wanted to cause the damage to the ship
Pollution resulted because of negligence of
government or other authority who failed to maintain
the lights or other navigational aid.
While the first point may not be difficult to prove,
other two points are more difficult to prove. This
means that ship owners have hardly any exception to
the liability. In nearly all the cases of oil pollution, ship
owners need to pay the money.
2. Ship owner needs to pay the full amount whatever
damages are claimed by various claimants if it is
proved that
Damages were the result of acts of ship owner
committed with the intent to cause this damage
Damages were because of the acts of ship owners who
knew that his acts would result in these damages

For example, if the ship was trading with an expired

trading certificate, ship owner would need to pay for
the all the damages.
3. If a ship owner does not fall in above two categories,
his liability in any one pollution incident would be
limited to
4,510,000 SDR for vessels up to 5000 GRT
For vessels over 5000 GRT, the maximum liability will
be 4,510,000 SDR + 631 SDR per additional GRT above
5000 GRT. So for a vessel with 10000 GRT, maximum
liability would be  SDR 7,665,000 (4,510,000 + 631 x
5000)
Maximum liability in any case will not be more than
SDR 89,770,000

The question is why limit the liability of the ship

owners? For example if the vessel got aground because
ship’s crew did not keep a good watch and damages
are in billions, why owners is required to pay only
fraction of it ?
The answer lies in the principle of shipping business. If
there is no limit of liability on ship owner, they need to
pay for more insurance. Because of this, they would
charge more freight and thus oil price would be higher.
Limit on ship owner’s liability brings a balance between
paying for the damages and not over-burdening the
ship owners.
4. What a ship owner needs to do to ensure that his
ships are not arrested by the claimant
In the case of Torrey canyon incident, the claimant
arrested a sister ship of the owners in Singapore. The
ship could only be released upon payment of USD
3 millions to the claimants.
This was the times before the CLC convention.
But to take the advantage of CLC convention and to
ensure that his ships are not arrested after a pollution
incident, a ship owner need to constitute a fund equal
to his liability as per CLC convention.
The idea here is that, after the investigation if ship
owner is liable to pay the amount equal to his limit of
liability, the claimant need not be chasing the ship
owners for money.
The money should already be in the possession of the
court.
The fund can be constituted by
depositing the sum or
producing the bank guarantee or
any other way acceptable to the contracting state
where fund need to be constituted.
5. Where the action for compensation can be brought
Again, in the case of Torrey Canyon, the pollution
resulted in the territorial waters of UK and France. This
could be very common situation in the present
scenario too.
So, where the action for compensation can be brought
against the ship owner?
As per article IX of CLC 92, action can be brought in any
of the country that was affected by the pollution.
Article X also states that the judgment given by the
court in which action is brought will have to be
recognised by other states.
6. Insurance required as per CLC 92
As per article VII of CLC 92, all ships that carry more
than 2000 T of oil as cargo need to maintain insurance
equal to the ship owner’s liability as per CLC 92.
This certificate is issued by the flag of the ship after the
ship owner provides proof of the insurance to the flag.

The insurance cover (proof of insurance) is called the

blue card. This blue card needs to be provided to the
flag along with the application for issuance of this
certificate.
The certificate is usually valid for the period of one year from
20th of February of each year.
The CLC certificate also plays one important benefit both for
ship owners and the claimant. The claim for the pollution
damage can be brought directly against the insurer or person
providing the financial security.
Conclusion
Each year close to 11000 Billion ton-mile of oil is transported
through sea. Even though oil spill incidents have reduced
drastically in recent year, shipping industry need to be ready
for all the eventualities.
CLC convention is one such step. It not only defines the
liability in case of oil pollution incident but also limits
this liability to encourage the oil trade.
The question you may ask is who would pay for the
amount spent over and above the ship owner’s
liability. This amount is paid under the Fund
convention which I will cover in future post.
CLC 69 did not cover bunker oil pollution and pollution
from tankers in ballast but the CLC 92 amendments
included the pollution from bunker oils and also for
tanker in ballast. So yes, CLC 92 would cover bunker oil
pollution
too.******************************************
*********************************************