The Changing Membership of the IOPC Funds

October 2000

When the 1992 Fund Convention came into force in May 1996, there were nine member States. By the end of 1999, the membership had grown to 39 States. By the end of 2000 there will be fifty member States. The latest State to bring the 1992 Fund Convention into force is Italy (16^th September 2000). Fiji, Mauritius, Tonga and Poland will bring the Convention into force before the end of the year.

In an ideal world, once the 1992 CLC and Fund Conventions came into effect those states that were party to the 1969 CLC and 1971 Fund would have become parties to the new regimes, thus resulting in a seamless transfer. Naturally, this did not occur. Consequently there is currently a mixture of arrangements that apply. Some States have adopted the 1992 regimes and renounced the earlier arrangements. Some have adopted the 1992 regimes without renunciation of the earlier Conventions, and others remain with the old regimes. The abolition of the industry schemes TOVALOP and CRISTAL should have served as a catalyst to change. Furthermore the IOPC Fund itself has done much work to encourage either adoption of the 1992 Protocols, or renunciation of 1969 CLC and 1971 Fund. The higher limits and wider scope of application of the 1992 Protocols mean there are no advantages to a State that has acceded to the 1992 Protocols remaining in the 1971 Fund.

As the number of States that are party to the 1992 Fund grows, so those who are party to the 1971 Convention diminish. By the end of 2000, the 1971 Fund will comprise 35 Member States.

Albania

Guyana

Papua New Guinea

Antigua & Barbuda

Iceland

Portugal

Benin

India

Qatar

Brunei Darussalam

Kenya

Russian Federation

Cameroon

Kuwait

St. Kitts & Nevis

Colombia

Malaysia

Sierra Leone

Cote d’Ivoire

Maldives

Slovenia

Djibouti

Malta

Syrian Arab Republic

Estonia

Mauritania

Tuvalu

Gabon

Morocco

United Arab Emirates

Gambia

Mozambique

Yugoslavia

Ghana

Nigeria

The Convention provides that it will remain in force until the number of Contracting States falls below three. However, from a practical viewpoint, the 1971 Fund, will cease to be financially viable long before that point is reached.

Claims paid by both the 1971 and 1992 IOPC Funds are funded by levies on the oil importers in member States. Contributions are payable by those who import more than 150,000 tonnes of oil. As the number of member States of the 1971 Fund falls, so the total quantity of oil on which contributions are levied decreases. In the event of an oil spill involving compensation under the 1971 Fund, the amount that is required to meet that compensation must inevitably be derived from a smaller contributing base, resulting in the amount of the levy per tonne of contributing oil increasing, thereby increasing the financial burden upon those in States that remain members of the 1971 Fund.

At its maximum, the total quantity of contributing oil under the 1971 Fund amounted to 1,200 million tonnes. By the end of 1999, that quantity had reduced to 250 million tonnes. One of the significant recent departures from the 1971 Fund is that of Italy on 8^th October 2000. The effect of Italy’s departure is to reduce the contributing oil base of the Fund from 250 million tonnes to some 100 million tonnes. By the end of 2000, it is anticipated that this quantity will have reduced to 95 million tonnes.

Quite apart from the increased financial burden caused by the contraction in the quantity of contributing oil, other potential problems loom. The IOPC Fund reports in its annual report for 1999 that a number of States fail to submit reports on the quantities of oil imported. Without this data the Fund cannot issue invoices for contributions. It is also possible that before the demise of the 1971 Convention is triggered by the number of member States falling below three, those States that do remain members may import insufficient quantities of oil to be obliged to contribute to the Fund. It is therefore conceivably possible that an incident may occur where the 1971 Fund applies, and compensation is due, but where there are no contributors in any of the remaining Member States.

In an effort to avoid these difficulties the Executive Committee of the IOPC Fund requested the IMO to convene a Diplomatic Conference for the purpose of adopting a Protocol to accelerate the winding up of the 1971 Fund. That request was agreed in November 1999, and the Diplomatic Conference was held in September 2000. This Conference recognised the difficulties outlined above, and agreed to amend the 1971 Convention such that it ceases to be in force:-

1. when the number of Contracting States falls below twenty five, or

2. twelve months after the Director of the IOPC Fund notifies the IMO that the total quantity of contributing oil received in the remaining Contracting States falls below 100 million tonnes, whichever is the earlier.

This Protocol will be brought into effect using the tacit acceptance procedure. Under this an amendment to a Convention is deemed to have been accepted six months from the date on which it adopted unless objections are received from at least one third of the Contracting States. This avoids the delay that would otherwise arise if positive acceptance of the amendment was required.

The Conference also adopted a resolution urging those Contracting States that have not already done so to denounce CLC 1969 and the 1971 Fund Convention and to become parties to the 1992 regimes.

In view of these amendments, if the IOPC Fund’s forecast concerning the total quantity of contributing oil to the 1971 Fund proves to be accurate, that Convention could cease to be in force in the not too distant future. That makes it particularly important for States that are currently parties to the old regimes to adopt the 1992 Conventions, otherwise difficulties could arise in obtaining compensation above the CLC limit if a casualty were to arise after the automatic demise of the 1971 Convention as in (a) above, and before the introduction of the 1992 Convention.

It is to be hoped that these changes cause more States to recognise these difficulties and adopt the 1992 Protocols.