Pollution History

Tankers, Big Oil & Pollution Liability
Tormod Rafgard
Content from this book may be reprinted as long as it is quoted and author is notified. Author can be contacted at: trafgaa@online.no
TANKERS, BIG OIL & POLLUTION LIABILITY

Tormod Rafgard
INDEX

Tormod Rafgard
Foreword & Acknowledgements Glossary 1. The big bang i. Un-loved tankers ii. Industry response iii. Polluter pays? 2. Petroleum and tankers i. The emergence of the tanker ii. Oil company fleets iii. Coal or oil? iv. Independent owners v. Initiatives for safety and environment vi. The Second World War; the dependence on oil vii. Consumption growth and giant tankers 3. IMCO Safety first! i. Early international initiative ii. Torrey Canyon 8 10
13 15 16
19 23 25 29 33 37 39
46 48
4. New conventions in 1969: Tanker owners face pollution liability & intervention of coastal states i. Background 58 ii. An industry divided 62 iii. The Diplomatic Conference Brussels 1969 64 iv. The cargo resolution 73 v. The intervention convention 75 5. Compensation for oil pollution damage introduced for the oil companies The 1971 Convention 78 i. ii. New incidents 80 iii. Brussels once more, but why relieve the shipowners? 85 iv. Technical co-operation? 88
INDEX
v. vi. vii. viii. ix. x.
The fee system Interpretation Role of the Fund: Substitution & supplementation Conditional relief The maximum amount Administrative matters
89 90 93 99 106 108
6. Tanker accidents accelerate the Amoco Cadiz oil spill, 1972-1982 i. Spectacular tanker accidents 109 ii. Berge Istra 110 iii. Argo Merchant 114 iv. More accidents and reactions 115 v. The Amoco Cadiz 117 7. Oil prices through the roof The huge tanker surplus 1970-1990 i. The tanker surplus ii. Remedial measures iii. The crisis deepens iv. Counterproductive measures? v. Pricy fuel and dirty tricks vi. More spills to follow vii. The slow but strong recovery of the tanker markets 8. The 1984 Protocols A stroke in the air? i. Setting the agenda ii. Chemicals iii. What ships, what oil? iv. Pollution damage preventive measures v. Geographical scope vi. Exoneration vii. Channelling viii. Limitations & Limits ix. The fees to IOPCF x. Simplified updating of limits xi. Entry into force/ratification xii. Summary Aftermath
124 127 134 140 142 146 149
156 157 159 162 168 170 173 177 184 185 186 187
INDEX
9. Exxon Valdez and subsequent incidents in US waters i. Exxon Valdez ii. Subsequent incidents in US waters iii. New radical legislation prepared after Exxon Valdez The tanker industry in despair iv. OPA90 & the IMO instruments v. Compensation for damage to natural resources vi. Responsible parties Channelling of compensation claims vii. Certificate of Financial Responsibility (COFR) viii. Prevention is better than cure Technical requirements ix. OSLTF in trouble x. Deepwater Horizon oil spill 10. IMO wakes up i. More OPA approaches? ii. The Salvage Convention iii. International Convention on Oil Pollution Preparedness Response and Co-operation (OPRC) iv. Resurrection of the Protocols v. TOVALOP & CRISTAL out New serious incidents at tanker terminals & in coastal waters around the globe, 19911992 i. Haven ii. ABT summer iii. Australia warns against Ships of Shame Kirki iv. Aegean Sea v. Braer vi. Maersk Navigator vi. Sea Empress Draconian measures required? The viability of IMOs solutions questioned again i. Erika ii. Castor and Prestige Place of refuge iii. Draconian measures required? iv. Compensation claims against classification societies v. IOPCF position vi. Greek master arrested
195 207 213 221 222 225 229 235 238 239
244 246 248 248 254
11.
257 262 263 266 268 273 274
12.
280 300 304 306 309 313
INDEX
13.
Supplementary compensation funds formed Private schemes to replace/delay IMO i. Review of the current system ii. Compensation increased iii. New Diplomatic Conference Supplementary Fund established iv. STOPIA & TOPIA New big spills in 2007 i. Volgoneft ii. Hebei Spirit Tanker owners & their classification societies On reflection
316 318 320 321
14.
326 328 330 344
15. 16.
Appendices: Hebei Spirit Extract of IOPCF annual report, 2009 Message from INTERTANKOs MD in the annual report, 1995, on his retirement after 25 years Bibliography Index of Ships Index of Organizations and Key Companies Index of People 356
371 376 378 380 382
FOREWORD & ACKNOWLEDGEMENTS
Foreword & Acknowledgements

In 1969, I was a member of the Norwegian delegation to the IMCO conference in Brussels to devise a new liability scheme on oil pollution damage. The conference was called in response to the Torrey Canyon disaster in the English Channel. This was the first of many oil pollution accidents that spurred significant, often contradictory, reactions from various stakeholders with competing interests. Later in my career, which included my time as the director of the international tanker owners association (INTERTANKO) and serving as a judge in the Court of Appeals, I was well placed to witness the unwieldy and cumbersome development of an ever-more complex liability structure. With so many parties involved, including governmental agencies, oil companies, environmental protection groups, classification societies, P&I clubs, coastal states and the shipping industry, it is perhaps no surprise that every accident seems to result in a scramble to pin the blame on one party, while everyone else seeks to disclaim responsibility. Is this an effective and appropriate way of dealing with an important maritime safety issue? Is it to the benefit of safety at sea to assign blame to one party while exonerate the whole industry whenever an accident occurs? When I retired from INTERTANKO in 1995 to become a judge, I began a project to describe the process. Progress was slow until I was introduced to the Leif Hegh Foundation, and to Ove - and his brother Westye Hegh, the two senior members of the Hegh shipping family. Ove Hegh is educated as a naval officer and holds an MBA from Harvard Business School. Westye Hegh holds a Bachelor of Law from University of Oslo, and an MBA from Wharton School, University of Pennsylvania. Both have been senior partners in the shipping company Leif Hegh & Co., Oslo, Norway. Among many other positions in maritime and industrial organizations, Ove Hegh has been the vice chairman - and Westye Hegh the chairman of INTERTANKO. Westye Hegh has, in addition, been president of The Norwegian Shipowners' Association, and the chairman of the council of Det norske Veritas. Our conversations led to a closer co-operation with the Leif Hegh Foundation, which generously has covered most of the project costs.
FOREWORD & ACKNOWLEDGEMENTS
The Foundation holds all copy and distribution rights to this publication until all costs related to this project have been recovered, after which time I take over all copy and distribution rights to the paper edition of this publication. I believe that this publication is a unique compilation of maritime history, case studies and anecdotes. I also believe that it is of value not just to seafarers, but all those involved with sea transportation who are committed to continuous efforts to reduce the risk of pollution at sea. I am also grateful to Ove Hegh for introducing me to Dag Bakka Jr., an experienced author of a number of maritime-related books, who offered invaluable insights on how to present complex material and contributed chapter 7vii, which describes the market fluctuations which occurred after my time in shipping. I am also deeply grateful to Blue-C, who was responsible for the final review of my manuscript and to Sax Media & Design for the design and layout. Their input has helped to create a book whose content I hope does justice to many contributors who have assisted me so admirably. Finally I would like to express my gratitude to shipping adviser Jarle Hammer of HM Strategies for his supply of illustrative graphs on the developments in the tanker market. Many thanks also to the senior insurance broker and jurist Sven Moestue for his reflections on explosions in large tankers and to Supreme Court Justice Lars Oftedal Broch, who has commented upon chapters four and five. I am furthermore indebted to the English shipping journalist Michael Grey who commented upon the very first draft many years ago and again before the book went to the printers. I am grateful for the participation of many other people and institutions, who are too numerous to list here. There is, however, one exception: Warm thanks to my wife, Anne Lise, for her patience during the years after 1996. I believe that I may have devoted more time to pollution liability than to my family a condition I hope to reverse in the years ahead!
Asker, May 2011
Tormod Rafgard
GLOSSARY
GLOSSARY
ABS American Bureau of Shipping API American Petroleum Institute APOC Anglo Persian Oil Company CLC 1969 International Convention on Civil Liability for Oil Pollution Damage, 1969 CMI Comite Maritime International CRISTAL Contract Regarding an Interim Supplement to Tanker Liability for Oil Pollution CVM Contingent Valuation Methodology DNV The Norwegian Veritas ECJ European Court of Justice EEZ Exclusive Economic Zone EMSA European Maritime Safety Agency EPA Environmental Protection Agency FC 1971 International Convention for the Establishment of International Fund for Compensation for Oil Pollution Damage, 1971 FOBAS Fuel Oil Bunker and Advisory Service FOEI Friends of the Earth International FPSO Floating Production/Storage/Offloading FSO Floating Storage/Offloading G.B.P British pounds HBLS Hydrostatically Balanced Loading Systems IACS International Association of Classification Societies IALA International Association of Lighthouse Authorities ICS International Chamber of Shipping IMCO Inter-Governmental Maritime Consultative Organization IMIF International Maritime Industry Forum IMO International Maritime Organization INTERTANKO International Association of Independent Tanker Owners ISM International Safety Management Code ITF International Transport Workers Federation ITOPF International Tanker Owners Pollution Federation IUCN International Union for Conservation of Nature and Natural Resources
10
GLOSSARY
IWF International Workers Federation LF Limitation Fund LLMC Convention on Limitation of Liability for Maritime Claims MEIF Mandatory Excess Insurance Facility MHPA Milford Haven Port Authority NOAA National Oceanic and Atmospheric Administation NRDA Natural Resource Damage Assessment NTSB National Transportation Safety Board OBO Ore-Bulk-Ore OCIMF Oil Companies International Forum OCS Outer Continental Shelf OPA90 Oil Pollution Act OPEC Organization of the Petroleum-Exporting Countries OSLTF Oil Spill Liability Trust Fund PARIS MOU Paris Memorandum on Port State Control PLATO Pollution Liability Among Tanker Owners Q.I Qualified Individual RINA Registro Italiano Navale SBT Segregated Ballast Tanks SDR Special Drawing Rights SF Supplementary Fund STCV Standards of Training, Certification and Watchkeeping for Seafarers STOPIA Small Tanker Oil Pollution Indemnification Agreement SUMED Suez-Mediterranean Pipeline TAPAA Trans-Alaska Pipeline Authorization Act TOCA Transfer Of Class Agreement TOPIA Tanker Oil Pollution Indemnification Agreement TOVALOP Tanker Owners Voluntary Agreement concerning Liability for Oil Pollution ULCC Ultra Large Crude Carriers UNCTAD United Nations Conference on Trade and Development UNCITRAL United Nations Commission on International Trade Law USCG United States Coast Guard VLCC Very Large Crude Carriers
11
THE BIG BANG
1 THE BIG BANG

In March 1967, aircraft of the UK Royal Air Force and Royal Navy carried out spectacular aerial bombing as a desperate last resort to stop massive oil pollution from one of the largest tankers afloat. The name of the grounded tanker was Torrey Canyon. But bombs could in no way prevent her cargo from polluting the coast of Cornwall and on the other side of the English Channel the beaches of Brittany in France. More than 100,000 tons of Kuwaiti crude oil leaked out, oil that refused to catch alight, burn and disappear. Instead the accident sparked media coverage beyond anything experienced in the shipping industry. The tanker fleet, which annually had provided consumers around the world with more than 1 billion tons of oil, came suddenly into focus. The shipping industry had had its tragic moments and appalling losses of lives such as the Titanic, but this accident in the spring of 1967 revealed an entirely new and more damaging capacity for spoiling nature and the environment. Torrey Canyon the first superspill ignited the formation of a new kind of international pressure group: The environmentalists. Changes in international law and the emergence of environmental law as a new branch of maritime law followed in the footsteps of sudden public interest. Ordinary people became concerned and angry as the oil spill began to pollute the coasts. Contaminated coastlines and dying seabirds provoked public outcry and a demand for justice. But who was ultimately responsible? Many parties were involved not only the shipowner and the sea transportation industry at large, but also cargo owners and the oil industry, as well as
12
THE BIG BANG
navigation safety agencies and local and national authorities that brought up the issue with international maritime organizations. The process Torrey Canyon ignited came in time to change the international liability regime for sea transportation through a complex process driven by a score of different agents. The evolvement of the liability regime changed the conditions for the shipping industry, not always to the better and not always with a fair distribution of responsibility. How could this happen?
I. UN-LOVED TANKERS
Oil is the worlds main energy source, and the shipyards of the world have been furnishing shipowners and oil companies with a steady flow of large tankers for more than a century. The quantities of oil that they could carry meant an increasing pollution potential. Not unexpectedly, a number of serious pollution accidents followed. Television screens showed golden beaches turned into dirty, polluted seashores and birds covered by black, greasy oil. Some tankers became notorious. Names like Torrey Canyon (1967), Argo Merchant (1976), Amoco Cadiz (1978), Atlantic Empress (1979), Exxon Valdez (1989), Haven (1991), Kirki (1991), Aegean Sea (1992), Braer (1993), Sea Empress (1996), Erika (1999) and Prestige (2002) are not easily forgotten. The largest tankers today can carry 400,000 tons of crude oil, a damage potential far beyond the Exxon Valdez spill of 36,000 tons. Still, Exxons tanker caused the loudest reverberation ever experienced in the field of maritime transportation. Pulitzer Prize-winning journalist Eric Nalder, an investigative reporter from The Seattle Times, published a terrifying portrait of the oil trade in 1994. One reviewer of his book, Tankers full of trouble, wrote: Get on board this ship with Eric Nalder, and you wont get off until you are sea sick with anger. Without subscribing to that opinion, it is easy to agree with Mr. Nalders comments on p. 223: Even people who hate oil tankers need fuel for their autos, factories and furnaces. They would raise hell if he spilled any, and they would be furious if he did not deliver. Twenty years before Nalder, another American reporter, Noel Mostert, won international praise for his book on the gigantic crude carriers that at the time
13
THE BIG BANG
had begun to ply the seas in growing numbers. A full cargo of crude oil on board a medium-sized tanker was enough to supply the energy needs of a city of 40,000 people for an entire year when his book Supership was published. In his view, the coming of the large tankers would result in disasters on an unprecedented scale. But despite all the harsh comments, Mr. Mostert admits that the world cannot do without them. In Supership, published in 1974, he describes the situation on page 16. To paraphrase: Ships can impact how people fare in life. They connect people. If ships can make smooth, timely journeys can greatly impact the people depending on them: The ships supplies can help them to survive. We saw this with oil tankers, getting the necessary fuel thats needed worldwide. If we didnt have the oil tankers, then the world could grind to a halt. Nothing will change as long as we are so dependent on oil. But if that changes, then the ships will quickly disappear. Much has changed since the publication of Supership, but oil as energy and tankers for transportation are as essential to the world today as they were at that time. Neither has the threat that tankers are imposing on the fragile marine ecosystem vanished. Oil leaking from a punctured tank will spread rapidly, cause pollution and form a threat to the environment. The fact that crude oil is a product of nature and a part of the environment is of little comfort when birds and beaches are smeared by ugly layers of oil and marine life is being laid waste.
Notes: What is referred to as a tanker accident need not necessarily relate to a tanker. Motor ships carry bunkers to fuel the ships own engine. This heavy diesel oil kept in designated tanks represents a pollution hazard if it leaks out. In March 1999, a woodchip carrier, New Carissa, stranded and polluted the coastline of Oregon, in the United States. The ship was a 44,500-tonner on her way to take aboard a mountain of timber off cuts. More than 1,000 tons of bunkers leaked out and menaced the oysters in the Oregon waters as they fattened themselves for the tables of fashionable Seattle, Washington, USA. In the media, New Carissa was presented as a tanker. The public requested effective measures against such nasty polluting tankers. Following the efforts of US authorities, an industry commentator, Aline de Bievre, claimed that the Torrey Canyon strategy of bombing polluting ships had come back into fashion. The US Oil Pollution Act of 1990 did not stop the US government from deploying torpedoes and napalm bombs. The attempts caused the vessel to break in two. In November 2002, a jury found the operators negligent and awarded the state of Oregon USD 25 million to cover removal expenses. The tragic saga of New Carissa was described by the exasperated local congressman Peter DeFazio as a Stephen King novel. Source: Lloyds List, March 8, 1999.
14
THE BIG BANG
II. INDUSTRY RESPONSE

Two years after the Torrey Canyon accident, a UN body, the Inter-Governmental Maritime Consultative Organization (IMCO), agreed to impose strict (no-fault) liability for damage polluting tankers caused. To ensure that pollution victims were compensated, compulsory insurance was introduced under the terms of the new International Convention on Civil Liability for Oil Pollution Damage, 1969 (CLC 1969). IMCO also looked into the role of the owner of the oil cargo. Should the oil companies contribute to the compensation for the damage caused to victims of oil spills? In 1971, a supplementary international fund was set up. The Fund was financed by the oil industry. The new treaty was named International Tanker Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971 (FC 1971). Over the 40 years since the Torrey Canyon disaster, a series of marine accidents have produced an extensive international regime for the protection of the environment and the marine bio-diversity. In 2001, the International Maritime Organization (IMO), as IMCO had been renamed, agreed on a convention for compensation for pollution caused by bunker oil from all ships, not only tankers. Tanker accidents represent some three percent to four percent of the total marine pollution. Oil from leaking tankers equals about the amount of oil that seeps to the surface from the bottom of the seven seas every year. The rest is mainly industrial waste or comes from refineries, terminals, offshore production and normal ship operation. And one should not forget that most spills from the world tanker fleet are not the result of accidents, but from routine operations in connection with loading, discharging, bunkering in ports or tanker terminals where reception facilities are often lacking. Statistics tell us that pollution from tankers is decreasing. Records the International Tanker Owners Pollution Federation (ITOPF) compiled disclosed that, on the basis of accidental spills, oil lost from tankers in 2009 was at the lowest level since it began compiling such statistics in 1970. In the same period, the volume of oil carried by sea has doubled, according to Fearnleys, the Oslo, Norway-based shipping analysts. Although we are striving for a zero-tolerance of oil spills, the overwhelming part of the worlds tanker fleet is operating along the strict regulations
15
THE BIG BANG
imposed by IMO and controlled by Port State Control agencies, charterers and classification societies. The tanker owners long ago saw the human factor as a crucial element in maritime safety and observing operational procedures as paramount.
Notes: The outcry for compensation against pollution offenders at sea supersedes other types of industrial accidents. Nearly 3,000 people died during a night in 1984 and some 200,000 were injured in the town Bhopal in India, where 43 tons of poisonous gas leaked out from a Union Carbide factory. According to Amnesty International, there have been at least 15,000 related deaths since. The compensation the corporation offered was a payment of about USD 1,200 to each family. This is a fraction of what Exxon spent in Alaska after Exxon Valdez. According to Eric Nalder, Tankers full of trouble, New York, 1994, p. 222: Exxon spent forty thousand dollars on the attempted rescue of each and every one of 5,000 oiled sea otters found in Prince William Sound. Despite the exceptional losses of lives Union Carbide caused, the press coverage is not comparable with the publicity about Valdez, with no lives lost. See Dan Kurzman: A Killing Wind: Inside Union Carbide and the Bhopal Catastophe, New York, 1987.
III. POLLUTER PAYS?

Thanks to the position the US took, the international community has been unable since 1969 to agree on how to deal with victims suffering from damages polluting tankers caused. The following pages represent a personal journey in search of solutions that began some 40 years ago. Can we attain cleaner seas, pay adequate compensation and still get cheap gas for our cars and heating oil for our homes? Having worked with tanker owners from 1965 to 1995, I might seem presumptuous to believe that an objective picture can be presented. However, 13 years work as a judge should hopefully provide sufficient distance to undertake a more unbiased re-examination. In any case, my ambition is only to bring to light commercial considerations which otherwise seem disguised in legal and technical agendas. Sometimes, the forest might be hidden behind all the trees. There is very little disagreement about the polluter-pays principle. In an ideal world, a polluter should be easy to identify and be compelled to pay for the damage with his own money. It seems logical that if the principle is not applied to cover the costs of the environmental damage, either the environment has to cure itself by the process of nature, or the coastal state and ultimately the taxpayer has to pay for the damage caused. In the real world, the situation is more complicated. Principles are fine, but
16
THE BIG BANG
the crucial test is their implementation in practice. In general, a major problem remains: To find often hidden behind the curtains the concurring polluters. The tanker owner is the easy target. The standards of tankers vary from vessel to vessel. Most of the tankers in the world fleet are well maintained. But not all. During the last decade, increased attention has also been paid to oil companies that select old, low-cost tankers to carry their oil. Thereby, financial results improve and shareholders are happy to see the dividend going up. The story about the 24-year-old tanker, Erika, hoisting the flag of Malta illustrates the role of the other participants involved in the game of marine oil transportation. Ship management, manning, operations, maintenance and cargo-handling are closely interlinked functions that need to be considered in unison if tankers are to be operated in the optimum manner. A number of initiatives have been taken to improve safety and avoid pollution. It may be fair to say that the tanker safety record has improved more or less steadily after the enforcement of the MARPOL Convention of 1973/78 and a series of mutually reinforcing industry mechanisms introduced after 1980. On the surface, the polluter-pays principle is just fine. But the quality of the classification societies, the navigational aids governments provided, together with the role of the insurers, the pilots and the terminal or harbour masters, as well as the charterers, are all relevant elements when considering the value of the polluter-pays principle. As important links in the marine safety chain, they deserve proper attention. This book seeks to show how the various actors are involved: Cargo owners, charterers, tanker owners, classification societies, port authorities, terminals, pilots and the salvage industry. Together, these groups form the links in what may be seen as the responsibility chain. By focusing on the master of the tanker as the only accountable part, together with the owner, one is running the risk of contributing to a culture of blame which might hide the real reasons for pollution accidents and the loss of life at sea. Each of the groups mentioned forms a part of the fabric that controls a tanker, and it is essential that all parties involved follow up their obligations of their contribution to the transport chain. If one or more links fails to perform, a serious accident might occur. The Greek shipowner Philip Embiricos, who for several years was a major safety spokesman of the International Association of Independent Tanker Owners (INTERTANKO), presented his
17
THE BIG BANG
view in the associations 1997 annual review of The Chain of Responsibility. It is shown below.
CA
RG
ER
CHARTERER
SHIPOW
NER
CL
SS
SO
GOVERNMENTS LAW COURTS P&I CLUBS, CARGO AND HULL UNDERWRITERS
CI
ET
IE
On the following pages, the focus is on oil tankers ships that carry or are designed to carry oil as cargo. Prevention will always be better than cure, but even so, the reader will find only minor references to the technical discussions about safety rules and pollution prevention. Information on that important subject will have to be sought elsewhere. Instead, the intention is to review the cure, which on the following pages is the development of compensation and liability rules in light of their origin and a number of spectacular tanker accidents.
Notes: A report, Ships of Shame from the Australian House of Representatives Standing Committee on Transport, sent to the Parliament in December 1992 states (paragraph 25): While incidents involving oil tankers have recently received publicity, the Kirki for example, the Committee has not received a great deal of evidence concerning the operation of oil tankers. It is generally recognised that the condition of oil tankers are better than dry bulk carriers. The polluter-pays principle is a cornerstone in environmental policies. Its first official mentioning seems to be in 1972 in a recommendation the OECD Council passed. It is later adopted by a number of bodies such as IMO and the European Community. It is no legal rule in the strict sense, rather a policy declaration or a slogan that appeals to common sense: If you make a mess, it is your duty to clean it up. If there is damage, you should repair. It says a lot, but lacks a clear definition and may perhaps sometimes serve as a soporific for an impatient regulator. Photographers have been listed whenever possible on photos used in this book. When photos came directly from a Website where the photographer's name was not available, we have attributed the photo to that site.
A U IE RTRIT PO O TH S
E G RY VAST L U SA D N I
PILOTS
TERMINALS
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PETROLEUM AND TANKERS
2 PETROLEUM AND TANKERS

I. THE EMERGENCE OF THE TANKER
The 20th century was characterized above all by the introduction of petroleum as the main energy source. It became the foundation of modern society with respect to lighting and heating, transport and travel in other words, to the very organization of our communities. The laden oil tankers were carriers of progress, bringing the essential source of energy that would make modern society function and revolve. As with every blessing, there are also shadows one being the emission of gases that threaten to disturb the very ecological balance of our planet. This is a major challenge in our time and as yet unsolved. Another is the potential for pollution and local biological damage oil tankers cause. This challenge perhaps of less importance than the emission problem has been dealt with through a gradual process that has managed to curb oil spills to a minimum and inspire a zero-spill objective. For almost 150 years, ships have been carrying petroleum, and the story of tanker shipping is riddled with geopolitical and logistical issues as it grew to become a global energy lifeline. The origin of the tanker trade goes back some 150 years and is linked to the discovery of oil in the US and the invention of paraffin lamps. Three Americans: Yale professor B. Silliman and businessman George H. Bissel led by a retired train conductor, Edwin Drake, started the worlds first
19
oil company, The Pennsylvania Rock Oil Company, around 1855. After having been the laughing stock of the people in the area, Mr. Drake struck oil by drilling for it on Aug. 27, 1859, close to a small town named Titusville. This was the first time in history that oil had been produced in this manner. The daily production was soon 25 barrels. The railroad conductor now became Colonel Drake and the oil was sold for USD 18 per barrel. The paraffin lamps not only gave a clear bright light, they were also odourless and smokeless. Furthermore, the petroleum used to fuel them was also much cheaper than the disgusting, evil-smelling lamps fed by whale oil that previously had been used. The new illuminator changed peoples way of life by extending the hours of daylight. Oil turned out to be perfect, not only for the lamps, but also as lubricants, solvents and in other applications. The increasing demand for the product turned petroleum into an important new energy source. The key to further growth of the American oil industry was transportation. But to satisfy requests from overseas consumers proved problematic; oil was a dangerous cargo. When carried in barrels and cases on board ships, it would often leak out, causing a constant risk of explosion and fire. The first full cargo of oil to cross the Atlantic was carried in the 224-ton (350 deadweight tons, or dwt) brig, Elizabeth Watts. An Englishman, Mr. E.A. Sanders, owned her, and the ship sailed her first voyage from Philadelphia to London in late 1861. The departure from the American port had difficulties. Crewmembers considered the new cargo with scepticism, and many deserted. The captain, Charles Bryant, had to resort to the local bars in Philadelphia, Pennsylvania, USA, to assemble men willing to take the brig to England. Despite the fact that the crew had been made up of several drunks from waterpoint bars, the passage went well and encouraged an increasing trade. Two years later, Mr. Gibson of the Isle of Man took a new initiative. He built an iron hull sailing ship, Ramsey. She could carry oil in bulk and was noted for her hollow masts which, connected with the specially designed iron tanks, served as expansion trunks. In addition, general cargo was carried on deck. On the other side of the North Sea, Norwegian ship-owners entered the game. The first primitive tanker might possibly have been the iron schooner, Risobank, built in Inverkeithing, not far from Leith, Scotland, in 1868. The owner, Emil Salvesen, operated an oil refinery in the little town of Mandal at the Southern tip of Norway. After some trips, however, the iron schooner disappeared with the Captain Edmund Eeg and his full crew in stormy winter weather somewhere off the Norwegian coast. Captain Eeg was the brother of my great-grandmother, and my one and only family relation in the story you
20
Photo: www.aukevisser.nl
Gluckauf are about to read! The next Norwegian effort was undertaken in cooperation with a group of French merchants in the 1870s. Gustav Conrad Hansen of Tonsberg, together with his captain, Even Tollefsen, had four sailing ships rebuilt for transportation of oil in bulk by lining the wooden hull with cement or felt. They had the sides of the holds double-boarded and sealed. One of the ships River Erik Aftenposten Another left the grounded in Delaware Furulund, Sveinin /1879. / Scanpix US with her first cargo, never to be seen again, but the concept proved reasonably satisfactory. A German, Mr. Heinrich Riedemann, ordered the first deep-sea steamship adapted to carrying oil in bulk, similar to the tankers we know today. Launched in June 1886 in Newcastle upon Tyne for a German subsidiary of Standard Oil, the ship was a significant breakthrough in the evolution of oil tankers. This true ancestor of modern tankers was about 3,500 dwt, given the name Gluckauf and was constructed with a centre bulkhead and a number of transverse bulkheads placed in pairs. A steam engine was fitted aft, where it would interfere least with the cargo. The danger of sparks from the funnel falling on the deck was thereby somewhat minimised, and the explosion risk reduced. Nevertheless, German sailors claimed that the tanker rather deserved the name Fleigauf (blow up). When Gluckauf arrived
S.S. Gluckhauf is the ancestor of the modern tanker. She was about 3,500 dwt and constructed with a centre bulkhead and a number of transverse bulkheads placed in pairs. A steam engine was fitted aft, where it would interfere least with the cargo. The danger of sparks from the funnel falling on the deck was thereby minimised, and the explosion risk reduced. Nevertheless, German sailors claimed that she deserved the name Fleigauf (blow up). On her first arrival in New York, the longshoremen blacklisted her. Oil company personnel refused to supply her with bunkers. Nevertheless, she traded for seven years until she ran aground.
21
in New York to load, the longshoremen blacklisted her, and as oil company personnel refused to supply her with bunkers, she had to sail up to St. John to refuel. Three weeks later, she returned to Germany with her first cargo. Gluckauf traded until 1893, when she ran aground off New York. When Gluckauf was launched, however, the Swede Ludwig Nobel brother of the famous Nobel Prize initiator Alfred Nobel had already introduced a revolutionary single-purpose oil carrier. The introduction of the new design was a consequence of the Nobel brothers purchase of land near Baku on the Caspian Sea, where huge fountains of oil were found in the ground. This made Russia the worlds largest oil producer for several decades. In 1878, Zoraster was delivered from Motala Shipyard in Sweden. Contrary to other tank ships built at the time, she was not a dual-purpose ship, but a pure tanker designed to carry 250 tons of kerosene in 21 vertical cylindrical tanks within her iron hull. Zoroaster was also unique in the sense that she burnt fuel oil, not coal, a feature that other tanker owners did not adopt until 40 to 50 years later. The Nobel design was improved several times and the cylinders removed so the oil could be carried directly in the iron hull. (Gold ships, pp. 18-23). Tankers were for many years considered to be dangerous ships. A number of tragic losses occurred both because of design errors and operational errors. The English directors of the Suez Canal Company had, since the opening of the canal in 1869, denied the transit of tankers with oil in bulk. Only the transport of case-oil was permitted. This meant that any bulk oil from the main source of oil outside America from Russia to the Far East had to be taken all the way round the Cape of Good Hope. As late as 1890, the Suez management turned down an American request to permit a Standard Oil tanker to transit the canal. The leap forward came as a result of the initiative of Sir Marcus Samuel, the English founder of Shell Oil. Transit through the canal was vital to his plan of shipping Russian kerosene from the Black Sea to Asia. The 5,000 dwt Murex-class tankers were constructed in West Hartlepool and built with special water ballast tanks to facilitate de-ballasting in case they went aground. Their design met all the stringent requirements of Lloyds insurers and was accepted by the directors of the Suez Canal. On her inaugural voyage in 1892, Murex carried over 4,000 tons of oil through the Suez Canal. Nine similar
Sir Marcus Samuel

Whilst Shell for several years had successfully rejected the competition from Standard Oil, the tide turned in the early 20th century against the founder, Sir Marcus Samuel. Perhaps preoccupied from his previous concentration on the development of his oil business by the civic pomp in England after his knighthood and election as the Major of London, he faced a new ambitious attack from Royal Dutch. This company originated in the West Indies and had prospered swiftly in the oil business. Dutch trader Jean Kessler developed it. Soon, the company came up against both Shell and Standard Oil. After a horrendous and intricate struggle, Sir Marcus in 1906 was 22 forced TANKERS, BIG OIL & POLLUTIONon humiliating terms: Forty-sixty in Dutch favour. to merge with Royal Dutch LIABILITY
tankers soon followed. Now Mr. Samuels progress endangered the American global trade monopoly that was so cleverly built up by John Davison Rockefeller and his Standard Oil company. Concerned about the competition from the upstart Shell, Mr. Rockefeller initiated a violent campaign in London to stop the passage of the Murex tankers through the canal to the Far East. His lawyers lobbied the Foreign Secretary, Lord Salisbury, and members of Parliament as well as some influential English newspapers. But all to no avail. The Rockefeller tankers were thereby left with a detour of the costly extra 4,000 miles around Cape of Good Hope, and the Standard Oils monopoly was broken.
Notes: The size of a tanker is measured in tons. But the definition of tons differs. In the following, the most common indicator deadweight ton (dwt) is used. This will indicate the maximum number of tons of cargo and fuel that the tanker in question can carry. An alternative measurement is gross register ton (grt). Grt represents roughly the cubic capacity of the tanker. A variation is net register ton (nrt), which is the volume available for cargo (and passengers). Finally, lightweight ton indicates the weight of the steel. This measurement is most interesting when tankers are sold for demolition. John Newton, A Century of tankers, published by INTERTANKO, 2002, and Anthony Sampson, The seven sisters, Viking Press, 1975. On Risobank, see A. Weyergang-Nielsen, Skonnert Riiso-bank, Norsk Sjofartsmuseum, 1988 and Rolf Kr. Danielsen, Frakteskuter og Fraktemenn. Currencies are written with the USD or GBP equivalents in parentheses based on the exchange rate from the year mentioned.
The Print Collector / Heritage-Images / Scanpix
John Davison Rockefeller

Mr. Rockefeller was born in 1839. At 33, he founded Standard Oil Company and thereby the American oil industry. At the turn of the century, he was seen as the richest man in the world, with a fortune exceeding USD 1 billion. He had expressed the hope to reach 100 years old, but this was one of the few ambitions which did not work out. He died at the age of 98 at his estate in Florida.
II. OIL COMPANY FLEETS

The 20th century proved to be an age of petrochemicals, mass production and automobiles. By the turn of the 20th century, in 1900, 51 percent of the crude oil was produced in Russia and 43 percent in the US, particularly Texas and California. The new century produced only one major crisis, but
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Josef Stalin
Born probably in Georgia in 1879, Josef Stalin was elected Secretary General of the communist party in 1922. From the end of the 1920s, he had gotten the better of all opponents within the party, not the least Mr. Trotsky. Stalin became the undisputed Dictator of the USSR until his death in 1953. In his younger years, from 1886, he was a revolutionary activist always on the run; in and out of prison. As a champion of armed resistance against the Tsar across Georgia, he did his very best to sabotage the oil production in the Baku area. Time and again the installations were in flames.
several smaller ones. Among the industries that had to face the turbulence of capitalism and a number of crises some of them self-inflicted was the tanker industry. During the next hundred years, the tanker market reflected the fluctuation between periods of demand for oil transportation and periods of oversupply of tonnage. In 1903, world trade slumped, and Mr. Samuel found it impossible to resist the competition of a fast-growing Dutch competitor, Royal Dutch. Mr. Samuel, who had then become Sir Marcus, was forced to swallow a bitter pill and agree with his major competitor in Europe, Mr. Henry Deterding, to merge with his company, Royal Dutch. Thereby, in 1906 a new oil giant was born in Europe: The Royal Dutch Shell group. By 1901, the Russian oil fields around Baku at the Caspian Sea produced half of the worlds oil, and the Nobel Prize, established that year, was founded on its profits. A pipeline was built to Batumi, a subtropical port at the Black Sea, where the crude oil was refined and exported in tankers. In the years to follow, the oil installations in the area became sabotage targets of the growing revolutionary forces including Bolsheviks and Mensheviks, who fought each other, but both in determined opposition against the ruling Tsar Nicholas II. Ethnic killing, burning, raping, shooting and throat cutting were the order of the days. A ruthless young Georgian who called himself Soso or Koba until after the Russian revolution in 1917 when he took the name Josef Stalin was in charge of the Bolsheviks. When the Red Armies seized all oil properties, Russias share of world oil production was reduced to four percent by 1920. The violence had not scared the French Rothschild family from investing heavily in oil production in Baku until the family in 1912, with huge profits, sold out to Royal Dutch Shell. A third of the production was still controlled by the Nobels, who in 1920 sold their rights to Exxon, which had worked hard to negotiate a deal with the Bolsheviks. But the Russians succeeded to generate chaos in the Western oil industry for several
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years. Compared with Mr. Rockefellers Standard Oil Empire, which controlled virtually all oil exports from the US, Russian interests had a minimal stake in the worlds tanker fleet. Foreign companies owned the tankers loading its oil at its terminals. New oilfields were discovered around the world. First, in 1909 in the Middle East, in particular in Persia. Two years later, export was in full swing. Mexico became more and more important as an oil producer and climbed to the worlds third-largest producer in 1912. By 1927, Venezuela had become the secondlargest oil exporter in the world. Shipowners in general had continuing reluctance towards the oil trade that was still considered dangerous. On May 1, 1907, the Anglo-Saxon tanker Silverlip exploded while on passage from Singapore to the UK with an oil cargo. Of the crew of 53, five died. The rest survived and were saved by a nearby steamer. In 1909, a fatal tanker explosion occurred in the port of Marseilles when an underwriter representative accompanied by the chief officer went onboard a three-masted oil carrier, Jules Henry, to examine the vessel and to ensure that the tanks were empty. A terrific explosion followed immediately after one tank was opened, and the men were violently thrown backwards. They escaped death, but more than eight crew members were killed.
Note: See Mike Ratcliff, Liquid: Gold Ships, pp. 58, 60 and 66, Simon Sebag Montefiore, Young Stalin, pp. 90-100 and Robert W. Tolfe, The Russian Rockfellers, pp. 50-61 and pp. 150-164, Stephen Howard, Sea Shell, p. 53.
Reza Khan Pevlevi

Reza Khan Pevlevi seized power in 1921 and became the Shah of Iran four years later. He started as a private soldier and was succeeded by his son, Mohammed Reza, in 1941. Commercial oil production had begun in Iran at the turn of the century, initiated by British interest. It is claimed that this oil saved the British naval fleet during two world wars. The Iranian oil was in the hands of BP and made the company a scapegoat for everything that went wrong in the country. From a turbulent political situation emerged in 1951 an exotic leader, Dr. Mossadeq, calling for nationalisation. The shah fled the country but returned when Mossadeq resigned after international pressure. But the shah was forced to flee for good when the Islamic revolution broke out in 1978 and Imam Khomeini established the current Iranian Republic.
III. COAL OR OIL?

The tankers had up to the new century been supplied with steam from coal-fired boilers. However, oil could be used for firing the boilers, and the first oil-burning tanker, built in 1887, carried fuel oil in her double
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Rudolf Diesel
Rudolf Diesel was born in 1858 in Paris with German parents. He invented the diesel motor. The advantage of oil instead of coal was gradually accepted by ship owners, and the first diesel tankers built used inexpensive refinery waste as fuel for their auxiliary boilers. From the 1920s, the dominance in shipbuilding, including tankers, changed from steam-powered to diesel-powered ships. Oil was cleaner, easier to store and much easier to handle by ship personnel. Any discussion of the potential oil pollution risk was absent. In 1913, Rudolf Diesel disappeared mysteriously when crossing the English Channel.
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bottom. It proved to be no success, as she was converted to coal after her maiden voyage. The reluctance of shipowners to move from coal to oil was not based on higher prices or scepticism to quality; it was simply the availability. Coal was to be had everywhere. Oil was not. Oil-burning merchant ships could be used only where they could re-fuel and were dependent on the growth of the fuel oil supply and depot network. The German engineer Rudolf Diesel had invented an internal combustion engine that could operate on liquid fuel, and this technology was first used in ocean-going ships in 1912, with the Selandia of the East Asiatic Company of Copenhagen. Gradually, the advantage of oil was increasingly accepted, and the first diesel tankers built used inexpensive refinery waste as fuel for their auxiliary boilers. From the 1920s, the dominance in shipbuilding, including tankers, changed from steam- to diesel-powered ships. Oil was, after all, much cleaner and easier to handle. Additional benefits were lower manpower requirements and faster turnarounds in ports. Finally, the weight of bunker oil compared with coal meant a savings of 25 percent. Neither was it unimportant that the top executives in Shell had been campaigning for the Royal Navy to switch from coal to oil. A key man in the battle was Winston Churchill, who arrived in the Admiralty in 1911. He was soon convinced that oil was to be the fuel for the future. However, he regarded Shell as a foreign company due to the Dutch majority ownership, and to Sir Marcus dismay, he convinced the Admiralty that the Government should buy 51 percent of the Anglo Persian Company in 1913. The price was a bargain: GBP 2 million (USD 3.13 million). The world tanker fleet was dominated by oil company ownership in the first decade of the new century. The Anglo American Oil Company, a British subsidiary of Standard Oil, was a major tanker owner at the time. So was the Anglo-Saxon Petroleum Company, which had been formed after an amalgamation of Shell and Royal Dutch Oil. At the time, the most economical size of tankers was thought to be around 9,000 dwt. But soon the size increased to 12,000 dwt and then to 15,000 dwt. Independent tanker owners played a modest role in the tanker transportation.
Winston Churchill
Winston Churchill, born in 1874, became known as the man who stopped Hitler 70 years later. His first important commission in England came at a time when the international situation was pregnant with peril. In 1911, he was appointed Minister of the naval forces. Interested in new strategic ways to beat the enemy, he was among other initiatives - eager to introduce oil as the alternative to coal for the English war ships. In World War II, when England in 1940 was the only nation fighting against Hitler-Germany, Winston Churchill made a comeback as Prime Minister, leading the war against the Nazis. He was defeated in the election after the war, but re-elected again in 1951. He died in 1965.
TANKERS, BIG OIL & POLLUTION LIABILITY 27
Halfdan Wilhelmsen
Halfdan Wilhelmsen was born in Tonsberg, Norway, in 1864. When he grew up, he witnessed the stagnant and difficult market for sailing vessels. He bought his first 1,800-ton steamer in 1886. The family company already operated a wide range of vessels, including liners. In 1912 and 1913, Mr. Wilhelmsen became the first important independent tanker owner when he bravely ordered four tankers, each 10,000 dwt, to carry oil for Californian oil interests. More soon followed. In the years to come, a number of other Norwegian shipowners followed suit. At the time of his death in 1923, the family owned 40 percent of the Norwegian tanker fleet. The company is still one of the major Norwegian shipping companies, but has disposed of its tanker fleet.
In 1912, the first independent tanker owner arrived at the scene in great style. Halfdan Wilhelmsen of Wilh Wilhelmsen ordered four tankers, each 10,000 dwt, to carry oil for Californian oil interests. In the years to come, a number of other Norwegian shipowners followed. At the time of Wilhelmsens death in 1923, his company owned 40 percent of the Norwegian tanker fleet. On Aug. 15, 1914, the Panama Canal was opened for navigation. A Shell ship, Eburna, was the first to cross from the Caribbean to the Pacific. On the very same date, England declared war on Germany, and the First World War began. This soon showed how vital oil and tanker transportation were. Sailing ships were already outdated, and the British Navy had switched from coal to oil when the war broke out. By 1914, the navies and the motorised army would be helpless without oil. So was aerial warfare - still in its infancy - at sea and land, but observation and fighter airplanes were built in increasing numbers. Oil supplies became the essential ingredient of success. Their supplies were dependent on safe crossings of the oceans of a large fleet of tankers from the oil fields to manufacturers and battlefields at the other end. This proved to be a bloody business. The German Navy achieved success by mines planted in coastal fairways and particularly by use of its submarines. During the war, nearly 2,500 merchant ships were destroyed, including a large number of tankers, and more than 14,000 sailors lost their lives. What in the end saved Britain and her allies was that the US entered the war in 1917 and introduced the convoy system at sea. Tankers and other merchant ships were sent across the ocean, in particular from the US, to Europe in convoys protected by warships. However, this slowed down the transportation and meant a further stimulus to tonnage demand. US yards entered into a massive construction programme to replace the lost fleet. Germany was at the time facing an accelerat-
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ing oil crisis, and their frightening U-boats were in desperate need of fuel. By far the biggest supply came from the US. A quarter of all oil came from one source alone: Exxon. Britain had also access to oil from BPs sources at Abidjan, whilst oil Shell supplies came from various supply depots around the world. The ability to keep the tankers with their oil cargoes going was a major factor in the victory of the allies. After the end of the war, the British foreign minister, Lord Curzon, put it this way: The Allies floated to victory on a wave of oil. An immediate trade bonanza followed the war, and the years 1916 to 1920 had the highest tramp freight rates so far recorded. The bonanza collapsed in the autumn of 1920, and the Great War turned out to be the divide between the optimistic pre-war climate in industrial countries and the uneasy, economically unstable, socially explosive and eventually depressive period of 1920 to 1940. The German fleet, which had been the second largest after the British, was now effectively destroyed. The Eagle Oil Transport Company operating in Mexico ordered 25 new tankers to be built in 1919. This fleet included several 18,000 to 19,000 tonners, the largest built so far. Through its tanker company, Anglo Saxon purchased 23 tankers in 1919. A further batch of 17 tankers was built from 1920 to 1922. Other oil companies followed suit.
Notes: Born in England, William Knox DArcy moved to Australia when he was 17. He returned to England in 1889. Through his representatives, he managed in 1901 to negotiate a concession for two years of drilling in Persia and has since been remembered as the father of the entire oil industry in the Middle East. The concession included areas that are now Iraq, but excluded the Northern Provinces to avoid Russian irritation. The Persians were given some shares, a cash payment and 16 percent of the net profit. Business went up and down until 1909, when the Anglo Persian Oil Company (APOC) was founded and Mr. DArcy was made a director. APOC later became BP. See BP Our Industry, London, 1947, and Adventure in Oil the Story of BP, London, 1959. For a table including the historical currency exchange rates (except for Euros) used in this book, see http://fx.sauder.ubc.ca/etc/USDpages.pdf
IV. INDEPENDENT OWNERS

The new element in the post-war period was the entry of the independent tanker owners. So far, shipowners generally had been reluctant to order ships for the oil trade that oil companies fully controlled, from drilling rigs all the way to the petrol station. Tankers were expensive and confined to one cargo
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Leif Hegh
Educated as an economist, Leif Hegh found that the shipping industry was the area for his interest in finance and economic cycles. He started his own company in 1927 at the age of 31. Hegh then emerged as an entrepreneur in oil transportation. He also took an active part in international shipping politics after the Second World War, promoting the views of Norwegian ship-owners. By his death in 1974, Leif Hegh & Co. was one of the largest privately owned shipping companies in Europe. Under the leadership of his two sons, the company remains a major marine transporter in a wide range of products including liquefied natural gas.
only and at the mercy of a small number of charterers. In an otherwise stagnant world trade, oil was the only commodity to show increasing quantities. This proved to be a strike of luck to the Norwegian shipping community, where a great number of building contracts had been arranged from 1925 to 1930 and largely secured by a 10-year time charter to the oil companies. Financing was largely raised through starving shipbuilders. By 1932, the Norwegian tanker fleet had jumped to 18 percent of the world fleet. Such strong growth would not have been possible without a change of philosophy by Shell (The Anglo Saxon Petroleum Company) and other oil majors. Instead of building tankers for its own account, it preferred to charter independent tankers to cover the peaks of transportation needs. Better to leave it to the independent tanker sector to take the risk of a sudden downturn than to run that risk for its own company. Shell came into the market with a chartering programme for 10 years, and practically the whole programme was taken by Norwegian owners. Leif Hegh was one of the newcomers in the tanker market who with the encouragement of the well-established Danish shipowner A.P. Moller grabbed the opportunity when more oil companies followed suit. This demonstrated that the oil industry was willing to pay for flexibility and avoid the risk of having to lay up their own fleets when demand slumped. Other owners joined in, and extensive new building of tankers created a huge surplus of tonnage in the 1930s. Success leads to excess. The Great Depression meant a terrible slump with falling freight rates. By 1933, an estimated 15 percent of the world tanker fleet was laid up, with as much 40 percent of independently-owned tonnage out of service. Action was needed for co-operation among tanker owners. In 1932, an enterprising British gentleman, Harry T. Schierwater of United Molasses (later Athel Line)
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A. P. Moller
A.P. Moller established the company in 1904 together with his father, and formally adopted the Maersk name for his shipping operations in 1928. Five tankers soon joined the companys 35-vessel fleet. By the end of the 1930s, the fleet had swelled to 46 vessels. His son Maersk McKinney Moller joined the company in 1940 at the age of 26 and was named a company partner. Today, the company is known throughout the world as a diversified conglomerate operating in shipping, oil and gas, shipbuilding, super markets, IT and other industries. Unravelling the financial situation of the shipping giant is a formidable exercise. In our context, it might be sufficient to state that Maersk Tankers remains one of the worlds largest tanker operators, with a fleet of some 100 tankers. Maersk McKinney Moller was a member of INTERTANKOs Executive Committee during the first year of its operation.
took the initiative to set up a tanker-pooling arrangement. He saw that the depressed rates were in the interest of neither the independents nor the oil companies, which controlled 55 percent of the tonnage supply. By introducing a levy on the employed tankers in the scheme, owners of laid-up tonnage could be given a subsidy in the best interest of all members. The plan materialized in 1934. It was actively supported by Mr. Moller and Mr. Dagfinn Paust, of Norway, who together with Mr. Schierwater stressed that the moderate ambition of the scheme was to ensure survival of the tanker industry and not to strive for excessive freight rates that in any case would be unrealistic. The scheme faded away at the time of the beginning of the Second World War, when economic activity recovered. Opinions differ with respect to the impact of the scheme. There were constant discussions between members about how to organize the pooling
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arrangement during its existence, not least about the size of the levy and the subsidies to owners with laid-up tankers. One other difficult question was how to deal with new buildings. The Norwegians became increasingly unhappy, and when freights boomed in 1937, they suggested suspending the whole plan; a proposal rejected by 18 votes to six. John Kulukundis
A partner of Retymnis & Kulukundis Ltd., John Kulukundis was the chairman of the Greek Shipping Co-Operation Committee (founded in London in 1935) when INTERTANKO was established in Oslo in the fall of 1970. He and other family members had left Greece to establish their own shipping business in London and soon became a solid part of the Greek community here during the 1930s. They became more prominent after World War II. Mr. Kulukundis volunteered to join an interim committee of the new association and was a member of the first INTERTANKO Executive Committee. He was a believer in a closer co-operation between tanker owners, and did not hesitate to stress the similarities in the background of Greek and Norwegian shipping, both originating from modest places at the coast or islands of the two countries.
Greek owners did not participate in Mr. Shierwaters scheme. Their fleet had lost more than two thirds of their tonnage by 1919. Nevertheless, from 1914 to 1938, the fleet soared from 13th to ninth place among the maritime nations and represented the second-largest dry cargo tramp fleet after Britain. The dynamic Greeks had not yet taken an interest in tanker shipping. In any case, the leading company, Rethymnis & Kulukundis (R&K), operated not only its own large fleet from its base in London, but also ships from other companies based in the UK as well as Greece. When the depression was at its deepest from 1932 to 1933, the global shipping crisis sent 27 percent of all dry cargo vessels into lay-up in 1932. In 1935, the Greeks established a minimum-rate-scheme for dry cargo ships with support from shipowners of other nationalities. The co-operation survived till 1939, administered by the Greek Shipping Cooperation Committee in London. The Committee has since remained intact and played an important role in shipping policy matters to this day. At the beginning of the century, the world tanker fleet had included about 145 tankers in international trade. The average size of tankers built at the time was some 8,000 dwt, and the world total tonnage included half a million dwt, no more than the carrying capacity of only one large super tanker built in the early 1970s. By 1939, the tanker fleet comprised some 1,731 vessels of 11.4 million gross tons (16.1 million dwt). The oil companies possessed the most of the British and US fleets, whereas the Norwegian held 18.5 percent and
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were thus the largest group of independent owners. And in addition, tanker shipping had proved the most profitable of all shipping segments between the wars. A well-managed tanker delivered in 1928 to 1930 on a 10-year time charter at the going charter rate would yield an annual profit of 29 percent on the investment over the period, compared to the interest rate of three percent for bank deposits. No wonder other European owners were keen to join the tanker trade. The main oil supplier to the international tanker trade at that time was the Caribbean area (predominantly Venezuelan production), with the US next and the Middle East in the third place. Russia still had its huge oil reserves, but had faded out as a participant in the international picture. The old sea trades from the Black Sea had dried up and were replaced by greater volumes of export from the Americas.
V. INITIATIVES FOR SAFETY AND ENVIRONMENT

Until the coming of steam power in shipping in the 19th century, protection against wind and waves, losses of ships and men at sea had generally been seen as beyond mortal control. But some regulatory efforts had been made as early as 1288 by the Hanseatic League. This league, which included some Germanic trading towns with branches all over the Baltic and North Sea, dominated European shipping at the time. To prevent unsafe overloading of ships, one of the most important members, Visby, introduced load line regulations for every Hanseatic cog and imposed substantial penalties for any shipowner who ignored them. Some 100 years later, the Venetians enforced similar load lines for every galley hoisting the flag of their Mediterranean republic. The origin of modern safety regulations for shipping is, however, found in England. The Merchant Marine Act passed by Parliament in 1854 represented an attempt to regulate the liability of shipowners towards third-parties. Marine safety issues were addressed when the act was amended in 1876. Out of scandalous circumstances in the shipping trade in the UK and other maritime countries, and as a mere reaction to the prevailing unfettered capitalism, time was finally ripe for the growth of social conscience. The introduction of genuine maritime safety regulations was promoted by a
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Samuel Plimsoll
Samuel Plimsoll was born 1824 in Bristol. He got involved in the coal trade in London, where he prospered in business whilst he at the same time passionately took up the cause of the seamen. Elected to Parliament in 1868, he gave a peoples voice to the abuses they suffered. Unscrupulous owners had for some time bought up rotten ships and insured them at the highest possible level before sending them to sea with not much hope of a safe return. The first lines in the preface of his famous book, Our Seamen: An Appeal, published in 1873 reads: Every-body knows that there is a great loss of life on our coasts annually, and nearly everybody deplores it. I am sure that if the English public equally knew how much of this loss is preventable, and the means of preventing it, no long time would elapse before means would be taken to secure this end.
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shipbuilder and shipowner from Newcastle upon Tyne, James Hall. His expertise was unquestioned, and Samuel Plimsoll effectively lobbied his arguments within and outside Parliament. In the preface of his book, Our Seamen An Appeal, published in London in 1873, Mr. Plimsoll started out as follows: Everybody knows that there is a great loss of life on our coasts annually, and nearly everybody deplores it. I am sure that if the English public equally knew how much of this loss is preventable, and the means of preventing it, no long time would elapse before means would be taken to secure this end. Mr. Plimsoll and Mr. Hall fronted the efforts to protect seamen from a number of shipowners who at the time were running coffin ships. Heavily over-insured, the ships were sent to sea without much hope of a safe return. According to Our Seamen An Appeal, 1,333 seamen lost their lives on British ships during short voyages from domestic ports in 1867. In 1869, the number was 933, and in 1871, 626 people died. Lives lost on the high seas were not included in these figures. There were nine sources of the disasters: Under-manning, bad stowage, deck loading, deficient engine power, over-insurance, defective construction, improper lengthening, over-loading and want of repair. The Liverpool Shipowners Association readily supported these points of view: While the constrictions upon loading will not affect those who already load their ships reasonably, it will act as a decided check on the unscrupulous Owner or Charterer and will tend, by the greater safety which will follow, to reduce the general rate of Marine Insurance.
Coffin ships
Girl: O, dear Jack! I cant help crying, but Im so happy to think youre not going in one of those dreadful ships! Jack: No, no lass never more! Thanks to our friend Master Plimsoll, God bless him! Sailors from other maritime countries were less fortunate. Thus due to resistance from ship-owners including the Norwegian Veritas, it took 30 more years before Plimsoll lines were made compulsory in Norway. In the meantime, hundreds of seamen perished while shipowners received generous compensation from the insurance industry for their lost vessels.
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It would be an overstatement to claim that the bill was supported by the shipping industry as a whole. But with regard to the interpretation of the current slogan, the polluter pays, the 140-years-old reference to charterers is noteworthy. Thus it was largely Mr. Hall and his spokesman, Mr. Plimsolls, doing that the amended Merchant Marine Act in 1876 laid down that any merchant vessel must bear a mark on her sides, indicating the maximum depth to which she might be safely loaded in salt water. In our own time, we have seen that the result of strict national regulations is the transfer of ships to other flags. The reaction of many British shipowners some 150 years ago is therefore hardly surprising. Vessels were sold to owners located in other countries where load line restrictions were still unknown. It was a golden chance for ambitious foreign captains to have a modest start on their own. The 1890s saw a heated public debate on maritime safety and working conditions for seafarers in other European countries, broadly inspired by the general movement for social improvement. Marine safety bills arose from this, including provisions for load lines, which were introduced in Norway in 1910. But a disaster was needed to bring about a break-through for international co-operation. In 1913, the year after the Titanic disaster, representatives of 13 countries met in London to develop uniform standards for passenger ships and radio requirements for cargo ships. World War I prevented immediate progress, but the work was followed up after the war and resulted in the 1929 convention titled International Convention for the Safety of Life at Sea (SOLAS). It laid down rules and recommendations on ship strength, navigation and communication equipment, fire-preventing measures as well as port state control. The convention entered into force in 1933 and still exists under the same name, despite being subject to numerous changes and improvements during later years. Mr. Plimsolls ground work was given the final stamp of approval when maritime governments agreed on the International Load Line Convention of 1930. The need to protect the marine environment was given no attention to speak of prior to the Great War. At best, it was regarded as a local problem. Thus the efforts to avoid and minimise pollution risk can be traced back only some 90 years, once again with the UK in the driving seat when Parliament passed The Oil in Navigable Waters Act in 1922. The law forbade under a penalty
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of 100 pounds the discharge of oil or oily water into its territorial waters. But the act of 1922 was an eye-opener for other countries. Four years later, an international conference was held in Washington, D.C., to work out an agreement on marine pollution regulations, but with no success. England, Belgium, Norway, Netherlands, the US and Sweden did, however, agree to prohibit discharge of oil in a zone within 50 miles of shore. A special committee was set up by the League of Nations and a draft convention on pollution prevention came to light in 1935. At the time, oil accounted for approximately 20 percent of total volumes carried at sea. Nevertheless, progress was slow. A planned conference to consider the draft had still not been held when World War II broke out in 1939.
Note:
See the letter from Liverpool in the Shipping and Mercantile Gazette of June 7, 1870, printed in Mr. Plimsolls Our Seamen An Appeal, pp. 70-71, published in London in 1873. See also Lloyds List 250th Anniversary Special Supplement, pp. 93-100, on the development of safety regulations.
VI. THE SECOND WORLD WAR; THE DEPENDENCE ON OIL

After the German war machine had crushed France in June 1940, the UK was isolated from the rest of the world and faced a serious threat of invasion. Availability of fuel oil to feed the Royal Navy and the Royal Air Force seemed even more important than during the First World War. Once more, tanker transportation became a most vital element in warfare. On every front, the war was once again fought and won on oil. In 1939, the main oil supply to Great Britain still came from the Gulf Coast of the US. However, Iranian oil was rapidly becoming more important. Huge oil reserves had also been found in several other countries around the Persian Gulf, but development of the fields had been slow. By 1939, only Iraq, Saudi Arabia and Bahrain were oil exporters of some minor consequence, representing a few percent of the international seaborne trade. Germany had relied on overland imports of Romanian oil and the domestic production of synthetic fuel. When Adolf Hitlers armies supported by Romanian troops invaded the USSR in June 1941, one of the targets was the rich oil fields of the Caucasuses. When he one year later in desperate need of oil ordered his armies to push for the oil fields, the battle of Stalingrad was in effect the battle for Baku.
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Tankers in convoys crossing the Atlantic had so far been a relatively easy target for German U-boats and aircraft. It became apparent that the menace of the submarines was so scary that the shortest route for tankers was not only the quickest but also the safest. Thus Britain, later joined by its allies, decided on a short-haul policy, meaning that oil for the war effort should come from the eastern seaboard of North and South America, rather than all the way from the Persian Gulf. At the beginning of 1943, Britains oil stock was at its lowest level ever. The peak of destruction of tankers was reached during the summer of 1942. From then on, the loss-rate improved as the submarine menace was gradually mastered, thanks to the introduction of heavily guarded convoys and providing long-range aircraft protection. Another factor of importance was the cracking of the U-boat radio codes. During the 1940s, most of the leading Greek shipowners left Greece and broke their relations with the Government at home. They left for London, but also, increasingly, for New York. The Greek merchant navy mainly dry cargo ships was reduced, with 72 percent at the end of the war. The exodus to other maritime centra did not come to an end after the war. Instead, the owners settled down and developed valuable contacts with charterers including the major oil companies. After the German invasion in 1940, the Norwegian Government escaped to London, and here requisitioned about 1,000 ships under the Norwegian flag in ports all around the world. In consultation with the UK Government, Nortraship the acronym of The Norwegian Shipping & Trade Mission was set up in London and New York and assigned the task of operating the national fleet for the duration of the war. At the end of the war, the Norwegian owners had lost about 40 percent of their tanker tonnage. Merchant fleets under British and American command also suffered huge losses. Thus the main priority for the shipbuilding sector in the free countries was to replace the huge quantities of tonnage lost without delay. The shipyards in the US took the lead and were soon capable of replenishing the massive losses sustained round the theatre of war. In 1942, the US government instigated an emergency building-programme. By 1945, about 500 units of a new type of standard tanker the 16,600-ton T2 had been built. Thanks to the large emergency shipbuilding programmes, the world tanker fleet by 1950 stood at 26 million dwt, significantly larger than the 16.6 million dwt fleet of 1938.
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Notes: A condition for an effective war machine was to keep the oil coming to the theatre of war. At a critical moment during the World War I, the Commander of the Allied Forces, Marshall Foch, declared: We must have oil or we will lose the war. John Newton, A Century of Tankers, p. 42. The Greek Shipping Cooperation Committee was formed in London in 1935, and includes shipowners of Greek origin with offices in London and New York. London was the shipping centre of the world. The infrastructure offered unique opportunities for personal contacts with charterers, countless insurers, banks, top law firms, good schools and brokers, etc. The meeting place for all was the Baltic Exchange, which after some years became open to foreigners. The Greeks that had set up their offices here were steadfast in their position: Shipping regulations must be implemented in a uniform, non-discriminatory way by all nations. See G. Harlaftis: A history of Greek-Owned Shipping, London & New York, 1996. The Norwegian Shipping and Trade Mission (Nortraship) was set up ultimo April 1940 after the German invasion of Norway. Most of the Norwegian fleet was outside the countrys territorial waters. The British government wanted to bring the fleet under the British flag to avoid the Germans taking control. Representatives of the Norwegian government in cooperation with shipowners succeeded, however, in negotiating an agreement under which a Norwegian state-owned company, Nortraship, was established with offices in London and New York. The mission became a valuable partner in the allied efforts to bring about the capitulation of Nazi Germany.
VII. CONSUMPTION GROWTH AND GIANT TANKERS

The post-war decades saw a strong growth in the consumption of oil and, with it, oil transportation. The volume of oil carried by sea was doubled in the 1950s and again in the 1960s. From 255 million tons carried in 1950, the volume passed 1,240 million tons in 1970 and culminated at 1,625 million tons in 1974. From a minor share of the global trade volumes, oil and oil products grew to about 50 percent in the 1950s. However, the growth rate was even greater in terms of ton/miles, driven by the longer distances involved from the Persian Gulf and later to the US and Japan. From 1962 to 1970, the volume of oil carried grew by 122 percent, while the actual transportation in ton/miles grew by 174 percent. When the war ended, the prospects for the tanker trade looked good, although much would depend on the realisation of the US T-2 tanker fleet. In 1947, the US government agreed to confine the majority of the vessels to the reserve fleet, while a number were offered for sale at reasonable prices. Owners with no relations to their national government, like the Greek Aristotle Onassis, were, however, not taken into consideration by the US authorities. Onassis was furious when his father-in-law, Stavros Livanos, was offered seven ships.
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Pressens Bild / Scanpix Sweden / Scanpix
Aristotle Onassis
Born in Saloniki in 1906 but growing up with his family in Smyrna, Aristotle Onassis due to the political unrest left for Buenos Aires as a youngster. He became a Greek shipping legend. He placed the Greek tanker industry in the forefront when he in 1953 launched a super tanker of 45,230 dwt and named her Tina Onassis, after his wife. Sixteen years later, he launched a super tanker four times the size of Tina the Olympic Athlete, weighing 216,490 dwt. He became a world celebrity until his death in 1975, not only because of the huge fortune he built up, but also because of his relationships with famous women.
In Norway, owners were frustrated in the early 1950s when the socialist government intervened and placed a veto against further contracting of new buildings. Foreign currency should be used for better purposes, stated the government. However, after a few years the interdict was lifted. Brisk contracting by Scandinavian and Greek owners led to a shift in the global tanker fleet. In 1938, independent owners had controlled 39 percent of the fleet; this share increased to 58 percent by 1968. In the meantime, the US had for the first time became a net importer of oil in 1948. The seven sisters, the five US major oil companies Chevron, Esso, Mobil, Texaco and Gulf, together with BP and Shell, were now firmly established throughout the Middle East. The oil reserves here were so huge that nobody could have dreamed of what was hidden under the sand before 1939. In 1960, Middle-East oil repre-
40
sented 24 percent of the world oil production (four percent in 1940). The sisters dominated world production, distribution and sales. Unable to operate profitably under the Jones Act provisions (requiring American crew and conditions for American-flag vessels), the US oil companies began to register ships under free flags in the 1930s. In the beginning, the Panamanian flag was the clear choice. Later, Liberia and Honduras offered their flags as well, and the PanLibHon fleet became a well-known concept. The idea was quickly adopted by Greek and other owners operating out of shipping centres like New York. Under a free flag, there would be no governmental and labour union interference, nor any tax liability. The International Transport Workers Federation (ITF) strongly opposed the new trend. In April 1958, a Greek owner of one of the largest tanker fleets in the world, Stavros Niarchos, took the unusual step of sending a letter to the editor of The Times in London to defend the free flag policy. Some six months later, a Norwegian, Erling D. Naess, who had left his home country for New York in the 1920s, was elected chairman of a new association, The American Committee for Flags of Necessity, to coordinate policies. One of the supporters was the Texas oil magnate Daniel K. Ludwig, who became the world leader by building the largest tankers afloat. His tankers were built in Japan, whose terms were most favourable to foreign shipowners. In 1955, the Imperial Japanese Naval Dockyard at Kure delivered a number of tankers to Mr. Ludwig. Among them were the 56,000 dwt Sinclair Petrolore, and four years later, the 103,000 dwt Universe Apollo. When the Suez Canal was nationalized by the Egyptian President Nasser in 1956, Britain and France did not hesitate to take military action to take in the waterway. The outcome was no success, because of the lack of
Topham Picturepoint / Scanpix
Stavros Niarchos
Stavros Niarchos was born in 1909 in Athens. It was with him and his compatriot and competitor Ari Onassis that the Greeks entered the tanker business in a big way after World War II. Niarchos built his first super tanker in 1952 and later operated more than 80 tankers worldwide. By the mid 60s, the Greek-controlled tanker fleet was the biggest in the world. Before he died in 1996, he went through several marriages. He was also wellknown as the owner of a large collection of impressionist and post-impressionist paintings and for his highly successful stables of race horses.
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Erling D. Naess (right)

Next to him is Jan Hudig of Van Ommeren, Netherlands the first chairman of Intertanko, Oslo Erling Dekke Naess rose to prominence in shipping as a deputy director of the agency in New York which operated the Norwegian fleet during World War II (Nortraship), and for initiating the Federation of AmericanControlled Shipping that enabled American and foreign interests to register their ships in Liberia, Panama and other low-cost countries. This was, however, regarded as unfair competition by his fellow countrymen, and he became unpopular at home. Nevertheless, he was more than welcomed when he, during the shipping crisis in the 1970s, persuaded the Norwegian government to establish a free registry for vessels flying the Norwegian flag. Mr. Naess died in his home in Bermuda in 1993 at the age of 91. His company, Anglo-Norness Shipping Company, was sold in 1968 before the shipping markets collapsed.
Foto: Norsk Handels og Sjofartstidene
American support, and the waterway remained closed for about six months. The effect on European oil supplies was immediate. Shipments of Middle East oil had to be diverted around the Cape, tanker freight rates skyrocketed and the Western economic dependence on Middle East oil became very apparent. Independent shipowners, however, enjoyed a tanker boom with ample opportunities for profitable time charters for years ahead. By 1961, the USSR produced as much as 60 percent of the oil produced in the Middle East and had replaced Venezuela as the second-largest oil producer after the US. Increased oil demand had driven the oil and tanker industries to place building orders with European and Japanese shipyards for more and larger tankers than ever seen before. Between 1956 and 1958, the tanker fleet again grew through new building and led to a moderate-to-weak market for the first part of the 1960s. Technical advances in shipbuilding and deeper ports and terminals opened for larger ships, creating economies of scale in shipping. In 1956, a tanker of 33,000 tdw would be considered large; but by 1962 the Nissho Maru of 130,500 tdw set a new scale. In a rapid succession of larger vessels, the Idemitsu Maru set a world record of 206,000 in 1966. Two years later, Universe Ireland set a new record of 326,000 tdw. Other owners, notably aspiring Greeks, picked up second-hand vessels from Scandinavians at low prices and extracted some more profitable years from them. In 1960, Jacob Stolt-Nielsen acquired a conventional second-hand 13,000 tdw tanker and had her converted for the parcel trade: An embryo of what was to become the company Stolt Tankers. There were other alternatives, as well. Some owners turned to smaller tankers built to carry several cargoes on one keel, known initially as parcel tankers, to serve the growing market for oil products, vegoil and chemicals. Of greater significance to the crude oil trade, however, was the trend for combined carriers vessels capable of carrying dry cargo and oil in the same holds (or tanks). The Ore-Oil carrier had been in use since the 1950s, designed to carry ore in the centre holds and oil in the wing tanks. In the early 1960s, the concept was improved through the Class acceptance of gas-tight hatch sealing, allowing Ore-Oil carriers to carry oil in the centre compartments, as well. Opinion is divided as to the origin of the Ore-Bulk-Ore (OBO) carrier, but the pioneer role is widely attributed to Mr. Naess, who had the first OBO built by AG Weser in 1965, the 71,000 tdw Naess Norseman. Scandinavian owners, in particular, came to invest heavily in OBO carriers. As it was 12 percent to 15 percent more expensive to build than a tanker of the same size, the economic viability of the OBO largely depended on the
43
owners being able to utilize its flexibility and shift between dry and wet cargoes. By 1974, the OBOs comprised 22 million dwt, or 14.5 percent of the tanker fleet. The tanker market remained at a low level from 1958, but firmed slowly with increasing seasonal variation from 1962. Large and efficient ships were able to show reasonable results, until the disappointing winter market of 1966 and 1967. This was no wonder, as the tanker fleet was growing vigorously. From 1960 to 1966, the fleet grew from 33.6 to 60.2 million dwt by 79 percent. Even at a time when the Western economies were growing quickly, this supply was outstripping demand. Under these circumstances, a Tanker Recovery Plan modelled after the pre-war Schierwater plan was introduced in September 1962, after initiatives by Norwegian and UK owners in particular. This time, however, no support from the oil companies was forthcoming, and the initiative faded away. Just as the dismal summer market dipped to the lowest level in five years and several tanker owners were beginning to worry, Israel launched a surprise attack on Egypt on June 5, 1967. The ensuing closure of the Suez Canal led to an immediate demand for tanker tonnage as the seaboards from the Arabian Gulf to the West became dramatically longer. The spot market went from sky-high virtually overnight, as all excess capacity was absorbed. This time the Suez Canal remained closed; it was reopened only in 1975. Borne by a strong rise in oil consumption, the tanker market remained buoyant from 1967 to 1974, broken by weaker periods in 1969 and 1972. In a tanker market without the physical restraints of the Canal, the largest vessels would offer the best economy. This led to a contracting boom for very large crude carriers (VLCCs) of more than 200,000 dwt. In December 1969, there were 90 VLCCs in service; in addition, some 200 were under construction around the world. Independent tanker owners were responsible for twothirds of the orders, and the financially much stronger oil companies for one third. The period from 1967 to 1973 was one of growth beyond precedent; the oil trade was doubled and so was the tanker fleet.
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Notes: After World War II, the International Workers Federation (IWF) and European maritime nations attacked the practice to register ships under Flags of Convenience. It was seen as a way to avoid decent wages and working conditions. According to Naess, the battle reached a crescendo in 1958, when the American Committee for Flags of Necessity was formed and in 1960, when the International Court of Justice said that IMCO should recognize Liberia and Panama as full members. ITF suffered a further blow in 1963, when the US Supreme Court endorsed the principle that the law of the flag state should govern the internal affairs on a ship. Currently, however, ITF, in cooperation with the UN and port states, is represented worldwide and controls that international standards are complied onboard. See E.D. Naess, The Great PanLibHon Controversy, Gower Press Limited, Epping, Essex, 1972, and Autobiography of a Shipping Man, Seatrade Publications Ltd., 1977. Tankers super sized with the building in France at Chantiers de l`Atlantique of four 550,000-dwt tankers delivered between 1976 and 1979 and scrapped between 1985 and 2003. Source: Lloyds List, May 13, 2009. At the time of writing (2010), it is reported the microstate Marshall Islands has passed the Bahamas and is now in tonnage terms the third-largest flag registry after the market leaders, Panama and Liberia.
HM Strategies
TANKER SPOT RATES M. E. GULF WEST 19671975
Worldscale Points. Medium-size vessels
TANKER SPOT RATES M.E.GULF - WEST 19671975

Monthly Average
HM Strategies
350 300 250 200 150 100 50 0
1967
1968
1969
1970
1971
1972
1973
1974
1975
Note: 1967 and 1968 converted from Intascale
Compiled by HM Strategies from Fearnley data
Tanker freight rates multiplied six times over in just two months in connection with the closure of the Suez Canal in 1967 and kicked off a strong rush in new tanker building orders. Some very turbulent years followed in the tanker market. The reopening of the Canal had limited impact on a tanker market flooded by way too many vessels.
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Graph by Shipping Adviser Jarle Hammer
IMCO SAFETY FIRST!
3 IMCO SAFETY FIRST!

I. EARLY INTERNATIONAL INITIATIVE
The United Nations special agency, IMCO, was established in 1948. It was charged with the international co-ordination and responsibility for maritime safety and environmental protection of the seas. To get the organization on its feet took many years. In many quarters, there was considerable suspicion about the role of a new international governmental organisation. What would happen to the traditional freedom of the seas? An announced international meeting in 1953 might have been the start, but a reserved attitude by important maritime nations, including Norway and Sweden, delayed progress. Finally, in 1959, the first IMCO Assembly met in London and could begin its work with the Dane, Ove Nielsen, as the first Secretary-General. In November 1950, a tanker named Inverpool stranded in the river Ribble in the North West of England because of a steering failure under the force of a very heavy sea. The master discharged 400 tons of fuel oil into the sea to lighten and refloat the vessel. The result was serious pollution of the seaside. The local authority sued the tanker owner, Esso Petroleum, for compensation for the pollution damage. The investigation revealed that the master of the tanker, whilst being aware of a steering gear failure at an early stage, nevertheless decided to proceed to port. In his view, the weather made it impossible to anchor and to turn about. Such action he claimed would have been even more dangerous than to proceed. The judge found that the choice of the lesser of two evils could not be considered to be careless. Neither did the plaintiff succeed to prove that the captain had been negligent when he decided to jettison some of the oil cargo in order to try to refloat the vessel, which was in serious danger of breaking. The Court of Ap-
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IMCO SAFETY FIRST!
peal reversed the decision. The case went all the way to the House of Lords, who, five years after the event, ruled in favour of Esso. Here the plea of negligence failed and the question of unseaworthiness was not pleaded. Other governments now recognized the potential pollution threat. In 1954, The International Convention for the Prevention of Pollution of the Sea by Oil was adopted, once again based on an initiative of the UK. However, the agreed instrument did not focus only on tankers. It also applied to ships in general and was aimed at the prevention and reduction of operational oil spills such as discharge of oily residues. Priority was given to protect the marine environment with preventive measures. These included new international rules to promote safer navigation, restrictions on discharges from ships, improved technical standards, as well as instructions for and supervision of ship personnel. The first important result of IMCOs work was visible in 1960, when the group reached a consensus on revising and improving the old SOLAS convention. During the same year, the five-year-old tanker Sinclair Petrolore, built in Japan for the account of Mr. Ludwig, exploded and spilled her entire oil cargo in the South West Atlantic Sea, off Brazil. This spill still figures in the list of the major tanker spills and may have caused far more concern in the US than in Brazil. In any case, the US Congress appointed a special committee to consider tanker hazards in general and to investigate this particular accident. However, few realized the potential pollution threat from tanker accidents, and the incident seemed soon forgotten. Eight years later, IMCO sent a questionnaire out to member states to obtain information on their experiences regarding oil spills from tankers during the last decade. Brazil said that there had not been any pollution event of importance. But in some quarters, there was concern. In March 1961, the chairman of IMCOs Coordination Committee on Oil Pollution at Sea complained about the general indifference to the potential pollution problems. Some very important shipping nations, such as Liberia, the US, Panama and Japan, representing nearly 40 percent of the tanker fleet, had not even bothered to ratify the 1954 Convention for the Prevention of Pollution of the Seas. Strong-willed IMCO, however, continued its work and obtained increasing support. The results became apparent in 1962, when the 1954 Oil Pollution Convention was improved. Then in 1966, a new International Convention on Loads Lines (ICLL) replaced the 1930 rules to secure safer and better loading practices. The oil and tanker industry seemed fairly relaxed. In its comprehensive
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IMCO SAFETY FIRST!
annual tanker reports in the early 1960s, the London tanker broker John I. Jacobs & Company Limited referred to the building of a number of large tankers in Japan. Many aspects related to the building orders were commented upon in some detail. However, the pollution risk in case of a major accident was not given particular attention. Tankers were still not subject to specific rules with respect to liability for pollution damage potential. Like the Titanic, it needs the catalyst of a major disaster to bring about an international response. Such an accident occurred in March 1967, with the stranding and loss of the Torrey Canyon.
Note: See John I. Jacobs Reports, Dec. 31, London, 1959, 1965, 1966 and June 30, 1968, and M. Ratcliff: Liquid Gold Ships.
II. THE TORREY CANYON

There is hardly any better illustration of the international dimension of the tanker trade than the Torrey Canyon. The tanker hoisted the Liberian flag, but was named after one of three small oil companies, which in 1890 had been wedded into the Union Oil Company of California. In 1967, this fast-growing corporation was the fourthlargest oil concern in the US. Formerly, the Liberian-flag tanker was owned by a Bermuda company, the Barracuda Tanker Corporation, a financial offshoot of Union Oil. The owners principal officers resided in New York. Together with two other large tankers, Sansinena and Lake Palourde, Torrey Canyon was built at the Newport News yard in the late 1950s. In 1965, the two last mentioned tankers were enlarged in Japan by widening and lengthening their hulls, thus doubling each original cargo-carrying capacity to nearly 120,000 tons. In this operation the stern sections had been cut off and floated into a dry-dock, where they were welded to a new stretched hull, thereby creating vessels of much larger dimension. Torrey Canyon was insured in London and crewed by 36 Italians, including Captain Pastrengo Rugiati and his officers. In early February 1967, Torrey Canyon was unemployed and had for several days been offered on the market at a low rate for a single voyage from the Persian Gulf to Europe. Finally on the suggestion of the London broker firm John I. Jacobs & Company, BP chartered Torrey Canyon. The voyage that made the name of Torrey Canyon notorious began at
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Torrey Canyon
The super tanker Torrey Canyon is shown here as the salvors found her in March 1967, when the British government faced a formidable situation. Two days after the grounding, a naval commander in Plymouth saw three choices: We can blow the bastard up We can empty her We can salvage her. Removing the oil proved to be impossible. Then one pinned the hope on Dutch salvage efforts only to experience that the captain of the team, Captain Stal, was killed following explosions as sparks had ignited the explosive mix of crude vapour in a tank. The salvage efforts were given up. The massive pollution that followed represented a quantity never envisioned before and sparked media coverage of a dimension never before experienced in the shipping industry.
Science Photo Library / Scanpix
IMCO SAFETY FIRST!
Kuwaits Mena al Ahmadi terminal, where she loaded a cargo of 118,000 tons of crude oil to be discharged in the UK at the tanker terminal in Milford Haven. On her way to the terminal, the tanker passed the Canary Islands on March 14. That day, Captain Rugiati had plotted a course to take the tanker which steamed on her automatic pilot five miles west of a cluster of islands, the Scillies off Lands End in Cornwall. On Saturday, March 17, everything was in order. But then, the Captain received a radio message from BPs agent in Milford that if he did not arrive at Milford Haven around 11 p.m. Saturday night, his deeply laden tanker would miss high water and be unable to enter the harbour at the agreed time. Such delay would imply several days at anchor due to the considerable fluctuations of the tide. In the early morning of the March 18, whilst the Captain was still in his cabin, the chief officer, Silvano Bonfiglio, reported that the tanker had been forced by wind and current to the east of the islands into confined, rocky waters. On request, Bonfiglio confirmed that the present course, would permit the ship to pass eastward of the Scillies. It was decided to not change the course. When the master arrived on the bridge around 7 a.m., the large tanker was going full-speed ahead. A change at that stage could have delayed the ship and now, all being well, perhaps half an hour was saved. But nothing went well. The tide in the passage rises and falls up to 16 feet, and some rocks were only a few feet below sea level at high water. When the captain an hour or so later regretted his decision and wanted to alter course again, it was too late; two or three fishing boats in the confined waters gave him little choice. Signals and warning flares sent up from the Seven Stones light vessel seemed to be ignored. The tanker ran aground in the morning around 9 a.m. Saturday, March 18, 1967. At a speed of 17 knots, she struck hard on the Pollard Rock on the Seven Stones Reef, between the Isles of Scilly and Lands End. Oil immediately began to spew out from the ruptured tanks. Not only was the ship aground on a hard rock, but her hull had been deeply penetrated in a number of places. Most of the oil spill damage affected the south western tip of Britain, but the following week even the French coast became seriously polluted. In the confusion, the UK Government had failed to inform the French authorities. Here, information about the accident was obtained from the master of one of the French fishing vessels in the area. Beyond all reasonable doubt, it was soon apparent that the liability rules of maritime law were hopelessly inadequate to deal with the potential damage represented by the new generation of tankers.
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T. Haugen
Torrey Canyon BP requested local tugs, fishing boats and a small coaster to assist and arranged for the Grangemouth refinery to provide large quantities of industrial detergents. Simultaneously, pumps, compressors and other equipment were airlifted to Cornwall in order to refloat the tanker. In the evening of the first day, naval vessels joined by chartered commercial vessels began to spray detergents in the hope that this would disperse the oil. Within hours of the grounding, Dutch salvage firm N.V. Bureau Wisjmuller was rushing its tug Utrecht to the area. The intention was to empty the damaged compartments with pressurized air, thus reducing the level of oil and water in each tank. The salvage expert, Hans B. Stal, hoped that he could refloat the ship off the rocks now that it had regained buoyancy. He had to take into
As a desperate last resort to stop one of the largest tankers afloat from polluting the coast of Brittany in France and Cornwall in Britain, aircrafts from the UK Royal Air Force and the Royal Navy spectacular carried out spectacular aerial bombing. But the cargo onboard the American-owned Liberia tanker would not catch alight and disappear. Bombed and broken, showing the explosion damage directly forward of the funnel, the cargo of 118,000 tons continued to leak out. The super spill ignited radical changes in international maritime law, in particular with respect to liability for oil pollution damage.
51
IMCO SAFETY FIRST!
account that sparks could ignite the potentially explosive mix of crude vapour in the tanks. Captain George King, manager of BPs shipping department in London, has in his book, A Love of Ships, (pp. 243-247) described the actions taken from that critical Saturday morning in March when a junior minister for the Navy, Maurice Foley, was ordered to Plymouth to coordinate the operation and to take political charge of admirals and generals. That same evening, Foley asked the Prime Minister Harold Wilson for GBP 500,000 (close to USD 1,4 million) to guarantee the supply of detergents and ships capable of spraying it. King was requested to accompany the junior minister by helicopter to the wrecked tanker in order to make a more accurate appreciation of the position. On Monday, two days after the accident, the 49-year-old vice president of Union Oil, Matthew Thompson, arrived in Plymouth and was also airlifted to the wreck. In Parliament, the Minister of Defence Denise Healey assured the nation that more than 20 ships would be on the job on Tuesday. That day, a heavy explosion in the stern was closely followed by a second explosion. At first, it seemed that the entire salvage crew had been miraculously saved. But then, Mr. Stal was found seriously injured in the water. He had been struck by wreckage that came like a projectile over the heads of the nearby crewmen to where he was standing. Thirty-six-year old Mr. Stal was rushed to a hospital in Penzance, but died before arrival. It was decided to evacuate all hands to a standby tug. The assisting vessels that were spraying detergents did some good, but not a great deal. The press reported that officials in Whitehall had suggested that the tanker should be towed far out in the Atlantic and sunk. But the government maintained it had no such right without the owners consent, and Union Oil would agree only if the company was paid the value of the ship, which was still regarded considerable, perhaps USD 10 million. The following Sunday, The Sunday Telegraph warned that the whole coast of Southern Britain was threatened by horrible, thick, black oil. The same day, cabinet members seriously discussed for the first time bombing the tanker. Such action had never before been taken in peacetime. On Monday, March 27, despite all human effort, Torrey Canyon died on the
52
IMCO SAFETY FIRST!
Seven Stones Reef, after breaking her back whilst four tugs were trying to pull her off the rocks. As the aft of the ship slided backwards, oil gushed from her torn hull. In the hope that the estimated 40,000 tons of remaining crude oil would be burnt off, eight Royal Navy Buccaneers and three RAF Hunters armed with bombs and rockets were despatched to destroy her. There was little success on the first day. The cargo disclosed obstinate reluctance to catch alight. The next day, napalm was used after some oil had been released by the high-explosive bombs. This worked better and managed to start a fire, which was visible from the mainland nearly 20 miles away. The fire was, however, extinguished a few hours later when the weather cleared up. New attempts were made, but the ship was now fast breaking up. On the Friday, the attacks were abandoned. Most of the oil left in the tanks had, by then, been burned. In the meantime, naval forces continued to carry out extensive spraying of the oil slicks with chemicals. Chemical and mechanical means were also used in an attempt to clean the large stretches of beaches in the area. According to the subsequent report from the UK government, 80,000 to 100,000 tons of the crude cargo had leaked out and polluted beaches of Cornwall, Devon and the Channel Islands. It took time before the French government reacted. After all, the wreck was located about 180 kilometres from its shore. But when Torrey Canyon broke her back and the hope of salvage was abandoned, the office of Georges Pompidou appreciated that a threat of serious pollution damage to French soil could not be discounted. But all the efforts of the government, people and available equipment, as well as a massive turnout of volunteers, could not prevent the coast of Brittany from being seriously polluted. BP, as charterers of the ship, had nominated Milford Haven as the terminal where the oil cargo should be discharged at an agreed time. The potential delay would be for the account of the owners. Moreover, the owner would be unable to use his valuable asset for more profitable purpose. To get the tanker to the discharging port on time and safely is what the master is paid for. An investigation the Board of Enquiry performed, set up by the Liberian government, ascribed blame for the accident to the captain. The investigators gave little attention to the possibility that there might have been something wrong with the ship itself and in particular with the steering mechanism. Captain Rugiati was found to have set an imprudent course in an effort to save
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1979: Betelgeuse 50 people killed
San Pedro
1976: Sansinena 9 people killed
1968: General Colocotronis heavy pollution
1968: Ocean Eagle heavy pollution
Major incidents 19681979 time and he alone had made the decision to go between the Isles of Scilly and Seven Stones. By blaming him, the board absolved the owner of actual fault or privity. The report could not have served Union Oil better had it been written by the companys own lawyer. Richard Petrow, in his book, The Black Tide, concludes that the Board thereby helped the owners and insurers save more than GBP 6 million (about USD 16,600,000). However, the captain had an outstanding record as a seaman. On that day in March, he had been on the ship for one year without leave. Without hesitation, he had stayed onboard Torrey Canyon to the last moment despite being pressed to leave earlier. He later explained that he was under pressure from BPs agents to reach Milford Haven as soon as possible. He had tried to alter the course, but had to give up due to several fishing boats in the narrow waters. One may speculate whether the Masters navigation error can be explained by fatigue or perhaps by stress to reach the terminal in time. In any case, Captain Rugiati lost his license and never sailed again. The oil spillage represented a quantity never envisioned before. The UK government reported that claims had been entered against the owner for some
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IMCO SAFETY FIRST!
GBP 3.25 million (about USD 9 million) for the cost of preventive measures. But figures for the damages Torrey Canyon caused differ. A study issued by the staff of the US General Accounting Office estimated the clean-up costs of the UK Government and France to be more than USD 16 million, and the estimated damage to private property, fishing and marine life exceeded that figure many times over. It was claimed that 50 percent of the bird population on the northern coast of Brittany disappeared. The oil later disappeared both in the UK and in France. However, the detergents injected were regarded to be a more lasting problem. Two and a half years after the accident, the International Group of Protection and Indemnity Clubs (the insurers) claimed that the action taken to stop the leakage was fantastic and hopelessly inadequate and increased clean-up expenses out of all proportion. The representatives of Union Oil had made every effort to save the ship and prevent the bombing. They had a responsibility to the underwriters and could not simply abandon the ship and claim full compensation. Later they argued that most of the damage was caused by the bombing of the stranded tanker by the Navy and the Air Force. The oil company had no assets in the UK and failed to appear in court as defendant. However, the lawyer of the UK government gambled that the companys sister ship, Lake Palourde, might call the port of Singapore. His legal mind opened a new jurisdiction when, by a fatal mistake of the Union Oil management, the tanker arrived in that harbour in July. Now Britain had something at hand and Lake Palourde was promptly arrested. The tanker was valued at some USD 17 million. The ship was released when a bond of USD 8 million was put up to cover the damages Torrey Canyon caused. The governments of the UK and France presented their claims in an American district court that, however, applied the limitation provision in the antiquated US Limitation of Liability Act of 1851. This meant that the exposure of Union Oil would be confined to the value of the vessel after the casualty. The tanker had sunk and the remaining lifeboat was said to be worth no more than USD 100. According to the 1851 act, limitations would be broken only if the damage was found to be caused by the shipowners privity or knowledge of negligence. The European governments in no way accepted the finding of the court view and appealed to the US Court of Appeals for the Second Circuit. Now they were more successful. Contrary to the findings of the Liberian Board, the appeal court concluded that the damages following the grounding were not necessarily caused by activities related to navigation, but could
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IMCO SAFETY FIRST!
be caused by Union Oils involvement in the original design and manufacture of the vessel. This meant that the claim for compensation fell outside the jurisdiction of the US Limitation of Liability Act of 1851. However, no final verdict was rendered, as the litigation was settled in 1969. An agreed compensation of about USD 8 million to 9 million was divided equally between England and France. The court proceedings were thereby discontinued. The owners had reason to be satisfied; the Liberian Board had dismissed the idea that there was any personal fault on their part, and the Court of Appeals had not reached any other final decision. Moreover, the insurance disbursement they received from the hull insurers for the loss of Torrey Canyon amounted to USD 8.25 million, the largest amount for a single loss ever experienced by The American Hull Insurance Syndicate. This amount equalled roughly the settlement agreed upon with the two governments. The only available asset from the ill-famed tanker is reported to have been one of the lifeboats worth USD 100. This is almost true, though not quite. When the pollution liability questions were discussed a year later, the representatives of the oil companies and the independent owners were unable to agree on an industry recommendation. The sub-committees chairman, a lawyer from BP, found the situation so impossible that he decided to withdraw from the chairmanship. As a consolation and as thanks for his energetic efforts, he was given a ships bell the bell of Torrey Canyon that had been recovered. The killing of fish, fowl and marine vegetation, the polluted beaches, and the damage on local economies started a discussion on liability for marine oil pollution damage. This would become a theme for discussions that would go beyond the century. Torrey Canyon became the symbolic warning of the threat to the environment represented by large tankers. Statistically, every feature seemed to be on a record scale the largest ship ever wrecked, the largest oil spill ever known, the largest hull claim ever presented. Subsequent to the grounding on the Seven Stones Reef, tankers and the pollution risk were brought into the public eye. For the first time owners of oil tankers were confronted with high-profile media attention all negative. The industry was made to understand how such an accident could present sensational material for the media, significant enough to alarm public opinion. Environmental issues became a part of the political agenda, and the tanker and oil industry found themselves in a new uncomfortable position.
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IMCO SAFETY FIRST!
Other incidents followed. In March 1968, two more tankers grounded, caused pollution and confirmed the potential threat from oil carriers. The Liberian tanker Ocean Eagle broke in two in the waters of Puerto Rico and caused heavy pollution of San Juan Harbour, whilst only four days later a Greek tanker, General Colocotronis, struck a reef off the Bahamas and polluted recreational beaches. The oil penetrated deep into the sand. Other tankers were disabled because of explosions. In the years that followed, it became clear that tankers were most vulnerable when the cargo tanks were empty, because the fumes are more explosive than the liquid. To prevent explosions, inert gas which contains less than five percent oxygen should be ducted into the empty portion of the tanks to prevent explosion. There were no mandatory regulations at the time that required such inert gas systems, and a number of tanker owners hesitated to spend money on such safety devices. One of them was Union Oil, which once more found itself in serious trouble when a stupendous explosion ripped its third tanker, Sansinena, apart and killed nine people and injured eight more. The fatal incident happened at the oil companys berth in San Pedro, California, where the 13-year-old tanker was to discharge a cargo of Indonesian crude oil. The ships mid-deck cabin was hurled into the air together with the occupants: The mate and a radio officer. Windows were shattered two miles away. Together with the unforgivable explosion of Betelgeuse in 1979, when 50 people were killed, the two accidents were contributory to IMCOs belated efforts to introduce mandatory requirements to install inert gas systems. The implementation was delayed nearly a decade.
Notes: On Torrey Canyon, see Welty & Taylor: Black Bonanza, New York. 1950, Richard Petrow: The Black Tide, London, 1968; E. Covan: Oil and Water London, 1969; Plymouth Laboratory: Torrey Canyon - Pollution and Marine Life, London, 1969; Crispin Gill, Frank Booker and Tony Soper: The Wreck of the Torrey Canyon, N. Mostert: Supership, New York, 1974; E. Nalder: Tankers Full of Trouble, New York, 1992; G. King: A love of ships, Hampshire, 1999; and Bradford Mitchell and Robert Dwelly: Touching the Adventures and Perils - American Hull Insurance Syndicate 1920 1970, New York, 1970.
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NEW CONVENTIONS IN 1969
4 New Conventions in 1969:

Tanker owners face pollution liability & intervention of coastal states
I. BACKGROUND
Limitation of liability has been regarded as essential to contain the exposure in potential risky business ventures. Ships and cargoes are exposed to weather conditions which human beings have no control over, and transportation of goods at sea has always been a particularly hazardous profession. It is arguable that limitation of liability has been a condition for growth of international trade through generations. The legal position of shareholders in joint stock companies might be seen as the basis for our capitalistic business society. In shipping, the origin of the limited liability seems to go way back to ancient Rome. Here, owners of ships trading to foreign shores often left it to a trusted person to take command of the ship and its crew. According to the law, the owner could be held liable for the damage caused by the master to third-parties. If the master was his slave or a family member, the owner could fulfil his obligations by abandoning the master to the damaged party. In doing so, he had honoured his obligation to pay compensation. This peculiar rule was apparently based upon a notion that nothing could cause damage beyond its own value. In the 11th century, an initiative was taken in France to collect judgements on
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maritime legal disputes. The collection became known as Rooles de Oleron. It is not quite clear to what extent the shipowners liability was limited under these rules. But 200 years later when the maritime law prevailing in the Mediterranean was codified in Consulato Del Mare, the shipowners exposure was limited to the value of his ship. When Venice, as the first case of extreme capitalism, matured into decay, it was outranked by the Dutch Republic. But the respective codifications formed the basis for further development of maritime law in Europe together with the rules agreed later just after the year 1400 by the Hanseatic League. In Denmark/Norway, the shipowners right to limit his liability was set out expressly in law from 1561. In 1734, Parliament passed this principle as the first English Act. It contained in its preamble the consideration that it is of the greatest consequence and importance to this Kingdom to promote the increase of the number of ships and to prevent any discouragement to merchants and others from being interested and concerned therein. A hundred years later, competition from ships under other flags was invoked as the main justification for the limitation principle. On the other side of the Atlantic, support for legal parity with other maritime nations was growing. The limited liability principle for shipowners was laid down in the US Limitation of Liability Act enacted in 1851. Absent from any privity or knowledge of any specific damage potential of the ship in concern, the shipowners third party liability was limited to the value of his interest in the ship plus the pending freight. The act should encourage shipbuilding and induce capitalists to invest money in this branch of industry. It would be to the benefit of the international shipping industry if the maritime law of the various seafaring nations could be harmonized and simplified. With industry support, an international group of respected maritime lawyers, the Comite Maritime International (CMI), founded in Belgium in 1897, provided their governments with various draft conventions suggesting unification of several aspects of the legal systems. CMI believed that maritime legislation should be declared with input from shipowners, merchants, underwriters, average adjusters, bankers and other persons engaged in the maritime trade. Full recognition of the advantages of an international liability system, which could contribute to equal competitive conditions, took considerable time. A quarter of a century passed before the first international convention on shipowners liability for damage to third parties was concluded in Brussels in
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1924. The liability was based on the size/tonnage of the ship in question. The limitation amounts were some eight pounds sterling per ton or, alternatively, the value of the ship plus 10 percent. For damage to people, the liability was set somewhat higher. The shipowner was exonerated of any claims if no fault or negligence could be shown on the part of the ship. After World War II, renewed efforts resulted in the International Convention on Shipowners Liability of 1957. This general convention on third-party liability covers both compensation for personal injury and compensation for damage to the property of third parties. Pollution damage as such was not specifically addressed. The first treaty to introduce a dedicated regime for damage caused by pollutants came about in 1962: The Convention on the Liability of Operators of Nuclear Ships. The 1957 convention continued to base the liability on negligence. The limitation rules could be invoked only when the damage was a result of the fault of master and/or crew. The compensation to be paid depended on the size of the ship and was limited to 1,000 Poincare francs (about USD 67 per net registered ton). A net ton equals a gross ton minus the space for the engine room. For personal injury, the liability limit was doubled. Under French law, the liability was linked to the custody of the vessel rather than ownership alone. Inspired by the French delegation, it was also agreed that the charterer, the manager and the operator of a ship were exposed to the same liability rules. But if the damage was caused by the responsible partys personal fault or privity, he became, in principle, fully liable. The Liability Convention of 1957 did not enter into force before May 1968. Thus, if a shipowner had failed to say that his vessel was not seaworthy or not in class, he would also risk that his insurance cover was revoked. At that point in time, the grounding of the Torrey Canyon had made it nonsensical as far as compensation for pollution damage was concerned. Following the Torrey Canyon disaster in March 1967, legal issues were included in IMCOs working agenda and an extraordinary Council meeting was summoned in May. It was decided to set up a Legal Committee to supply a paper on the traditional concept of the freedom of the seas with emphasis on a states access to intervene and protect their coastlines against a leaking tanker outside their territorial waters. A large majority of governments were convinced that shipowners liability limits were far too low to cover third- party pollution claims and to compensate governments for the clean-up costs. Thus,
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the committee should also reconsider the shipowners traditional legal right to limit his liability a principle confirmed in a convention passed only 10 years earlier, but at a time when pollution damage problems were given little or no attention. Governments were requested to assist the new committee by providing a summary of relevant national legislation and regulatory practice that could serve as a basis for future discussion. Furthermore, a questionnaire was sent to members to obtain information on major incidents of marine pollution in their territorial waters in the period from 1959 to 1969. But only a few governments replied. Even France, which had suffered badly from the pollution the Torrey Canyon caused, did not respond. Denmark, India and the USSR were among seven other countries with nothing to report. Norway did not seem to answer the questionnaire at all. Greece reported six minor incidents, four of which had caused no pollution damage at all. The interpretation of the term major incident obviously differed from country to country. The other 14 countries reporting back to IMCO were Belgium, Canada, Federal Republic of Germany, Hong Kong, Japan, Korea, Kuwait, Netherlands, Poland, Singapore, Spain, Sweden, Syria and the US. Among the 47 reported incidents, 21 occurred between March 1967 and July 1969. However, the most notorious oil spill so far was not from a tanker, but from the offshore oil-drilling rig the Santa Barbara. In January 1969, the blowout from the rig, operated by none other than Union Oil, spewed about a million gallons of oil about 3,250 tons into the sea between five and six miles from the Californian shore. Another two million gallons were lost over the succeeding months. The oil was dispersed over 800 square miles of ocean and 100 miles of coastline. Seepage was observed as late as October 1970, according to a report prepared for the US Federal Water Quality Administration. The blowout caused the same anxieties about the effect on the environment as Torrey Canyon. The same controversies about how to remedy the pollution damage came to light, including disagreement on the wisdom of applying chemical dispersants to the slick. There were heroic attempts to save seabirds, of which a great number died estimates vary between 4,000 and 6,000. This accident, and other spills to follow in American waters, prompted high pressure on federal and state legislators to deal with the environmental problem on home ground, rather than wait for an international agreement. A marine mammal expert at the University of Guelph in Ontario, Mr. David Aubin,
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noted the divide between public and scientific perceptions. He reported: Studies that found minimal effects (of the oil spill) were dismissed by the public as inadequate, whereas media reports were often overstated and sensational, and found little favour with the scientific community. It soon became clear that the intensity of news coverage of an oil spill could be predicted by the proximity of media centres to the scene.
Notes: The first international efforts to introduce unified rules on shipowners liability were taken long before 1957 and resulted in a convention of 1924. It entered into effect in 1931, but was not ratified by the important shipping nations and has been seen as a failure. There have been speculations that the reason was that it was conceived by France, not England the not invented here factor? Liability rules per se were left to national law. It focused on the limitation aspect. See Wu Chao, pp. 33 and 62-65.
II. AN INDUSTRY DIVIDED

Looking to public demand that victims of oil pollution should be fairly compensated, the industrys traditional limited liability system became full of peril. The industry was composed of two groupings: The oil companies and the independent tanker owners. In terms of economic strength, the many independent owners were not comparable with the major oil companies. The largest fleets owned by independent shipowners at the time included the Onassis group, Mr. Niarchos and Mr. Lemos representing Greece; Sigval Bergesen d.y.; Hilmar Reksten and Anders Jahre from Norway; A.P. Moller from Denmark; Chee-Jva Tung from Hong Kong; and Mitsui OSK, N.Y.K and Japan Line from Japan. Most independent owners, regardless of the size of their tanker fleets, came gradually to the conclusion that if no international agreement was reached on pollution liability, individual governments could be prompted to legislate unilaterally. IMCO seemed the lesser of two evils. The major oil companies were cargo owners, charterers and major tanker owners, as well. The policies of The seven sisters were traditionally against intervention of governments in any sector of their global activities. They prepared a third alternative that could work only if it was supported by the oil and tanker industry as a whole. Consequently, representatives of the independent tanker owners were invited to take part in preparing a private alternative compensation scheme. After a while, representatives of shipowners mutual insurance associations, the inter-
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national P&I clubs, were brought into the discussion. The aim was to form a voluntary international agreement offering better compensation to pollution victims through increased insurance coverage. The P&I Clubs presented their findings in a letter to IMCO from Annar Poulsson, the managing director of the Norwegian club, Skuld. Here it was stressed that the Torrey Canyon was the only major incident and that serious oil pollution incidents caused by tankers were rare. Their arguments were confirmed by the replies from the various governments to the IMCO questionnaire. Furthermore, one would have to take full account of the limited capacity of the insurance market. It was also argued that the clean-up after an oil spill could be undertaken at far less cost than had been expended in the Torrey Canyon case. Reference was made to documentation that disclosed that there were only two other tanker spills for which the cost had reached the liability limits of the International Convention on Ship-owners Liability of 1957. Out of 1,040 registered spills, the maximum oil spilled in any one incident except Torrey Canyon was 20,000 tons. With the same exception, the maximum single clean-up cost experienced came to USD 800,000. Against this background, tanker owners as well as cargo owners were in agreement that there was no reason to set aside the principles that shipowners liabilities for pollution damage should remain limited and based on fault. With the formation of IMCOs Legal Committee, one wondered whether CMI would play a less important role in the future. CMI, however, lived up to expectations. One of its sub-committees, chaired by Lord P.C. Devlin, President of the British Maritime Law Association, had in a relatively short time drawn up a new draft convention on compensation for pollution damage. As could be expected, the draft was based on traditional maritime law. After having been approved in Tokyo in the spring of 1969, the document was submitted to IMCO and became a basis for its further work. The International Chamber of Shipping (ICS) also had consultative status in IMCO. Members were national shipowner associations from a large number of countries. By and large, ICS supported the principles CMI promoted. Moreover, ICS had for many years contended that the larger tankers did not mean an increased pollution risk. Reference was made to the fact that most tanker accidents had happened in congested waters. Practically all of the pollution cases recorded had taken place at or very near port entries or near terminal facilities. In 1971, ICS again argued that there was no evidence that the increase in the size of tankers by itself has created a greater risk of polluting
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accidents. Indeed, to increase the size of tankers means that fewer ships are needed to carry the same amount of oil cargo and accordingly the risk is reduced. Among the independent tanker owners, there were strong voices claiming that it was the oil cargo that represented the pollution risk and not the tankers as such. Moreover, the oil industry had far deeper pockets than the fragmented tanker industry. ICS was therefore under obligation as a shipowner organization to promote the view of shipowners, it was argued. The view of the oil majors was that the shipowner, who was in control of his ship, was responsible for safe navigation. Owners should live up to their responsibility and accept to compensate victims alone if and when a pollution accident occurred. Consequently, the oil companies argued that any form of cargo liability should be rejected by ICS. Under these circumstances, ICS seemed to be of little help to either party. Before long, two new industry organizations came forward. The oil industry established the Oil Companies International Maritime Forum (OCIMF), while the independent tanker owners set up the INTERTANKO in Oslo, Norway.
Note: The 1962 Convention on the Liability of Operators of Nuclear Ships sought to make the operator of the nuclear-powered ship liable for any release of radioactivity regardless of whether the ship was at fault or not. Britain was the driving force in the drafting, and legislation was prepared in February 1964. In the fall, the Conservative Government lost the election, and the matter was dropped. Neither the US nor Russia has ratified.
III. THE DIPLOMATIC CONFERENCE BRUSSELS 1969

In the meanwhile, deliberations in the IMO Legal Committee had produced two new draft conventions: One on the pollution liability problem, the other on the coastal states right to intervene against polluting tankers on the high sea. Following an invitation from the Belgium Government, a diplomatic conference convened at the Palais des Congress in Brussels from Nov. 10 to 28, 1969. Albert Liar, head of the Belgian delegation and president of CMI, was elected president of the conference. Fifty-three countries were represented. Also present, as observers, were six governments and 11 organizations with consultative status, including ICS, CMI and OCIMF. A second committee, with the Secretary General of CMI, Dr. Walter Muller
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(Switzerland), as president, should deal with liability for pollution damage caused by tankers. This turned out to be even more controversial than the question of the intervention issue. On the first day, Mr. Liar invited comments upon procedural issues. How should the conference organize its work? But the President could not stop the head of the Canadian delegation, Donald Jamieson, Minister of Transport, who insisted to speak right away on the fundamental question for the conference, the responsible party. Referring to the documents sent to and distributed at the conference, Mr. Jamieson paid no attention to the plea from the chair that he was out of order. In his view, the documentation was off the mark. It stated: The striking feature in the documents was the lack of any allusion to the liability of the petroleum industry in Canadas opinion, pollution was mainly attributable to the nature of the substance carried and was only incidentally the carriers fault. Maritime law had always drawn a distinction between the cargo and the ship. the notion of joint enterprise applied also to marine pollution. Just as they shared the profits from carrying oil in bulk, charterers and oil companies ought likewise to share the liabilities inherent in that form of transport. The sharing of liability went hand in hand with the sharing of losses resulting from a joint act that caused damage. According to the principles in Regulation A of the York Antwerp Regulations, 1950, the cargo should contribute towards an adequate compensation for the losses suffered by the victim and that contribution should also serve to make good the loss which the victim suffered owing to the operation of the limited liability. His delegation accordingly proposed that liability for damage caused by pollution should be shared; the shipowner should be liable to a given figure, and the charterer liable for the balance. During the subsequent discussion, the Irish representative, J.N. McGovern of Irish Shipping Limited, said that: In the opinion of his country, from the point of view both of expedience and of principle, liability should be on the cargo. It was the cargo which caused the type of damage, not the ship, as was clear from the Torrey Canyon case. The cargo interest might include a variety of people such as the shipper, the receiver, or the owner for the time being of the cargo. The liability could not be placed on the owner, since ownership could
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change during a voyage The shipper, however, did not change and was a constant factor. The Irish Government had accordingly proposed an amendment embodying the principle that the owner should either identify the shipper or himself be deemed to be the shipper. The delegation of the Netherlands, Mr. van Rijn Alkemade, wished to associate itself with Ireland. In the paper submitted to IMCO prior to the Conference, the Netherlands had pointed out that the risk created by massive transport of oil in bulk was not in the first place created by the carrier, but by the technical development in transportation, made primarily in the interest of the oil industry as a whole. This industrial risk should be borne by the oil industry rather than by the carrier. Mr. L.M.S. Rajwar of India pointed out that the big international oil companies, which had the resources to build up a fund to meet the claims for oil pollution, had the maximum ability to shoulder the burden of liability. He therefore proposed that the major burden should fall on the oil companies. The carrier, of course, would continue to shoulder its limited existing liability based on fault. Mr. Ulf Nordenson of Sweden echoed the support for cargo liability. He stated that oil pollution was not a typical maritime risk, but one created by the vices of the product itself. Mr. M.J. Kerry of the UK eloquently presented the opposite view, that liability should be imposed on the shipowner alone with no involvement of the owner of the oil cargo. He stressed that unlike the shipowner, the shipper and the cargo owner could not exercise any control over the cargo while it was on the high seas. Furthermore, it was difficult to identify the cargo owner, particularly as the cargo might change ownership during the voyage. In any case, the preparatory work on imposition of liability on the cargo was not sufficiently advanced to make it possible for a convention based on that principle to be drawn up in the short time at the disposal of the conference. The UK government did not however, rule out the possibility of further investigation into potential ways of providing for damage not covered by maritime law as amended by the Convention. However, it regarded that as something which might be done at a later stage. The US, France and a number of other delegations had strict liability on the shipowner as their first choice. The French delegations spokesman, Monsieur
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Claude Douay, (Conseiller Juridique du Secretaire general de la Marine Marchande), became his countrys most active voice on legal matters in IMCO/IMO for many years. He strongly stressed that compensation must be made available also in cases where the ship could not be blamed for the accident. If the liability continued to be based on fault, the shipowner may claim that no fault is committed, with extensive litigation as the result. Such cost should not be borne by the victim. Thus: It was essential to provide higher compensation which was guaranteed and always available. Liability must therefore be based on risk, not on fault. Whilst identification of the operator could cause severe problems, the identification of the registered owner was claimed to be unproblematic, and Lord Devlin of the UK, also speaking as the chairman of CMIs committee, favoured the simple solution. In one intervention on the subject, he stressed that: The best channel for providing compensation was one which was simple in application, made use of existing procedures and offered an incentive to prevent casualties. Mr. Douay, in a lengthy statement, claimed that: Shipowners strict liability would be in accordance with the ordinary law applied to carriage and with ordinary maritime law, and would enable the Convention under consideration and the 1957 and 1924 Conventions to be applied simultaneously in cases where pollution damage was accompanied by ordinary damage. Several maritime countries, such as Japan, Liberia, Norway, the UK and the USSR and others shared the view that liability on shipowners should be maintained on the traditional fault basis. In a vote on a provisional basis at the end of the first week of the conference, a clear majority supported the view that the shipowner should be liable for pollution damage. But the delegations of Belgium, Denmark, Finland, Greece, India, Ireland, the Netherlands, Portugal, Sweden and Switzerland all voted in favour of the Irish view that strict liability on the cargo should be the first choice. After three weeks of heated discussions and voting article by article, a compromise text was worked out. The traditional concept of liability based on fault was abandoned. Thus the tanker owner became obliged to pay compensation for the damage caused regardless whether the pollution had occurred due to negligence on the part of his ship or not. There were, however, a few exceptions. The most important were that the
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owner was exonerated if he could prove that the damage was caused by: an act of war or wholly by a natural phenomenon of an exceptional, inevitable and irresistible character or damage caused with intent by a third party or failure of governmental authority to maintain navigational aids. (Article III 2) On the other hand, shipowners were allowed to continue to limit their liability. The protection afforded to victims in terms of compensation, was further to a proposal from France set at 2,000 Francs per ton according to the size of the tanker in question, or a maximum 210 million francs. These levels, which were agreed by 35 votes to three with three abstentions, corresponded to the capacity of the insurance market. The 2,000 Francs was twice the amount available for property damage under the 1957 general liability convention and the USD 14 million were estimated to be very close to the damages Torrey Canyon caused. The right to limitation assumed that the pollution incident was not a result of the shipowners personal fault or privity. If he was personally to blame, the shipowner would face an unlimited liability. From day one, it was clear to everybody that a new instrument which imposed a strict and higher liability on the shipowner would not be workable unless ways were found to enable him to obtain insurance against the potential claims for pollution damage. Norway had argued that insurance coverage differed greatly according to the nature of liability. To get the highest coverage in the market, any new liability for pollution damage should be based on fault. But the spokesmen of France and the US in particular insisted that the convention would be unacceptable and unworkable unless it was based on strict liability. Moreover, strict liability had to be combined with compulsory insurance coverage. With no such principle, a victim might be faced with an insolvent debtor. The French representative pointed out: There would also be such things as flags of convenience, and people using these would be able to evade their responsibilities, to leave compulsory insurance out of the convention would be tantamount to saying there should be no convention. Also, Ireland maintained that compulsory insurance would be an indispensable ingredient in the liability system to be introduced. Compulsory insurance was the second innovation of the new convention. By 30 votes to three with three abstentions, it was decided that all tankers carrying more than 2,000
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tons of oil in bulk as cargo should be required to take out insurance and carry a certificate to confirm that insurance was available. Marine liability insurance had traditionally been placed by shipowners with their P&I clubs on a mutual basis. Cooperation with the clubs was accordingly seen as a must, and the P&I representatives played a key role before and during the conference. One insurance aspect of particular importance to the clubs was to maintain the established pay-to-be-paid principle. The rules of the P&I clubs did not allow a victim to claim compensation directly against the shipowners club. The shipowner had traditionally been primarily liable to the claimant, but was indemnified by the insurer in respect of claims he had paid. Indemnification based on this well-established principle, based on English common law, was seen as a cornerstone for the whole mutual marine liability system. In the next round, after the shipowner had paid up or satisfied the claimant in some other way, the shipowner would turn to his club to be re-imbursed. In other words, there was no direct action. Most P&I clubs were domiciled in London, and it was the UK delegation that spoke most warmly in favour of pay to be paid. Mr. Kerry of the UK stressed the importance of avoiding direct recourse to the insurer. That was not in order that the insurance company might avoid payment, but because if the claimant were to go to the insurer directly, the insured party would lose all interest in defending the case, the result of which would be to make it more difficult for the insurer to defend himself against frivolous claims. Insurance would thus become much more expensive and the capacity of the market would tend to shrink. Should direct action be adopted in other insurance markets, insurance cost would not only increase generally, but also make it more difficult to obtain, it was argued. Professor K. Spiliopoulos of Greece was one of many who could not accept this view. In his defence for the new principle, he pointed out that in view of the fact that the Committee had accepted the principle of compulsory insurance, it must also accept direct recourse so that the victims could be adequately protected. Mr. McGovern stressed once more that direct recourse was essential. The main reason was that no funds otherwise might be available because of the
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many one ship companies which had limited funds. He could not agree with the view Mr. Kerry expressed that the insured party would take no interest in the claim, because that party would still have an interest in the cost of his insurance premiums, which was directly related to the claims he made. The direct action principle was then approved. The victims right should not depend upon the relations between the insurer and the insured. Other insurance aspects were also discussed at length. The conference decided that the insurer could invoke the liability limits and the same defences as the shipowner was entitled to. The insurers should be exonerated if the damage was caused intentionally by the shipowner and, finally, they were entitled to limit their liability if the incident was a result of the owners actual fault or privity. The victim of pollution damage had to claim compensation within three years of the date when the pollution damage occurred. His claim was otherwise extinguished. It was agreed that claims for pollution damage could not be directed against servants of the owner or any of his agents. This means that even when at fault, the servants and agents were immune against compensation claims for pollution damage. Such immunity was not provided for other parties. Hence victims might pursue claims against such other parties including charterers and cargo owners outside the conventions under ordinary national law. Finally, the shipowners right to recourse against third-parties and claim compensation under general law was expressly confirmed in Article III in fine. In summary, the liability deliberations may be said to have resulted in a compromise tanker owners would have to face a strict no-fault liability, combined with compulsory insurance, but were allowed to limit their liability at fixed monetary levels. The USD 14 million ceiling obviously favoured the largest tankers, as it meant that the liability increase based on the tonnage of the tanker stopped at approximately 200,000 dwt. But a large number of delegates realized that the compensation from shipowners now established provided only insufficient compensation. These considerations would eventually lead to a supplementary agreement regarding contributions from the cargo interests. But at this stage, the time for the conference was running out. Aside from the key provisions on liability, the Convention needed a framework, meaning that certain key concepts had to be defined. The target was oil tankers. Thus ships were defined as ships that actually carried oil in bulk as cargo. In other words, only loaded tankers. This meant
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that a tanker on its ballast voyage with no cargo onboard was not covered by the convention. Pollution caused by leaking bunker tanks from a tanker in ballast would be treated in the same way as bunker oil leaking from a dry cargo ship and would not entitle victims to compensation under the new rules. Warships and noncommercial ships on governmental service were also excluded. The scope of the convention was further limited to persistent mineral oil, including the bunker oil in a loaded tanker (such as crude oil, heavy diesel oil, fuel oil and lubricating oil). Non-persistent oil and light products were excluded, as they were believed to evaporate or be eliminated by nature itself. But whale oil was included in the definition further to a proposal from the Japanese delegation. Rikiwo Shikama explained that whale oil was also carried in bulk and had the same persistence and viscosity as heavy oil. The definition of oil is inextricably linked with the definition of pollution damage. Pollution of the environment affects everybody. It is an event whereby substances are introduced into the environment that adversely affect the balance of nature or the well-being of people in general. The draft definition of pollution damage submitted to the Conference was narrower. Its aim was to provide a clear framework for compensation to be paid for the damage caused by the escape or discharge of oil from tankers. From recent experience, the delegates knew that the spreading of chemicals to alleviate the effects of an oil spill had caused considerable harm to life in the sea. In the debate about an appropriate wording, the German delegation argued that the party responsible for the pollution damage should also be made responsible for the loss of marine life caused by any preventive measures. This was agreed, and the resulting definition of pollution damage read as follows:
Portrait
Per Gram
Per Gram was the Managing Director of the Northern Shipowners Defence Club in Oslo. He was an active participant in CMI, Bimcos Documentary Council and Chairman of the Documentary Committee of INTERTANKO from its inception in 1974 until his death in 1984. He was ahead of his time when he in this capacity initiated a close cooperation with Chase Manhattan Bank to find a solution to the problem of missing bills of lading in ports; a problem which exposed shipowners to enormous financial risks. An electronic solution was presented to the industry but failed to obtain sufficient support. Also noteworthy is his work for Scandinavian tanker owners to present a solution that would enable governments to realize the resolution passed by the IMO Conference in Brussels in 1969 to establish an international Fund which could top up tanker owners liability for oil pollution damage.
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Loss or damage caused outside the ship carrying oil by contamination resulting from the escape or discharge of oil from the ship wherever such escape or discharge may occur, and includes the cost of preventive measures and further loss or damage caused by preventive measures. By referring to contamination, the convention eliminated damage caused by an explosion or fire related to an incident. Some delegations felt that this limitation was most unfair. France had, for example, in a submission to IMCO, stated that It would be immoral not to compensate victims in cases of explosion or fire causing loss of life and resulting from an escape or discharge of oil. In her book Pollution from the Carriage of Oil by Sea, (p.48) Wu Chao argued that the option clearly made pollution law look like an extravagance, because bodily injury suffered by man would be treated less favourably than damage to the environment. It is difficult to not agree. With the new limits, CLC doubled the amount of compensation available under the 1957 convention on the shipowners general liability. This meant that the compensation for damage by oil would exceed the compensation for a dead seaman resulting from other shipping accidents. The fact that damage to the environment was given such generous compensation compared with bodily injury has been explained by the intervention of the media and the resulting public pressure. Such considerations may, however, be rather rash, as catastrophic accidents should not be swept away, even if damage to people generally may be given priority. CLC 69 would be applicable only when the territory (and the territorial sea) of a contracting state is contaminated. Pollution damage on the high seas was excluded despite the strong argumentation from Canadas Mr. Max Wershof, who claimed that there were places outside the territorial sea where damage to fishing interests could be catastrophic. A clear majority agreed, however, with Mr. Douay, who reported that a working group, which had dealt with the problem, did not want to reopen this question, as damage occurring on the high seas was, as a rule, relatively small compared with damage to national territory or in the territorial sea. The French spokesman was one of the leading and most engaged of those at the Conference and had also been so in the preparatory discussions within IMOs Legal Committee. He spoke very fast but also very clearly. In the cor-
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ridors of the conference hall, the discussion of possible compromises was the ever-recurrent theme. In addition, the speech-making capabilities of Mr. Douay were also frequently commented upon. Chatting over a cup of tea, a blond, robust, but smart interpreter was asked how in the world she managed to translate Mr. Douay so efficiently. It sometimes even seemed that she was ahead of him, Captain Holt of the Norwegian delegation said to her. Well, she replied, you know I have heard him so many times in London, that I have a pretty good feeling for what he is going to say!
Notes: The Official Records of the International Legal Conference on Marine Pollution Damage, 1969, printed in London 1973, provide a comprehensive report (819 pages) on the participation, documentation and deliberations by the IMCO Conference in Brussels from Nov. 10 to 29, 1969. See in particular the following pages in the Report: pp. 7, 8, 49-52, 60, 79, 84, 85, 100, 102, 185, 198, 199, 439-40, 537, 623, 624, 626, 632, 633, 635, 638, 639, 643, 647, 703-707, 713, 730-738, 748, 749 and 761. Ref French comments p. 446. The Records pp. 36-49 also contain the text of the IMCO questionnaire sent out to member states asking them to report spills as well as the replies. See also the review of subsequent spills in Tanker Spills Prevention by Design issued by the National Research Council, Washington, D.C., 1991, pp. 16-19. The dollar figures are the approximate equivalents of the CLC figures that were expressed in gold francs. The International Group of P&I clubs includes 13 underwriting clubs that provide liability coverage for about 90 percent of the worlds ocean-going fleet. Each club is a non-profit entity providing coverage for shipowner and charterer members against third-party liability. The members, who represent all maritime transport, control the clubs activities through a committee elected by the membership. The insurance coverage provides protection against a wide range of risks such as pollution damage, injury to the crew and passengers, cargo loss and damage. The clubs also provide advisory services.
IV. THE CARGO RESOLUTION

What about the suggested supplementary regime sponsored by the cargo owners? The United Arab Republic had prepared a draft resolution presented by Mr. A.A.K. Mohamed suggesting that some form of supplementary scheme in the nature of a supplementary Fund is necessary to ensure that adequate compensation will be available to victims of large scale pollution incidents but that the time available did not make it possible to give full consideration to such a scheme. A draft Convention to be submitted to an International Conference to be convened, if possible, in 1973. Also, the Netherlands followed up the comments submitted to the conference where it, amongst other things, was stated:
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A solution placing liability on the cargo, if this could be worked out satisfactory, would probably meet with less difficulties than one putting the burden of strict liability on the carrier ... Whereas it is generally accepted in the nuclear field that liability should attach not to the carrier but to the operator of the nuclear installation who manufactured the obnoxious material, it is equally appropriate that in the field of the oil industry, liability should rest on producers, owners or receivers of potentially obnoxious cargo. Because of the widespread sympathy for shifting the burden, or some of the burden of compensation to the oil industry, hectic meeting activity outside the conference rooms finally produced results. In his capacity as a prominent figure both within CMI and the influential UK delegation, Lord Devlin became the key person in the efforts to find a solution that the delegates could live with. Several suggestions were outlined to him by Swedens Mr. Nordenson, who co-operated closely with Professor Allan Philip of the Danish delegation, as well as the delegations from Finland and Norway. On the Nov. 24, a draft resolution was presented by Denmark, Finland, Norway and Sweden proposing that an international oil pollution compensation fund, financed by the oil industry, should be established. After consultations, the draft was withdrawn and a new amended draft to the same effect appeared the following day. Professor Allan Philip, who introduced its text, explained that the sponsors had tried to combine their earlier draft with the one from the United Arab Republic. The new draft was meant to be a compromise. The sponsors had voted for the introduction of strict liability on the shipowner, as the UK suggested, despite the fact that several other countries had disagreed. In an effort to obtain satisfaction for the victim of oil pollution damage, the sponsors hoped that other delegations would now reciprocate by voting for the draft resolution. Mr. Scheffer, head of the delegation of the Netherlands, expressed his support for the precise text of the Scandinavian resolution. So did a number of delegations, including the USSR, Germany, Liberia, India and others. The delegations of the US, France, the Federal Republic of Germany, the UK and others then expressed that whilst they all preferred the compromise proposal from the United Arab Republic, they could also support the Scandinavian proposal. Lord Devlin went along and declared that: On the understanding that the delegates were free to put forward any ideas for a solution and were at present committed to none, the UK delegation welcomed
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the idea of entrusting the task to IMCO and hoped that its efforts would be successful. The resolution was thereby agreed on. IMCO was requested to convene not later than the year 1971 and the International Legal Conference to consider and adopt a compensation scheme to be organised by an international fund. IMCO was charged with preparing a draft for a supplementary convention. In its work, one should take into account as a foundation that victims should be fully and adequately compensated under a system based upon strict liability. The main function of the Fund should be to compensate victims who could not obtain full compensation for pollution damage under CLC 1969. However, there was also an extra provision to the effect that the Fund should in principle relieve the shipowner of the additional burden imposed by the present convention. The implementation of this last part of the controversial resolution would prove to be strongly opposed by the international oil companies in the years ahead. The Norwegian delegation to the 1969 Conference included representatives of the national shipowners association. On their return, the Norwegian Shipowners Association decided to set up a committee to prepare the ground for a realization of the Fund Resolution. The new committee was chaired by one of the delegates, Per Gram, who was an internationally recognized expert on maritime law. The committee, which after some time became known as the Fund Committee, worked closely with its government and fellow associations in the other Scandinavian countries in order to present a viable scheme by 1971.
Note: The author was a delegate to the 69 Conference, and later undertook the job as secretary to the committee mentioned.
V. THE INTERVENTION CONVENTION

Whilst the discussion in Brussels in November 1969 on pollution liability in Committee II of the Conference proceeded, Committee I considered the draft on the public law aspects. This draft was designed to permit Coastal States to take steps to combat the pollution of their shores even beyond the limits of their territorial seas. Under international law, the right for the UK government to intervene
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against a foreign tanker outside the three-mile territorial waters limit, including bombing the wreck, had been questionable. In many quarters, it was felt that the action taken by the UK government in March 1967 could be seen to have been a radical departure from the traditional principle of freedom of the high seas and could establish a dangerous precedent in international law. But with the growing number of large tankers, it was unlikely that the Torrey Canyon incident would be an isolated event. Soon there might be a need for a coastal state to act against a foreign vessel to protect its shores against an imminent threat of pollution. The catastrophe galvanised the desire for an agreement. Prime Minister Wilson was at his cottage on the Scillies for his traditional holiday that Easter morning when seas were rocky and Torrey Canyon grounded. He later warned the owner that the tanker would not be allowed entry in to UK territorial waters. Nor would other Channel States wish the giant ships welcome. Wilsons statement was widely interpreted as a strong signal to the owners to give up the tanker to permit the Air Force and the Navy to destroy her. After eight days, it became clear that the ship had broken its back. The subsequent decision made two days later to bomb the wrecked Liberian tanker was widely criticized. The shipping industry was concerned, and the French government made no secret of its view, that the bombing added to further pollution of the French coast. At the 1969 Conference, a special committee, with George Maslov of Sovinflot, USSR as president, had been given the task of working out an international agreement embodying acceptable principles and ways for Coastal States to prevent or mitigate oil pollution damage arising from a tanker in distress. In this forum, the delegation of the UK argued that its actions in March 1967 were justified because of the principle that every coastal state was entitled to exercise the right of self-protection. A clear majority of the governments present supported this view, but considered it necessary that the right should be most carefully worded. After nearly three weeks of discussion, participants reached agreement. Governments should be allowed to take action to end serious pollution threats to their coastline when the accident occurred outside their territorial waters. Measures could be taken on the high seas as may be necessary to prevent, mitigate or eliminate grave and imminent danger to their coastline or related interests from pollution or threat of pollution of the sea by oil, following upon a maritime casualty or acts related to such casualty, which may reasonably be expected to result in major harmful consequences. The scope of the new instrument named International Convention Relating to Intervention on the High Seas in cases of Oil Pollution Casualties
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of 1969 was not confined to tankers, but applied to all seagoing commercial vessels that represented a grave and imminent pollution threat. The Convention entered into force in 1975.
Notes: In 1973, IMO adopted a protocol for the Intervention Convention whereby the right to intervene was extended to casualties involving substances other than oil when they are liable to create hazards to human health, to harm marine life or to living resources in the sea. To assist coastal states, a list of the relevant substances was worked out and agreed upon. The Protocol entered into force in 1993. In 1996, the list was revised and entered into force the following year. See Z. Oya Ocayir: Liability for Oil Pollution and Collisions pp. 175-177.
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COMPENSATION FOR OIL POLLUTION DAMAGE INTRODUCED FOR THE OIL COMPANIES
5 Compensation for oil pollution damage introduced for the oil companies
I. THE 1971 CONVENTION
IMCOs Sir Colin Goad, who had become Secretary General in 1968, left Brussels with the challenge to work out a scheme that would provide an oil industry-financed fund that would secure extra compensation for pollution damage. The Resolution required that the preparatory work had to be finalized within two years. Since 1969, representatives of the industry had presented their private compensation schemes to IMCO that would, it was argued, serve as intermediate solutions until the governmental instruments could be implemented. The P&I clubs had been involved in the preparations. A most important participant was the recently established Oil Companies International Forum (OCIMF). The ICS thereby soon came between a rock and a hard place as independent tanker owners had responded by setting up INTERTANKO. Independent tanker owners with large fleets had one by one been subject to effective lobbying by the major oil companies. They were persuaded to support a scheme called Tanker Owners Voluntary Agreement concerning Liability for Oil Pollution (TOVALOP), to be administered by the International Tanker Owners Pollution Federation, Ltd. in London. The scheme was signed in March 1969 by the seven major oil companies (the seven sisters) and was meant to provide compensation to governments for clean-
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up costs and damages tankers caused. The liability was based on fault in line with traditional maritime law. Shipowners recognised that the governmental procedures to ratify international instruments were slow. Such delays might result in worldwide frustration and lead some governments with long coastlines to work out their own legislation. The consequence of this scenario would be most uncertain. Hopefully the private schemes would prevent unilateral action. The shipowners liability under TOVALOP was originally limited to the lesser of USD 100 per gross ton or USD 10 million per incident. The resourceful oil industry was moreover in a position to present a new supplementary scheme, Contract Regarding an Interim Supplement to Tanker Liability for Oil Pollution (CRISTAL). The signatory oil companies that represented most of the oil transported by sea agreed to provide supplementary compensation. The oil scheme intervened, however, only in very few cases, and the compensation paid never exceeded USD 30 million per incident, i.e., the difference between the aggregate amount of compensation available from TOVALOP and all other sources. One of the many conditions for rendering compensation was that the tanker that caused the spill was a member of TOVALOP and that it carried a cargo a CRISTAL member owned. According to one oil industry official, the intention was: to defer governments from legislating unilaterally in the first place, but, if this could not be done, then at least to try to persuade them by example to legislate sensibly.
Notes: Many documents used as sources for this book use only first initials for peoples names. Thus, first initials were used here when the full first names were not available. The International Chamber of Shipping (ICS) is based in London and is the association of national shipowner associations around the world. It represents the interests of all forms of shipping: Dry bulk carriers, tankers regardless of whether the owner is an oil company or independent, passenger ships, container ships and liner ships. A major focus of ICS is IMOs work to promote safety and protect the marine environment. It has had consultative status in IMO since this organisation was set up in 1958. The seven sisters was the popular name for the major oil companies at the time. These giant corporations included Exxon (or Esso), Shell, BP, Gulf, Texaco, Mobil and Chevron (Socal). See Anthony Sampson: The Seven Sisters, 1975. Wu Chao, pp. 115-128, sets out an historical introduction to CRISTAL. See the oil industry representatives comments on TOVALOP/CRISTAL in the US General Accounting Offices GAO/ID-83-19, Feb. 3, 1983, pp. 7 and 9.
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II. NEW INCIDENTS

Whilst the preparations for the next IMCO conference went on, the mass production of super tankers continued, and new oil spills caught the attention of the media. In 1970, the tanker Antonio Lavalleja grounded and spilt 38,000 tons of crude in Algerian waters, whilst the Norwegian five-year-old tanker Polycommander burst into flames, spilling 16,000 tons of oil in Spanish waters and killing 23 crewmembers. After a collision the same year between two other crude carriers - Allegro and Pacific Glory in the British Channel - the cleanup operation was undertaken at low cost and claimed to be perfect. But the liability limitations of CLC69 were exceeded when a third tanker, the Arrow, stranded in a cold-water environment off Nova Scotia. The belated attempts were not more effective than in the Torrey Canyon case. The most serious incident happened, however, in February 1971 when the Liberian tanker Wafra grounded and spilt 62,000 tons of crude due to engine room failure off Cape Algulhas, the southernmost point of Africa. A single tank in a super tanker had a larger cargo-carrying capacity than an old-fashioned T-2 tanker could hold all together. Moreover, because of economic considerations, the super tankers were built with a thinner and less robust steel skin than in the past. Wafra was owned by an American oil company affiliated with Getty Oil and caused the largest spill since Torrey Canyon. The crew piled mattresses, planks, etc., into the cracks in the hull in a desperate effort to stop the leaks, but in vain. The water rose and destroyed the tankers propulsion power. The area where the accident occurred was one of the principal breeding grounds for birds and penguin species of the Antarctic. Volunteer workers from Cape Town saved 1,000 penguins cleaning the sea birds of the oil that clogged their feathers. The public as well as the industry had then already been rocked by mysterious explosions on board three new VLCCs all within a period of 18 days. Marpessa, the largest vessel ever lost owned by Shell, London exploded and sank off Senegal on her maiden voyage. Two men were killed. Two more lives were lost when a second Shell tanker, Mactra, exploded in the Mozambique Channel. Finally, the Norwegian super tanker, Kong Haakon VII, owned by Hilmar Reksten, met her destiny after an explosion off Monrovia on Africas west coast, but with no loss of life. These two disabled tankers blackened by fire nevertheless managed to reach port having suffered less critical weakening of their structures than the Marpessa.
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The tankers in question were all returning to the loading area in ballast condition, and the explosions seemed to have occurred whilst their tanks had been cleaned by mechanical rotating water guns. Whole deck areas of the tankers, 400 metres long, were ripped off by the explosions as though attacked by a giant can opener. Questions were asked about whether the explosions were connected with discharge of static electricity caused by the cleaning procedures. Within the industry, every effort was made to find the reasons for the disasters, and IMCO was presented with new problems to be studied in its technical bodies. Eventually the discussions resulted in requirements for the installation of inert gas systems in the tanks for tankers over a certain size.
Explosion in large tankers

A personal experience by Sven Moestue: In the summer 1969, the Norwegian tanker Silja, 95.000 dwt, collided outside Genova, Italy, with the French liner vessel Ville de Majunga. The collision caused a series of explosions onboard the Norwegian tanker; she sunk six minutes afterwards with the loss of most of her crew. I wondered what caused this. Did it mean that all large tankers were dangerous? I had several clients with similar and even larger tankers. As claims a representative in Norway for the UK Club, I became involved in the settlement for loss of lives. Ville de Majunga was entered in the UK Club and Silja in Gard. The French vessel did have the right of way, but was held partly to blame for having failed to blow a warning signal, as required by the navigation code. According to an international agreement, each vessel had to pay 50 percent of the loss of lives, regardless of the degree of blame. A settlement was agreed amicably. I started to study the possible cause of these dramatic explosions. My brother, an oil engineer with the Esso (Exxon) refinery in Norway, gave me some valuable information: He explained that there must have been an explosive atmosphere in the tanks after discharge in Genova. To create such an atmosphere you need only four percent to six percent oil or gas. The rest is air. Empty tanks are especially dangerous with larger tankers, as the larger content of air makes them prone to having an explosive atmosphere.
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I learned about the fire triangle: To create a fire or explosion (rapid fire), you need three elements: 1) oil 2) air 3) ignition source Loss prevention onboard tankers had focused on eliminating the ignition sources, but what if a collision caused the ignition? Did this mean that large tankers could not collide with empty tanks? Obviously. This was clearly demonstrated by the Silja accident. How could we eliminate this risk? We cannot take the remaining oil away from the tanks, so the answer must be to take away the air. It turned out that the industry had already found a system for blowing air out of the tanks and replacing it with inert gas nitrogen from the exhaust boilers or from separate inert gas boilers. BP used this system on all their tankers. This was the obvious answer to eliminate the risk. I proceeded to warn all my clients with large tankers, explained my findings and urged them to put in the inert gas system. The response was good everywhere except with my biggest client: Hilmar Reksten. The ownership had recently changed Hilmars technical director. The outgoing director had ordered the inert gas system for all the ships, but the new director had cancelled the order. My message was most unwelcome. We were on collision course, and I had to tread very carefully. He decided to eliminate the collision risk by filling the wing tanks with ballast water. Early in December 1969, Shells Marpessa, 235,000 dwt, exploded and sank. The vessel was doing tank washing at the time. High-speed water hoses were used to clean the tanks for remaining oil. It was a common procedure at the time. I got in touch with my brother again: Could the tank washing create an ignition? Yes, the oil industry had a long experience with static electricity. Sudden explosions had occurred when oil was pumped too rapidly through the line. Bombarding the remaining oil with high-speed water could very likely be the cause of the explosion. My principal client, Hilmar Reksten, called. He was quite upset by the loss of
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Marpessa. He had several similar ships. What was happening? I had to give him the story. Had I written a letter on the subject? No, I explained that the matter was a bit delicate in-house. He ordered me to write a letter explaining everything I knew about this matter, which I did. Ten days later, his own Kong Haakon VII and Shells Mactra exploded on the same day, both doing tank washing at the time. Kong Haakon VII was saved because the first explosion came in the centre tank and spread to the wing tanks when the ballast water had been emptied. Thus she was not cut in two pieces, but the damage was extensive. I was called in together with the shipbuilder to discuss the matter and the repairs. The shipbuilder told me that the owners of Silja, having two large tankers on order, had turned down the inert gas system. After hearing my story, he said he would order the inert gas system for all the new buildings at his yard. The international press was alerted, and Shell called a meeting at the Shell Theatre in London. Hilmar Reksten asked me to attend together with its technical staff. Prior to the meeting in Shell Theatre, we had meetings, first with BP alone, and then jointly with Shell and BP. During the first meeting, there was total agreement about the cause of the accident and the remedy to eliminate the risk. During the Shell meeting, it was different. Shell said that they had developed a blowing air system to avoid having an explosive atmosphere. The explosions on Marpessa and Mactra were caused by the crew not following their instructions. I said this theory could not be right and urged them to convert to the inert gas system. This was a question of pride and money. They had 20 ships that needed the system installed. They elected to stick by their blowing system. BP said nothing. After the meeting, I asked BP why they had not supported me. They replied like well-behaved civil servants: Shell has lost two of their ships. We did not want to put salt into their wounds. The meeting in Shell Theatre was a big to-do, where Shell explained to the world press that they had done nothing wrong. Their blowing system was good if operated properly by the crew. They would now give more specific instructions to avoid similar accidents. Quite a number of tanker owners understood that the inert gas system was
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the right answer and acted accordingly. One leading underwriter in London gave a premium rebate for tankers with the inert gas system. He was highly criticized by his colleagues. The feeling was that this was a matter for owners and classification societies. The matter was discussed in the International Chamber of Shipping with an opinion of making the system mandatory. Shell refused to agree, and the mandatory requirement was delayed for 10 years, up to 1980. My relations with the Hilmar Reksten ownership soured after the Kong Haakon VII accident, and two years later I lost contact with them. (For me this was an element of luck. I developed other business, whilst the ownership went bust after the oil crisis in 1973.) Several years later, the Norwegian owner Sigval Bergesen d.y. lost contact with the 230,000 dwt ore/oil carrier Berge Istra. Two survivors were picked up from a raft weeks later. They reported that the vessel had exploded. Laden with iron ore, she went straight down. The two survived because they were painting on deck near to the life raft. The vessel had the inert gas system installed, but this had been turned off as they were doing some welding on pipes in a so-called gas free wing tank. Some years later, Sigval Bergesen d.y. lost contact with the sister ship Berge Vanga, also carrying iron ore at the time. Here there were no survivors. We can only assume that the story is the same, because the vessel went down so quickly that no signal was given. When London underwriters heard that they had been doing welding onboard, one of them refused to pay for this second casualty, but he gave in later. I think it was a mistake for shipowners, engineers and classification societies to treat this as a steel matter. Had they consulted with the oil industry, they would have been given a quicker answer to the problem. It is indicative that the Silja owners did not want the system on their new buildings, also that the Berge Istra crew turned off the system that could have saved their lives. Obviously, the value of the system was not well understood until years later. We have had no ugly tanker explosions since 1990, but the airline industry had one some years ago, when TWA 800 went down. After nine months of research the conclusion was that faulty wiring in an empty fuel tank caused the explosion. Here we go again, searching for the ignition source. It is no surprise that the wiring on an older aircraft might be faulty; but the empty fuel tank was the real cause of the accident.
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Notes: Arrow was owned by Aristotle Onassis and had according to Noel Mosterts Supership, New York, 1974, p. 59, been operating with almost none of its navigation equipment serviceable. See also Mr. Mosterts comments on Wafra, pp. 164 and 165. On Marpessa, Mactra and Kong Haakon, see Anchor and Balance - The Norwegian Veritas, 1864-1989, pp. 265-268, S. Howarth: Sea Shell, pp. 153-158 and Audun Reksten: Slik var det, Oslo, 1983, pp. 88-89. Sven Moestue is a lawyer by education and was a leading insurance broker and adviser to several major tanker owners, including Mr. Reksten. Later he also served as an insurance expert for owners of kingsize passenger vessels such as the Royal Caribbean Cruise Lines.
III. BRUSSELS ONCE MORE, BUT WHY RELIEVE THE SHIPOWNERS?

Within IMCO, top priority was given to the establishment of an oil pollution compensation fund. When delegations in late November 1971 returned to the meeting rooms in Palais des Congres in Brussels, the majority of the delegates were still of the legal profession with an agenda confined to seek compensation for oil pollution damage. The conference was scheduled to last from Nov. 29 to Dec. 18. Forty-nine states were represented. A great number of the delegates had been present in Brussels in 1969. In addition, new countries such as Iran, Kenya, the Philippines and Thailand were present as observers. Imagination was needed to reconcile the legitimate interests of the oil companies and to protect the interests of shipowners at the same time. The main target was, however, to provide effective protection for the society at large, taking into account the point of view of the insurance companies whose cooperation would be essential. Sir Colin Goad paid special tribute in his introduction to OCIMF and CMI for their assistance with the preparations of the draft articles. A draft for a Fund convention erecting an international fund financed by oil importers and organized by governments was on the conference table, drawn up by the IMCOs Legal Committee. According to the compromise from 1969, the Fund would fulfil two conditions: It would improve the position of the victims of oil pollution damage through better compensation and secondly provide relief to the shipowner by bringing the cargo interest into play as a provider of additional compensation. It was clear from the start that delegations faced two major difficulties: The oil industry had made representation to a number of governments which now were convinced that they should not support the principle that shipowners would be relieved. Secondly, a number of delegations had ambitions to
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introduce improvements which went beyond the compensation issue. In his opening remarks, the elected chairman of the Committee on the Whole, Dr. Walter Muller of Switzerland, expressed his gratitude to Mr. Nordenson, who in 1970 had prepared the first draft that had served as a basis for all subsequent deliberations. Already during the first debate, it became clear that one faced a new situation. Whereas the proposal to establish a compensation fund was generally approved of, the relief function was met with strong criticism. Netherlands Mr. Rijn van Alkemade explained that his Government previously had been in favour of cargo liability, but now had doubts about the need to shift the lines between the ships part and that of the cargo. If it was found possible to dispense relief, his delegation would support such simplification. Mr. G.R.W. Brigstocke of the UK looked forward to the establishment of a Fund, but he saw no reason for the oil industry to take over the burden already imposed on the shipowners. The American representative Mr. A.L. Doud shared the view of the Netherlands and the UK and others who saw no reason to give shipowners relief. Mr. Doud praised CLC69 as a first constructive step and said that his government was anxious that it should come into force. However, there were five basic shortcomings in the convention: The geographical coverage was too restricted because a victim of pollution damage deserved compensation wherever the damage occurred. The shipowner had too many defences to the greatest extent possible, these defences should be eliminated from the Fund. Victims would be indemnified whether they could identify the polluting tanker or not. The amounts of compensation were too low and finally, the convention failed to offer sufficient inducement for the adoption of measures for the prevention of oil pollution. Lars O. Broch of Norway, Ms. B. Blom of Sweden, Professor K. Spilioplous of Greece and Mr. B.H. White of Liberia all spoke in favour of implementing of the Resolution of 1969, including the provision on relief. Norway attached great importance to this function, chiefly as a prerequisite not only for the widest possible acceptance of CLC69 but also for the supplementary convention to be concluded. The economic burden would, Mr. Broch pointed out, ultimately be passed on to the consumer. As a response to Mr. Doud, he added that shipowners would be encouraged to comply with minimum safety standards and be granted relief only in such cases when this condition was met.
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Also other delegations including Denmark, Japan, France, Finland and the USSR stressed the need to comply with the compromise agreement achieved in 1969. Canada was now rather vague; the previous frank position calling for cargo owner liability had obviously evaporated, as its representative, J.C. Langley, said diplomatically that it had been apparent to his delegation that the most equitable distribution of costs should be found. Mr. McGovern of Ireland recalled that CLC69 would not have been concluded if it had not been for the clear understanding that the Fund would alleviate shipowners of the additional burden imposed upon them in 1969. But there should be no relief for the negligent shipowner. His government believed that the implementation of the 69 Resolution would materially increase the number of contracting states that would accept both conventions. The fact that the Resolution clearly stated that the Fund envisioned would in principle relieve the shipowners of the additional financial burden imposed upon them by the CLC69, and that this terminology meant the full burden did not even come to light in the meeting room. In 1992, 21 years after the Conference, Mns Jacobsson the then-future Director of the Fund explained why. The relief was part of a political compromise at the 1969 Conference as a quid pro quo for ship owning nations accepting strict liability, higher liability limits and compulsory insurance. As is often the case in this world, promises are not upheld, and in particular not political promises. This was also the case here. Mr. Nordenson, who was one of the architects behind the Resolution as well as the driving force behind the draft on the table, had in good time before the meeting learned that further to the oil company lobby - any efforts to obtain full relief would be in vain and perhaps result in no agreement at all.
Notes: The Official Records of the Conference on the Establishment of an International Compensation Fund For Oil Pollution Damage 1971, printed in London 1978, provides a comprehensive report (742 pages) on the participation, documentation and deliberations by the IMCO Conference in Brussels from Nov. 29 to Dec. 18, 1971. See in particular the following pages in the Report: pp. 61, 191, 249, 250, 260263, 273, 284, 309-314, 320-327, 330, 332, 333, 340, 356, 361-374, 390-392, 395, 404-409, 432449, 451, 453, 456, 462, 479-489, 493-498, 501, 621, 661-663, 675, 687 and 688. M. Jacobssons presentation on the Conference is found on pp. 39-55 in a CMI publication Liability for Damage to the Marine Environment, issued by Lloyds of London Press Ltd., 1993, edited by Colin M. de la Rue.
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IV. TECHNICAL CO-OPERATION?

The question of other future tasks was brought up on the first day of general debate. The most interesting proposal came perhaps from Mr. Y.K. Quartey of Ghana, who said that his government was eager that the Fund could take on a more active role. In case of a serious pollution incident, it would be able to come to the aid of coastal states, especially in developing countries. Rescue squads could be organized and be ready to assist any country threatened by serious pollution damage. He illustrated his intervention by referring to a tanker containing 600 tons of oil that had just stranded near the coast of Ghana. The tanker was presently in danger of breaking up, but his country had neither the men nor the equipment to deal with the situation. Ghanas proposal as discussions proceeded received strong support from representatives of the developing countries and the US representative. The US representative reminded the Conference that his delegation had repeatedly stressed that they considered the Fund was intended to supplement CLC69 and provide means for the protection of the environment. Also the delegations of Australia, Canada and the USSR argued that the Fund would not serve a useful purpose if its role were restricted to intervention only after the damage was done. Very often damage would be irreparable in nature, and in such cases compensation in terms of money alone would be inadequate. Mr. P.A. Medcraft of OCIMF voiced a strong protest against the proposal to introduce extra burdens on the Fund. He pointed out that to keep such equipment on stand-by at various stations around the world would incur enormous costs for the Fund. He respectfully suggested that the oil companies located where the pollution occurred could better deal with the type of pollution that concerned Ghana. The delegation of the UK strongly backed up the view of the oil companies, saying he could not imagine that the Fund would have at its disposal the expertise and equipment required to carry out an operational role as Ghana imagined. But the proposal deserved further study, he said. On Dec. 10, the Chairman, Mr. Muller, invited the Committee to vote on the Ghanaian proposal. A roll-call vote was taken and resulted in 34 votes in favour, none against but with abstentions from Belgium, Italy, Japan and the UK. Despite its scepticism, the UK volunteered together with the Netherlands to work out a draft that would include the proposed principle. With some amendments suggested by the Nordic countries, the draft was accepted.
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Twenty years later, IMCO adopted the International Convention on Oil Pollution Preparedness, Response and Cooperation (OPRC) 1990. The OPRC may well be seen in the light of Ghanas initiative, but was one of several measures adopted as a response to the Exxon Valdez oil spill in 1989.
V. THE FEE SYSTEM

The oil industry financing of the new international compensation fund caused lengthy discussions. In what way should the payments be arranged, and who should be directly responsible for the funding? The Legal Committee had suggested that oil importers in each contracting state should pay the operation of the Fund. The Spanish delegation had at the very outset argued that such a system would destroy the balance and impair the equity of the convention. If the financial burden of contributions were placed only on the countries importing oil, the oil-exporting countries would not contribute, but would still enjoy all the benefits. Yet these countries were subject to great risks of incidents at their own shores, and it would be logical that they should contribute, as well. Neither was the representative of India, Mr. R. Doraiswamy, happy. He proposed instead that one should take into account not only the quantity of oil imported, but also the distance the oil was carried. This would be fair and logical because the risk of pollution increased with the distance over which the oil was carried. His proposal was therefore to base the calculations on ton/miles instead of tons only. Spain and Indonesia supported him. Other delegates agreed with the representative of OCIMF, who pointed out that the proposal of the Legal Committee represented the best practical solution, as import figures were ready available in the form of Customs statistics and would not involve governments in any additional work. The ton/mile concept would, on the other hand, complicate the system enormously. Also the adviser on insurance matters to the Norwegian delegation, Mr. Poulsson, supported this view by informing that in the experience of the P&I clubs, practically all cases of pollution incidents recorded had occurred near port entries or near terminals. Distance had therefore nothing to do with the number or size of pollution incidents. After an exchange of view, the Indian delegate withdrew his proposal. The Egyptian representative, Mr. E.E. Issa, was, however, still in doubt about the quality of the proposed contribution system. He was in particular
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concerned about the ambiguity of the term terminal installations. Some of the oil transported from the Persian Gulf in tankers was in his country discharged in the Port of Suez, for transhipment by pipeline to Alexandria. Then the oil was subsequently re-loaded in other tankers and transferred by sea to ports in Europe. If this oil should be considered contributing oil in Egypt, the situation would be illogical and irrational because the same oil would probably be subject to taxation also at the European destination. The Chairman replied that since no such amendment had been submitted in writing by Egypt, the rules of procedure did not permit a vote. At the end of the Conference, Mr. Issa once again raised the matter, introducing a paper with a proposed amendment submitted in cooperation with Iraq, Libya and Syria. Contributions ought to be paid only at the final terminal of destination. Reference was made to the generally accepted principle that taxes should not be levied twice on the same goods, and to introduce any such provision would be in flagrant contradiction with the principles of equity and equality. The US pointed out that the matter had been discussed fully in the Legal Committee. Moreover, the risk of pollution was connected with every entry and exit from ports. Thus, there was some merit in requiring a double contribution. In any case, the contribution would be at a minimal rate; something in the order of at most one-tenth of a cent per ton. The Plenary finally rejected the Egyptian proposal by a very narrow margin. Then, with 32 votes to none (five abstentions) it was decided that the Fund should be financed by a levy on the oil received by importers in a port or terminal of contracting states, provided the quantity was 150,000 metric tons or more per calendar year. Oil importers, not the governments, were made responsible for the payments, unless they explicitly had assumed this responsibility. Their normal role was to take appropriate measures under domestic law, to ensure that the contributions were paid.
VI. INTERPRETATION
Uniform interpretation of the definitions in respect to CLC69 and the new Fund Convention was required if the two instruments should work successfully together. Whereas this principle was generally agreed on, its implementation raised several questions. Already during the discussions in the Legal Committee, there had been suggestions to go beyond the scope of CLC69. The discussion about the definition of oil gave rise to a considerable debate
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that illustrates the problem. In general, it was felt that the notion persistent referred to oils which represented a danger to the environment either because a proportion will remain in nature after evaporation has ceased, or because of the time it takes for such oils to dissipate naturally. In CLC69, oil was defined as any persistent oil such as crude oil, fuel oil, heavy diesel oil, and lubricating oil. The only non-hydrocarbon oil included was whale oil. Release of lighter fractions of petroleum products were, in the opinion of the Canadian delegation, equally damaging in given circumstances, although less apparent than those emanating from the black oils. Thus it was felt necessary to fill the gap in CLC69. This proposal was, however, met with protests from a number of delegates who stressed the need for consistency between the two legal instruments and in the end, Canada withdrew the proposal to include petroleum products. For practical reasons, it was decided to exclude petroleum products and other hazardous substances and leave any appropriate compensation questions in this respect to be dealt with by IMCO at a later stage and in a special convention. Despite that delegates apparently were on guard against any deviation from the established definitions in CLC69, two variations were nevertheless agreed on after some debate. Both proposals were initiated by the delegation of the UK. Mr. Brigstocke stressed that the oil that the Fund should deal with was clearly persistent mineral hydrocarbon oil. The oil companies were not in the whale oil business and could not be expected to pay for damage whale oil caused. If such oil should be included, then the whale oil industry would also have to contribute. But to bring in this industry as a contributor to the new Fund would in his opinion, as well as in the opinion of Mr. Claude Douay, serve no practical purpose and would only complicate its machinery. In support of this view, the USSR pointed out that the amount of whale oil carried at sea was very small; in the region of some 100,000 tons out of a total of one billion tons. As whale oil was carried in very small shipments, it therefore was unlikely to cause damage in excess of the limits in CLC. However, Mr. M. Date of Japan, backed up by Ghana and Portugal, protested against the deletion of whale oil on the grounds that this would be unfair for possible victims of such pollution. Moreover, the definition in the two legal instruments should be consistent. His efforts were in vain. A clear majority decided to exclude whale oil. As a consequence of the majority view, the UK delegation then suggested that it should be spelt out quite clearly that the term oil should be confined to
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persistent hydrocarbon mineral oil. The proposal was meant solely to eliminate any ambiguity in the definition and was adopted with an overwhelming majority. The nature of pollution damage turned out to be one of the most difficult challenges to cope with not only in 1971, but also for many years to come. Mr. Langley of Canada introduced a proposal to make it quite clear that a state that undertook preventive measures on the high seas in order to avoid pollution damage to its territory should recover its expenses from the Fund. Furthermore, all direct and indirect costs incurred should be accepted as recoverable expenses. For example, the cost of using men and materials already employed on government service in connection with a particular incident should be compensated even if some of the expenditure would have been sustained in any case. Mr. Nordenson, who had been elected as Rapporteur, reminded delegates that it was agreed in 1969 that pollution damage on the high seas remained outside the scope the convention agreed on. But the report of a working party that had dealt with the issue at that time included a reservation that the cost of the protective measures outside territorial waters undertaken to protect the coast of a contracting state should be recoverable. The general feeling of many delegations was that the effect of pollution on the high seas normally was less important and should not require the involvement of the new Fund. Nevertheless, Mr. Nordensons reference to a reservation in a nearly three-year-old report was not found to be quite satisfactory. Mr. R. von Keeler of the Federal Republic of Germany agreed with Canada that a clarification was required. Mr. Doraiswamy of India suggested that because the proposal was related to the question of the territorial scope, a decision should be postponed until Article 3 on the geographical scope came up for discussion. Mr. L.N. Etherton explained that outside Australian territorial waters, the Great Barrier Reef was a most sensitive area, and it was under constant threat from oil spills from tankers. He introduced an amendment to ensure that expenses incurred in dealing with such pollution damage should be covered, even if the measures were taken outside the territorial sea. The principle was advocated by the American and French delegations, as well. They stressed that the objective of the Fund was to rectify the inadequacies of CLC69, one of which was indeed its limited geographical scope.
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Mr. Kerry of the UK repeated the points made previously by his delegation as well as by Mr. Nordenson, and stated once more that claims for the cost of preventive measures in respect to incidents on the high seas could be entertained under the CLC69 as already agreed. Moreover, it would be a mistake to be seen to give the Fund Convention wider application than CLC69. His concern was that it would run the risk of being flooded with claims for trifling sums, which would render administration unnecessarily difficult. The discussion continued outside the meeting room. After initiatives from Canada and Australia, a renewed debate started at the morning session of Dec. 13. At the end of the session, the Chairman felt compelled to invite the Committee to vote on the inclusion of the Canadian principle. The outcome of the vote was a surprise. It was decided by 18 votes in favour to 15 against (six abstentions) to include the Canadian principle in an article in the Convention. Nevertheless, the Norwegian and Dutch delegations continued their opposition and claimed that the voting had been quite confused, as Canada had been willing to accept that the mentioned principle could be included in only the Preamble instead of the text of the new instrument. By 29 votes to two, the previous decision was then cancelled. The principle would be included in the Preamble, which thereby stated that the agreed instrument would provide a regime for compensation for pollution damage in Contracting States and for the cost of measures, wherever taken, to prevent or minimize such damage. By including the words wherever taken, it was felt that any ambiguity was removed. That may be so, but what the delegates really did was to add an explanatory note how the other Convention, CLC69, should be understood.
VII. ROLE OF THE FUND: SUBSTITUTION AND SUPPLEMENTATION

When no liability arose under CLC69, victims of pollution damage were not left empty-handed. The Fund had to fill the gap, substitute the shipowner and pay compensation. The Fund had to also compensate pollution victims if they were not fully indemnified under CLC69. It had a role to play either if the shipowner was not liable, or if neither he nor his insurer were able to meet their obligations. Thus, two clear roles of the Fund were established: Substitution and supplementation.
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The need for substitution became visible when a shipowner was exonerated, because he could prove that the damage was wholly caused by an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character, or the damage was wholly caused with intent by a third party or by a wrongful act of a governmental authority to maintain navigational aids (CLC69 Article III 2). Moreover when pollution occurs at sea, the culprit may be an unidentified ship and despite further investigation, it may still be difficult to establish the identity of the ship that has caused the damage. The oil may well have some other origin. It could e.g. be caused by the bunker fuel from a dry cargo ship, or emanate from some offshore oil drilling installation or from a land-based source. In its draft, the Legal Committee had proposed that knowledge of the source of the polluting oil was the first requirement for compensation. Thus the Fund would be exonerated if the identity of the ship that has caused the damage has not been established. The consequence of this suggestion seemed to be that when two tankers were involved in a collision, the claimant would in order to obtain compensation from the Fund have to prove exactly which of the two tankers polluted his property. Mr. Brigstocke saw no need for changing the draft and explained that it was highly improbable that the identity of a tanker causing a large oil spill would not be known. Possibly there could be many small spills from unidentified ships, but if the damage in such cases should be paid for by the Fund, the result would be a very heavy administrative burden. He also argued that to include unidentified spills would mean that there would be no incentive for coastal states to ascertain the origin of spills. The observer of OCIMF complained that it would be unfair to the oil companies if they also should pay for unidentified spills. This would mean that the companies would be asked to pay while the shipowners went scot-free. Mr. White, Liberia, agreed that involvement of the Fund in such cases could lead to lengthy recovery procedures against the interest of the victim. The Fund should, in his opinion, primarily compensate for serious disasters like the Torrey Canyon and not for any kind of spill at sea. The US did not agree. Mr. Massey wanted to see the Fund play a role. It would, in other words, substitute the missing shipowner. There were a number of gaps in CLC69, which it was important to fill as quickly as possible if a
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fair system would be established. The objective of the work undertaken was not merely to prepare an instrument that would enable CLC69 to enter into force. It seemed inequitable to deny relief to victims merely because the identity of the ship was unknown. If it was proved that the pollution was a result of oil escaping from a ship carrying oil in bulk as cargo, the victim should not surmount the additional burden of proving what particular tanker was to blame, particularly if more ships had been in the area at the critical time. His point of view had the strong support of Australia. Mr. W.B. Nicholson said that when it had not been possible to impose liability on the shipowner to cover the damage an unidentified ship caused, the Fund should certainly provide such coverage. Mr. Broch of Norway, supported by Scandinavian delegations, feared that courts dealing with damage claims would face serious difficulties in deciding the validity of a claim where the offending ship was not identified. On the other hand, it would be unreasonable that the victim was left uncompensated in particular when the damage amounted to a substantial sum. Thus, Professor Philip introduced a compromise proposal on behalf of the Scandinavians to the effect that the Fund would come in operation only if the damage exceeded for example 15 million Francs (approximately USD 2.9 million) or such a significant amount which delegations would find appropriate. The temperature in the meeting room increased when Mr. Douay repeatedly made it clear that he wholeheartedly disagreed with the suggested compromise. He felt very strongly that by asking the Fund to cover damages from an unknown source, one would thereby make it a relief institution to be brought into play in a multitude of minor incidents. If the Conference wished the Fund to meet all requests for compensation for damage by persons unknown which was another way of saying that no action would be taken against such ships and that any attempt at prevention was being abandoned, then it might just as well tear up the 1969 Convention right away. Later he added that if such a proposal were accepted his government would be obliged to reconsider its position with regard to ratifying the 1969 Convention. It was finally agreed that the Fund would incur no obligation if: The claimant cannot prove that the damage resulted from an incident involving one or more ships. This meant that if the damage was caused by one of several tankers in the area where the spill occurred, the victim was not obliged to identify which tanker caused the pollution damage. To obtain compensation it would be
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sufficient to prove that one of the tankers involved must have caused the pollution damage. The Legal Committee had suggested by a narrow majority that it would be inequitable to deny compensation when the damage resulted from a natural phenomenon beyond the victims control. In a submission to the Conference, the US had argued that the new compensation scheme should have the broadest possible scope and, to the extent possible, one should avoid that the injured party was denied relief. The US, supported by a number of delegations, was opposed to introducing any defence similar to the one in CLC69, if the pollution damage was caused by natural phenomena of an exceptional, inevitable and irresistible character. On the other hand, a submission from France had suggested a natural phenomena of an exceptional character was a classical case for exoneration. Reference was made to the Paris and Vienna Nuclear Conventions. Several other delegates supported this view including the UK, who in its submission contended that such damage would be rare and it is not considered equitable that the oil industry should bear the this risk, any more than do the shipowners, who are given an exception. Also, Mr. Spilliopoulos proposed that in a given situation it would be quite unfair to give victims of tanker spills an advantage over victims of pollution from other sources. Greece therefore suggested exonerating the Fund if the pollution damage was caused by a natural phenomenon of an exceptional, inevitable and irresistible character. By an indicative vote, the Greek proposal was rejected by 19 votes to 14 with eight abstentions. The Legal Committees proposal was accepted, and the Fund filled a new gap in CLC69. Another gap in CLC69 was the exoneration of shipowners when the pollution damage was caused by an act of war, hostilities, civil war or insurrection. The Legal Committee had concluded that exoneration in such cases was a normal feature of other liability conventions and would therefore also apply to the Fund. Moreover, if a warship or a ship owned/used in non-commercial service should cause the pollution, the Fund would incur no obligations. Mr. Douay again underlined that the Fund would not be a charity institute to compensate all victims of pollution. Damage arising as a result of acts of war would be excluded as in other conventions. Not only would such coverage place an intolerable burden on the Fund, but also it would be excluded on
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moral grounds since the shipowner was under no obligation to pay compensation, so why should the oil industry pay? Mr. Massey of the US repeated that there were a number of gaps in CLC69 that needed to be filled as quickly as possible if a fair system of compensation scheme should be established. The Fund Convention would enter new areas of law, and would adopt new principles of compensation and new approaches to environmental problems. A century ago, both governments and the industry would have denied all responsibility towards victims of oil pollution. Since then, great efforts had been made to alleviate the problems by legal means. He stressed that: The Conference should not look back towards the past, but use the opportunity offered by the Fund Convention to take a step forward, thus bringing nearer the day when redress could be provided for injustices of all kinds. His delegation therefore suggested that the exception for an act of war, hostilities, civil war or insurrection should be deleted so that the Fund could play its proper role. The deletion would not add much to the cost, in view of the fact that these cases in any event would be rare. The only way in which society at large could cover the costs of pollution damage in such cases was for those costs to be spread over all the countries which benefited from the transport of oil at sea; otherwise the full cost would fall on the individual. Mr. A. Makowsky of the USSR shared the view that it was not equally defensible to cover risks related to war. That would be to shoulder an unreasonable administrative burden. In the view of his delegation, the state responsible should be held liable to pay compensation in such cases. Mr. Amoroso of Italy agreed; the Fund was made up of contributions from the private sector, and it was for the state, not for the private sector, to provide protection under its domestic law for any of its citizens who suffered from pollution incidents caused by acts of war or hostilities. His view was shared by Mr. Brigstocke of the UK and Mr. van Alkemade of the Netherlands, who both expressed that their governments would find it very difficult to ratify the Convention if the Fund was not exonerated in such situations. Thus, the majority view was that it would be wrong to impose upon the Fund the obligation to cover war risks. The American proposal was defeated. A related gap in CLC69 was the exoneration of shipowners when the pollution damage was caused wholly or partially by a person who suffered
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the damage either intentionally or by negligence. The proposal by the Legal Committee was that also the Fund should be exonerated in the same way and always when the ship owner was exonerated under CLC. Mr. Alkemade supported the proposal that the Fund should be relieved from liability in such cases, and the same principle should apply when the damage was caused by the wrongful act or negligence of governments themselves. But his government had submitted an amendment that would modify the rule. Where a party suffered damage as a result of the negligence or wrongful act of a government other than its own government, then it would be reasonable for the Fund to provide compensation, he said. Mr. I. Perrakis of Greece supported Mr. Alkemade and argued that failure to take adequate security measures to prevent sabotage against tankers should be treated as negligence. Hence in such cases, the state in concern should not be entitled to claim compensation from the Fund. But Mr. C.K. Kennedy of Canada and Mr. Massey disagreed. They would both be sorry if the Fund was exonerated and the innocent party not entitled to compensation. The society at large should cover the costs of pollution damage in such cases by spreading the costs over all countries that benefited from the transport of oil at sea. The result of a prolonged discussion was that the draft from the Legal Committee suggesting a qualified exoneration of the Fund was approved. If it is proved that the damage was caused wholly or partly either from an act or omission done with the intent to cause damage or due to negligence by the party that suffered the damage, the Fund may be exonerated partially or wholly. Moreover, it was agreed that the Fund should be exonerated in any event to the extent the shipowner would be exonerated under CLC69. The Funds supplementary role was to pay compensation when the recoverable amounts from the shipowner proved to be inadequate. If the owner and his insurer were not financially capable of meeting their obligation, the Fund would provide compensation on the condition that the victim - after having taken all reasonable steps - had not been able to obtain satisfaction of the amount due under CLC69. The Legal Committee realized, however, that it might take years of legal proceedings to establish whether a shipowner in a given case was liable or not. In order to avoid undue delay, the Fund should be authorized to pay compensation and simultaneously acquire by subrogation the rights that the person compensated had against the ship owner under CLC69.
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But Mr. Kennedy of Canada went one step further and proposed that if a Contracting State, which under a national scheme paid compensation to a victim of pollution liability in advance of any adjudged liability of the shipowner under the 1969 Convention or the Fund, should acquire by subrogation the same rights as the victim would enjoy under the draft convention. The proposal was approved after being supported by Norway, Greece and the Netherlands.
Notes: In her book: Pollution from the Carriage of Oil by Sea, Wu Chao, p. 80, opines that article 4.1a in the 1971 Fund Convention must be understood to the effect that the Fund nevertheless substitutes for the shipowner if a pollution incident is caused by an act of war, the intentional act as a third party or the negligence of a government. But this may be right with respect to costs for preventive measures only.
VIII. CONDITIONAL RELIEF

Much more controversial was as already mentioned the Funds relief function. In accordance with the 69 Resolution, the Fund should in principle relieve the shipowner of the additional financial burden imposed by the present convention. Tanker owners had been allowed to limit liability at levels corresponding to the full capacity of the insurance market; 2,000 Poincare francs (USD 134) per ton of the tanker in question subject to a maximum of 210 million francs (about USD 14 million). This was seen as an additional burden, as it was twice the compensation amount available for property damage under the 1957 General Liability Convention. Since then, the deliberations in the Legal Committee proved it impossible to agree on the implementation of this part of the Resolution. The draft submitted by the Legal Committee revealed that the compromise agreed on in 1969 had been subject to a new compromise in the time that had passed. According to its wording, the Fund should only indemnify the shipowner for a part of the liability imposed by CLC69. The world tanker fleet had in the meantime grown to some 3,200 units capable of carrying 10,000 tons or more of oil. The total fleet in terms of deadweight (dwt) or carrying capacity was close to 170 million dwt. Independent tanker owners represented about 110 million, the oil industry nearly 60 million dwt. The seven sisters owned most of this tonnage. Whilst many independent tanker owners regarded the proposal as inferior to
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the intent and text prepared in 1969, the oil industry claimed relief was meaningless, at least in the present climate. In its submission to the Conference, OCIMF stated: no case has been made out whereby there is any necessity for the relief in principle of the ship-owner from the additional burden imposed by the Civil Liability Convention. We suggest that the basis for the Resolution requires reconsideration in the changing climate of opinion and that there are no grounds for relief to ship-owners. Due to the over-supply of tonnage in the market, the prospects for the independent tanker owners looked bleak. The tanker fleet had increased by more than 11 percent in 1971, whilst the increase in oil consumption had declined. Viewed against the background of more than 100 million dwt tankers and combined carriers on order at the shipyards around the world, the trade developments were disturbing. The major oil companies had convinced a number of influential tanker owners that it would be in their interest voluntarily to assume the responsibility for governments clean-up costs after pollution incidents and join TOVALOP. Several owners had been seen to believe that the oil charterers were prepared to pay a freight surcharge to meet the added insurance premiums consequent of higher liability exposure. In hindsight, this was too good to be true, and the oil companies after a while saw no reason to take on extra costs. The oil industry and not least Shell had always maintained a lofty and sceptical attitude towards governments and was convinced that private arrangements would be far better than governmental interference. Governments were informed that the private scheme had come into force in October 1969 and that it was meant as a stopgap until CLC69 was implemented. Thanks to the efforts of coordinator John Kirby, president of Shell International, owners representing some 90 percent of the world tanker fleet had accepted the scheme at the time the conference convened in Brussels in December 1971. As mentioned above, the oil industry had also gone one step further and offered to provide additional compensation to victims of oil pollution by topping up the shipowners liability through an oil company-financed scheme, CRISTAL. It was advertised as a solution to bridge the gap until the Fund Convention came into force. Prior to the Conference, Mr. I. Nomura of Japan had no problem with the interpretation of the wording of the 69 Resolution; the additional financial
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burden, would be the difference between the figure of 1,000 francs per ton stipulated in the 1957 Convention and the figure of 2,000 francs per ton stipulated in the CLC69. On the other hand, his delegation was prepared to take a flexible approach to the question, provided that the amount of indemnification was a figure substantial enough to be meaningful to shipowners. Several other delegates, including the UK, were far from convinced that there was a need to provide relief in accordance with the Resolution. Also the Dutch delegation, which had spoken frankly in favour of cargo liability in 1969, now supported the view of the oil industry. Mr. Alkemade declared that the situation had changed since 1969. This brought the question of relief in a new light. He referred to the TOVALOP plan now in operation and to the insurance market that now seemed prepared to accept risks that it had refused at the time. Mr. Broch of Norway stressed that the introduction of relief, as suggested by the Legal Committee, would be required to make CLC69 generally acceptable by maritime governments. Several governments had in the preparatory discussions in IMCO been in favour of a close link between safety standards and relief. According to the draft presented to the Conference, the Fund should incur no obligation to indemnify the shipowner if the pollution damage resulted from the wilful misconduct of the owner himself. Those shipowners who failed to observe safety standards should rather be penalized. His colleague, Mr. Poulsson, added that excess insurance offered in the private market would be more expensive than through the Fund, which would be able to offer substantial savings and would be in a distinctly better position than an ordinary insurer. Professor Philip pointed out that the additional burden not only embraced a higher limitation figure for the shipowner, but also a new principle of strict liability which replaced a liability system based on fault. The Resolution was a compromise agreed on in 1969. What one now was faced with was a proposal to reach a new compromise on what already was a compromise. He explained: Some people said there was no longer any need for relief of the ship owner by the Fund because he was covered by the TOVALOP plan which had come into force after the 1969 Conference. This view was quite unfounded, because the TOVALOP plan had in fact come into force before the 1969 Conference and the participants in the Conference had been aware of its
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existence; in particular they had known that it was a provisional system. In 1969, a compromise had been reached on the question of who should bear the additional financial burden; they had not wanted to change the whole draft in order to shift the burden from the owner to the oil industry; it had therefore been decided to lay the burden on the owner subject to his being relieved above a certain figure. It would be going back on that compromise if they were to raise considerably the figures suggested by the Legal Committee; the higher the figures, the fewer pollution cases the oil industry would have to cover, because few cases of damage would reach the lower limit, so that in the end the owner would have to carry the financial burden alone. Also, a number of other delegations expressed that they supported relief but on the condition that there was no wilful misconduct or negligence attached to the shipowner himself when the pollution accident occurred. Some went further and agreed with the Canadian view that compliance with environmental safety standards in general should be a condition for indemnification. Canada now argued that to be socially acceptable, relief had to be linked with the tanker owners application of safety standards: In face of the failure to make provisions for full and adequate compensation of the victim in the case of a massive oil spillage, the only way remaining to redress the balance would be to introduce measures designed to reduce the probability of such disasters as far as humanly possible. The draft Convention should have a preventive as well as remedial character and should seek to promote multilateral as opposed to unilateral action on the preventive side. The UK had, as the discussion went on, understood that some sort of relief could not be avoided. When Mr. Brigstocke withdrew his delegations opposition, he stressed that the question would in any case have to be seen in the light of the TOVALOP plan. He found, however, the proposed conditional relief problematic. Whereas at first sight the idea was an attractive one, it gave in reality rise to so many objections that it was doubtful whether it should be pursued. He reminded delegates that shipowners already had a substantial incentive to observe recommended safety practices because their records were taken into account in assessing the cost of insurance premiums:
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TANKER ACCIDENTS ACCELERATE THE AMOCO CADIZ OIL SPILL, 19721982
In any case, the idea that the Fund should set itself up as a regulatory or regulation-making body, as contemplated under Alternative I in footnote 10, would if implemented, convert it into a completely different body almost a rival to IMCO for which it was not suited. Instead of the simple and economical organization hoped for, a much larger and more complex set-up would be needed. The major oil companies assets at the time ranked from USD 8 to 21 billion. Japan and Liberia considered it fair to ask the oil industry to pay its proper share. After all, it was the consumer who paid in the long run. Because the oil companies were closer to the consumer than the shipping companies, they could more easily pass on the burden. Hence they agreed with the Legal Committees draft but doubted the practicality of a proposal that meant that the Fund should be a body to enforce IMCO conventions or recommendations. Among the delegates who supported the Canadian view were India, Italy and the US. Mr. C.R. Hallberg said that the US delegation had consistently maintained that the relief in some way had to be coupled with measures for prevention of pollution. He pointed out that pollutants had a fine disregard for political boundaries, the only answer, therefore, lay in international legislation and in the case of marine pollution that was particularly true. Mr. Douay, on the other hand, maintained that the Fund should not be turned into a technical body. But, nevertheless, his delegation sympathized with anything that could be done to reduce pollution and was prepared to study any formula that would not distort the aim of the Convention and at the same time implement the principle of conditional relief. Mr. Nordenson as Rapporteur summarized the discussion by concluding that a majority of the delegates would like to link the relief to certain safety standards. He suggested that a small working party should be set up to study the matter further. This was agreed. Many delegations wanted to participate. The group finally numbered 14 countries, and Mr. Broch was selected as chairman. In the morning of the Dec. 14, the group reported that its deliberations had resulted in a proposal based upon two basic principles. The first principle was that the safety measures should be considered as applicable to the ship rather than its flag state. Secondly, the conditions should refer to the mandatory rules laid down in four safety conventions that had already entered into force. These
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Conventions were: The Convention for the Prevention of Pollution of the Sea by Oil, The SOLAS Convention, The Load Line Convention and the International Regulation for Preventing Collisions at Sea. The Fund would be exonerated from the relief function wholly or partially if it was proved that the pollution was a result of the actual fault or privity of the owner provided there was a causal link between non-compliance of the mentioned regulations and the incident. The report was in general well received, but Mr. Brigstocke was still sceptical and reserved his position. Mr. Langley felt that the scope was too limited and restricted to a few conventions, none of which had been designed to cope with accidental pollution. When the Chairman called for a vote on conditional relief as set out in the report, it was approved in principle by 33 votes to none with seven abstentions. The next question was to what extent the shipowner should be relieved. The Legal Committee had suggested for the moment that the relief should start above the shipowners liability under the 1957 convention. In other words above 1,000 Poincare francs per ton or more than 105 million francs (about USD 7 million). This meant that if the damage exceeded any of these amounts, the balance paid by the shipowner or his P&I club would be indemnified by the Fund. Mr. Brigstocke and Mr. van Alkemade were both of the opinion that the mentioned figures were unacceptable. There was no justification for imposing such an additional burden on the oil companies. The situation was not any longer what it had been in 1969, and the Conference should not be tied down by the letter of the Resolution. Mr. Medcraft referred to OCIMFs information paper that pointed out that it was possible for shipowners to insure the whole liability arising under the CLC69. The cost of that insurance would be an element in the freight rate that would be passed on to the oil companies. Thus, in his mind, the additional burden was not necessarily borne by the shipowner. In the light of the TOVALOP plan, it would be reasonable to take the amount therein as a basis. With no solution in sight, the atmosphere was perplexed. The discussion was postponed to the next day. The next morning Mr. M.R. Jeannel of France said that his delegation in the interest of a much-desired compromise would be prepared to propose a figure of 1,250 francs per ton as the limit above which the relief should come into effect. Several delegations supported the proposal.
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Once again, strong opposition came from the UK, the Netherlands, the US, Australia and Canada. In the midst of the discussion, Mr. P.C. Goh of Singapore found reason to deplore the element of haggling in the debate. He regretted that many delegations seemed to believe that the intention of the Fund was merely to relieve shipowners. No, it was for compensation of victims, and coastal states had made considerable gestures of compromise. Mr. Medcraft then said that the oil industry was ready to contribute above 100 USD per ton or a maximum of 10 million USD provided that paragraph 2 was so worded as to leave the option open to the Fund of acting as an insurer. After this intervention, the meeting was suspended. When resumed, Professor Philip reported that the Danish, Norwegian and Swedish delegation had agreed that the furthest concession they were prepared to make was to base the relief figures on 1,500 francs per ton (as suggested by OCIMF), but with a maximum of 125 million francs. It should be left to the Fund to decide whether it would act as an insurer. The expectation that the shipowner would be relieved of his liability exposure above the amount laid down in the 1957 Convention would not be fulfilled by Mr Philips formula. Greece, Liberia and the USSR made it clear that they were unable to support the compromise. Even though the compromise gained backing from other influential delegations and six different proposals were voted upon, there was still no clarification. Following hectic consultations, more support for Professor Philips formula emerged, and Mr. Brigstocke now in favour suggested that an indicative vote should be taken by roll call. The compromise was then approved by 18 votes to 11. Hence, during the last day of the Conference, article 5 was adopted by the Plenary, including the part on indemnification by 27 votes to three with 12 abstentions. In practical terms, the owners P&I club would pay up to the maximum limit of CLC69. But taken account of the relief conceded, the clubs would be re-imbursed by the Fund according to the agreed formula. To round off two weeks hefty debate on indemnification, the following additional paragraphs were included in the Preamble: Considering further that the economic consequences of oil pollution damage resulting from the escape or discharge of oil carried in bulk at sea by ships should not exclusively be borne by the shipping industry but should
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in part be borne by the oil cargo interest, Convinced of the need to elaborate a compensation and indemnification system supplementary to the International Convention on Civil Liability for Oil Pollution Damage with a view of ensuring that full compensation will be available to victims of oil pollution incidents and that the shipowners are at the same time given relief in respect of the additional financial burden imposed on them by the said Convention.
Note: Two thousand Poincare francs were in 1969 equivalent to USD 134. See Colin de la Rue and Charles B. Anderson: Shipping and the Environment, London, 1998, p.18. For more information about Poincare francs exchange values, see http://www.jus.uio.no/english/services/library/treaties/07/7-04/hague-rules.xml
IX. THE MAXIMUM AMOUNT

The maximum amount that the Fund would be requested to contribute including the liability of the shipowners had been one of the main topics during the preparatory discussions in IMCO since 1969. An information paper OCIMF submitted said that apart from Torrey Canyon the only other incident where the CLC69 limits had been exceeded was the Arrow stranding in 1970 off Nova Scotia in Canada. Reference was also made to a recent collision between two tankers; the Allegro and the Pacific Glory in the British Channel. The incident was seen as an example of a wellorganized clean-up operation in which modern techniques were used. As a result, the total claims were only USD 500,000, including the cost of standby tugs, but excluding the salvage operation. OCIMFs conclusion was that a maximum compensation of USD 30 million for pollution victims was more than sufficient to meet future needs: any suggestion that future incidents may involve greater cost due to the increase in size of ship ignores the improvement in ship design and in cleanup techniques which are available for use and in salvage methods which restrict loss of cargo. Mr. Nordenson explained that the Legal Committee had found it necessary to restrict the maximum amount, but had suggested for further consideration the maximum amount of 450 million Poincare francs per incident as suggested by OCIMF (about USD 30 million at the time). This figure would be reduced by any sum recovered from the shipowner under his obligations in CLC69. If the
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aggregate amount of damage exceeded 450 million francs (about USD 30 million), the amount available should be distributed among the claimants in such a manner that their proportion was the same for all. The amount might, however, prove inadequate in the future due to the cost of future incidents and to changes in the monetary values. Thus the draft suggested that the Fund Assembly should be empowered to raise the mentioned figure to say 900 million francs. The amount of 450 million francs was twice the cost of the damage laid at the door of Torrey Canyon, according to Mr. Douay and Mr. Broch. They felt this amount would be appropriate. Also, Mr. J. Djavad of the USSR, Professor Spiliopolos and Mr. Date as well as other delegates opined that there was no justification at present for higher figures. Mr. Brigstocke opposed, however, the proposal that the Fund should be empowered to raise the maximum level as suggested by the Legal Committee. It was for the present conference rather than the Assembly of the Fund to make a definite decision on the amount of the compensation. The amount should rather be 750 million francs. This would be more than three times the maximum liability in CLC69 and should be sufficient to cover any damage that was likely to occur, Even, if the size of tankers continued to increase, and the value of money to fall, the new limitations on tank size and improved techniques for cleaning up oil spills tended to counteract these effects. Moreover, the Fund should have something in reserve; that was why the UK proposed that the figure of 450 million francs given in the draft, should be increased. The rapporteur, Mr. Nordenson, explained that if the Fund was not allowed to raise the maximum figure, then it would be necessary to embark on a full process of revision of the Convention, which would take several years. After considerable debate, the UK proposal was rejected. The 450 million francs suggestion was approved by 33 votes. The proposal to allow the Fund to increase the 450 million francs to 900 million was thereafter approved by 18 votes to five with 12 abstentions.
Notes: A list of the major oil company assets at the time is found in A. Sampson: The Seven Sisters, New York, 1975, p. 226, and in Fortune magazine for May and September 1973. In 1979, the Fund Assembly raised the maximum Fund limit to 45 million Special Drawing Rights (SDR), and in 1987 the maximum amount was increased to 60 million SDR. See IOPCF 25 years, pp. 10, 11. Note that the official figures in the Protocols are related to SDRs. Dollar figures can therefore be confusing depending upon the exchange rate used. Here, 1 SDR = USD 1.3.
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X. ADMINISTRATIVE MATTERS
At the end of the Conference, a link was established between CLC69 and FC71. The new Convention could be ratified or approved only by States that had given the same support to CLC69. It was agreed that The International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage of 1971 (IOPCF) should enter into effect as soon as at least eight states had ratified, provided that persons in such states had received during the preceding calendar year a total quantity of at least 750 million tons of contributing oil. The work would be administered by IOPCF, whose highest organ, the Assembly, would meet once a year to supervise the proper execution of FC71 and decide on the budget as well as the contributions and approve settlements on compensation claims. The election of an executive committee and the appointment of the director were included among other functions. The choice of the headquarters location stood between London and Paris. Mr. Jorgen Bredholt, who later became the Chairman of the Assembly, reported in the Funds 25-year jubilee book that the legendary French delegate, Mr. Douay, made an eloquent speech explaining why London was the best solution. It took seven years before the 1971 agreement entered into force. Once again a serious accident was required. In March 1978, a large tanker grounded on the French coast, causing a major oil spill. Six months later, support from several governments enabled the Fund Convention to enter into force. IOPCF started its operations the same year with the support of 15 members, including Japan.
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6 Tanker accidents accelerate - the Amoco Cadiz oil spill, 1972-1982

I. SPECTACULAR TANKER ACCIDENTS
During the 1970s, the world witnessed more serious oil spills than ever since World War II. The first spectacular pollution incident occurred in December 1972, when the Korean 120,000-ton tanker, Sea Star, spilled her entire cargo after a collision in the Gulf of Oman. A massive fire broke out and the following explosions killed 12 crewmembers. The fire immediately spread to the other tanker, Horta Borbosa (Brazilian flag), which was in ballast, but here the crew safely abandoned the ship. Nearly two years later, Shells Metula, 206,000 dwt, suffered serious bottom damage in the Strait of Magellan. Some 45,000 to 50,000 tons of light crude oil leaked out in the cold water off the coast of Chile. In cold climates the oil will evaporate and disperse much slower than if spilt in waters with higher temperatures. The oil from Metula covered 1,000 square miles of water and seemed to cause serious environmental damage. The remaining cargo some 140,000 tons was transferred to other tankers whilst Metula was towed to Brazil and eventually sold for demolition. Despite the light grade of her oil, studies at the scene 12 years later found asphalt pavements with a weathered crust of low-viscosity oil. Nevertheless,
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it is claimed that the fishery in the area was not damaged for more than a year. On Jan. 29, 1975, another well-established tanker owner, Maersk Line of Denmark, lost a large tanker, Jacob Maersk, built in 1966. It carried 88,000 tons of crude oil when she exploded in Portuguese waters. Most of the oil was consumed by fire, but according to estimates, 41,000 tons were spilt and six crewmembers were killed.
Notes: See Tanker Spills - Prevention by Design issued by the National Research Council, Washington, DC, 1991, pp. 16-19 and Lloyds List Tanker Safety Supplement, May 2000. The long-lasting pollution damage caused by Metulas light oil cargo in the frosty weather at the coast of the Magellan Strait may be seen in contrast to the rapid dispersal of crude oil released in the Persian Gulf during the Iran-Iraq war. Metula is, however, not worthy of comments in Stephen Howarths book, Sea Shell.
II. BERGE ISTRA

At the end of 1975, a large Liberian flag combination carrier, Berge Istra, disappeared in the Indian Ocean on her way from Brazil to Japan. Three weeks later, two of the 32 crew were picked up from a raft north of New Guinea. Their story was simply that the ship had sunk after two big, sudden explosions. Berge Istra was an Ore-Oil carrier with a cargo-carrying capacity of 224,000 tons in five central cargo holds and 20 side tanks. She was owned 80 percent by an American investor, Hugo Neu Corporation in New York, and managed and 20-percent owned by a well-known shipping company in Norway, Sigval Bergesen d.y. Her sister ship, Berge Vanga, was also lost three years later with 40 crewmembers onboard, probably because of a similar explosion. There was no survivor who could tell. These tankers were two of four similar ships built for Bergesen at the Uljanik shipyard in Pula, Yugoslavia, from 1972 to 1974. The yard had in the past built medium-size tankers, but had no previous experience in building ships of this dimension. The owners had been pleased to negotiate a good deal, although delivery was 14 months late. The ship was employed carrying ore from Brazil to Japan and oil from the Arabian Gulf to Europe. After the Berge Vanga disaster in 1978, the owners decided to convert the two remaining sister ships, Berge Brioni and Berge Adria, to pure dry bulk carriers no more oil. Other explosions causing loss of life also occurred in other combined carriers within the Bergesen fleet.
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Berge Istra survivors

The two Berge Istra survivors, Imeldo Barreto Leon and Epifanio Lopez, are now in their seventies and live on Tenerife, in the Canary Islands. They are shown here pointing at the raft that saved their lives. They still keep the raft in a garage in the village where they live.
Nina Ruud/Dagbladet Magasinet
It was on Dec. 30, 1975, whilst sailing from Tubarao, Brazil, to Kimitsu, Japan, that Bergesens office in Oslo lost connection with Berge Istra. A number of theories about the disappearance were launched in the international media whilst American, Japanese and Norwegian craft searched in vain the vast area where she was believed to be lost. Shipping people know that tanks with oil residues contain a mixture of different levels of hydrocarbon gases dependent upon the grade of the oil cargo previously carried. The mixture of air and gas must be kept within certain limits, otherwise it will be flammable and can be ignited. To maintain a safe proportion, the tanks should be properly cleaned after the discharge of the oil cargo. According to Norwegian journalist Otto Risanger, who wrote a book about the accident published in June 1975, a spokesman for Bergesen contended after the accident that the big centre tanks had been thoroughly washed after the discharge of the oil cargo and then provided with inert gas to keep the mixture within safe levels. The wing tanks which would not be used for the ore cargo had, however, not been fully cleaned, but inert gas was injected. This was standard procedure within the industry, he claimed. In the report on the Berge Istra hearing conducted on Jan. 28, 1976, in New York, Bergesens Captain Gudmundsen testified and confirmed the company practice with respect to the wing tanks There would always be some residues. We never take up the residues. If so, it may seem that the recent introduction of inert gas systems has inspired some misplaced confidence. In the wing tanks, one finds additional complicated structural parts required for the strengthening of the entire hull. Under the centre tanks, there are pipelines connected with the wing tanks. The wing tanks are not easy to clean. Today, nearly 35 years after the accident, it is well known that the sludge that is, the oil residue is thickest in the wing tanks and possesses additional gas content. Sludge represents an unnecessary weight for the ship that eventually would reduce payload. Non-removal of sludge would in the long run also cause corrosion of the hull. Whereas the cleaning of the wing tanks was not mandatory at the time, such rules were in the offing. Safety is important, but time is money. In the long run safety also is should be profitable. The International Safety Guide on Oil Tankers and Terminals worked out by ICS and OCIMF recommended in 1978 that Before loading a dry bulk cargo, all holds that have been used for the carriage of oil cargoes should be washed, gas freed and vented. The Liberian report on Berge Vanga pointed out the one distinctive difference in the case of Berge Vanga was that she had a riding crew on board
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to do hot work at sea in the process of installing COW machines and piping. In 1979, a professor at Norges Tekniske Hoyskole (the Norwegian Technical University) was asked to compile relevant information on the background of the explosions on board the Berge ships. In his report on Nov. 28, 1979, he revealed referring to Det Norske Veritas (DNV) that because of difficulties cleaning the wing tanks, a reasonable estimate seemed to be that the wing tanks during carriage of ore still might contain about 500 tons of oil. Ten years later, Anchor and Balance (p. 267), was published by DNV in connection with its 125-year jubilee. Commenting on the Berge explosions, DNV refrains from criticizing its paying client, and explains that a change of cargo as often as each trip sometimes made it impossible to carry out sufficient cleaning in all spaces other than the cargo tanks. Impossible is a very strong word. But cleaning takes time, and time is money. There can be little doubt that the classification society with its central role in international tanker shipping was well aware of the ICS/OCIMF recommendation industry practice. In any case, it may be telling that combined carriers managed/owned by other Norwegian companies did not experience the same explosions. To this day, no one can say with certainty why Berge Istra exploded and killed all the crewmembers with the exception of two survivors. The ships were operated by a reputable shipowner and manned by officers of professional competency. According to the chief investigator, Captain Alister Cromble of the Marine Safety Department Bureau of Maritime Affairs, it would be accepted that an explosive atmosphere had developed in the wing tanks in spite of the introduction of inert gas in these compartments. Due to the complicated internal structure of the wing tanks, flammable gas pockets might have remained there, and if the pipeline system was not tight, explosive gas from the wing tanks may have leaked into the pipeline system below the centre tanks. Cleaning machines are inserted into the tanks from the main deck, known universally as Butterworth machines after the brand name of the leading manufacturer. From the documents available today, the number of washing machines differs. On the sister ship Berge Brioni, an inspection the Norwegian Maritime Directorate carried out in November 1979 reveals that eight Butterworth cleaning machines were in use and did the job. In a paper on Berge Istra safety routines and equipment worked out by the managers, 12 transportable washing machines were referred to. How many were in use, we do not know. It has been claimed that the number of such machines on board the Berge ships was modest compared with comparable combination carriers operated by
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other owners, but the author has seen no such evidence. But as expressed by an old schoolmate who followed the construction of Berge Istra as a technical engineer for DNV in Yugoslavia: It is not here the problem lies. He might be right. Bergesens two other combined carriers were converted to dry cargo bulk carriers after strong pressure from a senior captain who told the old owner that he would inform the media about the risks these ships represented when carrying oil. When the inert gas plant was last surveyed in September 1975, there was an outstanding recommendation requiring the alarm device for the inert gas plant to be brought in order. In Rotterdam, where the last oil cargo was discharged, such a device (Servomex) was taken ashore for repairs. It is not known if it was repaired on the spot, but it is possible that it was not and that portable instruments had checked the oxygen. The mentioned reports stress that both carriers were well-run ships operated by a reputable shipowner. But nevertheless, circumstantial evidence indicates that the efficiency of the inert gas plant had fallen below the level required to protect the wing tanks. The gas might have leaked out from the wing tanks into the piping system, which went all the way below the centre tanks. But what caused the ignition? No one knows for sure. A senior technical director within the Bergesen group has said that no operational routines were changed on board the Bergesen combination carriers after Berge Istras disappearance. In the report on Berge Vanga, it is noteworthy that the Liberian Marine Board of Investigation concluded The most likely source of ignition was hot work below deck.
Notes: On Berge Istra, see Otto Risanger: Skipet som ikke kunne synke (The ship that could not sink), Oslo, 1976, and the Preliminary report on Berge Istra conducted in accordance with the Maritime Regulations of Liberia after hearings in New York, Jan. 28, 1976, and Report of the Marine Board of Investigation on Berge Istra, published March 31, 1978. On Berge Vanga, see the Report of the Liberia Marine Board of Investigation, Monrovia, Nov. 18, 1981. Other sources are various files deposited at The Norwegian Maritime Directorate, a letter from Aug. 20, 2008, from Hans Kristian Ovstaas, previous Project Director with Bergesen; interviews in 2008 with Thormod Holt Hansen, a naval architect who on behalf of DNV followed the building of Berge Istra in Yugoslavia; Arne Sagen, a naval architect and researcher; and with Kaare Kopperud, Norwegian General Counsellor who had administered the marine investigations relating to explosions and loss of life in two other Bergesen tankers, Berge Edda (83,000 dwt) which exploded in April 1980 and cost the lives of two crewmembers and Berge Septimus (280,000 dwt)in August 1983, when three more people died. Both explosions occurred at sea on the ballast leg. Thus in an eight-year period, Bergesens combined carriers and tankers cost the lives of 75 crewmembers. On Berge Istra, see Dagbladet/Magasinet primo February 2011. DNV comments on the explosions onboard combination carriers are found in Anchor and Balance, Oslo, 1989, pp. 265-267, published by the society in connection with its 125-year jubilee.
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III. ARGO MERCHANT

In addition to highlighting the threat from new super tankers, the media focused equally critically on old, obsolete tankers, now named the rust buckets of the seas. Both types were seen as major potential polluters. No rust bucket raised more public alarm than Argo Merchant. She was a small 28,000 dwt Liberian flag tanker built in 1953. Between 1964 and 1973, the ship was involved in 14 casualties, including one collision and two groundings. It was revealed that the ship had changed names several times. Before her final voyage from Venezuela with a cargo of heating oil to Salem, Massachusetts, USA, she had come off a charter with one of the American major oil companies. In the early morning of Dec. 15, 1976 close to the media centres of the world she grounded in international waters off Massachusetts and started to spill oil. The 45-year-old captain, Georgios Papadopoulos, had served as master since 1969, and had never before been involved in a grounding. The owner was a Greek company in New York. Despite pressure from the US Coast Guard, the shipowner refrained from involving assistance to minimise the oil spill. In the meantime, under very severe weather conditions, the 38-member crew was evacuated. After a few days, the ship sank whilst her cargo of 28,000 tons of fuel oil drifted out to sea. The shallow waters and weather conditions made it impossible to offload the oil or salvage the ship. Thanks to the currents and a north westerly wind, the fear of a massive injury to the environment on the US North East Coast never occurred. It later appeared from a report published by the Liberian Bureau of Maritime Affairs in October 1977 that the tanker was six months beyond the date of her annual inspection by the classification society. The compass was old and did not work well and the crew comprised a number of nationalities, including two unqualified helmsmen. Several of the seamen spoke neither English nor Greek. Whereas some of these failures may not have been very unusual at the time, more noteworthy was that the charts on Argo Merchant were outdated. The master explained that he had been without authority to buy new ones. Some crewmembers had been discharged in Venezuela and again the captain had been without authorisation to engage new hands. Because of the extremely poor freight market prevailing, the investigators speculated whether the management would sooner sink the ship than continue to operate it and thereby obtain the insurance money. No direct evidence was found, but the delay in efforts to salvage her was unexplained and inexcusable.
Note: On Argo Merchant, see de la Rue and Anderson: Shipping and the Environment, London, 1998, pp. 53-54, 777, 837 and Jack Devanney: The Tankship Tromedy, Florida, 2006, pp. 34-35.
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IV. MORE ACCIDENTS AND REACTIONS

Argo Merchant, hoisting the Liberian flag, was in international waters when she grounded. In accordance with traditional international law, the flag state has exclusive jurisdiction over violations. Now the Intervention Convention of 1969 had entered into effect, and not surprisingly the Coast Guard boarded the vessel, taking control of the salvage attempts that proved to be in vain. In 1980, the exclusive economic zone was included in the national plan to prevent marine pollution. The accident led to proposals for new regulations governing tanker operation and construction. Moreover, international initiatives on these aspects were taken in order to secure support for new safety rules in IMO, including a requirement for tankers to be constructed with double bottoms. No agreement was achieved on this proposal and the US disappointed with the reaction started the unilateral legislation process that culminated in 1990 after the Exxon Valdez catastrophe. With President Jimmy Carter in the White House, bill HR 1023 was introduced in Congress to preserve a part of the oil import to the US for domestic tankers. Reference was made, perhaps for the first but certainly not the last time, to the threat to the environment foreign tankers presented. The fact that the same tankers were chartered by US oil companies to carry their oil, and that the worst polluter ever, Torrey Canyon, was owned and operated by a US oil company, did not seem to get any particular attention. Further to the substantial tonnage surplus, the highest volume of tanker tonnage ever was scrapped during the first six months of 1976. Some 160 tankers were sold for demolition or converted for other uses. The number of idle tankers had increased rapidly. In 1974, the whole tanker fleet with very few exceptions had been fully employed. But during the first half year of 1976, an armada of 534 unemployed tankers had been sent to lay-up. These tankers represented more than 14 percent of the total world tanker fleet. Also, total losses of tankers had increased during these six months and aggregated nearly half a million tons. This number included new tonnage. The very large crude carrier, Olympic Bravery (273,600 tons) may serve as an illustration. The VLCC had been delivered from a French shipyard to her Greek owner. In January 1976, with no employment in sight, she was on passage off the French coast to a Norwegian fjord to be laid up when she developed engine trouble and grounded. All attempts to re-float her were unsuccessful. She broke in two and was eventually declared a total loss. With no cargo onboard, the resulting pollution was, however, minimal.
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In May the same year, Urquiola (111,000 dwt) spilt 91,000 tons off the northwestern coast of Spain when she struck the bottom as she was entering the port of La Coruna. All but the master and the pilot abandoned the tanker before explosions ripped through the forepart, followed by a major fire. The master was killed, but the pilot managed to swim to shore. Thick black smoke soon covered the port, and the tide spread the crude cargo throughout the port area, to the shores and out to sea. Helicopters and vessels dumped detergents in large quantities in the hope of containing the spill that threatened to destroy the shellfish industry. Then in February 1977, a new major spill occurred near American waters. The Liberian-flag tanker Hawaiian Patriot sustained a huge crack in her hull during a storm 330 miles west of Honolulu. She was loaded with 95,000 tons of crude oil, of which more than 17,000 tons leaked out before it was ignited in an enormous explosion. Hawaiian Patriot broke in two and sank. One life was lost. The currents carried a 50-mile oil slick away from the shores. Changes in tanker design to protect the marine environment and prevent oil spills were introduced in 1978, when the MARPOL Convention was revised. Requirements for segregated ballast tanks (in new buildings) located in places where they could protect the most exposed cargo tanks were introduced and agreed upon. But despite the huge tonnage surplus, the voices raised to make these arrangements applicable also for existing tankers were ignored. Implementation of such rules would not only have enhanced the environment, but would at the same time have reduced some extra carrying capacity of the tanker fleet. The exact reverse occurred in 1966 prior to the closure of the Suez Canal when new load lines were introduced to allow large tankers to have a deeper draft and carry more oil. Thereby the tonnage supply was increased, to the benefit of the worlds oil industry. Also, the US proposals for double bottoms and double sides were strongly opposed and rejected in IMCO without much opposition from the American delegations spokesman, a USCG admiral. The new MARPOL tanker became the standard against which any further design changes would be measured. Operational procedures were standardised. Among the other safety conventions agreed upon, perhaps the most important was the revision of SOLAS - the International Convention for Safety of Life - in 1978. Its overall objective was to assure the safety of the crew, ports, passengers, ships and cargo. Now, SOLAS mandated the incorporation of inert gas systems to counter the risk of explosion in the cargo tanks that had resulted in so many serious accidents.
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The Amoco Cadiz oil spill

The US oil company Amoco group owned the Amoco Cadiz. The oil spill in 1978 represents one of the worst catastrophes ever seen. In hindsight, it is easy to see that it could have been avoided or substantially reduced if the master of the super tanker had the authority to engage professional salvors to assist the vessel at an early stage. Instead, a lengthy discussion with the management in Chicago went along whilst the tanker drifted into dangerous waters. The pollution victims later sued the oil group in the United States for a huge compensation. The subsequent litigation lasted until 1992, when a Federal Court decided they were entitled to an award of USD 61 million plus interest. The judge expressed that Amoco has little reason to shed crocodile tears.
Benoit Gysemberg / CAMERA PRESS / Scanpix
CHAPTER
Notes: On the market conditions during the 70s and 80s, see John A. Jacobs semi-annual World Tanker Reviews. On the US position on double bottoms in IMCO, see E. Nalder, Tankers Full of Trouble, pp. 214215, New York, 1992, where he quotes the remarks of an American double-bottom advocate after an IMCO-meeting: Sometimes I wonder if the US Coast Guard is really a subsidiary of the oil industry. Whether this is a fair remark, one may doubt. But it is a fact that the admiral, who was head of the US delegation, later was appointed managing director of AIMS, the American Institute of Merchant Shipping, which the US oil companies dominated.
V. THE AMOCO CADIZ

But again, a long time passed before the new legislation entered into force. In the meantime, more serious accidents occurred and additional tankers were added to the long list of total losses. On March 16, l978, more oil was spilled off the windy coast of Brittany, France, than the world had ever seen. The 240,000 dwt Liberian flag super tanker Amoco Cadiz was owned by Amoco Transport, an offspring of Amoco International, whose parent company was in turn the old Rockefeller Standard Oil of Indiana, with an office in Chicago. The grounding occurred in French waters on her voyage from the Persian Gulf bound for Rotterdam. The large tanker, fully laden with a Shell cargo of 220,000 tons of heavy crude oil, got out of control because of a failure of the steering gear. All attempts to repair the hydraulic gear proved unsuccessful. Despite the problems with the steering gear, Captain Pasquale Bardari hesitated to accept salvage assistance pending a green light from the owner. The master of the West German salvage tug that had arrived wanted the salvage operation performed on the common contractual terms of Lloyds Open Form - the standard form used in such cases. But acceptance of these terms meant that the salvage master would take over the command of the ship and that the salvage company, if it was successful, would be entitled to a substantial salvage award from Amoco. The accident, however, revealed an anomalous position of a master who felt it to be his duty to minimise his owners costs by avoiding salvage and instead try to obtain assistance under a less expensive towage contract. From the start, the disaster has been described as a black comedy of errors when commercial pressures were followed by physical failures. The master of Amoco Cadiz later explained that he had no authority to expose his superiors to the costs of salvage. Whilst the captain discussed with his Chicago headquarters, the weather worsened. After long negotiations on the financial terms between Captain Bardari and the master of the tugboat, the Captain agreed to receive a towline. This, however, broke during the discussion, and the huge
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tanker drifted towards the rocks. When he finally got a green light from Amoco to agree to the Lloyds Open Form, it was too late. The tanker drifted aground and soon spilled a quarter of her Iranian crude cargo into the sea. Twelve days after the grounding, the fore part broke in two, and the rest of the cargo went into the ocean. Clean-up operations took months, and an estimated 10,000 people took part. The French Government decreed a national disaster and called in the troops, but could not do much to prevent that more than 300 kilometres of coastline were badly polluted. Again, an ugly thick layer of oil covered beaches. The wreck could be bombed in an effort to ignite the oil and sink the ship. Pungent fumes would blow inland and taint the farmland. Thus, French farmers protested because they feared that the soot would ruin their crops. On the windy coast, waves washed off more than half of the spilt oil in four weeks. The clean-up operations led by the Government continued for a full year after the grounding. The fishermen, farmers, hoteliers and other victims did not find much comfort in the fact that France had ratified CLC69, which was now in force. Unless the claimants were able to prove that the spill was caused by actual fault or privity of the owners, the limitation rules would only allow a compensation of no more than a fraction of the amount claimed. Even if such a compensation claim based upon the owners fault or privity would be successful, it was more than doubtful that a French judgement could be effectively enforced against a Liberian company, with or without assets. On this background, the French government and other claimants, including representatives of some 90 French towns and villages, chose to pursue the claims in the US and brought suit in the Federal District Court of Chicago against Amoco Transport Company, the registered owner, the operator; Amoco International Oil Company and the parent company, Standard Oil Co. of Indiana. A legal battle started which would last for years. In the end, the court held both Amoco International and Standard Oil Co. responsible. It turned out that the maintenance of the tanker had been postponed to avoid disturbance in the commercial operation. Hence the management had also failed to carry out maintenance of the steering gear. The judge pierced the corporate veil and found that the parent company had been so substantially involved in the operation that both companies had to answer for their negligence. Amoco Transport Company, the registered owner, was found to have to have failed to remedy the deficiencies on board
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Lannion Morlaix St. Brieuc
Douarnenez
T. Haugen
Amoco Cadiz oil spill
its tanker despite having actual knowledge of them. The US Limitation of Liability Act of 1851 was not applicable. The two mentioned oil companies were not the registered owners of the tanker. Neither were they immune if CLC69 had been applicable. There was no inhibition in the text that precluded victims from claiming compensation outside the convention against persons other than the owner, his servants or agents. According to the judgement, the legislative history of the CLC also clearly showed that it was meant to immunise the master and the crew but in no way the operators of a vessel. By 1982, USD 2 billion worth of writs had been filed. The claims exceeded by far anything seen in the past for pollution damage. For two to three years, the
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public outcry against the oil company prevailed and its sale of oil products was reported to have fallen by about 15 percent p.a. Litigation took a longer time. The appeal that followed was in vain. In 1992, the claimants received an award of USD 61 million plus interest as the Federal Court of Appeals confirmed the lower courts decision and severely reprimanded Amoco for its negligence: Amoco has little reason to shed crocodile tears. Exxon reportedly spent USD 2 billion to clean up the oil Exxon Valdez spilled off Alaska, it has agreed to pay another USD one billion as damages and to pay a criminal fine of USD 125 million. Amoco will be called on to pay only USD 61 million plus interest to redress a spill that not only was larger but also occurred in a more densely populated area. Calling the USD 61 million the result of inflated or fraudulent claims taxes credulity. The international salvage rules in 1978 were based on an old convention from 1910. Amoco Cadiz became an impetus to re-examination of these rules, and IMCO eventually adopted a new International Convention on Salvage in 1989. Its most important feature was that it provided for compensation for salvors when they managed to prevent or minimize pollution, even if the ship was not saved. After the grounding of Amoco Cadiz, it took only a few months before IMCO had sufficient ratifications of FC71. This process would in all probability have been further delayed if the catastrophe had not happened. In March 1980, the worst affected districts in Brittany were just beginning to recover from the damage the Amoco Cadiz caused when the Malagasy tanker Tanio broke up in heavy weather and spilled 13,500 tons of heavy fuel oil. More than 125 miles of shoreline were polluted. Once again, there was serious concern about the economic losses. France had just ratified FC71, and the Fund now had to consider the admissibility for economic losses for the first time. The Fund took the view that such claims were admissible in principle provided the claimant depended directly on earnings from coastal or sea-related activities. Claimants were required to describe the nature of the loss and to provide documentation to prove that their claims resulted directly from the accident. Apart from clean-up costs, considerable expenses were connected with the removal of oil in the wreck, which had sunk in deep water. The pumping operations lasted 16 months. Upon examination of claims, some GBP 32 million were deemed to fall within the criteria of
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recoverable loss under FC71. After interim payments, the claims were settled without litigation against the Fund for some 70 percent of the established amounts. Despite the claims exceeding the maximum amounts available under the two international regimes, ways were found to compensate victims in less than five years after the incident. This contrasts with the 14-year period that elapsed before the legal struggle about the Amoco Cadiz compensation came to an end. To the claimants satisfaction, supplementary compensation was recovered against other parties involved, including the vessels bare boat charterer and classification society. The public reaction was this time far less vigorous, not because of indifference, but the parties involved learnt lessons.
Notes: On Amoco Cadiz and (Tanio), see Jeff Wheelwright: Degrees of Disaster, New York, 1994, p. 85, Norman Hookes article on tanker accidents in Lloyds Safety Supplement, May 2000, an article by Emanuel Fontaine in a CMI publication Liability for Damage to the Marine Environment, issued by Lloyds of London Press Ltd, 1993. See also IOPCF 25 years, Kent, 2003, Jack Devanney: The Tankship Tromedy, Florida, 2006, pp. 36-42, M. Rafcliffe: Liquid Gold Ships, p. 149-150 and de la Rue and Anderson: Shipping and the Environment, London, 1998, pp. 31-33, 97-98 and 657. The 1969 Convention (CLC69) was changed by the 84/92 Protocols, which now provide that the exclusive remedy lies against the owner.
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OIL PRICES THROUGH THE ROOF THE HUGE TANKER SURPLUS,1970-1990
7 Oil prices through the roof The huge tanker surplus, 1970-1990
I. THE TANKER SURPLUS
Brisk industrial growth and improved standards of living in the Western economies led to a strong growth cycle in oil transportation from the mid1960s. Over the 10 years from 1964, crude oil carried by sea increased by 182 percent. The growth was even stronger in ton-miles, which grew by 350 percent because of the longer transport distances. The strong demand produced a firm tanker market with lofty expectations for continued growth in consumption. This produced a contracting surge for large tankers in the 200,000 tdw class. Swedish and Japanese shipbuilders were offering vessels of 500,000 tdw, and Mr. Kirby, the president of Shell International, envisaged even larger vessels: We are reaching a plateau. The next increase should be 1,000,000 tons deadweight. When the US by and by became convinced that its domestic production would be far less than demand and decided to remove the import quotas in April 1973, inquiries for tonnage accelerated in the fall of 1973 when tanker freight rates reached the highest level seen since the closure of the Suez Canal in 1956. On Oct. 6 that year, the fourth war between Israel and Egypt the Yom Kippur War started. Supported by most other Arabian states, Egypt attacked Israel. In the wake of the war, the Arabian oil-exporting countries imposed an oil embargo on most Western nations. The Organization of the Petroleum Exporting Countries (OPEC) utilized its market position by a substantial rise in
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Portrait
OPEC meeting 1973 oil prices, as seen by the price of Arabian Light, the marker crude, soaring from USD 2.90 a barrel to USD 13. There had been underlying weaknesses in the Western economies as private consumption had outgrown productivity gains, as already seen by the collapse of the fixed currency system. Now, the oil price hike contributed to inflation and economic stagnation. At a time when the order book for tankers amounted to 196.9 million tdw, equivalent to 91 percent of the trading fleet, the consumption of crude oil stagnated. Over the years 1974 to 1978, the world tanker fleet grew by 54 percent, whereas the tanker trade remained stagnant. At the end of 1978, more than 100 ultra large crude carriers (ULCC) were constructed. This gross imbalance between tankers and trade brought about an overcapacity of vessels and a long and painful crisis for the tanker industry.
1973 was the year that turned the tanker business upside down, partly because of the price-increase decisions the men shown here made. Centrally placed, we find the leading figure of OPEC, H.E. Sheik Zaki Yamani of Saudi Arabia. OPEC had now become well aware of using the oil as a weapon to promote its cause. The Sheik expressed, The world needs our oil and we in our turn need the world. In other words, we are all like the human body; when one part of it is hurt all the other parts are affected.
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Many tanker owners tried to cut back in their building programmes, and about 70 million tdw of large tankers were cancelled from 1974 1976. Still, the fleet continued to grow, as the volume of laid up tankers reached 50 million tdw in 1975. By mid-1978, the research department of the London shipbrokers John I Jacobs estimated the tanker surplus to some 142 million tdw, or 43 percent of the total tanker fleet. The financial effects on the shipowners were severe. Freight income was severely reduced, or even reversed when trading below breakeven. Ships values plummeted. A 280,000 tdw tanker delivered in 1973 at USD 50 million saw its value drop to USD 15 million by 1976 and USD 9 million two years later. Shrinking values would frequently bring owners to default on financing terms, and a large number of modern tankers were put on the market at bargain prices to be picked up by new owners. In established maritime communities in Europe, traditional shipowners were forced out of business. In Norway, shipowners such as Hilmar Reksten and Hagb. Waage went bankrupt, despite saving efforts, as did Swedish owners such as Malmros, Greeks like Colocotronis, and so on. From the time OPEC turned the price squeeze, miseries began for the tanker industry. Everything that could go wrong did go wrong. Higher oil prices meant that the industrial world looked for other fuels, and fuel-saving technologies were developed. The depression following the increased oil prices in 1974 was reinforced by the Iranian revolution, when oil prices in 1979 and 1980 once more went through the roof. The situation was further worsened by the increased production of oil in the North Sea located close to the consumers in Europe and the US. The start-up of oil production in Alaska made an impact by cutting US oil imports.
Scanpix
Hilmar Reksten
Hilmar Reksten was born in 1897 in Bergen. He started as a shipowner in 1929 and contracted his first tanker in Sweden in 1941. During World War II, he worked for the Norwegian Government in London and New York. After his return to Norway, his tanker fleet made him a huge fortune connected with the unrest in the Middle East in the late 50s and 60s. His policy was to refuse to charter his tankers on safe long-time charters, but played instead in the spot market. His fantastic profits were immediately pumped into the procurement of more and more ships. But what went up had to come down. His fleet was taken over by the Norwegian Governments Garantiinstitutt after the market crashed 1973/74. His last years, up to his death in 1980, were darkened by accusations of tax evasion and manipulation of the national currency regulations. Not many of the accusations were later confirmed.
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The re-opening in 1975 of the Suez Canal, which had been closed since 1967, was a triumph for those involved in its clearance, but reduced the distance from the producer countries to the consumer and was hence another blow for the owners of oil tankers. Other negative factors included the increased building of pipelines to transport oil, notably the opening of the SuezMediterranean (SUMED) pipeline in 1976. The pipeline began running on an annual rate of 20 million tons, only a quarter of its full capacity. The result was shorter tanker hauls and less demand for tanker transportation. The masters were ordered to cut costs and sail at slow speed to reduce fuel consumption. And, ironically, it was mainly the modern, well-equipped tankers that were laid up. The older tonnage could offer lower freight rates, and the charterers looked for the cheapest ships.
Notes: In March 1968, the Nagasaki shipyard of Mitsubishi Heavy Industries launched the biggest tanker at the time 276,000 dwt for Daniel Ludwig. If placed upright on its stern, it would reach the 100th floor of the Empire State Building in New York. Esso was at the time looking into the possibility of building 800,000 tonners, whilst John Kirby of Shell had even more ambitious dreams. See R. Petrow: The Black Tide, London, 1968, pp. 26-27. OPEC was started in 1960 with only five members: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Among the objectives was the stabilization of prices in the international oil markets with a view to eliminating harmful and unnecessary fluctuations. Source: A.A. Kubbah, OPEC - Past and Present, Vienna, 1974.
II. REMEDIAL MEASURES

The massive overcapacity of crude-oil tankers became an important issue for the tanker owners and hence for INTERTANKO. The organization had seen a strong beginning with a listed fleet of 160 million tdw by 1975, and with industry leaders such as Mr. Jahre, Peter George Goulandris, Mr. Naess, YueKong Pao, Ali Khasawneh, Sven H. Saln, Carl Rentz-Petersen, Francis Ravano and Mr. Tung on its executive committee. INTERTANKO explored every possibility to reduce the over-capacity. Shipowners were encouraged to cancel new building contracts without employment and to scrap older vessels. The organization helped locate lay-up facilities around the world, promoted tankers for oil storage, looked into new design concepts that were environmentally safer and also cut down on capacity. Through their organization, independent tanker owners consistently strived to persuade other parties in the industry that the only way out of the disastrous
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Jorgen Jahre, Tormod Rafgard and Thor Heyerdahl (from left)

Jorgen Jahre was born in 1907. He was active in Norwegian and international tanker shipping until his death in 1998. Apart from being a partner in his uncles whaling and tanker company Anders Jahre & Co, his many commissions of trust included the chairmanship of the Norwegian Ship-owners Association from 1960-62, the Norwegian Olympic Committee from 1963-65 and INTERTANKO from 19721975. During the miserable market in the 1970s, he - thanks to his remarkable diplomatic skills succeeded in establishing the International Maritime Industry Forum in London, bringing together the four major actors in the tanker industry: Banks, European oil companies, shipyards and tanker owners. The aim was to alleviate and reduce the enormous tonnage surplus in order to expedite a balance in the market through cancelling shipbuilding orders and scrapping obsolete tonnage.
Private photo T. Rafgard
situation was to cut down the tonnage supply in order to narrow the gap between supply and demand. One of the astonishing aspects of the situation, however, was that governments and bankers seemed to deny any long-time problem caused by the massive overcapacity. Thus, in December 1975, INTERTANKO, on the initiative of its chairman, Mr. Jahre, was instrumental in setting up the International Maritime Industry Forum (IMIF) to take remedial action to try to alleviate the tonnage surplus. IMIF drew together tanker owners, European oil companies, shipbuilders and bankers. The steering committee was comprised of Robert B. Horton, director of BP Tanker Co., Otto Norland, executive director of Hambros Bank and L. A. Vernede, managing director of the AG Weser shipyard, as well as Mr. Jahre. The aim was to promote market recovery. Among the most important targets were to convince shipyards to accept that a number of new building contracts had to be cancelled. Likewise scrapping of obsolete and surplus tankers had to be accelerated if market balance should be pushed forward. Whether it could be credited to IMIF and INTERTANKO or not, the volume of scrapping amounted to 45 million tdw from 1975-78, in addition to 20 million tdw temporarily withdrawn from the market to serve as storage tankers. Jan Erik Dyvi of Norway sent the first undamaged VLCC to the scrap yard for demolition in 1978. The Dyvi Nova was only 10 years old and was followed by six oil company-owned super tankers of the same vintage. The first half of 1978 saw the greatest volume of tanker tonnage scrapped in any previous six-month period. Between 1974 and 1986, a fleet representing a carrying capacity of more than 200 million dwt had been sold for demolition. In its June 1975 report, John I. Jacobs recalled the tonnage shortage in 1968 after the closure of the Suez Canal when the Load Line Convention was amended. This had allowed for deeper loading and increased capacity by five percent. Now, the idea of reversing to the original load lines might give some small alleviation. The oil industry, however, did not favour such a scheme. INTERTANKO brought up several other ideas for curtailing the tanker surplus, some of them more viable than others. The oil industry was opposed to a proposal discussed in IMO that would also in the interest of a cleaner marine environment introduce rules requiring existing tankers over a certain size to be equipped with segregated ballast tanks (SBT). This would cut the cargo capacity and reduce the desperate need for
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reception facilities in loading ports and terminals for the dirty ballast carried in the cargo tanks. Opposition also came from tanker owners who were in the lucky position to have their tankers fixed on long-term charters, as it was unthinkable that they would be paid the same freight rate for less transportation capacity. For tanker owners in the spot market, the intention seemed grand, but there was little capital to finance costly conversions to SBT. The discussion within the industry and even more so within IMO lasted for much too long to have any meaningful effect on the surplus situation. A viable alternative use of tankers was for floating oil storage. The Japanese Government initiated a floating storage programme in 1980. It was expanded to involve around 30 super tankers. US oil companies built up a fleet of floating storage in the US Gulf and the Caribbean. Floating storage reached its peak in October 1981, when nearly 150 tankers representing about 35 million dwt were used for that purpose around the world. No stone was left unturned in the efforts to reduce the tonnage surplus. Tankers were converted and used for cement storage, harbour construction facilities and at least in one case as a reception facility for oil slops received from other ships. Moreover, in the period from 1973 to 1982, 12 tankers totalling about half a million dwt were converted to sheep or cattle carriers. In 1982, it was reported that a super tanker, World Saga, had been purchased and converted to an ice island drilling vessel in the Beaufort Sea. The use of older tankers for oil production and trap/storage/offloading (FPSO) vessels would become common at a later stage. In 1977, INTERTANKO suggested to the US Department of Energy that there were substantial savings to obtain if Alaskan oil was transported to the US East Coast and Caribbean the long way around Cape Horn instead of being transferred to smaller units and sent through the Panama Canal. Costs would be reduced and some of the tonnage surplus would be absorbed. The calculations were straightforward, and after a while some VLCCs traded around the Horn. During the Falkland War, one of them, the US-owned Hercules under Liberian flag, was attacked and struck by a bomb when she was in ballast from St. Croix to Valdez in Alaska. Because of the hazard of the unexploded bomb, it was decided to scuttle the vessel off the Brazilian Coast.
Notes: In 1983, some 372 tankers were laid up at the end of the year with an all-time high during the summer, whilst 75 tankers were employed as floating storage. Further information on the massive disposal of tonnage is found in the reports of major tankers brokers like John I. Jacobs, Fearnleys, etc., and in the
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annual reports of INTERTANKO, where an oversight of alternative use is given in the annual report for 1982, pp. 38-42. See also John Newton: A century of tankers. In INTERTANKOs annual report for 1975, p. 10, readers are reminded of tanker owners understanding of oil companies problems in 1967 and 1968, when the closure of the Suez Canal created a tonnage shortage. Owners then voluntarily agreed to deeper drafts before the new load line rules were implemented. John I. Jacobs comments in its review, June 1975, p. 24: One remedial measure which could be implemented quickly provided governments can be persuaded to provide prompt ratification would be a return to the pre-1966 situation regarding load lines. It will be recollected that on ratification in July 1968 the 1966 Load Line Convention allowed decreased freeboards and the consequently increased deadweight for tanker amounted to about 5 percent To put the clock back to 1968 could reduce the existing and future tanker availability by nearly 20 million tons, which would be a worthwhile palliative. On transport of Alaskan oil, see INTERTANKO annual reports 1978, p. 8, where it is reported that it had been proposed to the US Energy Department that transport of oil in VLCCs around Cape Horn would cost about USD 10 per ton, whilst the traditional transportation costs through the Panama Canal in smaller tankers were more than double that amount. On water transportation, see Seatrade, June 1979.
Slow steaming
The masters on board tankers were ordered by their principals to cut losses and sail at slow speed to reduce fuel consumption. The oversupply of oil-carrying tonnage at the end of 1975, as estimated by John I. Jacobs, was more than one third of the total oil-carrying fleet. Owners of some 450 tankers provided data to INTERTANKO relating to tonnage operating both on the spot market and on period charter during the period from July to October 1976. The information indicated that for the tankers below 100,000 dwt, the average speed reduction was equivalent to a loss of six and a half percent of total carrying capacity. The larger tonnage groups showed nearly a 12 percent reduction, equivalent to about two knots. The tonnage actually trading in oil at the time was about 300 million tons, allowing for at least 34 million tons in lay-up. Because oil-company owned tonnage was also operating at similar reduced speeds, the total reduction in global cargo carrying capacity was estimated to have been about 30 million tons at the time. The man behind the estimates was a young economist who 40 years later would become one of the leading European tanker owners, Herbjorn Hansson.
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Bringing fresh water to MEG

A fascinating proposal to alleviate the weak market was to carry fresh water in tankers on their ballast voyage to loading terminals in the Middle East. The plan was launched by INTERTANKO at the Environment and Pollution Seminar in Kuwait in April 1979. Reference was made to the fact that every year some 400 million tons of water were carried as ballast to the Middle East. Water transported in tankers for drinking and industrial use had in the past been carried by tankers to destinations that had been short of rainfall, e.g. to Peru and from Chinese rivers to Hong Kong. Why not use the fresh ballast water for agricultural irrigation in loading ports in areas where water was badly needed? Supplies by tankers could be supplementary to methods used locally in the Middle East countries to overcome chronic water scarcity. Not only would such a scheme help to make the desert bloom and increase food production, it could also help to defray the operating costs of desperate tanker owners. Commander Trygve Meyer, INTERTANKOs technical expert in cooperation with the Kuwait Institute for Scientific Research and the Agricultural University of Norway, had researched plants watered by cleaned ballast and grown in Gulf sands. They proved successful in that all those involved have eaten happily of the fruit and lived to tell the tale! Parallel to these experiments, the Water Supply Team of Mitsui Japans Ship and Project Division worked with a similar project to make use of the ballast water in tankers. In 1982, the Arab Gulf Cooperation Council which included Saudi-Arabia, Kuwait, Qatar, Bahrain, Oman and the United Arab Emirates decided to look into the feasibility of importing water in incoming tankers. Also, IMO initiated studies on the provision of dual-purpose reception facilities where fresh water ballast would be treated and used ashore for industrial and agricultural purposes. But sadly, when the Iran-Iraq War entered into a new phase in 1984 through numerous assaults on tankers, placing oil transportation and the lives of sailors at risk, there was little priority left for new schemes like water transportation.
Note: Source: Seatrade, June 1979, p. 82 and INTERTANKO Annual report 1979
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Heads that had never been used

In the midst of a dismal freight market and a poor image, there was, however, still room for an ironic twist. INTERTANKO chairman Mr. Naess, who was no longer a young man, demonstrated that superbly in his eloquent annual dinner speech in Eastbourne in 1978. In his well-drawn and witty presentation, he admitted that he suffered from a strange head ailment commonly known as vertigo and had consequently been hunting for a new head: Being in London, I therefore used the opportunity to visit the Caledonian market where as you know you can buy all kinds of second-hand articles very cheaply. I told the salesman that I was in the shipping business and needed a secondhand head to replace the one I was now carrying, which was no good. Being in the shipping business, he suggested that perhaps I would like a shipbuilders head. I could have a European shipbuilders head very cheap. I was delighted, and he showed me several, but alas, they all had their throats cut. The salesman said this was unfortunately so because of the competition with the Japanese. I was certainly not going to buy a head with its throat cut, so I asked him to show me some other heads. He suggested that perhaps some bankers head might interest me. I said it would, and he showed me several. But they all had their eyes wide open and looking scared. I asked if they could not shut their eyes, but the salesman said they had lost the ability to shut their eyes and sleep because of anxiety over their ship loans. I said this would be no good to me and asked for other alternatives. Brightly, he suggested some oil company heads. I was enthusiastic, and he brought out several from the cold store. But they were all squinting. He explained that they all did because they for so long had one eye on the US Department of Justice Anti-Trust Department and the other on their business. All oil company heads squinted. I said that did not want to go through the rest of my life squinting, so he had to get me something else. Yes, I could get a shipowners head, but that would be much more expensive. He had several good ones, but they cost several thousand dollars. Why so expensive, I asked. Ah, he said, the reason for that is that they have never been used. I replied that unfortunately this would be no good, because why should I swap one head that has never been used for
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another which was never used. That was the end of my visit, and unfortunately I still have my old head. It is not what you preach; it is the way you preach. The joke being full square on the owners themselves had them falling about in laughter.
III. THE CRISIS DEEPENS

The oil price shock of late 1973 was followed by new shocks in 1979 and 1980, when the depression was reinforced by the Iranian revolution, the removal of the Shah and the arrival of the Ayatollah Khomeini. In September 1980, the eight-year-long war between Iraq and Iran began. The glimmer of hope for a more healthy tanker market was overtaken by new price panic, as oil prices once more went through the roof and jumped from USD 13 per barrel to over USD 40. Several Arab governments, inspired by the boom in 1973, realized that they had invested in tankers much too late and became the victims of their own oil prize policies. Apart from the industrys unfounded optimism, other important reasons for the development of the disastrous tonnage surplus were the bankers readiness to provide soft loans and the desire of many governments to keep their shipyards alive and the workers fully employed through heavy governments grants. Despite all the negative aspects, the fleet of VLCCs, tankers above 200,000 tdw had continued to grow as the shipyards delivered an increasing number of super tankers. Thus the world tanker fleet at the end of 1978 included some 700 big units. Thirty of these super tankers could each carry a cargo of 400,000 tons or more. By now, however, further ordering had ceased and at the end of 1978, the order book was confined to only 16 VLCCs. The research department in the London shipbroker firm John I. Jacobs estimated that the surplus of tankers amounted to some 116 million dwt, or 31 percent of the total tanker fleet. The VLCC sector was hardest hit; the value of a three-year old, 250,000-ton turbine tanker had plummeted from USD 70 million in 1973 to USD 10 million in 1978. After a passing market improvement in 1979 and 1980, decreasing oil transportation once more deflated the rate levels. From 1978 to 1985, crude oil transportation shrank by incredibly 61 percent, expressed in ton-miles. Such a collapse of the market was only aggravated by the already massive oversup-
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ply of tankers. The long and painful adjustment of fleet to trade caused the second and most vicious part of The Shipping Depression, the structural changes which came to affect the shipping industry. The bottom was reached in the summer of 1983, when a fleet representing 73 million dwt, more than 400 tankers, were without employment and laid up around the world. This oversupply caused a trading environment where only the cheapest operation could survive. For the tanker industry, it was nothing less than a massacre. By 1990, a fleet of tankers representing nearly 200 million dwt had been removed since 1974 and was sold for demolition mainly to scrap yards in the Far East. That amount of tonnage corresponds to no less than some 400 very large crude carriers. The painful adaptation of supply to demand, or tankers to trade, led to a range of cost-cuts. Maintenance was in many instances reduced to the minimal of surveys and what the classification society required. Replacing trained crews with cheaper maritime labour from developing countries cut manning costs. Management and crewing were often sourced out to third-party contractors, while the commercial control of the vessel remained with the owners in the traditional shipping centres. Dr. Martin Stopford, managing director of H. Clarkson & Co. Ltd. in London and a respected shipping economist, stated at a shipping conference in Hong Kong that during the survival period routine maintenance of tankers became a thing of the past. He reported: major inspections were reduced to a few hours paperwork in the office. Together, these factors led to a restructuring of the shipping industry, the move from integrated shipping companies under national flags and national crews to a globalized industry based on minimum standards and low-cost labour. The cumulative effects of these changes took time to show. But from 1987, the International group of P&I clubs began to receive claims that turned the pool claims for the successive years from 1987 to 1992 into all-time records. For the P&I club Gard, 1986 was closed with claims of USD 55 million, which was the lowest in a decade. The following years, however, came to run pool claims of a staggering USD 1.013 billion by 1994. The shipping industry had been hit by a monster wave of calamities.
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The years of gloom finally drew to a close in 1986, when time charter earnings for tankers were up noticeably from USD 4,000 to 5,000 up to 15,000 per day. From 1985 to 1990 the tanker trade picked up by 56 percent, expressed in ton-miles, whereas the fleet continued to shrink by nine and a half percent. This produced a long-awaited improvement. It was time to pocket sale profits and look for new and competitive tonnage as new opportunities opened.
Declining fleet of combined carriers

Saddam Hussein
The president of Iraq started a war with Iran in 1980 with tacit support from the United States. When the US eventually lost patience with Saddam and bombed Southern Iraq in January 1993, US President George Bush explained that he had ordered the attacks to teach Saddam a short, sharp lesson. No result. When the US invaded Iraq in 2003, Rumsfeld was US Secretary of Defence and in the forefront of the campaign which ended with the capitulation of Iraq and the hanging of Saddam. The fight with Iraqi terrorists still continues.
From 1979 to 1980, the combined carrier fleet began to decline from the peak of 47 million tdw. The loss of faith in this sector seems to be a combination of various factors, one of which is that the operation of such ships is far more complicated than the operation of a straight bulk carrier or crude tanker. According to SSY Consultants, the biggest hurdle for these ships has been the policy of many oil companies to not charter this type of vessels. The fate of Derbyshire and other mysterious disappearances might also have been a contributing factor. By the year 2000, the combined fleet remained a third of its former extent.
The first Gulf War

During these dismal years, an opportunity appeared for profitable tanker trade in the war zone in the Middle East Gulf during the Iran-Iraq war which began in August 1980. Freight premiums were offered for owners who took the risk and sent their tankers for loading in places such as Kharg Island in Iran. The war initially created a short
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fall in crude oil supply as bombing damaged export terminals. However, revenues for owners of VLCCs were further depressed by an increase in bunker prices of some 30 percent. USD 2 million was now required to fuel a VLCC for a round-trip voyage from the Middle East to Europe. In 1984, the war entered a new phase, as neutral shipping became military targets, both for the Iraqis and Iranians, what was to be called The Tanker War. This began when Iraq attacked Iranian tankers and the oil terminal at Kharg Island in 1984. Iran struck back by attacking tankers carrying Iraqi oil from Kuwait and then any tanker of the Persian Gulf states supporting Iraq. The attacks by air and small boat did very little damage to Persian Gulf state economies. Iran moved its shipping port to Larak Island. No less than 343 tankers had been hit in the war, resulting in more than 60 total losses and about 250 sailors being killed in the straits of Hormuz. On Nov. 1, 1986, Kuwait formally petitioned foreign powers to protect its shipping. The following year, the US Navy was brought in to protect US interests and also neutral ships bound for Iraqi ports. Lloyds of London estimated that the Tanker War damaged 546 commercial vessels and killed about 430 seafarers. The work done by INTERTANKO towards sensitizing public opinion to the importance of this matter was apparently not lost on the United Nations. Recognition by the Security Council of the legitimacy of the associations concern and initiatives as expressed at the May 1988 meeting in New York between representatives of the Security Council and INTERTANKO under its chairman Mr. Papachristides augured for an awakening of international conscience on a most critical issue.
Basil Ph. Papachristidis

Basil Ph. Papachristidis is the Chairman of Hellespont Steamship Corporation and various shipping groups. His father founded Hellespont in 1946 and became a member of Intertankos Executive Committee. Basil Papachristidis become its chairman in 1981. In 19871989 as chairman of INTERTANKO, he placed the war between Iraq and Iran on the top of his priority list. He urged maritime actions to provide naval escorts to protect innocent passage in the Gulf and started a tour of meetings with political leaders to whom his message was clear: The attack on shipping and the killing of seamen in breach of international law had to be stopped. At the time he retired as a chairman, the combatants had agreed on a cease fire.
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Mohammad Souri
Mohammad Souri has served as Chairman and Managing Director of NITC since 1986. He is a Howard University (USA) graduate with 30 years' experience in shipping. In 1982, he joined the Islamic Republic of Iran Shipping Lines and served as Chairrman and Managing Director until he joined NITC in 1986.
NITC tanker, Barcelona

The National Iranian Tanker Company continued its services during the war with Iraq. This photo depicts the tanker Barcelona ablaze in the Persian Gulf.
Notes: In his article, Tanker Industry Overview, Martin Stopford commented on tanker owners strategies in the survival period. See INTERTANKO, The first 25 years, Oslo, 1996, pp. 91-101. Out of a total number of 567 VLCCs in the market by the end of 1983, as many as 332 units were estimated to represent surplus tonnage (slow steaming taken into account). Sixty-five VLCCs were sold for scrapping that year, including the largest tanker ever built, the 546,000-dwt PierreGuillaumat. See J.I. Jacobs reports from December 1980 and 1983 and INTERTANKOs annual report for 1983. Today, the VLCC fleet includes about 550 units. See Erik Ranheims article in Kapital no. 2, 2010. On the development of the combined carrier fleet, see SSY Consultancy & Research Ltd., London, Vol. 2, 2000. On the Gulf War and the cost of a round-trip voyage from the Middle East to Europe, see Stephen Howarth Sea Shell, pp. 176-177 and Jack Devanney: The Tankship Tromedy, Florida, 2006, pp. 31-32, where he describes the attack on the 412,000 dwt storage tanker World Petrobas, which was bombed by Iraqi jets whilst transferring oil to another tanker. The captain reported: Since we were both inerted and had our inert gas plants running, an explosion was avoided. Devanney opines that inert gas was a tremendous step forward in tank ship safety the single most important step of all time.
IV. COUNTERPRODUCTIVE MEASURES?

The groundings in 1976 of old Argo Merchant and two years later the recently built Amoco Cadiz caused pollution from ships as different as two crude carriers could be. But yet their negative effect on the image of the tanker and oil industry was much the same. Ironically, the Amoco Cadiz accident happened at the same time as the annual INTERTANKO meeting on the other side of the English Channel in Eastbourn. The independent tanker owners had gathered its members to discuss the public perception of tankers and the perception of the new giant tankers that during the last years had been delivered by the ship yards to carry oil cargoes over 300,000 tons. In Eastbourne the press was told that as most accidents happened in congested waters, in and out of ports. According to both the oil industry and the independent tanker owners, larger units would mean less traffic, less control problems and safer transportation. The environmentalists had long argued that the increasing number of VLCCs was bound to result in more disasters. Thus the answer from the environmentalists was: No way, the bigger the tankers are, the bigger the disaster will be. Few tanker owners found much comfort in the Greek proverb: The sea gets sick, but it never dies. In this crisis, most tanker owners felt that the current mass production of new rules was counterproductive. Strict implementation of current rules would be far better than the production of new measures, that
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Sir Yue-Kong Pao governments seemed to neglect and which a large number of owners could not afford to implement in any case. The problem for those owners who tried to follow up the new regulations was further increased by the oil companies preferences for cheap transportation. Despite the public declarations from their top men, their chartering departments continued to prefer the lowest bidder. In September 1981, INTERTANKOs chairman, Sir Pao, sent a message from Helsinki which included the following passages: Intertanko particularly endorses the current efforts of IMCO to obtain ratification of international conventions . The delay among some IMCO member states gives rise to concern. INTERTANKO is apprehensive that over-ambitious goals set by IMCO
Born in 1918 in Ningbo, China, Sir Yue-Kong Pao trained as a banker. He moved to HongKong in 1949 and established his own shipping company. Over the next 25 years, he assembled the largest privately owned ocean-going fleet under one house flag over 20 million dwt including tankers and dry bulk carriers. He was the resourceful chairman of INTERTANKO from 1979-1982 with direct access to world leaders such as Britains Margaret Thatcher, Americas Ronald Reagan and Germanys Helmut Schmidt. Before his death in 1991, he was knighted by Queen Elisabeth of England.
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may result in difficulties experienced by individual governments This might in turn, injure IMCOs image and effectiveness ... a need exists to consolidate present efforts with the aim of inducing governments to give priority to the ratification and enforcement of conventions already agreed. INTERTANKO believes that amendments approved prior to ratifications of conventions very often raise uncertainty among administrations and tanker owners. This can only be harmful to IMCOs efforts to achieve early ratifications INTERTANKO, therefore, urges IMCO to consider this aspect fully before considering further amendments to conventions awaiting ratification. IMCO took the point, and two months later its Assembly decided that the organization should: entertain proposals for new conventions or amendments to existing conventions only on the basis of clear and well-documented demonstrations of compelling need, taking into account the undesirability of modifying conventions not yet in force or of amending existing conventions unless such later instruments have been in force a reasonable period of times, and experience has been gained of their operation, and having regard to the cost of the maritime industry and the burden of the legislative and administrative resources of member states. (Source: Resolution A-500). European ministers responsible for maritime safety met in Paris in 1982 and agreed on a Memorandum on Port State Control, which committed them to inspect 25 percent of all foreign ships entering their ports every 12 months. Moreover, it was agreed to develop common inspection standards.
V. PRICY FUEL AND DIRTY TRICKS

During the years since 1973, soaring oil prices and reduced supplies of oil had resulted in demand for higher yields from every barrel of crude. At an IMIF meeting in London in June 1977, a prominent tanker owner from Norway illustrated the huge operating losses owners of VLCCs were suffering. He pointed out a 250,000-dwt tanker, burning 165 tons of bunker oil a day at the speed of 16 knots, which would earn on a voyage from Kuwait to Rotterdam some USD 820,000 at the current freight level. The cost of the bunker oil alone would come to about USD 800,000, and port fees accounted for a
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further USD 115,000. Daily running costs under the Norwegian flag for the 63-days-long round trip represented about USD 7,000, totalling USD 440,000. Even if depreciation and interest on capital were ignored, expenses exceeded income by around USD 8,500 every day. Few owners could afford to continue effectively subsidizing the oil companies and other charterers in this manner for long. The poor quality of fuel the shipowners would receive from their suppliers made the increasing fuel prices problem worse. This was related to the oil industrys introduction of a new separation process: Catalytic cracking. By this process, the crude oil achieved higher yields of lighter distillates from each barrel. The residual oil left at the bottom of the barrel was sold as fuel oil for ships called bunkers: An extremely poor product for which there was little market elsewhere. Still, bunker oil remained without comparison the single most expensive part of a tankers operating costs. The quality of the residues at the bottom of the barrel declined gradually to an all-time low, whereas prices accelerated to an all-time high. It did not help that the oil industry left it to the shipowners to separate and dispose of abrasive sediments as aluminium and silicate particles, which might tear up the cylinders and the fuel pump in a short time. Refineries would easily be in a position to remove the sediments. Tanker owners and other shipowners were under international law in duty bound to ensure the seaworthiness of their vessels prior to the commencement of the voyage. This meant that the fuel must be good for the engine, good enough to enable the tanker to reach its destination safely. Engine breakdowns because of inferior bunkers were experienced, but not yet in narrow and heavily trafficked waters. The industry could not afford another Amoco Cadiz. Neither did it help that the business ethic of an increasing number of bunker suppliers became more and more questionable. Excess water was blended in to the bunkers sold to shipowners. Seeing that as a business opportunity, some bunker suppliers were even more inventive and provided reception facilities for the oil slops that remained after the discharge of cargo. As discharging of the tank residues in the sea was illegal and no alternative for the prudent operator, his best alternative was to pay a price at the bunkering station to get rid of the cargo residues. But then, a clever bunker supplier would mix the slop into the bunker oil that he sold back again to shipowners and hocuspocus, the supplier was paid twice. The reception facilities dreamed of in IMOs meeting rooms did not exist in the real world.
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In ancient China, mixing sand and gravel in rice was a crime punishable by death. The major tanker owner of the world, the Mr. Pao, put the problem on INTERTANKOs agenda. At the annual meeting in Manila in 1980 attended by Dr. Carsten Boe who spoke for the DNV together with representatives of Chevron, it was decided to establish a closer cooperation to find remedial measures to improve the situation. Shortly after the meeting, tanker owners were offered to send samples of the fuel bunkered by express airmail to the laboratories of DNV that developed a fuel-testing programme. The ships would receive test results within four to eight days. Reports were issued monthly showing the most important parameters for each bunkering station to all subscribers. At the instigation of The General Council of British Shipping, the British Standard Institute introduced marine fuel standards in January 1983. Moreover, in close cooperation with Dr. Carsten Boe, INTERTANKO provided from that time on a bunker information letter called the White List which became popular for reporting names of reliable bunker suppliers around the world. In the same spirit, the International Chamber of Shipping succeeded to persuade its oil company membership to accept a standard delivery note to be used by suppliers for some specifications of the fuel delivered. When receiving reports on the most important parameters for each bunkering station, buyers could make more informed decisions on the fuel-quality standards of different suppliers. A minimum requirement was, however, that the chief engineer onboard knew more about the fuel he received from bunker suppliers. It would be of little help if the chief engineer and his assistants onboard were not capable of understanding what the specifications meant. But as Moses descended from Mount Sinai with 10 guidelines to his people, the organization of tanker owners descended into the engine rooms of its
Dr. Carsten Boe

Dr. Carsten Boe was born in 1944 in Bergen. A few years after he earned his doctorate, he joined Det Norske Veritas, where he became a director and developed a special interest in the field of bunker economy for ships. At a General Meeting of INTERTANKO in Manila in 1980, he presented his views on the prevailing quality problems together with Mr. F.B Ashlock, Vice President for navigation and marine sales of Chevron. Dr. Boe suggested a closer co-operation between tanker owners and the classification societies to provide information on bunker qualities in the various ports of the world. After the meeting, chaired by Sir YueKong Pao, several constructive measures were initiated to alleviate the problems. Dr. Boe also set up his own business in Oslo to provide expert advice.
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membership with 10 commandments for the chief engineers to ensure that they were up to par. A fuel focus report published and distributed by CBC Marine Publications (set up by Dr. Boe) complemented the White List. Both were based on the analysis of data supplied by Lloyds Registers respected Fuel Oil Bunker and Advisory Service (FOBAS). In July 1992, the port of Singapore clamped down on bunker fraud as the Port instituted a new bunkering procedure in order to eliminate fraudulent practice in the largest bunker port in the world. By and by, other ports also took similar action. After some years, an organization of bunkering ports was set up to improve the image of this industry. Not all tanker owners seemed clean either, and some appropriated quantities of cargo oil to fuel the ship. Control was not easy. Some cargo loss had, after all, always been accepted by the cargo-receiver as measurement was no exact science, and human failure had to be taken into consideration. Thus, cargo insurers had for a long time accepted about a half percent cargo loss as a standard insurance deductible. As cost-cutting was a condition for continued trading, the less honest owners found that one way to survive was by bunkers cheating. Pressed by soaring bunker prices, low-quality bunkers and the lowest freight market ever seen, cargo losses were turned to account by some ship-owners. By manipulating the positioning of the tanker just after loading, it was possible to trick the terminal inspector to believe that less cargo was loaded than was the case. One step further was taken when the idea struck the even more inventive ones that a good deal of money could be saved simply by pinching some tons of crude from the cargo tanks and using it as bunker oil. By installing a hose from the cargo tanks over to the bunker tanks connected with the engine room, good money could be saved. Regrettably, more than one owner abused this opportunity to reduce their losses. It was a highly dangerous practice, as the transferred crude contained the gas naphtha and other flammable gases that increased the risk of explosion and endangered the lives of the crew. Similarly, the use of oil slops (residues in the tanks) as bunker oil was a dangerous practice, as the slops contained explosive gas. But key officers were rewarded for performing this risky operation. It is alleged that rewards in the form of travellers cheques were contributory to the unveiling of a celebrity case that related to a Norwegian tanker owner who later acquired one of the worlds largest tanker fleets.
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The details were presented in an unauthorized biography published in 1991 and go as follows: The shipowners P&I club had received more claims than average for cargo losses onboard his tankers. Suspicion raised, the insurers managed to find a dismissed captain who put the cards on the table and confessed. He was moreover in a position to name other officers who could confirm his story. A professional insurance investigator got after some pressure the information he was after. Further supporting witnesses appeared from other quarters. Unveiling documentation was, however, never confiscated. It was believed to have been burnt as soon as the ship owners directors understood the seriousness of the case. But the Norwegian Police concluded they had gotten sufficient evidence and arrested some executives while they searched after the top man. In June 1986, the shipowner gave himself up. Subsequent to countless examinations, he was released after several months in jail. The case came never up for trial. It was postponed time and again. In the meantime, lawyers unveiled the amateurish investigation by the police who had no knowledge of maritime matters. It did not help, either, that elementary rules of procedure in the penal code seemed to have been overlooked in the rush. Some of the confessions given by the executives were withdrawn. The drama ended in September 1989, when the parties settled the matter. According to the unauthorized biography, the shipowner accepted to pay his insurer USD 800,000, and some of the money that had been seized. He also accepted to pay a heavy fine for endangering the lives of the crew. All other charges were withdrawn.
Notes: On owners operating losses because of bunker prices, see the report of J. I. Jacobs, June 30, 1977, p. 22. On the general bunker problems, see a presentation by T. Rafgard for DNV Forum, May 6, 1982, in New York; Lloyds List, March 10, 1986 and Jan. 21, 1987; Hauge & Stavrum: John Fredriksen an unauthorized biography, Oslo, 1991; Tradewinds, July 31, 1992; Seatrade Review, August 1993.
VI. MORE SPILLS TO FOLLOW

On Jan. 8, 1979, the corroded structure of a large French oil company-owned tanker, Betelgeuse, blew up whilst discharging at Bantry Bay in Ireland. Fifty people were killed. Findings by an Irish tribunal under a High Court judge placed the responsibility at the feet of the owners, the Total Oil Company, but also apportioned blame to Gulf Oil, which managed the terminal, because of its failure to ensure the safety of personnel at the offshore jetty. An inspection
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of the tanker, nine months before the explosion, revealed 37 cracks in its cargo tanks. The ships classification society, Bureau Veritas, knew that the ship was in an inferior condition, but did not interfere, as Total intended to sell the ship. The oil pollution caused is not reported. The Tanio case had served to show that the principles in CLC/FC were reasonably well-adapted to cope with pollution incidents of large magnitude. But the Amoco Cadiz disaster, where the real damages had been estimated to be well over USD 1 billion, had made it abundantly clear that the liability limits for pollution damage were hopelessly out of date and were far too low to provide fair compensation to pollution victims. Both the oil industry and the tanker owners recognized the need to provide increased compensation to pollution victims. But the opposing views on who should pay up delayed the progress. It took more than five years of preparations before IMCO, with some hope of success, once more could invite delegations to London to revise CLC69/FC71. In the meanwhile, IMCO had in 1978 taken steps to revise the MARPOL Convention of 1973. Whilst fresh amounts of documents were produced in preparation for a new conference, new serious tanker accidents occurred. According to statistics provided by the US Coast Guard, an oil spill larger than the one caused by Amoco Cadiz occurred on the July 19, 1979, 10 miles off Tobago in the West Indies. The 292,000-ton Greek super tanker, Atlantic Empress, caught fire after having collided with a large Liberian tanker, Aegan Captain. The oil spilt threatened not only Trinidad and Tobago, but the South American mainland, as well. With oil leaking out, Atlantic Empress became completely engulfed in flames. Instructed by the local government, salvors managed to tow the wreck further out to sea, whilst at the same time striving to extinguish the fire. But to no avail, an enormous explosion ripped the tanker apart and she sank with most of her 257,000 tons of oil cargo still on board. Twenty-nine of her 34-man crew were killed. The Aegan Captain was towed to Curacao, where her remaining cargo was discharged before she was sold for demolition. Atlantic Empress is still listed as having caused the largest oil spill ever. Thanks to the salvage operation, the cargoes did not cause pollution ashore. An environmental catastrophe had been avoided. But the weakness of the old international salvage rules was once again unveiled; as salvors had failed to save any property, they had no right to any award for their services rendered.
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Some months later, on Nov. 15, 1979, south of the Strait of Bosporus, the Romanian tanker Independenta (147,631 dwt) exploded after a collision with a dry cargo ship. All but three of 45 crewmembers died. The force of the explosion smashed windows up to four miles inland. The tanker continued to burn for weeks. From the breached tanks, 95,000 tons of oil poured out, while a blanket of thick acrid black smoke hung over Istanbul. After a month, the fire burnt itself out. In the meantime, navigation in the strait was halted. The next year, 1980, the tanker Irenes Serenade exploded and spilled 82,000 tons of oil in Greek waters. Even if no pollution damage was traced, the picture of 1980 would not be complete without mention of the mysterious disappearance of the largest UK-flag ship ever to have vanished at sea, the 170,000-ton ore/oil carrier, Derbyshire. She was built by Swan Hunters shipyard in the UK and launched in 1976. On her final voyage, she was bound for Japan carrying dry cargo when she was lost with 42 British officers and crew and two wives. The subsequent formal investigation concluded that one could never with any certainty find out what happened during the last minutes before the vessel disappeared, leaving no trace. The most likely explanation could be that it was caused by a violent typhoon. This conclusion was, however, not generally accepted by the International Transport Federation and other parties, as findings of what is believed to be the stern section and hundreds of small pieces of wreckage indicated an extremely violent break-up of the hull in a very short time - perhaps only seconds or minutes. One may also wonder whether this combined carrier collapsed, due to an explosion in the same way as the two Berge-ships. The years 1981 and 1982 went by without serious tanker spills. In 1983, however, one of the major oil spills so far occurred. Thanks to the weather, what could have become one of the worst pollution catastrophes ever was avoided when the Spanish super tanker Castillo De Bellver, laden with 250,000 tons of light crude oil, burst into flames in 1983 off South Africa. She came from Jebel Dhanna, United Arab Emirates, bound for Spain. After huge explosions, she started to burn, broke in two and sank with some 100,000 tons of crude oil still in her tanks. Three crewmembers were killed. More oil escaped into the sea from Castillo De Bellver than from Amoco Cadiz, but an offshore wind pushed the 60-square-mile oil slick out to sea and away from the nearby beaches. A black oily rain - from smoke caused by the oil on fire - fell upon the farmland, damaging wheat crops and
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harming flocks of sheep in the land around Saldanha Bay. In 1994, South Africas Cape peninsula beaches were polluted again. Oil seen bubbling up to the surface in the same region was believed to have come from the Spanish tanker that had gone down there 11 years earlier.
VII. THE SLOW BUT STRONG RECOVERY OF THE TANKER MARKETS

Troubled tanker owners began to see a silver lining in 1986, when the freight rates showed signs of improvement. The trade decline had bottomed out the previous year and from there begun to climb, driven by a general economic recovery and a shift in manufacturing from Western to Far Eastern economies. The tanker market went into a healthy recovery in 1988-1991, as reflected by long-awaited revival of ship values. From 1986 to 1991, crude oil transportation grew by 11 percent per annum, while the fleet continued to shrink until 1988 and from there pick up slowly. By 1991, the world tanker fleet stood at 246.4 million tdw; 18 million tdw less than in 1985. The phase of recovery passed into a slower pace in the 1990s, with a 14 percent increase in crude oil transportation from 1991 to 1999 and a marginally higher increase in vessel capacity. The decade ended on a negative note, as transportation decreased by 12 percent until 2002, while the fleet continued to grow by five percent. The progress of the globalized economy and the China boom made the period from 2002 one of rapid growth. In six years, the world seaborne trade showed an increase of 39 percent; six and a half percent per annum. The growth in crude oil transportation, however, was barely half that rate, 18.5 percent, or three percent per annum. Additions to the tanker fleet could not keep pace with the growth, but left an order book at the end of 2008 of 164 million tdw, corresponding to 43 percent of the trading fleet of large tankers. Relations may be put into perspective by looking back: The crude oil trade in 2008 of 9.3 billion ton-miles was about the same level as 1973, while the fleet was more than doubled, 101.5 percent larger to be exact. Behind the dry statistics we find a dynamic and dramatic story. The revival of the industry in the late 1980s brought several ailments to the surface; more on these later. The 1990s were largely disappointing to the shipping industry, with weak periods from 1991 to 1993 and 1998 to 1999. Shipping was still
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Furulund, Svein Erik / Aftenposten / Scanpix
considered to be high risk and low profit. Yet, the trading environment changed with stricter regulations and operations requirements, brought about by OPA 90, the ISM code and stricter practices by the oil companies. And at the same time, a consolidation process began which also altered the structure of the industry, with large fleets built up in specific segments by players such as Teekay, the Tankers International pool and others. Those who remained in the market were to be richly rewarded by the China boom. The boom was preceded by a strong upturn in the autumn of 2000 that saw freight rates unseen for decades. From 2003, rising demand came to maintain a firm market with pronounced contractions to all-time high levels. In general, tanker values doubled from 2002 to 2006. The recovery from 1986 was followed by an unexpected surge in damages; in small incidents like collision, groundings and cargo contamination, but also human and environmental disasters. Ferry tragedies such as the Herald of Free Enterprise, Scandinavian Star and Estonia contributed to a new focus on stability and fire protection, while Exxon Valdez, Mega Borg and others led to a new round of pollution liability. It all turned into a disaster tsunami of excessive damage claims. The P&I pool claims went from a quiet period in the mid-80s into a wave of claims in 1987 to 1991. For the period from 1982 to 1986, annual claims came out at USD 59 million after eight years, rising to 209 million per year for 1987 to 1991. An analysis the P&I club Gard carried out in 1992 showed that slightly over half of all major claims resulted from human error by crew, officers or pilots. Thirty-five percent were related to structural, mechanical and equipment failure. Pilot error was the main cause in 50 percent of all major property damage cases, with officer error accounting for a further 25 percent and crew error 12 percent. More major claims arose in the US than in any other jurisdic-
Herbjorn Hansson
Herbjorn Hansson was born in 1948. In 1974, the Norwegian Shipowners' Association hired him. From 1975 to 1980, he was chief economist and research manager of INTERTANKO. During the 1980s, he was Chief Financial Officer of Kosmos. In 1989, Mr. Hansson founded Ugland Nordic Shipping AS, or UNS, which became one of the world's largest owners of specialized shuttle tankers. Mr. Hansson is also the founder and has been Chairman and Chief Executive Officer of Nordic American Tanker Shipping since its establishment in 1995.
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tion: 42 percent of the number and 50 percent of the value. Vessels in the 10to 14-year-old range were the most liable to claims. There were reasons, effects and consequences. The shipping industry had come to face the bill for 12 years of depressed markets, the combined effects of low-cost operation, neglected maintenance, faulty technical equipment, human error, cultural clashes and also the emergence of a new breed of players. The drive for cost-cutting in order to survive had brought in a new manning structure largely based on third-world seafarers, not all of which were properly trained and qualified. Even the standards of classification societies were slipping. There were losses and pollution where the owners of the incumbent vessel were impossible to trace, hidden behind a free flag register and a post office box address in a tax haven. Disasters such as Exxon Valdez and Herald of Free Enterprise attracted great public outcry and political concern. When also the US Coast Guard and the Paris MOU port state control agencies revealed more vessels with technical defects or not compliant with regulations, the shipping industry at large came under scrutiny. The industry was to be taken to task. The European nations and Japan were pressing for IMO solutions rather than unilateral steps like the OPA90. It was not the lack of rules and regulations, but rather the lack of implementing them that had caused the accidents. Consequently, a safety management system was needed. IMO agreed on the International Safety Management (ISM) code in May 1994, to be implemented by 1998 and 2002. This also included external audits of ship and shore organizations. The human factor was dealt with in a new Standards of Training, Certification and Watchkeeping for Seafarers (STCW) code with stricter requirement for seafarers training and qualifications in 1995. The charterers, the oil companies, instigated their own quality control systems, based on regular control of management, operational procedures, contingency plans, etc. These vettings became a new control burden on the vessel and the officers, along with Port State Control and Class. Neither ISM nor the Port State Control could prevent the Italian-owned tanker Erika from breaking up in heavy weather off Brittany in 1999. The measures laid down by the EU Commission in the Erika packages the following year laid a time-table for phasing out single-hull tankers. More ominous was the lack of continued efforts to include other actors in the safety chain as potential responsible parties for pollution damage.
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Notes: The Betelgeuse salvage operation lasted for more than a year. Total claims for the incident amounted to USD 120 million. The West of England P&I club paid for the pollution response costs and the removal of the wreck. Independenta closed the Istanbul Strait for weeks. The wreck remained in the area for several years before it was removed. According to ITOPF, the incident in 1979 is in 2010 still listed as the 12th largest oil spill. See also the UK P&I club 125-year anniversary report. On the mysterious sinking of Derbyshire, see Lloyds List on April 11, 2000. The relatives of the 44 people who died had formed the Derbyshire Families Association to try to prove that the vessel suffered structural failure rather than being overcome by the forces of nature. In January 2010, it was reported that the chairman of the Families Association was appointed Member of the Order of the British Empire for his continued efforts to campaign for better shipping safety regulations, Lloyds List, Jan. 5, 2010. Derbyshire was owned by Bibby Line in Liverpool and built by the Swan Hunter shipyard. On Castillo De Bellver, see Lloyds List June 27, 1994, and Norman Hooke in Lloyds List Safety Supplement, May 2000. According to ITOPF, the spill still ranks as the third-largest oil spill. The fleet and trade statistic is based on information published by Fearnleys and RS Platou, Oslo, and Institut fur Seeverkehrswirtschaft und Logistik, Bremen. Herald of Free Enterprise was a car/passenger ferry which capsized outside the Belgian port of Zeebrugge in March 1987. The ferry with 650 passengers was bound for Dover when hundreds of passengers were trapped onboard. The final death toll was 193. The owner was Townsend Thoresen. The Scandinavian Star caught fire in April 1990 while carrying 439 passengers and 268 crewmembers between Oslo and Fredrikshavn, Denmark. One hundred fifty-eight people were killed. During the investigation, there were great problems with identifying the real owners of the vessel. Estonia was a passenger ferry with 989 people on board when she sank en route from Tallinn to Stockholm in September 1994. Only 137 people survived. The owners were EstLine Maritime Company of Estonia and the Swedish company Nordstrom & Thulin. The three tragedies resulted in a new focus on passenger ferries within IMO in order to improve stability and fire protection.
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TANKER MARKET SELECTED GRAPHS by Shipping Adviser Jarle Hammer SEABORNE OIL TRADE
SEABORNE OIL TRADE 14000 SEABORNE OIL TRADE

14000 12000 10000 8000 6000 4000 2000 0 PRODUCTS BILLION TONNE-MILES 12000 CRUDE OIL PRODUCTS 10000 CRUDE OIL 8000 6000 4000 2000 0
BILLION TONNE-MILES
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62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 Fearnleys 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 Fearnleys
This slide shows the phenomenal growth in oil ton-miles due to strongly increased oil usage and longer shipment distances because of the increased role of the Middle East and in particular the closure of the Suez Canal from 1967 to 1975. The strong decline in the late 1970s and up to the mid-1980s can mainly be ascribed to the North Sea offshore expansion and the war between Iran and Iraq. This war led to severe oil-production cuts and strongly increased oil prices, spurring the search for alternative oil and favouring other types of energy. An increasing share of seaborne oil trade is shipped as oil products following increased downstream involvement in oil-exporting countries in order to get higher value added. The growth in world oil consumption has tapered off significantly. Total seaborne oil trade measured in tonne-miles in 2009 was only about 2 percent higher than in 1977.
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OIL PRODUCTS BY AREA 19602010 OIL PRODUCTION BY AREA 19602010 OIL PRODUCTS BY AREA 19602010
MILLION B/D incl. NGL & Condensates
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Sources: BP/OPEC/IEA
MILLION B/D incl. NGL & Condensates 30
30
Sources: BP/OPEC/IEA
25
M. EAST OPEC
25
M. EAST OPEC
20 R-O-W 15 N. AMERICA
20 R-O-W
FSU OTHER OPEC
15 N. AMERICA 10 FSU
10
OTHER OPEC
5 N. SEA
0 60 62 64 66 68 70N. SEA 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 72 74
0 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 N. America includes USA, Canada & Mexico
N. America includes USA, Canada & Mexico
Here, production developments since 1960 are shown. Middle East OPECs role as a swing-producer is clearly displayed. So is depletion in some areas, like North America (USA, Canada and Mexico) and the North Sea. The former Soviet Union has managed to get back to pre-collapse levels. As for areas not included in the graph, Brazil has enjoyed substantial offshore success, whereas China and the Far East show fairly stable or stagnant output levels.
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HM Strategies
TANKER MARKET SELECTED GRAPHS by Shipping Adviser Jarle Hammer
CRUDE OIL EXPORTS
MILLION B/D 35 30 25 20 15 10 5 0 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 NON-OPEC EXPORTS OPEC EXPORTS
CRUDE OIL EXPORTS

Source: OPEC
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OPECs crude oil exports were in 2009 lower than in 1972. However, OPECs oil production was significantly higher. OPECs domestic oil consumption has increased strongly, and more oil is exported as oil products. NonOPEC exported more crude oil than OPEC in 2002, but has since seen a continuous drop due to depletion of resources.
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SEABORNE OIL TRADE

OIL TANKER DELIVERIES & DELETIONS [Vessels over 10,000 dwt] BILLION TONNE-MILES
OIL TANKER DELIVERIES & DELETIONS 14000

VESSELS OVER 10 000 DWT
MILLION12000 DWT
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PRODUCTS CRUDE OIL
50
10000 DELIVERIES
40
8000 6000 4000

DELETIONS
30
20
2000
10
0 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 Fearnleys
60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 Fearnleys
In this graph, deletions include scrapping, losses and conversion to offshore units, heavy-lift vessels and bulk carriers. In recent years, many more tankers have been converted than actually scrapped. Old, solid single-hull vessels constructed with mild-steel skin, which is thicker than the high-tensile skin used in modern vessels, provide a favourable alternative compared to construction of purposed-built offshore units and various vessel types starting from scratch.
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HM Strategies TANKER MARKET SELECTED GRAPHS by Shipping Adviser Jarle Hammer

OIL TANKER LAY-UP YEARLY averages OIL TANKER LAY-UP. Yearly AVERAGES
75 MILLION DWT 75
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50
50
25
25
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0
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
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0 Source: Fearnleys
SEABORNE OIL TRADE

VESSELS OVER 10 000 DWT
500
12000 MILLION DWT 10000
OIL CARRIER FLEETTONNE-MILES [Vessels over 10,000 dwt] BILLION 19602010 OIL CARRIER FLEET 19602010 14000
PRODUCTS CRUDE OIL
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START OF YEAR
400
8000
OIL TANKERS
300
6000 4000
200
2000
100
COMBINED CARRIERS
62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 Fearnleys
0 1960 1970 1980 1990 2000 2010 Fearnleys
This shows the fleet development for oil tankers and combined carriers. The tanker fleet peaked at 331.8 million dwt at the beginning of 1978. The combined carrier fleet peaked at 48.7 million dwt one year later. It took 29 years for the tanker fleet to become larger than in 1978. It stood at 410.1 million dwt at the beginning of 2010. The combined carrier fleet has seen a continuous decline to only 4.7 million dwt. The serious disasters of Berge Vanga and Berge Istra in the 1970s illustrated the risk of combining oil cargos with possible gas leaks - and iron ore, with possible sparks in connection with cargo handling. Combined carriers are more expensive to build than plain tankers and bulkers. They are either suboptimal tankers or suboptimal bulkers. However, the few still around benefit from nice combination trades in wet and dry and modest ballast distances. In protracted periods of tonnage oversupply, cargo owners were in a pick-and-choose position, and the popularity of combined carriers has faded away.
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THE 84 PROTOCOLS A STROKE IN THE AIR?
8 The 84 Protocols A stroke in the air?

I. SETTING THE AGENDA
In 1984, IMCO changed its name to the International Maritime Organization IMO. The number of parties to the 69CLC was now twice the number of states that had ratified the 71FC. One particular weakness of CLC69 had been that the compensation figures could not be adjusted without the blessing of a diplomatic conference. This practical problem had been foreseen in 1971, and hence FC71 included a stipulation that enabled the Fund Assembly to raise the limit. In 1978, the compensation available from the Fund had been increased by 50 percent to USD 54 million. Shipowners had in this connection pointed out that the Fund already had power to raise compensation further to USD 72 million but had failed to use this option. The Assembly had instead passed a resolution asking IMO to revise CLC69. The two conventions were regarded as one package, and the oil-importing member states claimed that it now was time to re-establish the balance between the two instruments. IMOs Legal Committee had, after lengthy discussions, prepared a number of suggested amendments. These suggestions were discussed with interested parties at a number of meetings during 1983 and 1984 in London, Stockholm, Brussels, Djakarta and other locations in between the sessions of the Legal Committee. No agreement had been reached on the future sharing of pollution liability. The definitions of ship, oil and pollution damage had been discussed but required further critical examination. Other important issues were the
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channelling provision, the geographical scope and the exoneration question as well as the future amendment procedures. All these questions were still unsolved when the 84 Conference convened. In addition, the Conference had to solve problems related to what rules should apply in the transitional period until the new set of rules had replaced the old instruments. What the parties seemed to agree on was that only the new texts should take the form of Protocols to the 69 and 71 Conventions. When the Conference finally convened in May 1984, delegates met in the new headquarters on Albert Embankment in London. The delegations elected a young Swedish lawyer, Mr. Jacobsson, as chairman for the deliberations on how to update CLC69 and FC71.
Notes: For further information on the 84 Protocols, see the official records of The International Conference On The Revision Of The 1969 Civil Liability Convention (69CLC) and The 1971 Fund Convention (71FC). See also the records on The International Conference On Liability And Compensation For Damage In Connection With The Carriage Of Certain Substances By Sea. Both reports were printed in London in 1993 in four volumes. Volume 4 contains the report on the subsequent Conference in 1992 on 69CLC and 71FC. The 92 Conference was initiated when it became clear that the 84 Protocols would not enter into force in the foreseeable future and was intended to maintain the substantive provisions in the 1984 Protocols but with lower requirements for entry into force. The four volumes provide comprehensive reports on the participation, documentation and deliberations by the IMO Conferences in London from April 30 to May 25, 1984, and from Nov. 23 to 27, 1992. See in particular the following pages in Volume 1: pp v) viii), pp. 132214 and 321-372, Volume 2: pp. 3-150 and 311-629, Volume 4 (a report on the Conference held in 1992): Refer in particular to pp. 78-87, 94-96 and 149-154.
Mns Jacobsson
Mr. Jacobsson was the Director of the International Oil Pollution Fund from 1985 to 2006. Before his appointment, he had represented the Swedish Government on frequent occasions, not least with respect to the preparatory work to reconsider the text of the oil pollution liability regimes. He was elected chairman of the IMO Diplomatic Conference in 1984. Thanks to his able chairmanship and personal diplomatic skill, the 84 Protocols were agreed with great majority. Several later developments not least the Exxon Valdez accident delayed, however, the implementation of the Protocols. But in 1992, the text agreed on in 1984 was adopted with two minor adjustments, and the instruments went into force after a few years.
II. CHEMICALS
CLC/FC applied to only the pollution damage caused by persistent oil. Despite all the difficulties ahead, the ambitions of IMO went even further. Certain toxic substances
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tankers carried could, in the event of a spill, have the same damaging consequences as those caused by crude oil. In 1969, a resolution had recommended that IMCO should intensify its work on all aspects including liability of polluting agents other than oil. The chemical tankers or parcel-tankers were equipped with a number of separate tanks, one for each type of the liquid hazardous cargo that the tanker carried. Notwithstanding IMCOs work to improve safety of tankers carrying such dangerous cargoes, accidents of a catastrophic nature could not be ruled out. Transportation of such cargoes had grown considerably, both in volume and in frequency. The convention on shipowner standard liability of 1957 had been revised in 1976 and the liability limits were increased considerably, at least in percentage terms. But the environment is not restored by percents. Several governments considered the general limits to be far too low for potential claims for damage caused by chemical tankers. Time had come to find a better solution. Thus the International Conference on Liability and Compensation for Damage in Connection with the Carriage of Certain Substances by Sea was to be arranged at the same time in 1984. A separate committee should undertake the work, basing its work on a draft prepared by the secretariat in cooperation with the Legal Committee. The draft conventions scope of application was defined by referring to lists of various hazardous and noxious substances (HNS) in other IMO conventions. IMO failed to realize that many governments lacked interest in the matter. After all, no record of serious incidents could be tabled. Moreover, the chemical industry declined to contribute to an instrument similar to the model CLC/FC provided. Suffice to say that the Conference did not manage to reach any agreement on chemical tankers. Further elaboration in IMO lasted 12 more years before finally in May 1996, the convention on Liability and Compensation for Damage in Connection with the carriage of Hazardous and Noxious Substances (HNS) was adopted. The subject had then been on the agenda for 25 years. In 2010, the convention was still not in force. A new diplomatic conference convened in April that year addressed several practical problems that had prevented many states from ratifying the Convention agreed on in 1996. Under the new Protocol, damage caused by chemicals carried in bulk would first be sought by the shipowner, up to a maximum Special Drawing Rights (SDR) of 100 million (USD 130 million) whilst damage caused by packaged HNS could be compensated by SDR 115 million (USD 149.5 million) from the owner. Once these limits are reached, compensation would be obtained from a second tier, the HNS Fund, up to a maximum of SDR 250 million (USD 375 million) including compensation paid under the first tier. This seems to mean
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that in the best case the HNS liability convention can enter into force about 45 years after IMCOs Resolution of 1969, which recommended that the organization should intensify its work, in collaboration with all interested international organizations, on all aspects of pollution by agents other than oil. IMO had more success when the Legal Committee in 2000 completed a draft convention regarding liability for bunker oil pollution damage. Together with the HNS Convention, the plan was to provide a comprehensive set of unified international rules governing compensation to all victims of pollution damage from ships. As the International Convention on Civil Liability for Bunker Oil Pollution Damage was closely modelled on CLC69/84/92, without the need for any contribution from the oil industry, the ratification process was simpler. It entered into effect in the fall of 2008. It makes the shipowner, bareboat charterer, manager and operator strictly liable for such damage, up to a certain limit, and his responsibility is backed up by the requirement of compulsory insurance.
Note: For a full review of the Bunkers Convention, see Maans Jacobssons article in the Journal of International Maritime Law, 2009, p. 21. See Mr. Jacobssons two articles; The HNS Convention Prospects for its entry into force CMI yearbook 2009 and Diplomatic Conference adopts Protocol to HNS Convention Shipping and Transport International 2010, no 2, p. 8.
III. WHAT SHIPS, WHAT OIL?

Two essential questions were: What ships and what oils should be covered by the new instruments? The 1969 and 1971 regimes covered only pollution laden tankers caused. The potential danger from the oil residues and from the fuel (bunkers) kept in designated bunker tanks had become apparent when the Greek tanker Olympic Bravery grounded off the French coast in late January 1976. (Chao, p. 130) Two months later, a storm broke the wrecked tanker in two and 1,200 tons of fuel oil leaked out, with some environmental damage as a result. The accident demonstrated that even if a tanker was in ballast with no cargo, there might still be plenty of oil onboard to cause pollution should an accident occur. Although many delegates surely knew that also dry cargo and other ships carry bunker oil and are capable of causing serious pollution damage, nobody suggested that oil spilt by such ships should be dealt with. The general feeling was that the general liability rules of the revised 1957 Convention would normally
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be sufficient to cover pollution damage caused by dry cargo and passenger ships. If a tanker with an oil cargo onboard spilled persistent bunker oil and no cargo oil, CLC69 would still cover the spill. In 1984, it was suggested to extend CLC and FC to provide compensation also for pollution damage caused by unladen tankers. This meant that when a tanker had discharged her oil cargo and began the ballast voyage back to the next loading port, pollution damage caused by spills of cargo residues or bunker oil should in principle be covered. It was also suggested to extend the coverage in the same way to the first ballast voyage undertaken by a combination carrier or any other vessel capable of carrying oil. Emphasis was placed on whether the ship was constructed or adapted for the carriage of oil in bulk as cargo. The total combined carrier fleet of the world included at the time some 337 vessels above 10,000 dwt. Because of the oversupply of tankers, most of the combination carriers were employed in dry trades such as grain, coal etc. Thirty units were laid up and nine arrested by creditors. Only about 100 combination carriers were actually employed in the oil trade. OCIMF had pointed out that it was not logical to make the cargo interest coresponsible for damage caused by oil from unladen tankers. Such damage would arise from the bunker oil, not from the cargo. Moreover, provided the new liability limits were raised to a realistic level, the potential damage would be limited and would be well covered under CLC in the future. The other view was that the cargo residues reflected the cargo interest because the ballast voyage was as much a part of the venture of transporting oil as the loaded voyage was. Consequently, it was logical that the Fund should be available in the normal way. Hence, a substantial majority of the Legal Committee had been in favour of applying both conventions to unladen tankers and to apply the same rules to combination carriers. Dr. Kalpin (USSR) stressed that his delegation felt that any extension to unladen tankers should be confined to tankers having oil cargo residues on board from their previous voyage. This view was generally accepted. The new instruments should apply also to combination carriers on the ballast voyage following a voyage with oil cargo onboard unless it was proved that there had been no oil residues onboard from the previous voyage. Because the claimant, in most cases, would not have the means of proving what the situation was, Dr. N. Trotz of the German Democratic Republic and Dr. Hisashi Tanikawa of Japan, among others, suggested imposing the burden of proof on the shipowner. This was agreed.
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Both instruments applied to persistent oils. Neither of them defined the meaning of this term. Some 80 percent of the oil transported at sea was crude oil. Crude carriers caused the major accidents experienced. Persistent indicates to what extent oil residues remains in the marine environment after evaporation. The general notion was that persistent oil included crude oil, heavy and medium fuel oil, heavy diesel oil and lubricating oil, whilst damage that gasoline, light diesel oil and kerosene caused was not covered. At the 1971 Conference, a Canadian proposal was presented intending to enable the Fund to fill the gap in CLC69. Mr. Langley had then drawn attention to the potential damage that could result from the release of the lighter fractions. Such releases, although less apparent than those emanating from the black oils, were equally damaging in given circumstances, he argued. In the meantime, there had been considerable debate in the Legal Committee whether to extend the scope to damage caused by non-persistent oils or not. At the 84 Conference, Admiral B.F. Hollingsworth of the US recommended that incidents non-persistent oils caused should be covered. The environmental effect of such oils was under certain conditions for example, in cold or shallow waters similar to the damage caused by crude oil. Hence, any required response action should be covered by CLC and not left to be paid by the Government the oil spill affected. In the view of Mr. J.R. Perrett of the UK, it was tempting to extend the scope as suggested, but in his mind this meant that some serious difficulties would arise. CLC was concerned with contamination, and it would not be logical to include toxic non-persistent oil. Furthermore, the potential damage was less serious; often nature alone would solve the problem. When damage occurred, the Convention on shipowners general liability, revised recently in 1976, would be sufficient to cover the claims. Moreover, an extension would mean that a great additional number of vessels of different types would be included. This implied an administrative challenge to enforce certification and compliance with the compulsory insurance requirements. Thus the administrative burden to extend the application to non-persistent oil would be heavy and quite out of proportion to any possible benefit. Furthermore, the cargo interest represented in the transport of non-persistent oil tended to be more fragmented and differed from the ones engaged in the transport of persistent oil. The contribution system to the Fund was already the subject of some criticism. To extend the definition to non-persistent oil, without at the same time
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extending the duty to contribute, would make the current scheme unworkable. Experience in no way supported the need to include such spills. Mr. Douay said that his delegation was strongly in favour of including nonpersistent oil in CLC69, whilst there was no need to include such oils in FC. Ms. K.M. Bruzelius of Norway agreed and pointed out that when incorporating CLC69 into its domestic legislation, Norway had extended the concept of strict liability to include damage also from non-persistent oils. The USSR gave the UK view strong support, as did the Federal Republic of Germany, Greece, Japan and India, among others. The Director of the Fund, Dr. Reinhard Ganten, also warned against the consequences of including nonpersistent oil in FC: it would be necessary to decide whether receivers of it were also to contribute to the IOPC Fund. the number of contributors was likely to increase, from some 350 to probably more than 1,000. The infrastructure of those small contributors often did not allow them to have experts understanding the system of the Fund Convention, and thus the collection of monies from them could cause a great deal of additional work The Chairman noted that 21 states had spoken against the inclusion of nonpersistent oil, with only 16 in favour. On this basis, the suggested change could not be introduced. Instead, the CLC definition of oil was somewhat narrowed in line with the definition of oil in FC71. Whale oil was not carried in such quantities that it had to be covered. For clarification, the words hydrocarbon mineral were inserted in the new definition of oil.
IV. POLLUTION DAMAGE PREVENTIVE MEASURES

The definitions of pollution damage, preventive measures and incidents were the pillars of the entire compensation system. The long time the Conference spent to find acceptable solutions reflected their importance. In CLC69 and FC71, the definition of pollution damage referred to loss or damage caused outside the ship by contamination. Contrary to a proposal
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from France, it had been agreed that damages caused by fire or explosion should not be covered. It followed that the impact sustained in a collision with a ship or other object also fell outside the definition. But the definition was not at all clear with respect to environmental damage. Should such claims be covered? As the text stood, they were neither allowed nor expressly excluded. Many delegates felt that the old definition could lead to speculative claims, whilst one on the other hand risked rejection of justified claims. The Legal Committee had concluded that the concept should be clarified, but was unable to draw the line of demarcation, which was no easy task. As no consensus had been reached with respect to a new wording, the Committee had instead presented a proposed CMI text and listed several questions, which delegates were invited to address: Whether the definition should include personal injury and loss of life, whether it should stipulate that recovery would be limited to costs actually sustained, whether it should be restricted to loss resulting directly from contamination, whether the reasonableness of costs incurred should be a condition of recovery, and whether there should be a reference in the definition to restoration of the marine environment. Allowing the national courts wide margins of interpretation would lead to unfair differences in terms of compensation. The challenge was to find a solution that ensured compensation for persons earning their living from tourism, such as hoteliers and restaurant owners, but at the same time excluding those who were not directly dependent on such activities. In connection with the publication of the book on the 25th Jubilee of IOPCF, Dr. Ganten commented in 2003 on how the interpretation of the definition had caused working problems: With all due respect to the drafters of CLC (in those days greater clarity had not been possible), this definition was a totally inadequate yardstick for deciding whether the damage could be regarded as pollution damage. Clearly, clean-up costs would normally be covered, but what about loss of income by fishermen making a living in a polluted area or losses suffered by hoteliers, petrol stations or tourist shops close to a polluted beach, damage caused by an accident involving vehicles taking part in clean-up operations or loss of tax revenues suffered by local authorities owing to a decline in tourism?
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When it turns out that a definition in a treaty requires further interpretation, such problems could usually be left to national courts. However, in this particular case, most delegates felt that different consideration should apply. As the members of IOPCF shared the cost of pollution claims, it was imperative that all states admit claims on the same basis, otherwise serious inequity would occur. For the purpose of uniformity, it seemed necessary to reach a definition as detailed as possible. Mr. E. Klingsborn of the Federal Republic of Germany stressed that only reasonable costs should be compensable. Reasonable claims based on estimates of future costs of reparation should also be compensable even if the costs had not yet materialized. Finally, reasonable costs borne to restore the marine environment should be covered. Ms. A. de Bievre of Friends of the Earth International (FOEI), an environmental group, argued that it was important to include expenses arising from the restoration of the environment. A second valuable element was providing compensation of costs expected to be incurred to restore the marine environment. Together with Dr. V. Sebek, observer for the Advisory Committee on Pollution of the Seas, she supported the German intervention. Several delegations supported by the observers from the oil and tanker industry were concerned that if measures that had been undertaken should be covered, as well as measures that should be undertaken, this could invite speculative claims. Admiral Hollingsworth underlined the importance of limiting compensation to claims for costs that had been incurred and economic losses that had been sustained, and to exclude such claims that were speculative in nature. In his view, courts should approve claims only accompanied with firm plans and make sure that such plans were carried out. What delegates had in mind when referring to speculative claims may be illustrated by the restoration calculation that had been based on a mathematical model the USSR applied in the Antony Gramsci case. In February 1979, this tanker had grounded in the Baltic Sea. Fifty-five hundred tons of crude oil had leaked out and caused damage to the coastlines of Sweden, Finland and the USSR. The USSR, which at the time had ratified CLC69, but not FC71, claimed compensation for ecological damage. Based on domestic legislation, the USSR authorities claimed compensation according to a formula whose only variable was the amount of oil spilled; two roubles per cubic metre of polluted water for restoring the water to clean condition. Although compensation could not be sought from the Fund, as the USSR was not a member, the
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claim was of considerable interest to the Fund because it competed with a claim put forward by the Swedish government (which was a Fund member) for the amount payable by the shipowner. The Fund Assembly reacted by adopting a unanimous resolution stating that the assessment of compensation for environmental damage to be paid should not be made on the basis of an abstract quantification of damage calculated in accordance with theoretical models. Following the adoption of the Resolution, the Fund decided that compensation for environmental damage could be granted only if a claimant had a legal right to claim under national law and had suffered a quantifiable economic loss. The Gramsci case (which was settled out of court) was of considerable interest when the Conference set up a working group chaired by Dr. Trotz to find an acceptable text. It was realized that what was reasonable had to be considered on the facts available at the time of decision. The group could not agree on one single proposal and presented two alternative definitions of pollution damage. The first alternative contained more specific guidelines for the national courts, whereas the second alternative gave them more freedom of action. Contrary to the view of the P&I clubs, both alternatives allowed compensation to be granted for future expenses referring to measures to be undertaken. Dr. A.B. Jaafar of Malaysia found that the proposals tabled were not satisfactory, as both the suggested alternatives referred to loss of profit, which in his mind was too restrictive. In many societies, including his own, the loss would bear on income rather than on profit; fishermen, for example made no actual profit but still had to pay their overhead expenses and to hire or purchase boats and other equipment. The next day, however, he left this somewhat subtle point in the hands of a drafting committee. Finally, a clear majority agreed on the following definition of pollution: a) loss or damage caused outside the ship by contamination resulting from the escape or discharge of oil from the ship, wherever such escape or discharge may occur, provided that compensation for impairment of the environment other than loss of profit from such impairment shall be limited to costs of reasonable measures of reinstatement actually undertaken or to be undertaken b) The costs of preventive measures and further loss or damage caused by preventive measures.
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The Fund had on several occasions paid compensation to hotel owners, restaurant owners, shopkeepers and others who were conducting their business at beaches and living from tourism. There had been voices claiming that sometimes the damage suffered was too remote to be directly caused by the pollution incident. The new definition did not require a direct cause. Hence, IOPCF welcomed the wording, as it confirmed the legality of the internal guidelines for granting compensation. The decision on whether fishermen, businessmen, etc., living from tourism or involved in related industries suffered a compensable loss would be based on the same explicit evaluation as before. It is somewhat unusual to award compensation for measures to be undertaken in the future. So when the majority favoured that cost of measures to be undertaken should be included in the definition and be compensable, this was a clarification of importance. As set out above, several delegations had preferred that compensation was restricted to proven damages actually sustained and preventive measures actually taken. Most delegations were comfortable with the change that allowed compensation for costs of future measures, e.g. to reinstate the environment. It should be kept in mind that such claims would be compensated only if they were found to be reasonable, which meant that claims based upon theoretical calculations like in the Gramsci case would not be honoured. Nor would it be possible to obtain compensation if it was found that there was no real intention or possibility of actually restoring the environment in question. Moreover, money up front was clearly important to poor countries. In a number of developing countries, the clean-up measures could not be undertaken until compensation was readily available. Efforts to clean up or re-instate the environment should not be postponed until a settlement had been reached between claimants and the shipowner and his P&I club. Behind the new definition, one may assume that also the experience gained from the Tanio accident played a part. The Fund had in that case paid out compensation on the basis of an estimate and thereby avoided the ludicrous result of not paying compensation because the costs had not actually been incurred, because there had been no money available to pay for the measures. The expenses from a successful operation to prevent pollution are often substantial. But the operation might be so successful that no pollution damage occurs; should the expenses thereby connected be recoverable? The question was raised after Tarpenbeck a small tanker collided with
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an auxiliary vessel and capsized off the coast of England in June 1979. The salvors agreed with owners to strive to avoid/minimize pollution at a daily rate instead of the usual no-cure, no-pay principle. The measures taken were successful. The contractors towed the tanker into sheltered waters and pumped the cargo over to safer storage. Considerable expenses were thereby incurred. The owner claimed compensation from the 71Fund for the amount that exceeded his modest liability limits under CLC69. IOPCF, however, was of the opinion that pre-spill costs were entirely irrevocable and refused to accept the claims for compensation from the shipowner, the UK government and the local authorities. The refusal was based on the fact that there had indeed been no escape of oil. Thus it was argued that when no pollution occurred, the Fund did not come into play. At the 84 Conference, it was agreed that it would not be reasonable to grant a right of recourse to anyone who had partially succeeded to prevent pollution, but refuse to provide compensation to someone that had been completely successful in his efforts. Hence, it was concluded that measures taken after an accident but prior to the threat of an oil spill, which prevented spills, should be covered. To avoid any misapprehension, the Conference had to introduce a new definition of incident that was interlinked with the definition of pollution damage. In the original version of the two conventions, the incidents to be taken into account were any occurrence or series of occurrences having the same origin, which causes pollution damage. It was decided that if no pollution damage was caused, compensation for clean-up costs should also be obtained if the incident creates a grave and imminent threat of causing such damage. Before this conclusion was reached, a long debate went on. It was argued that a threat could be very serious in the long-term, even if there was no imminent danger. A sunken tanker could cause substantial pollution damage many years after the incident, and it would be reasonable to cover expenses taken to prevent such damage right away. Attempts to remove the oil should not be discouraged under such circumstances, and several delegates felt that it would be sufficient that there had been a serious threat of pollution damage. The majority, however, preferred to refer to a grave and imminent threat. In such cases, expenses incurred to undertake preventive measures would be covered, even if no oil spill occurred. The words grave and imminent also appear in a parallel section of The International Convention Relating to Intervention on the High Seas in Cases
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of Oil Pollution Casualties of 1969, and are a condition for governmental authorities intervention on the high seas in case of pollution incidents. Moreover, the new definition of incident adopted the same wording as laid down in the TOVALOP agreement.
Note: On the admissibility of claims, see Dr. Gantens article, pp. 59-61, and Mr. Joe Nichols article, pp. 103118, in IOPCF 25 years, Kent, 2003. See also de la Rue and Anderson: Shipping and the Environment, London, 1998, pp. 419-431 and 503-558, and W. Chao: Pollution from the Carriage of Oil by Sea, pp. 146-156 and 361-382. See also Maans Jacobssons article; How clean is clean? - The concept of reasonableness in response to tanker spills. Ref. Scritti in onore de Francesko Berlingeri.
V. GEOGRAPHICAL SCOPE
CLC69 restricted its application to pollution damage caused on the territory including the territorial sea of the contracting states and to preventive measures taken to prevent or minimize such damage. This could be understood to the effect that the costs of preventive measures taken outside the territorial waters were not recoverable. Contrary to this interpretation, the Preamble of FC71 implied that CLC69 was a regime for compensation for pollution damage in Contracting States and the cost for preventive measures, wherever taken, to prevent or minimize such damage ... Canada had in the past strongly criticized this approach. In the representatives mind, it was not at all clear that the connected costs were compensable when a state undertook preventive measures on the high seas in order to avoid pollution damage to its territory. Now, in 1984, Canada wanted to repair the mistake and clarify what may have been an oversight in 1969. In the years to come, it was realized that what the Canadians had suggested in 1971 was common sense. During the preparatory work, there was general agreement that one had to spell out clearly that measures to minimise or prevent pollution damage should be compensated also if these measures were taken outside the territorial waters. Thus the revised text of CLC article IIb and FC article 3b made reference: to preventive measures, wherever taken. Representatives of Australia, Canada, New Zealand, the US and several South American countries advocated further extension. In the view of these groups, the new protocols should allow for compensation when pollution damage resulted in loss of income in the Extended Economic Zone (EEZ), a
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zone which together with the territorial sea covers a surface greater than the continents. Mr. L.J.W. Ludbrook of New Zealand emphasised that Coastal states possessed sovereign rights in respect of natural resources in the EEZ and on the continental shelf. Those natural resources required protection from pollution damage. Activities, installations and structures connected with the exercise of such sovereign rights also required protection. The same opinion had been strongly voiced and elaborated in a submission from the FOEI. One of the arguments was based on the Law of the Sea Convention, under which contracting states had a duty to co-operate to ensure adequate compensation in respect of all damage caused by pollution to the marine environment including the EEZ. Mr. M.R. Carly of Belgium opposed, arguing that Extension of the Conventions scope to areas beyond the territorial sea would incur the risk that, in subsequent years, some countries might claim that those waters were their property, since they could obtain compensation for damage occurring therein, they might indeed claim that the 200-mile zone comprised territorial waters. Belgium attached great importance to the freedom of the seas. Other opponents referred to the fact that the concept of the territorial sea was now much wider than it had been in 1969. Furthermore, the legal rights and obligations of states with respect to the EEZ were not at all clear in international law. The various national zones were very different in nature, and some of the potential contracting states had not even established such a zone. Thus it was claimed that the only link between the various national zones was the name by which they were described. Mr. Aage Os of Norway pointed out that for some states which were situated very close to their neighbours, it was impossible to allow for a zone of 200 nautical miles. The distance envisioned should not exceed 10 nautical miles. The opposition was supported in a submission from the P&I clubs that had dealt with 17,000 claims for oil pollution damage throughout the last 13 years. Their experience was that a number of claims had been grossly inflated. Thus, the insurance industry felt strongly that the EEZ question should not be seen in isolation, because the cumulative effect of widening the conventions could involve a dramatic increase in the exposure both of the Fund and the ship owner without any corresponding benefit. Each proposed extension had to be very carefully considered on its merits to avoid contentious or speculative claims and an unacceptable aggregation of risk, it was argued.
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The discussion continued for five to six days till a compromise finally was achieved. The agreed text extended the geographical scope to include the EEZ, provided that the zone was established in accordance with international law. If no such zone was established, it was decided that in no case should such zone extend beyond 200 nautical miles from the baselines from which the breadth of its territorial sea is measured. The extension of the geographical scope was seen as one of the main changes undertaken by the 84 Conference to improve the position of the potential victims for pollution damage. Arguably, it also seems to favour the party potentially liable, the shipowner. He now acquired the right to limit his liability if the pollution damage occurred in the EEZ outside the territorial waters. With no such extension, he could have been subject to national laws that may not have entitled him to limit his liability.
Note: On the geographical scope, see Dr. Thomas Mensahs article in IOPCF 25 years, pp. 48-49, and W. Chao, pp. 153-156.
VI. EXONERATION
There was no proposal put forward to the 84 Conference to turn the clock back and re-introduce the traditional maritime principle that the liability of the ship-owner should be based on fault. The strict liability under CLC69 had come to stay. The question was rather whether the exceptions to the strict liability agreed on in 1969 should survive. According to CLC69, the shipowner was obliged to insure his potential liability, and the majority of governments had found it appropriate to exonerate him for such risks which marine liability insurers normally were unwilling to bear. To be exonerated, the owner had to prove that the pollution damage was caused by certain extraordinary events listed including act of war, a natural phenomenon of an exceptional and irresistible character, or wholly caused with intent of a third party or failure of governmental authority to maintain navigational aids. The preceding discussions in the Legal Committee had revealed that a number of delegations were of the opinion that the current system deviated too much from the principle of strict liability on which CLC69 was based. No agreement had been reached. A particularly difficult question was whether the shipowner
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should continue to be exonerated when the pollution damage was wholly caused by the negligence of any governmental authority responsible for lights or navigational aids. Such governmental failures did not constitute force majeure in the usual meaning of the term, it was argued. Moreover, the exception compelled victims to sue governments and prove negligence to obtain compensation. This was felt to be an unfair burden, because most victims would contrary to shipowners have little or no knowledge on how to go about proving the insufficiency of navigational aids. Other delegations concluded that the reference in the text to wholly caused was too restrictive, as exoneration did not clearly result, for example, when a ship relied on faulty navigational charts. The problem was illustrated by a case that had been considered at length by the Swedish Supreme Court. Tsesis, a USSR tanker laden with about 16,000 tons of oil, grounded in October 1977 on a submerged rock in the sensitive waters off the Swedish coast. Five hundred tons of heavy fuel oil escaped. The rock was not marked on the chart, and a majority of the judges concluded that navigational aids must include marine charts. There had been no negligence, and the shipowner was not held liable from the resulting oil pollution damage. The difference of opinion among the judges showed that the provision in CLC69 with respect to navigational aids was in no way clear, and courts in other countries could have reached the opposite conclusion. The representative of the International Association of Lighthouse Authorities (IALA) pointed out that mariners learn to not rely 100 percent on navigational aids, but have to use all available means to ensure safe navigation. If negligence in the maintenance of aids is claimed and the innocent victim should sue the government responsible directly, he would be put in a very unfavourable position. On the other hand, nothing would prevent the owner from suing the governmental authority responsible for substandard aids of navigation in order to recover any compensation paid. The International Association of Ports and Harbours put similar arguments forward. Dr. Jaafar of Malaysia, together with other delegates including Major Bernard of Trinidad and Tobago and Mr. Douay of France, argued that maintaining navigational aids had never been a legal obligation of coastal states, but was merely a moral obligation. The basic concept of the 1969 Convention was one of strict liability; in exchange, the owner was allowed to limit his liability.
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To make maintenance of the navigational aids legally mandatory, would, in their minds, destroy the whole basis of the Convention. On the other hand, a lengthy submission from FOEI pointed out that charts and other navigational documents clearly were the responsibility of public authorities, and it would be most unfair to make shipowners liable for any resulting damage. Several delegations supported this view, including the UK and the Scandinavian countries. The Conference was reminded that the wording adopted in 1969 was a part of a compromise package. Deleting the provision would put other elements of the compromise at risk, according to Dr. Kalpin of the USSR. He rejected the argument that the victim would have great difficulties in bringing claims against the authorities. He suggested in fact in most cases it was the Government or authority itself which was the victim and which made the claim. In his mind, to excuse Governments from their responsibilities would have catastrophic consequences, since it would lead to a situation in which they could rely on being free from liability whatever might occur. INTERTANKO argued that the direction of a cleaner environment had emphasized the need for closer co-operation between sea and shore interests. In this respect to delete par. 2c would seem extremely odd in the light of Assembly Resolution A.500 (XII) which stipulated that existing instrument should not be altered except where there was a compelling need. After a lively discussion it was decided by simple majority to delete the exoneration of the shipowner when an accident was wholly caused because of failure of navigational aids (article III c). However, at the Plenary a twothirds majority was required to alter the text, and the majority 38 votes in favour of deletion and 20 against was insufficient. The exoneration of the shipowner when the damage was wholly caused by negligence of a Governmental authority responsible for navigational aids very narrowly survived. The cases in which the Fund was exonerated raised little discussion at the 84 Conference. There was one exception. According to Article 4.3, the Fund was wholly or partially exonerated if it was proved that the pollution was caused by the claimants own negligence or with his intent to cause damage. But it was also stated that this exoneration did not apply with regard to claims for recovery of costs related to preventive measures. In this regard the chairman raised the questions of whether the Fund should always be exonerated only to the extent that the owner was fully
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exonerated, or if there should there be special treatment with respect to preventive measures irrespective of who took them. To encourage rapid clean-up operations, no delegation wished to cover less than the costs of preventive measures taken by the shipowner. Mr. E. Gesmar of Denmark was of the opinion that as a general rule, preventive measures should always be compensated. Mr. Douay agreed that preventive measures should be treated as a special case and pointed out that in any case, it was only reasonable preventive measures that would qualify for compensation. To encourage all victims to take preventive measures, it was agreed to insert a new stipulation in article 4.3 of the Fund Protocol: However, there shall be no such exoneration of the Fund with regard of the preventive measures. Later, it was pointed out that introducing this stipulation contradicts the other provision in the very same paragraph, reading, The Fund shall in any event be exonerated to the extent that the ship-owner may have been exonerated under Article III, paragraph 3, Liability Convention. There is no need to see this as a contradiction. The article imposes a heavier burden on the Fund; otherwise it is exonerated in the same way as the shipowner.
Note: On the Thesis case, see de la Rue/Anderson, pp. 89-90 for details. CLC69, article III 2.
VII. CHANNELLING
According to article III in CLC69, the shipowner was liable for any pollution damage the ship caused. Only the owners servants and agents were explicitly excluded from liability. No other parties were excluded. The text thereby opened up the possibility that parties other than the owners (charterers, salvors, cargo-owners, shipbuilders or other interests) might incur liability for oil pollution damage under national law. Clarity and simplicity are essential elements in a provision on channelling, and the registered owner was the most easily identifiable party to assume responsibility. It was generally agreed upon that the need to encourage salvage operations and preventive measures required a change in the text so that these parties were protected against claims from pollution victims. But the Legal Committee went several steps further and presented a proposal to the Conference that directed all pollution damage claims against the registered owner and explicitly barred claims against a number of parties listed.
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In the same way as under CLC69, servants or agents of the owner or the member of the crew, were protected. Now the exception was extended to salvors and the pilot or any other persons performing services for the ship. Moreover, no such claim could be directed against other parties such as charterers (howsoever described) manager or operator of the ship, as well as people taking preventive measures or servants or agents of the people mentioned. P&I clubs supported this solution. Their argument was that such elimination would increase the capacity of the insurance market and reduce the need for overlapping insurance coverage. Moreover, rather than chasing other parties that might be involved in the pollution incident, it was normally easier for victims to sue the owner and benefit from his compulsory insurance. For obvious reasons, the international oil industry, which otherwise could be exposed as charterers of tankers, also wanted a new wording. By and by, a majority within the Legal Committee was convinced that adopting a proposal to exclude charterers and other parties was the best option for the victims under the revised instruments. Others would agree with The International Union for Conservation of Nature and Natural Resources (IUCN) and the European Council of Environmental Law, who opined that strict channelling should not permit persons who cause damage to escape liability. The proposed text precluded victims to claim compensation outside the Convention against the parties listed, unless the parties were reckless or had intended to cause damage. Other parties (not listed) in control over the oil transport or the handling of the oil which were in a position to minimize the pollution risk consequently remained a potential responsible party under national law if an incident causing pollution damage was because of their negligence. Thus shipyards, tanker terminals/cargo owners (unless the cargo is owned by a party explicitly excepted), classification societies or an owner of a colliding vessel, had according to the proposal no absolute protection against compensation claims pursued by victims under national law. In view of this possibility, OCIMF had submitted a paper proposing a wording that precluded potential liability for all parties except the ship owner. This proposal did not get any support. The effect would have been that companies behind the registered owner as an alter ego could not have been held liable as in the Amoco Cadiz case. At the preparatory stage, the association had alternatively suggested that shareholders should be included in the list of exempted persons. This proposal was rejected, and one delegation observed:
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that if a corporation was a ship-owner and was sued for pollution damage, it was because it was a shipowner, not because it was a corporate shareholder. However, several delegations questioned the proposal of the Legal Committee. The adoption of a provision disallowing claims against certain parties directly involved in the operation of the tanker was a considerable step from the traditional legal system in many countries. The litigation following the Amoco Cadiz incident in 1978 had demonstrated the need to seek compensation for pollution damage against other parties than only the shipowner. In an effort to avoid the modest compensation CLC69 offered, action was brought in the US not only against the owner Amoco Transport Corporation, an offspring of Amoco International, but also against the operator, Amoco International Oil Co. and the parent company, Standard Oil Co. of Indiana. If the US had been a party to CLC69, such litigation would also have been permissible according to the 1969 wording where only the agents or servants of the owner were excluded. The representative of the US, Admiral Hollingsworth, stated that the channelling question represented one of the elements crucial for the US. The concept, however, was unfamiliar in the US law and his country could only accept the concept if the ship-owners liability was set at a sufficiently high level and provision made to protect the subrogation rights of the Fund. Also, Alfred H. E. Popp QC confirmed that the concept was foreign to his countrys legal system, and could only be applied if the compensation offered by the Convention, as supplemented by the Fund Convention, was satisfactory. The definition of owner in the Canadian Shipping Act could cover the registered owner, the operator or the charterer. Mr. Douay was also sceptical to the proposed text of the Legal Committee. Favouring retention of the present text, he objected strongly, because it would provide virtual immunity to the parties listed. This was quite excessive. Thus the exception of potential liability for the parties listed in the drafts subparagraphs a to f should be deleted. The formulation in its present form seemed unacceptable all the more so if inadequate amounts of liability were adopted. Several speakers, including Mr. I. Petrakis of Greece, Mr. P. Anders of Poland and the representative of The International Chamber of Shipping supported Mr. Douay.
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Also Mr. Perrett of the UK questioned whether an exhaustive list of parties to be exonerated was a good solution. Some parties might be left out, which, in retrospect, should have been included. Moreover, CLC69 had proved to be reasonably satisfactory. One should remember that it was not a question of attributing blame but of organizing compensation in the best practical way. Only salvors might be considered added to the parties already exempted in CLC69. What the UK delegation argued might on reflection seem to be common sense. However, more enthusiastic support for the proposal of the Legal Committee was voiced by the representatives of the Netherlands and the German Democratic Republic, who both explained that they favoured the suggestion of the Committee because it had the advantage of avoiding overlapping insurance cover of persons connected with the operation of the ship. Many other speakers also supported the proposal obviously for the same reason, but with no further argumentation. Thus, if the total compensation to be provided was sufficiently increased, the majority of delegations were prepared to disregard established legal principles and provide a sanctuary for most other parties involved in the operation of tankers including the charterers. The Legal Committees formula was in the end accepted with 29 votes to 13 and five abstentions. The exclusion of liability for the parties listed, including charterers, operators, pilots, salvors and their servants required, however, that the damage did not result from their personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result. In such situations, a claim may be brought against them under national law. Consequently, it is arguable that the position for servants and agents of the shipowner thereby became less favourable than under the original text of CLC, because under that instrument their immunity was absolute. The shipowners right to recourse against third parties, Article III 5, was retained. Here it was stated: Nothing in the Convention shall prejudice any right of recourse of the owner against third parties.
Note: On channelling, see Dr. Gantens article in Oil & Petrochemical Pollution, 1985, p. 93-107. Regarding the various problems with respect to the interpretation of actual fault or privity, see W. Chao, pp. 174-183.
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VIII. LIMITATIONS & LIMITS

Under CLC69, the shipowner lost his right to limit his liability if the pollution damage resulted from his actual fault or privity. Within IMCO, it seemed to be general agreement that the existing text had led to wide differences in its application by courts in the various countries. Furthermore, it was not clear who had the burden of proof. The P&I clubs had in a submission to IMO expressed that one of the most glaring defects in CLC was this very provision. Settlement of many claims had been delayed in many cases until the issue of limitation was clarified. The Conference accepted that the legal interpretation could cause serious difficulties and that divergences might emerge as a result of inconsistent judgement, depending on which national law was applied. In the 1976 Convention on Limitation of Liability for Maritime Claims (LLMC) the provision on conduct barring limitation read: A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss or recklessness and with knowledge that such loss would probably result. After an informal meeting of all interested parties in Stockholm in December 1981, general agreement had been achieved to delete the reference to actual fault or privity and to replace it by a new clause in line with the provision in LLMC. The type of conduct barring limitation described here was generally believed to be graver than under the previous wording. CLC69 also contained another provision in article V.3, which had prevented quick settlements. In the view of many delegations, the compulsory establishment of the Limitation Fund (LF), which shipowners had to set up after an incident as a pre-condition to limitation, should be discontinued. The aim of the LF was to make adequate compensation available to victims promptly, but in practice the procedures had proved to be very time-consuming and delayed the payment of compensation. P&I clubs usually arranged the compulsory insurance requirements in CLC69. This meant that there was very little risk of compensation not being paid. Thus, in the experience of IOPCF, the duty to set it up might in some cases impose a disproportionate burden on the shipowner. If the claim was small compared to the substantial legal cost required, the requirement had therefore in some cases been waived despite the stringent wording.
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Nevertheless, the obligation to constitute a Limitation Fund was retained in the new text. Its survival has been explained by reference to financial considerations; the Fund might accumulate substantial interest between the point in time when it was set up and the time when compensation was paid. It is shown that in the Tanio case, the LF nearly increased 100 percent in this period. IOPCF was, however, according to an additional provision now introduced, expressly empowered in extraordinary cases to decide that compensation could be paid even if no fund was constituted. The limitation figures and the amounts of liability constituted the heart of the revision work. The figures laid down in the two instruments were the prime reason for the revision work. Neither the shipping industry nor the oil industry objected in principle to an increased liability. But their views collided on the question of how the future liability system should be structured. Whereas most governmental delegations considered that an upward revision of the limits was essential, they were divided with respect to the way the increased liability should be shared between shipowners and the oil industry. Moreover, several delegations had emphasized that some of the new proposals would be acceptable only if the liability of the shipowner was set at a sufficiently high level. Thus France, the US and Canada had accepted only the new channelling provision on the condition that the compensation amounts would be substantially increased. Japan, the USSR, Greece and other governments felt, on the other hand, that the experience from recent years could justify only a moderate revision. Despite a number of informal meetings attended by representatives of governments, various industry groups and other interested parties arranged around the world, no agreement and nothing close to a compromise was in sight prior to the 84 Conference. The Chairman, Mr. Jacobsson, reminded the delegations of the remaining basic questions: Should there be a tonnage link on the shipowners liability or a flat amount for all ships? Should there be a specific minimum amount for small ships? What amounts should be inserted? Regarding the Fund; what amounts should be fixed? Should there continue to be some system of roll-back/relief for the owner?
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Regarding the last question, the shipowners had, on the presumption that the liability should continue to be shared with the cargo interests, already accepted that time was ripe to abolish a roll-back system introduced in 1971 to provide for shipowner relief. This question no longer represented any problem. In principle, it was agreed in the Legal Committee that a minimum liability for small ships should be introduced. The shipowners accepted that a minimum limit was required in order to reduce the workload for the Fund. The oil industry argued that the gap between the liability of the ship and the cargo had to be tightened, and one way to do it was to impose a high minimum liability on shipowners. No agreement had been reached on the question where the limit should be drawn. What tanker should be considered a small ship under CLC, and what should the limitation amount be? In OCIMFs submissions to the Conference, it was argued that there was no correlation between the size of a vessel and the amount of the damage it caused. The continued use of the ships size as the basis for the limits was therefore no longer sound. An analysis of the serious pollution claims showed that most of the significant casualties involved tankers of less than 40,000 tons. The vast majority of pollution incidents occurred in a harbour or other estuarial or coastal waters where the smaller tankers trade. Establishing a high minimum in the revised CLC would result in smaller vessels having to carry responsibility more appropriate to the risk they posed. In OCIMFs view, the limitation figure for the tanker owner should cover all claims except the catastrophic incidents for which the Fund would provide supplemental coverage. It was also pointed out that contributions to the Fund were made by individual companies in separate states. This resulted in an uneven balance between contracting states and created problems. Three nations Japan, Italy and France provided almost 60 percent of total FC obligations. Moreover, the capacity of the insurance market had markedly increased since 1971, and a way to avoid the imbalance was to increase the CLC limits substantially, as shipowners now had the possibility to cover themselves through their insurers. OCIMF had suggested that the shipowner with tankers up to 50,000 gross register tons (grt) should take responsibility for the first USD 50 million of pollution damage per incident, with a supplemental coverage from the Fund of USD 75 million per incident. For vessels above this size, USD 10,000 per grt up to a limit of USD 100 million should apply. FC supplementary coverage would provide a total compensation per incident of USD 250 million. If it was
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agreed to continue the old linkage system between limits and tonnage in CLC, Mr. Blackwood, on behalf of OCIMF, appealed to delegates, to establish the same linkage in FC. INTERTANKO had persistently rejected the arguments OCIMF put forward. The mentioned proposal would, if accepted, mean that the oil industry contribution would come into play only in very rare cases and thereby in practice abolish the principles on sharing as agreed in 1969 and 1971. Oil was a very special cargo, and its transportation at sea represented a very special and serious pollution risk. Both the owner of the ship as well as the owner of the cargo should consequently accept a fair share of the financial burden in case of pollution incidents. IMO was reminded that the inherent particulars of the cargo had not changed its characteristics since 1971, but the value of oil had increased dramatically. Whilst the oil industry had prospered during the last years, the tanker industry had suffered from a continued depression since 1974. According to figures recently presented by OECD, the transportation cost was about 40 percent of the price of the oil in 1969-1971, whereas this element in 1984 had decreased to about two percent. Contrary to the oil industry, owners of oil tankers could not pass on the increased costs to the consumer. In the light of the principle laid down in IMO Assembly Resolution A. 500, it would be paradoxical to change the rules of the game in the current situation. The resolution made it clear that IMO should entertain only proposals for amendments to existing conventions on the basis of clear and well-documented demonstration of compelling need Under these circumstances, INTERTANKO suggested that the minimum liability of USD 1 million laid down in the private compensation scheme, TOVALOP, should be included in the revised CLC. From that level, the shipowners liability should increase on a ton basis, up to a maximum of USD 30 million. With supplementary compensation from the cargo through the Fund, the total compensation package should be USD 150 million. Japan a major importer of oil and thus also potentially a major contributor to the new Fund had during the preparatory talks stressed that radically increased compensation levels would discourage participation from oilimporting countries. Thus, the view of Japan had been that the maximum limit of compensation for one incident should not exceed USD 100 million, includ-
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ing the amount payable via CLC. The Japanese representative, Dr. Tanikawa, on behalf of several delegations stressed that adjustment should be done in such a way that the inflation since 1969 and 1971 was reflected. The average inflation rate had been calculated as approximately three times the original figure. The delegations considered it essential that the balance between the exposure of the ship and cargo was maintained. The economic burden should be spread fairly between shipping and oil-importing interests. USD 30 million available under CLC would be acceptable. Canada, on the other hand, wanted to see a high minimum level of some USD 15 million to 20 million on the shipowner with an upper limit of about USD 70 million, based on a tonnage-related progression. The maximum exposure of IOPCF should be in the range of USD 200 million to 225 million. The French delegation argued that new opportunities were afforded by the increased capacity of the insurance market. This meant that it would be no difficulty for the shipowner to obtain insurance coverage for up to USD 100 million at an acceptable premium. There was no doubt that compensation had been reduced in real terms in light of the inflation. Mr. Douay concluded that a minimum level of USD 5 million to 8 million should be imposed on the shipowner with a maximum limit of USD 60 million to 100 million. Adding the contribution from the Fund, a compensation package of USD 250 million to 300 million would then be available to pollution victims. Finally, he recommended that the Fund Assembly should be authorised to increase that amount further. The representative of the P&I clubs, Mr. J.C.W. Riley, maintained that tonnage remained a rational basis for limitation. The statistics of the P&I clubs revealed that in the period 1970-82, the fleet of small tankers had over the last 12 years produced less claims and that the average costs per incident not surprisingly increased with the ships size. Statistics also revealed that the growth in cost of incidents had not kept pace with inflation, which could partially be explained by improved technology in fighting spills. Reference was also made to an extensive submission to the Conference in which the argument that an insurance coverage of USD 300 million was available in the market and was rejected. The suggestion was ill-founded, since any radical change in limits could seriously affect the confidence of underwriters to provide protection not necessarily at the top range of risk but at the
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lower levels of re-insurance where their funds are more likely to be exposed to regular rather than infrequent claims. It would be unrealistic to impose a higher liability upon the shipping industry than what could be insured by their P&I clubs. A major claim would then prove financially disastrous. Ms. De Bievre of FOE stressed it did not seem fair to impute all the liability to the shipowner. FOE was opposed to any system that set the amounts independently of the ships size and recommended that a criterion based on tonnage be adopted instead. The compensation should be shared between the shipowner and the cargo. Chris Horrocks of ICS said that the majority opinion within the shipping industry was in favour of sharing. Being in a difficult as well as delicate position, he added that some of the views expressed in the submission from ICS to IMO were not necessarily shared by the oil company-owned fleet within its membership. There was no compelling need for experimentation, claimed Mr. Shen Zhaoqi of China, who presented a joint proposal from China, Cyprus, Greece, India, Italy and Poland. According to the proposal, a USD 3 million minimum limit on the shipowner and a maximum contribution of USD 30 million would be appropriate. Adding to the Funds contribution, the total compensation could be between USD 100 million and 120 million. Mr. Douay now surpassed all previous frank statements and declared that he considered the proposal China presented to be misleading and as such it did not provide a valid basis for discussion. Whilst the originators of the proposal China presented may have been surprised by the patronizing tone of the French spokesman, consolatory support came immediately from other delegations who saw no reason for the proposal to be ignored, and Mr. Perrakis of Greece questioned how it could be claimed that a document, expressing the views of important regions, was not a basis for a serious discussion. The temperature in the meeting room increased. Delegates asked themselves whether the deadlock could be overcome only by an entirely new concept. Time was short. Acceptance for innovations would require the maximum amount of tact and diplomacy. Admiral Hollingsworth found that the time had come to clarify the intention of his country because he was aware that some delegations seemed to be-
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lieve that the US had no intention to ratify the new instruments. However: The US ratification process was complicated and full of impediments. , it required the approval of the Administration followed by the Senate and, finally the adoption of both Houses of Congress. He appreciated: considerable scepticism among other delegations regarding American ratification if an agreement was reached. But on the assumption that the outcome would be acceptable the ratification process had already begun. The Administration had ... announced its support. A Bill was before Congress enabling the United States to ratify. Furthermore the Senate Committee had participated in formulating the US positions and was represented in his delegation. Of course, no guarantee , but he doubted that any other delegation was in a position to provide such an assurance. a compensation ceiling of some 225 million to 250 million dollars would ensure adequate compensation time may have come to discuss this in smaller groups which should include insurance experts. After several more days of group discussions, there were indications that the deadlock could be overcome when the US, Canada, France, Gabon, the Federal Republic of Germany, Ireland, Malaysia, Netherlands and Zaire presented a fresh approach with respect to the role of the Fund: The maximum compensation including the shipowners contribution could start at a relatively low level. This basic coverage could enter into effect quickly as soon as a limited number of oil-importing governments had ratified. The new element was the application of a trigger mechanism which would provide expanded coverage when contributing oil received in three member states reached at least 600 million tons. This figure would be reached when the US had become a party to the Fund. In other words, the Fund would first operate providing a moderate level of compensation. But as soon as the US joined, the level of compensation would go up. In an effort to circumvent the impasse, Mr. Jacobsson embarked upon private consultations. He succeeded. A majority of delegations agreed to support a SDR 3 million (about USD 4.1 million) minimum liability on ships up to 5,000 gross tons. From every ton above, the limit would increase on a linear scale by SDR 420 per ton up to 140,000 gross tons (equivalent to a tanker of some 280,000 dwt.) to a maximum amount of SDR 59.7 million (about USD 82 million).
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As suggested by the US and eight other delegations, contributions from the cargo would be set at two levels. The first would give a total compensation of SDR 135 million (around USD 186 million), including the liability exposure of the shipowner. This amount would increase to SDR 200 million (about USD 275 million) when there are three Parties to this Convention in respect of which the combined relevant quantity of contributing oil received by persons in the territories of such Parties during the preceding year, equalled or exceeded 600 million tons. Many delegations supported the proposal of the Chairman whilst others including the US and France were not entirely satisfied, but accepted the proposal under the circumstances in the spirit of compromise. Mr. T. Yamada made it clear, however, that the compromise was not acceptable to Japan. The compensation limits were far too high and the balance between ship and cargo were destroyed. Mr. I. Blackwood wished to state how disappointed OCIMF was. He foresaw that a number of states would have to reconsider whether it was wise to accept such a financial burden. After the interventions, the chairman, Mr. Jacobsson, suggested that the new limitation figures would be considered adopted, and it was so decided.
Notes: For Mr. Yamadas comments, see Conf. rep. vol. 2, pp. 615-616. About the USD 30 million available, see Conf. Rep. vol. 1, p. 381. IOPCF Annual report 1992.
IX. THE FEES TO IOPCF

In the consolidated text forwarded to the Conference, the annual contribution system was retained. Thus the Fund would continue to be financed by importers of oil in the contracting states provided that they individually received more than 150,000 tons during a calendar year. This meant that states that paid nothing or very little had precisely the same benefits as major oil-importing countries if an accident occurred. But Mr. H. Sinaga of Indonesia referred to a paper submitted by his delegation and appealed to all delegations to take a fresh look at the system and provide a better balance between the obligations and the potential benefits. He stressed
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that the level of risk of massive marine pollution of the individual country was influenced not only by the quantity of imported oil, but by many other factors, as well. These factors included geographical features, weather conditions, the density of tanker traffic and the availability of national resources. Even if Indonesia, geographically, was vulnerable, he argued that the most serious pollution incidents occurred in the western world. Moreover, the ability to pay should also be taken into consideration as the present obligations represented a heavy burden, in particular on developing countries. Whilst some delegations had expressed sympathy for the Indonesian proposal, the general feeling was that the present system might not be perfect, but it had, after all, proved workable and reasonably fair. After consultations with other delegations, Mr. Sinaga said he felt compelled to withdraw his proposal. The Legal Committee had suggested that the initial contributions for new members should be abolished. These levies were originally meant to provide a working capital and were no longer required. Moreover, it had been agreed that these contributions represented an obstacle for ratification. Dr. Tanikawa opposed the proposal, pointing out that when a new fund was set up, initial contributions would again be necessary. However, after the proposal to abolish the initial contributions had been supported by most other delegates, he accepted the majority view.
X. SIMPLIFIED UPDATING OF LIMITS

Experience had shown that a serious defect of CLC69 was the lack of a provision authorizing IMO to update the limits of compensation without arranging a Diplomatic Conference. Such amendment procedure had been secured when FC71 had been agreed upon. A text the Legal Committee had prepared was on the table. The document ensured that the shipowners liability amounts could be updated and thereby maintained in real terms without the need for cumbersome summoning of another conference. Most delegations agreed that such a stipulation was essential to ensure that the conventions could be kept viable for a long time. However, other delegations feared that a simplified amendment procedure could create constitutional difficulties. But an alternative proposal to convene a Diplomatic Conference every five years to discuss the matter had little support. Admiral Hollingsworth said that: the establishment of effective procedures
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for periodically updating the liability limitation amounts in the Conventions was almost as important as fixing the limits themselves. It was found essential that limits in both instruments were revised at the same time and according to the same rules. Thus, detailed conditions for amendments were introduced in both protocols; CLC article 15 and FC article 33. In short, any request to amend the limits had to be supported by one-quarter of the contracting states and should be sent to members of the Legal Committee with six months notice. All contracting states were entitled to participate in the Legal Committee when such a request was on the agenda. Any amendments required a two-thirds majority to be recommended, with at least half of the contracting states present in the committee. No amendment could be considered before five years had passed from the entry into force of the Protocol or any later amendment of the limits. No increase should exceed six percent per year, calculated on a compound basis from 15 January 1993, and should not exceed three times the original limits. With all the safeguards, including those mentioned above, the amendment procedures were found acceptable, also to the delegations that had constitutional reservations to the first proposal.
XI. ENTRY INTO FORCE/RATIFICATION

In order to secure a worldwide acceptance, a number of delegations were fronted by Captain Zhuanghuai of China, who advocated that the entry into force of CLC should require ratifications of governments that represented a definite percentage of the world tanker fleet. Mr. Perrakis of Greece argued that this principle would be fair and facilitate the new instruments entry into force. G. Ivanov of the USSR supported the proposal, but was in favour of an increased number of signatures to allow the Protocols to enter into force. Mr. Perrett of the UK disagreed due to the disparity of tonnage of national fleets. The proposal from China and other delegations overlooked that the existing system had worked extremely well. He pointed out that the suggested system would mean that a convention could enter into force simply because one or two countries with large fleets had ratified it; and conversely that those countries could delay or even prevent its entry into force. Several other speak-
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ers, including those from France and Norway, supported him. The opinion was evenly split. After a vote resulting in the rejection of the proposal put forward by China, the Chairman tabled a compromise package that was adopted. The entry into force of the CLC Protocol should be dependent upon the ratification of 10 states, including six states with a tanker fleet of not less than one million gross tons. The proposal for the Fund Protocol proved less controversial. It was decided that the Fund Protocol could not enter into force before the CLC Protocol. Subsequent to a proposal from the UK, it was agreed that it should enter into force when eight states representing a total of 450 million tons of contributing oil had ratified. When three of the ratifying states in the preceding year together had received a total quantity of 600 million tons, it was agreed that the compensation available to victims would be increased to SDR 200 million (USD 260 million). When the Plenary finally voted on the adoption of the two 84 Protocols, no delegation voted against. There were, however, several abstentions: 16 for the CLC Protocol and 21 for the Fund Protocol.
Note: The background for the entry into force provisions is outlined in a presentation by Mr. Magnus Goransson in the CMI publication, Liability for Damage to the Marine Environment, London, 1993, edited by Colin M. de la Rue.
XII. SUMMARY AFTERMATH

The definition of pollution damage was clarified, and expenses incurred for reasonable preventive measures became recoverable. For the oil and tanker industry, other important changes were that a minimum liability limit of SDR 3 million was introduced, and the maximum liability was increased dramatically. Moreover, the system that provided indemnification of shipowners (roll-back) was abolished, and a simplified procedure for updating the amounts was introduced. The immunity of the master and the shipowners servants and agents was extended to pilots, managers, charterers, operators and salvors. The destiny of the agreed instruments was now to a great extent in the hands of the largest oil-importing nation, the US. But the record of this country when it came to ratification of international conventions in the field of maritime law was not particularly impressive. In hindsight, it seems that many delegations based their optimistic attitude with respect to ratifications upon
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the fact that the liability levels was close to the agreed compromise proposal put forward by the US. One overlooked the facts: The definition of pollution damage, the new channelling provisions, the geographical scope and the limitations all differed a great deal from the position of the US at the opening of the Conference. The US Secretary of Transportation, Elizabeth H. Dole, arrived in London a few weeks after the IMO Conference to sign the 84 Protocols. Even if her signature had no legal significance, it was a clear token of goodwill, the more so as she used the opportunity to declare that she and Secretary Schultz (State Department) had agreed that the process should proceed without delay. In vain, the IOPCF Director, Dr. Ganten, testified in Congress (House SubCommittee on Coast Guard and Navigation). He argued: From the US point of view, the results is (sic.) in my opinion quite satisfactory. This is due to the fact that a two-tier system was adopted which allows for a 48-percent increase of the IOPC Funds limits when the US joined the Fund Convention. This achievement was due to the efficient way in which the US delegation at this Conference lobbied other delegations as a result of this, considerable concessions were made many of the U.S. objectives were largely achieved. Should the US decide not to ratify , the enormous amount of goodwill built up would not only be lost , but could have the contrary effect of delegations becoming unwilling to accommodate wishes of the US at Diplomatic Conferences President Reagans message to the Senate in November 1984 was clear, but produced no results: I transmit herewith, for the advice and consent of the Senate to ratification, the Protocol of 1984 to amend the International Convention of Civil Liability for Oil Pollution Damage, 1969 (Civil Liability Convention) and the Protocol of 1984 to amend the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971 (Fund Convention). By 1985, the 84 Protocols were signed by the UK, Sweden, Portugal, the Federal Republic of Germany, Poland, Morocco, France and the US. As late as 1988, the US Secretary of Transportation, Samuel S. Skinner,
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confirmed the administrations intent to ratify. He outlined the advantages of the Protocols at the same time as he stressed that within 10 years, the oil imported on foreign keels would increase to 65 percent. At the time, the majority of the House of Representatives were in favour of ratification. However, the US oil companies had continued their opposition. They argued that consumers would have to pay far more than they were likely to receive in compensation. Thus when the oil industry testified before the Merchant Marine and Fisheries Committees Coast Guard Subcommittee, the oil representative called for careful revaluation of what would best serve American interests. According to an anonymous analysis of the 1984 Protocols conducted pursuant to memos prepared for the Oceans and Fisheries Committee and Assistant Secretary Malone Congressmen Young (Alaska) and Breaux (Louisiana) found it politically difficult to express support for the international solutions. How do we justify exposing American citizens to paying 30 to 45 percent of the damages and cleanup costs if an oil spill finds its way to the Sheik of Sharjahs beachfront villa? One is left with the picture of Americas compensating the Ayatollah Khomeini if Iran joins the Fund. While this is a somewhat melodramatic picture, it could happen. The US Senate, which had the final say, was negative from the start, and the 1984 Protocols formally never entered into force. Their resurrection was, however, secured when IMO eight years later subsequent to the US Congress adoption of the Oil Pollution Act of 1990 modified the entry into force provisions and introduced them as the 1992 Protocols. The oil industry, which felt that compensation for pollution damage was best, dealt with by the private industry, made no secret of its position. In a memorandum to its shareholders: CRISTAL set out the shortcomings of the Protocols in clear language. The most important failures were that IMO should have imposed a substantially higher liability on the tanker owner in particular for spills from small- and medium-size tankers and thereby neglect the financial impact on oil-importing companies. Moreover, it was argued that the new definition of pollution damage would open up for speculative claims in respect of prospective restitution of the environment. Finally, the extension of the geographical scope to cover the EEZ could result in an unacceptable increase in the exposure of the industry. In the campaign against the international instruments, the oil companies found some unusual bedfellows. It turned out that most of the American environ-
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mentalists and their organisations also opposed the Protocols, but for different reasons. In their minds, limited liability was no good at all. Time had come for the boards of TOVALOP and CRISTAL to re-evaluate their positions. The oil industry proposed to abolish the current private agreements and adopt a new and more attractive compensation scheme. This was named PLATO, an acronym for Pollution Liability Among Tanker Owners. One important feature of the plan was that shipowners maximum liability would not be more than USD 10 million in case of tankers up to 5,000 grt. For tankers in excess of that size, USD 10 million plus USD 500 per grt in excess of the mentioned 5,000 tons subject to a maximum of USD 60 million. Considerable efforts were made to gain support for new scheme. Invitations with comprehensive information were sent out throughout 1985 to all tanker owners. The invitation was signed by: the president of Amoco Transport Co., E. J. Roland; the managing director of BP Shipping, Ian G. S. Hartigan; the president of Chevron Shipping Co., D. C. Wolcott; an attorney for Esso Int. Shipping, Chris J. Carven; a director for Fina Marine, H. Cran; an attorney for Mobil Shipping, Walter C. Mink Jr.; the managing director of Shell Int. Marine, Juan H. Kelly; and the vice-president of Texaco Inc., J. A. Cole Jr. The plan was to make PLATO operational when a tanker fleet of 50 million grt had been entered in its membership. However, the needed support had not come forward within the time limit, March 31, 1986. In a presentation on Sept. 5, 1985, in the International Chamber of Shipping, Mr. N. Zervudachi, a vice chairman of INTERTANKO, had made the points that: 1. PLATO would have severe adverse effects on ratification and entry into force of the 1984 Protocols 2. PLATO/CRISTAL offered less compensation than the Protocols. 3. PLATO increased the financial burden on the ship-owners, while reducing the obligation of the cargo owner to compensate pollution victims and 4. Ship-owner organizations including Comite Central des Armateurs de France, Danish Ship-owners Association, Japanese Ship-owners Association, Norwegian Shipowners Association, Swedish Shipowners Association, Union of Greek Shipowners, Hong Kong Shipowners Association and BIMCO all opposed the scheme. Because of insufficient signatories, the scheme was given up without becoming operational.
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Instead, a TOVALOP supplement was worked out. In February 1987, tankerowners agreed to increase their level of compensation close to the figures in the CLC Protocol. The CRISTAL limits were also raised, but the oil industry saw no reason to increase their compensation to match the Fund Protocol. There were also some other significant differences. The revised CRISTAL adopted a tonnage-linked cargo compensation system, which OCIMF had strongly promoted during the 1984 Conference. Moreover, several strict conditions had to be satisfied before CRISTAL would provide any compensation. On the background of the oil companies campaign against ratification, Ms. Chao seemed perhaps not quite realistic when she, in her otherwise excellent book, claims that the lower CRISTAL limits would appear to have been done deliberately in order to encourage States to ratify the Protocols. In hindsight, it might seem puzzling that so little governmental action was taken to ratify the Protocols. However, further to the increased compensation from the private regimes, the effective lobbying of the oil industry and other political events in the shipping sector, the interest of governments seemed to evaporate. One reason may be the Iran-Iraq war. The conflict lasted from 1980 to 1988. For the shipping industry in particular, serious problems escalated in 1984. From that time, tankers in the Gulf were bombed or hit by Exocet missiles from fighter planes as well as being the target for surface craft, mines and landbased missiles. Before the war ended, more than 250 seafarers had lost their lives. One dramatic but unsuccessful attack was on one of the largest Liberian flagholding tankers in the world fleet; World Petrobras (412,000 dwt) occurred on Dec. 22, 1987. At the time, the tanker served as a floating oil storage ship in the northern part of the Strait of Hormuz. When Mirage jets dropped two 500pound bombs onto the main deck, the crew was in the process of transferring cargo to other smaller tankers. Some damage was caused, but World Petrobras could resume operations 42 hours after the attack. Probably because of the working of the inert gas plants on board, a serious explosion were avoided. The tanker had, however, to be later repaired in Singapore. One of the many other victims was the super tanker Seawise Giant owned by Mr. Tung in Hong Kong. She was built by Sumitomo Heavy Industries of Japan in 1976 for a Greek owner and later sold to Mr. Tung, who rebuilt the ship to increase its carrying capacity and make it the worlds largest tanker.
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After being bombed at Larak Island, the tanker was burned out, but later completely restored, rebuilt and resold to Norwegian interests, then named Jahre Viking. It was 565,000 dwt. Having appealed in vain for several years to both sides to stop the attacks, the INTERTANKO Chairman, Basil Papachristides, in May 1988 hosted a meeting with members of the UN Security Council in New York to discuss the situation in light of international law and freedom of navigation in international waters. The need for the UN to see the tanker war as a separate issue was stressed. The impact of the meeting should not be overstated; combatants agreed later that year on a cease-fire. Both CLC69 (article IIIa) and FC71 (article 4.2) provide immunity for the shipowner as well as the Fund with respect to pollution damages caused by act of war. Nevertheless it is noteworthy that the chairman, Jorgen Bredholt, of the IOPCF Assembly (1978-1994) in pages 64 to 67 of the organizations 25th-jubilee book reviewed his period without mentioning the tanker war with one word. Long after the hostilities between Iraq and Iran had come to an end, a new dramatic situation emerged in early October 2002. Terrorists attacked a French-flag super tanker, Limburg, with a cargo-carrying capacity of nearly 300,000 barrels of crude oil while she was miles off the shores of Yemen. The attackers were believed to be associated with al-Qaeda. They fired a rocket from a small boat against the hull of the tanker, which caught fire. According to another source, it was a suicide boat laden with explosives that the terrorists used. The explosion killed one crewmember. In early 2005, a Yemeni appeals court found that it was proved that the arrested individuals had given a pledge to al-Qaeda leader Osama Bin Laden to kill infidels. A group of 15 men was found guilty of the attack. The leader was sentenced to death. The tanker was to be repaired later. According to the international liability regimes, the shipowner was not exposed to pollution liability claims in such situations. Moreover, standard P&I rules excluded coverage for damage war perils caused unless a special insurance agreement was signed between the parties. No surprise that the press reported that the Belgian operator of the Limburg (Compagnie Maritime Belge CMB) reacted furiously when the Yemen government initially requested a warranty between USD 18 million and 19 million in respect of the resulting
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pollution damage. The government, however, shortly dropped the claim, and the damaged tanker was permitted to leave its waters and be towed to Dubai. After the event, P&I clubs have offered coverage for war perils including acts of terrorism. The attack was unique because it was the first time terrorists caused pollution. Because of the leakage from the large tanker, IMO offered its assistance to combat the oil spill. The pollution problem proved, however, to be manageable. It had happened neither in Europe nor US and did apparently not produce a great deal of dead fish and birds. Hence the media attention was of only middle intensity and probably a great disappointment for the terrorists, who had hoped to catch the headlines in the media in the same way as Erika and the calamity that followed a month later off the Spanish coast. In the meantime, tanker accidents at sea had continued in more peaceful areas. In March 1985, Greek tanker Patmos collided in the strait of Messina with Spanish tanker Castillo de Monte Aragon. Seven hundred tons of oil drifted ashore. The Italian Ministry of the Merchant Marine lodged a claim that included lost values of the affected natural resources. Were such losses legally compensable and covered by the definition of pollution damage set out in CLC69? A higher court upheld the claim, but the basis for the award is unclear. In 1994, it became clear that the final compensation was within the limitations of the shipowner, and the Fund was not called upon. On Nov. 10, 1988, the 136,280 dwt Liberian tanker, Odyssey, caught fire in the mid-Atlantic. She lost her cargo of 132,000 tons of crude oil about 700 miles off the coast of Nova Scotia. Nature took care of the spilt oil, but all 27 crewmembers died. More attention was given to Khark 5, an old and not well-maintained Iranian VLCC of 284,632 dwt which exploded off Morocco in 1989. Seventy-six thousand tons of crude oil were released. The Dutch salvors were denied taking the tanker into the sheltered waters of the Canary Islands. This was also the position of other coastal states. Despite the huge oil spills the Odyssey and Khark 5 caused, there were no serious initiatives to have the 84 Protocols ratified internationally. The accidents would be completely overshadowed by a tanker accident in March 1989 in Alaskan waters.
Notes: An American review of the 1984 Protocols to the 1969 International Convention on Civil Liability for Oil Pollution Damage and the 1971 International Convention on the Establishment of an International Fund for Oil Pollution Damage is found in memos prepared for the Oceans and Fisheries Committee
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May 1, 1985, and for Assistant Secretary Malone, March 27, 1985. On pages 4 and 5, it is reported that the major contentions of the oil industry are that the Protocols would place a disproportionate financial burden on US consumers as they fail to place sufficient liability on the tanker owner and too much of the burden on the cargo interest. The general conclusion of the review is that the 1984 Protocols do indeed entail the probability of a net outflow of money. If one could devise an optimum international regime that would best serve US interests, the Protocols would not be that regime. About the oil industrys PLATO scheme, see Ms. Chao, Pollution from the Carriage of Oil by Sea, pp. 192-196, and INTERTANKO Circular letter to members, no. 5A, May 24, 1985. On the revised TOVALOP and CRISTAL agreements, see the October 1987 presentation of The Britannia Steam Ship Insurance Association Limited and Ms. Chao, Pollution from the Carriage of Oil by Sea, p. 210 note 81, where she comments on the revision of CRISTAL. Contrary to TOVALOP, it does not entertain the same compensation as provided in the Protocols. On the Iran-Iraq war, see above chapter 7iii. On Limburg, see IMO News no. 4, 2002 and various articles referred to in IMO Awareness Bulletin, November 2002 to March 2006
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9 Exxon Valdez and subsequent incidents in US waters

I. EXXON VALDEZ
Maritime safety legislation and rules on compensation for pollution damage were pushed ahead after the event at the Seven Stones Reef in the British Channel. The public outcry after the grounding off the coast of Brittany 11 years later generated a new wave of rules. The next impetus came after a new interval of 11 years. The incident happened in Prince William Sound, south of Valdez, Alaska. On a late evening in March 1989, a modern, very large crude carrier of about 215,000 dwt departed from the Valdez Marine Terminal. She was built at the National Steel & Shipbuildings yard in San Diego, California, and named Exxon Valdez. Real industrial oil production had started in Alaska in 1965. But it all began in a modest way more than 100 years ago when a beach caught fire after a hunter had lit a match to it. Such seep sites were obvious places for oil exploration, and by 1930 a modest amount of 150,000 barrels of oil per day were produced. In 1965, Union Oil was blessed with a series of oil discoveries in the icy waters of Cook Inlet. The strikes signalled the finding of new rich oil and gas fields. Three years later, one other enterprising company, Atlantic (later Arco) struck oil in Prudhoe Bay. This proved to be a reserve of major importance. Money for further development was no longer a problem when Exxon was brought in as a partner. Also the geologists from BP had been hunting for oil in the area, and their search was rewarded nine years later.
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EXXON VALDEZ AND SUBSEQUENT INCIDENTS IN US WATERS
Valdez had a good port. In 1963, only about 400 inhabitants had settled here. On Good Friday 1964, an environmental disaster hit Alaska. It took the form of a violent earthquake that jolted the coast including the town, which was half destroyed within five minutes. At night, four surges completed its ruin. It turned out to be the strongest earthquake ever recorded in North America. Union Oils efforts to explore potential oil fields suffered a serious setback. Bad luck struck again in October when the companys tanker, Santa Maria, loaded with heating oil and gasoline, collided with another vessel and caught fire in the same area. In 1969, Exxon converted one of its large tankers, Manhattan, to find out whether ice-breaking tankers could deliver crude oil from Alaska through the Arctic ice fields of the North West Passage to the US East Coast. Her hull was reinforced by 10,000 tons of extra steel and included an ice belt around the tankers waterline. The test voyages made it clear that she still was not powerful enough. The experiments were suspended in 1970. Tankers sailing south continued to carry the oil from the North Slope. Oil was also pumped to the markets through pipelines. This was no easy game. They were laid through forests and rugged hills, encountering numerous problems in the early years. New projects were met with opposition from environmentalists, who claimed that realization of such plans would seriously disturb the wildlife of the whole region. The protests delayed the oil production for three to four years. But then, the federal government, alarmed by the Arab oil boycott, swept the opposition aside and encouraged the oil industry to explore for more oil in Alaska and on the outer continental shelf. One contribution of Congress was the enactment of the Trans-Alaska Pipeline Authorization Act (TAPAA) in 1973, which would facilitate the delivery of gas and oil. Alyeska, a consortium owned by seven oil companies, became the operator of both the long 800-mile Trans-Alaska Pipeline and the Valdez tanker terminal. From now on, the Alaskan oil production became an important part of world production, and the North Slope became a pioneer province for petroleum development in Arctic conditions. Under TAPAA, strict and joint liability was imposed on operators and owners of tankers for all damages oil spills caused. The TAPAA Fund established under the law would top up the USD 14 million liability of the operator to a total of USD 100 million. It was entitled to seek reimbursement from negligent tanker owners. If the damage exceeded the maximum amount, the
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claims were reduced proportionally, and the claimant could pursue his claim under any other applicable state/federal law. Under Alaska state law, a shipowner was strictly liable for all clean-up costs and damages incurred as a result of the spill, including damages on private properties. That particular evening of March 23, 1989, the Exxon Valdezs Captain Joseph Hazelwood had some drinks in his favourite bar, the Pipeline Club, half an hour drive away from the terminal. After returning to his tanker, he radioed the Coast Guard station that he would be changing course to avoid some small, drifting icebergs on the way out. He received permission, but instead of guiding the tanker from the bridge, he went back to his cabin after instructing the third mate and the assisting helmsman to get back into the lane once the ship had passed the icebergs. With a cargo of nearly 200,000 tons of North Slope crude on board, the large tanker moved slowly out into Prince William Sounds shipping lane. The third mate had gotten less than six hours sleep during the last 24 hours and was probably very tired. Just after midnight, the large tanker grounded with a loaded draft of 56 feet on Bligh Reef, where the lowtide chartered depth was only 30 feet. When reporting the grounding over the radio to the Coast Guard, Captain Hazelwood added: We are leaking some oil. We will be here for a while. In his conversation with the Coast Guard representatives and during later hearings, the captain never denied that hed had some drinks. Thirty-two years old, he was Exxons youngest master and had turned down promotion ashore on several occasions. Now commanding one of the newest and largest tankers in the fleet, his style later did him no favour along with his concise reply to the first Coast Guard officer to board his grounded vessel. What is the problem? asked the officer. I think you are looking at it, was the answer.
NICK UT / AP / Scanpix
Captain Joseph Hazelwood

Known as Jeff in his younger days, Captain Joseph Hazelwood was born 1946 in Hawkinsville, Georgia. As one of four children, he was the son of a Pan Am Pilot. The allegation that the Captain was drunk when Exxon Valdez grounded has been rejected by the crew. A test taken some 10 hours after the accident found that his blood alcohol content was about 50 percent higher than the 0.1 percent level laid down in Coast Guard regulations. The Coast Guard later expressed that his handling of the tanker after the grounding was exemplary. By adjusting the engine power, he kept the ship stable, thereby preventing an even worse spill and may have saved lives.
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US OIL SUPPLY BALANCE

MILLION B/D 12 Source: EIA
10
CRUDE OIL PRODUCTION
8 CRUDE OIL IMPORTS
OIL PRODUCTS IMPORTS
2 OIL PRODUCTS EXPORTS 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
Note: Minor crude oil export volumes excluded
Compiled by HM Strategies
US Oil Energy Balance

The negative oil supply balance and the increasing dependence on foreign oil has for many years been a challenge for the US Congress. The breathing space Alaskan oil provided in the mid- 70s was warmly welcomed. The same can be said for production of oil in the Mexico Gulf wells during the more recent years.
It appeared that 11 of the centre and starboard tanks were ripped open, resulting in an oil spill of 37,000 tons. At first light on Good Friday, observers flying over the crippled tanker saw an oil slick of about five miles long and 1,000 feet wide. That was seven hours after the accident. The release of the crude oil polluted a 1,300-mile shoreline, comprising one of the most sensitive wilderness areas in the US. Local fishermen and businesses were dependent on fishing and wildlife and feared that their future was disrupted. Exxon Valdez has been seen as a disaster on a scale that defies comparison. But paradoxically, the accident is not found in the list of the 35 worst tanker spills; neither did it cause any deaths. Statistically, the oil pollution was less than one third of the spill from Torrey Canyon and about 15 percent of Amoco Cadiz. But the clean-up costs, the claims from fishermen and other parties, the headlines in the media, the series of legal battles, the political discussions and the consequential national and international legislation put the event in a class of its own.
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The past spills of any importance in Alaskan waters were limited to the Santa Maria accident 25 years earlier and the Glacier Bay, an American flag tanker owned by Apex Oil which grounded in 1987 and released an estimate of 100150 tons of crude oil. Due to the increased tanker traffic as well as the growing appreciation of the environmental risk, a US Coast Guards office had been opened in Valdez in 1977. In 1989, about 8,700 oil tanker transits had taken place, but only minor spills had occurred. Exxon was blamed for permitting a suspected alcoholic to be in charge of a super-tanker that was operating along an environmentally sensitive coastline. The refusal of its chairman to demonstrate the slightest regret over the spill did not help the position of the company. It may be assumed that legal advice had suggested that regret would indicate liability. In Washington, DC, young girls were walking around wearing T-shirts marked I hate Exxon. As the first few days passed after the grounding, a whole crew of other villains began to emerge, including Alyeska, whose statistical department in 1986 had previously presented figures implying that a major tanker spill would take place in Prince William Sound once every 241 years. Alyeska had a commitment to the federal government to implement a contingency plan in case of a major oil spill. But it turned out that little had been done. The evening before the grounding, its management had declined an invitation from a local group to give a presentation at a meeting convened to discuss the tanker traffic and the potential pollution risk. After the spill, the media was quick to point out that the partners BP and Exxon had just spent hundreds of thousands of dollars to prepare and present their new logo, but the spending on an efficient contingency plan for Valdez never reached an amount worthwhile mentioning in any PR report. Also, the Coast Guard came in to the fire line. In a report on the grounding issued some time after the accident, the National Transportation Safety Board (NTSB) of Washington, DC, concluded that the Coast Guard had not been maintaining an effective vessel traffic system in the area. It was revealed that the person standing watch on duty on the fated day lost the tanker on his radar screen. When the master reported that he would be leaving the normal route to avoid ice, the watch did not adjust his screen to locate the new position and course of the tanker. Thereby, he failed to see that the new course brought the vessel into dangerously shallow waters. When Exxon in 1994 in a federal court claimed that the Coast Guard had failed in its duty to warn the tanker of impending danger, the agencys top of-
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ficer at the time of the grounding, Paul Yost, rejected the allegation, pointing out that Prince William Sound was a rather easy area to navigate, requiring no extraordinary safety measures by tanker captains. He was convinced that the Coast Guards control centre bore no blame for the grounding. The vessel was in open water on a clear night with all the aides working. On the bridge was a competent third mate, but the pilot as well as the captain should have been there. Somebody is at fault when a ship goes aground. In this case, it is not the vessel-traffic service, Mr. Yost said. However, other subsequent investigators have maintained that the traffic control system was neglected at the time. Exxon Valdez would not have slipped through the surveillance if the radar equipment had been up to par and the operators less complacent. The night of grounding and during two more days, the weather was calm. The smooth sea was perfect for an orderly cleanup. That task rested with the US Coast Guard, which, however, made no protests when Exxon took upon itself to lead the work. Exxons authority lay in its purse. When informed about the spill, the top management of Exxon in New York saw what might be in the offing and immediately assumed full responsibility. But it took nearly 12 hours before a tugboat arrived with equipment to pump oil off the grounded tanker. By the time Exxon had sufficient equipment available, the weather had changed dramatically, and gales drove the oil ashore with tremendous force. Under such conditions, the use of chemical dispersant and efforts to burn off the oil were non-starters. The Jones Act, which protects US flag vessels, meant that vessels under foreign flags could not be deployed immediately. Another frustration was that no waste disposal sites were available. An organisation including over 12,000 people, 85 aircraft and 1,400 vessels was established to do what could be done with the oil spill. These efforts could not prevent the grounding from sparking a battle lasting for years about who was most to blame, a firestorm of lawsuits and a flurry of legislation. In the years following the spill, a high percentage of fishermen and associated companies went bankrupt. More than 4,000 plaintiffs filed 190 lawsuits in the Federal District Court of Alaska. More than 200 cases were filed with the Alaskan State Court involving some 3,000 plaintiffs. The federal government filed criminal charges against Exxon, Captain Hazelwood and several other officers onboard. In April 1989, US President George Bush requested an assessment of the spill
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response. A report provided by the National Response Team was available the next month. It stated that none of the responsible parties, Exxon, Alyeska, the State of Alaska or the federal government had been prepared for a spill of this magnitude. In July, a Senate Committee reported that the spill was exacerbated greatly by an unreasonably slow, confused and inadequate response by industry and government that failed miserably in containing the spill and preventing damage. A year after the accident, the Valdezs officials felt compelled to issue a press release to convince the hesitant potential tourists that the spill did not have the long-term effect the media supposed. In any case, the lost wildlife was only a minor fraction of the fauna in the surrounding area. The affected shoreline was remote and outside the area likely to be seen by seaborne tourists. Ten years after the grounding, Bob Malone, President of Alyeska, told the Anchorage Chamber of Commerce that the company now was very different from what it was in 1989. At that time, the companys clean-up standard mandated a response to only a 4,000-barrel spill. Now we can respond to spills of 300,000 barrels in 72 hours, he said. Payments to victims were delayed. Four years after the accident, the mayor of a nearby fishing community committed suicide and left a note blaming Exxon for some of his problems. The claimants for damages numbered 11,000, and in 1994 a federal jury finally ordered the corporation to pay punitive and actual damages of USD 5.3 billion the largest amount ever assessed by an American jury. The company was found to have been recklessly guilty when it had failed to monitor the captain, who had been an alcoholic for some time. The punitive amount was roughly equivalent to a single years profit by Exxon at that time. But the stock market may have fared even worse as Exxons shares rose after the verdict. If the punitive fine had been based on 2005 profits, it would have been about USD 30 billion (not accounting for inflation). However, its chairman at the time, Lee Raymond, described the award as utterly unfair, totally unwarranted and excessive. He promised that every legal means would be used to fight the unjust verdict. Exxon had paid USD 300 million voluntarily after the spill, but many commercial fishermen expected far better compensation and looked forward to having their claims honoured. In March 1999, attorney generals from 37 US states sent a letter to the chief executive, Mr. Raymond, demanding that Exxon should pay the punitive damages for the spill in accordance with the 1994
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verdict. In this connection they pointed out that the oil company was profiting from delaying the payment: Each year Exxon delays payment of its obligation it earns an estimated USD 400m from the difference between the statutory interest rate on judgements of six percent, and the companys internal rate of return of about 14 percent. Neither were the efforts to overturn the verdict well received by a group of 30,000 to 40,000 people the spill affected. They had taken the name Survivors of the Exxon Valdez Oil Spill. Steven Goldstein, their press secretary, responded: People all across the country and the world are indignant at Exxons arrogance ... Exxon had been counting on the political pressure to subside once the 10th anniversary (of the spill) passed. But guess what? The pressure is still on. Exxon seemed to take little notice and maintained that the company was: exercising a fundamental right to appeal these damages, a right to which every American individual and company is entitled. This is a core value of our judicial system which any AG (Attorney General) should understand and support. The reward came about in 2001, when the 9th Circuit Court of Appeal ruled that the punitive damages imposed in 1994 were excessive. At the end of 2002, the punitive damages were set at USD 4 billion plus interest. Exxon appealed again, but this just caused the judge to increase the punitive damages to USD 4.5 billion. Once more, the oil company appealed. The US Supreme Court who decided that the reduced amount should be reviewed again wrote the next chapter in the tragic/comic saga. In December 2006, IMO reported that an appeals court, considering the case for the third time, had slashed the punitive damages to USD 2.5 billion. The Court hoped that its third review of damages awarded to the Alaskan seafood and tourist industry now would end the lengthy litigation. But Exxon/Mobil still felt over-penalised and continued to press for a better deal. However, in May 2007 18 years after the event the public was informed that: Exxon Mobile has failed yet again to get a US appeals court to cap its Exxon Valdez punitive damages at USD 2.5 billion, setting the stage now for the US Supreme Court to issue the final verdict. The US Court of Appeals for the Ninth Circuit refused on Wednesday to reconsider its earlier decision to set the punitive damages payable by Exxon Mobil at USD 2.5 billion. This decision, issued in late December last year, had trimmed the damages figure down from USD 4.5 billion.
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Contradictory reports have been released regarding the long-term effect of the spill. During the first years after the accident, each scientists report on the extent of the pollution damages generally reflected the view of his or her sponsor. But in 1993, a geochemist, K.A. Kvenvolden, working for the US Geological Survey independently from Exxon, concluded that on the surface of the shores it was easier to find residues from the unnoticed spill after the earthquake in 1964 than from the oil that gushed from the big tanker in March 1989. His findings indicated that some of the claims against Exxon were not valid. A report from early 1999 issued by a coalition of federal and Alaskan agencies working to restore the oil spill region was far more negative in its judgement. Out of the 28 species listed as being injured by the spill, only two, the river otter and the bald eagle, were considered to be recovered. Eight species were considered to have made little or no progress towards recovery, including killer whales, harbour seals and common loons. But in a comment to the report, Molly McCammon, executive director of the Exxon, told the press that the impact of the spill now was subtle and probably not detectable. More than USD 2 billion had been spent on cleaning up the mess after the grounding in Valdez. Despite the favourable weather conditions throughout the night of the spill and the two following days, the local contingency plan Alyeska prepared proved to be worthless. Later, it was claimed that there had been more focus on operational pollution caused by discharge of ballast water from loading tankers than on the capacity to handle a major accidental tanker spill. Whether that assumption is right or wrong is water under the bridge. What became clear was that the combined efforts of the US government and one of the worlds largest corporations proved inadequate. Exxon spent millions on animal rescue and billions on shoreline clean-up and compensation to fishermen and various local businesses. Two months after the accident, between 700 and 750 vessels and oil skimmers were deployed, assisted by 36 helicopters and 17 floatplanes. More than 6,000 people were involved in the effort. The background or qualifications did not matter much to the labour contractor, and what counted to the job seekers was the good pay. The work force engaged in the clean-up left their garbage in the wilderness. Some of the cleaning methods may have done more harm than good. The chemicals used seemed to remove the oil from the rocks and beaches, but devastated many of the organisms under and above the surface.
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The exact amount of monetary damages will never be known. The research undertaken at the time was more than ever subject to public pressures. Emotions ran high, and each scientists presentation echoed to a large extent the interest of his/her sponsoring agency. Exxon seemed to be blamed by everybody. An exception was no surprise the president of the firm in Anchorage that handled the cleanup for the oil company, Peter Leathard. Out of tune with public opinion, he compared the current damages with the strongest earthquake ever recorded in North America on Good Friday, 25 years earlier: We did not waste time seeking to punish the cause of that disaster, he said in a press statement sent out a few weeks after the accident. He continued: nor is it productive to spend time placing blame and seeking to punish the perceived cause of this disaster. It has been estimated that as much as one quarter of the spill evaporated and disappeared. Jeff Wheelwright a long-time science editor of Life Magazine and devoted to environmental issues worldwide claims in his book, Degrees of Disaster, that the billions Exxon spent for the cleanup were mainly an exercise in corporate contrition. His analysis of the shoreline cleanup program concluded that the operation in itself was a disturbance and inferior to the natural cleansing by waves and weather. It was overkill that fell short, a paradox obscured by an overkill of figures. However, after public hearings many years later, the National Fisheries Service in Juneau reported that the oil spilled had caused further harm to the environment than previously thought. Further to the report, the US federal government and the State of Alaska in 2006 asked Exxon/Mobil to pay an extra USD 92 million to cover the lingering ecological damage in Prince William Sound. It was alleged that remaining pockets of oil spilt in the basin in March 1989 continued to threaten a variety of marine species. A press release sent out by the US Department of Justice on June 1, 2006, refers to a 1991 civil settlement reached with Exxon. The agreement included a re-opener provision enabling the authorities to claim up to an additional USD 100 million for damages not reasonably anticipated in 1991. Such claims had to be submitted by June 2, 2006. When notified about the intention to re-open the case, Exxon/Mobil spokesman Mr. Boudreaux, referring to the findings of more than 350 studies done by independent academics, commented that the sound has recovered, is healthy and is thriving. ... We find the timing interesting, that the study has been released for peer review two weeks before the deadline for the decision to notify Exxon Mobil of an intention to request a reopener of the settlement.
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Exxons own estimates were that its war against the oil spill had resulted in expenditures for clean-up costs, government settlements, fines and compensation exceeding USD 2.5 billion. The scale of expenditure seems to bear no serious relation to the technical affairs of the case, but reflects to a far greater extent the large resources of the company and its determination to do whatever could be done to repair its damaged public image. It is claimed that Exxon spent USD 40,000 on every one of the 5,000 otters that the company tried to rescue. Thanks to its relentless legal defence, there have been widespread feelings that the oil giant avoided paying damages that it should have paid. Alaskan fishermen still insist that the spill continues to have bad effects on their livelihood, such as the herring catches, which are way down. Further to the huge pollution-related expenses, Exxon turned to its global corporate excess insurance policy and called for re-imbursement from underwriters for the incurred costs. The underwriters first repudiated the claims for a number of reasons. Their objections were many, including arguments that the corporation had failed to disclose material facts about Exxon Valdez and oil transportation in Alaskan waters. Moreover, a good deal of Exxons expenditures were made to protect its profits and public image for which it was not insured. Neither did the policy cover the claims, fines penalties, etc., which resulted from violating government regulations. Finally, it was asserted that the stranding occurred because of wilful and/or reckless misconduct of Exxon as a shipowner. The tanker was unseaworthy before the incident, and the company knew, but failed to report. Nevertheless, in 1996, a settlement was agreed on with the underwriters in the London market. The settlement brought the total payout from insurers up to about USD 780 million. This amount adds to what Exxon has recovered through tax write-offs and not least by a simultaneous and well-timed increase in the price for its product. Finally, further to the punitive damages imposed in 1994, the company set aside the USD 5 billion and has since been collecting good interest. With respect to the underwriters, they embarked on a lengthy litigation to recover their outlays from the re-insurers. Captain Hazelwood, who previously had lost his drivers license because of alcohol problems, was for some time said to be the most hated man in America: A villain whose recklessness had caused irreparable harm to the environment. The relentless pursuit of the wretched master should be seen in the light of one mistake. Contrary to regulations for navigation in inland waters, navigation was left to a third mate who possibly left the steering on automatic
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pilot. It was claimed that the mate had had very little sleep and was deadly tired. According to industry practice, mates in a loading port and on watch standing after departure could be on the job for up to 36 hours. Although he was permitted to leave Valdez after the accident, Captain Hazelwood was then regarded as a fugitive from justice. Despite a pre-arranged agreement to attend the court at a certain time, various New York City and State police forces were waiting outside when he returned home for the honour of bringing in the fugitive to court. He was first convicted but later got the conviction reversed, being defended by Michael Chalos of a Manhattan law firm. The firm rose to public prominence through its client. Mr. Chalos argued that the captain was merely a convenient scapegoat for the significant failures of the other actors in the drama. The captain never had his masters license revoked and he paid his share through a long-lasting community service in Alaska and finished his debt by handing over a USD 50,000 check to the authorities in May 2002. The final act in the legal drama that had lasted for 19 years ended when the US Supreme Court in June 2008 slashed to USD 500 million the USD 2.5 billion in punitive damages that Exxon had been ordered to pay for the Valdez disaster in Alaska. Writing for the majority, Justice David Souther said the punitive damages should not have exceeded the actual damages of some USD 500 million that Exxon had spent in compensatory damages to those who had suffered economic losses from the accident. Exxon/Mobil chairman Rex Tillerson was reported to send an apologetic note after he had been informed about the decision, reiterating the oil giants regret for the tragic accident. But Exxon and the oil industry in general had reason to cheer. In 1994, a jury had awarded those harmed by the spill USD 5 billion in punitive damages. Now the 32,677 fishermen and other interests whose business was disrupted by the spill were left with USD 500 million. Since the lawsuit was filed, plaintiffs alleged that 20 percent of those eligible for damages had died. Environmental groups criticized the decision. The worst environmental calamity in US history will continue to haunt the Prince William Sound and those dependent upon it for their livelihoods said the director of Greenpeace US in a statement. One other spokesman in Valdez now felt that enough was enough and said that The courts have spoken, and its time to put it to bed and get on with life. The Senate Judiciary Committee chairman Patrick J. Leahy regretted the ruling as another in a line of cases where this Supreme Court has misconstrued congressional intent to benefit large corporations.
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In September 2008, the press reported that Exxon/Mobil had reached an agreement with the plaintiffs over the punitive damages, meaning that a portion of the disputed award could be expected to be paid out in October 2008.
Notes: On TAAPA, see de la Rue and Anderson: Shipping and the Environment, London, 1998, pp. 48-51. On the history of Valdez, see Welty & Taylor: The 76 Bonanza, and J. Wheelwright: Degrees of Disaster and in particular p. 150, where he makes the point that risk assessment is a social science that produces hard numbers, the utility of which is not known until after the fact. Thus it was not a good assessment when Alyeska in 1986 predicted that a major tanker spill in Prince William Sound would happen only once every 241 years. This should be noted by coastal states with much tanker traffic. See Federal on the Scene Co-ordinators Report on the Exxon Valdez oil spill, published by USCG September 1993 and the report to 101st Congress 1st session, July 28, 1989, from the Senates Committee on Environment and Public Works. See also E. Nalder: Tankers Full of Trouble, pp. 37-48, 187, 225 and Jim Mulrenan in Lloyds List, March 24 and 30, May 1994, July 13, 1992, Oct. 2, 1993, Oct. 4, 1995, Nov. 2, 1996, July 10, 1998, Feb. 12, 1999, Oct. 2, 2003, Sept. 13, 2004, Dec. 28, 2006; and Seatrade Week, July, July 17-23, 1992; Tradewinds, Sept. 11, 1998 and July 9, 1999; New York Times, Dec. 1, 1993; Fairplay, Dec. 6, 2001; Oil Spill Intelligence Reports, Jan. 17, May 23 and June 23, 2002, June 8, Sept. 14, 2006 and Sept. 4, 2008; Financial Times and US Today, June 25, 2008; Wall Street Journal, June 26 and 27,, 2008; and a press release from the US Department of Justice, June 1, 2006, on a new compensation claim.
II. SUBSEQUENT INCIDENTS IN US WATERS

At the beginning of the new millennium, Valdez was again in a panic when a sister vessel to Exxon Valdez, the S/R Long Beach, started to leak crude oil in waters nearby. According to press reports, another environmental disaster was narrowly averted. Now the oil giant Exxon had joined forces with Mobil and become the worlds largest oil company. After the grounding in 1989, Exxon changed the name of the company from Exxon Shipping Co. to Sea River Maritime Co. The unfortunate Exxon Valdez was renamed Exxon Mediterranean and sent in to exile outside home waters. Under a section in the Oil Pollution Act of 1990, the tanker was banned from ever entering the Prince William Sound again. A suit to have the section declared unconstitutional was in vain, and Exxon suffered a new setback when the Anchorage District Court in 1998 dismissed the lawsuit. An appeals court upheld the ban in the fall of 2002. The Exxon Valdez spill was followed in quick succession by new tanker accidents in US waters. Three spills happened on June 23/24, 1989, and demonstrated that oil pollution from accidental tanker spills was a real and
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continuing threat to the public health and welfare. The Greek tanker World Prodigy (30,000 dwt), built in 1986, spilled about 200 tons of Bulgarian heating oil in the coastal waters of Rhode Island. Later, it was contended that the captain had violated state regulations by entering the area without a pilot, he had suffered from lack of sleep and was using an obsolete map. The next day, the Uruguayan tanker President Riviera (87,300 dwt) left the shipping channel in the Delaware River and grounded 15 miles from Philadelphia. About 100 tons of heavy fuel oil leaked out. For good measure, a barge collided at the same time with a freighter in the Houston Ship Channel, spilling about 10 tons of heavy crude oil. In June 1990, a Norwegian tanker, Mega Borg (136,500 dwt) exploded and caused a major oil spill while in the course of lightering operations off Galveston, Texas. Twelve thousand tons of its cargo of crude oil were lost overboard across 57 miles of beaches in Texas. Four crewmembers were killed in the explosion and blaze. The 15-year-old tanker burned for five days. The smoky blaze was tremendous, and the locals demanded that it be put out. This was done, but the USCG, again unprepared for a spill of this magnitude, had to fly in equipment from the North Sea to stop or at least minimize the damage. Little of the leaked oil reached the coast. The tanker was later towed to the Far East and sold for demolition. The need for better American legislation to protect against pollution from tankers was reconfirmed in February 1990 by the unfortunate American Trader (80,700 dwt). The tanker, owned by Attransco, punctured her hull by running over her own anchor when approaching the mooring buoy at low tide in Huntington Beach off the coast of California. Associate branches of BP of America had time-chartered the vessel and owned her cargo. More than 9,000 barrels were spilt to the sea. It emerged that the water depths in the area were four feet less than the master and the pilot had been led to believe from their charts. The Attorney General, Bill Lockyer, later described the accident as the worst in California for 20 years. Claims included compensation for lost opportunities of beachgoers and boaters who were unable to use local waters and beaches after the accidents. After more than nine years of litigation, a settlement was reached with the tanker owner. The shipping company agreed to pay USD 16 million for the damages. The case raised the interesting issue of whether a charterer could be considered to be an operator. The court noted that this possibility should not be ruled out, but due to the settlement, the question
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remained unanswered. Separately, between 1994 and 1996, the cargo owner, the tanker terminal and other involved parties had paid about USD 11 million for clean-up costs, biological resource damages, lost recreational uses and legal fees, etc. BP was reported to have spent about USD 250,000 a day to minimize the spill. Even though the money paid out and the responses to the latest spills by and large were more prompt than in Valdez, the efforts were in the view of the US Congress no unqualified success. The pollution damage was given substantial media coverage and gave a further impetus to the feelings that the tankers represented a continuing threat to the environment in the waters and the coastline of the US. In the wake of these accidents, the interest in Alaska was revived for a pollution accident that had occurred way back in July 1987. At the time, an American flag tanker, Glacier Bay (82,000 dwt) controlled by Apex Oil Company based in St. Louis spilled about 150 tons of oil whilst in transit from Valdez to the Nikiski Terminal in Cook Inlet, Alaska. The tanker was in the process of dropping her anchor in the inlet when she struck an unknown rock, resulting in the leakage. It was later claimed that the National Oceanic and Atmospheric Administration (NOAA), had failed to chart the rocks in the area properly. The P&I club, the West of England Shipowners Mutual Insurance Association, had undertaken the cleaning in co-operation with the owner of the ship, the cargo owner and the time charterer. Because of the renewed interest for compensation, claims were now brought before the court for the District of Alaska. The court held that the Trans-Alaska Pipeline Authorization Act (TAPAA) had completely removed the old federal 1851 Limitation of Liability Act with respect to the tanker owners liability and tanker transportation of Alaskan oil. The shipowner was a member of TOVALOP. The oil company, which owned the cargo, was a party to CRISTAL Ltd., which was backed by more than 700 oil companies worldwide and intended to provide a last-resort fund. Compensation could only be claimed when the oil cargo in question was owned by a party to CRISTAL. Two hundred thirty-two claims arose from the spill. West of England paid out some USD 60 million to compensate claims from fishermen, fish processors and others. The amount exceeded the shipowners liability limits of TOVALOP, and West of England requested reimbursement of up to USD 40 million from CRISTAL. However, the claim was denied on the grounds
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that written notice, in accordance with the rules of this institution, was not given within two years of the incident. Furthermore, reference was made to its charter that stated: In fulfilling its obligations ... CRISTAL shall be the sole judge ... of the validity of any claim made hereunder... West of England opined that proper notice was given. In any case, the time bar did not apply to the circumstances of the case, and it would be repugnant or void as contrary to public policy if CRISTAL was the sole judge of its legal obligation. The insurer brought the claim to the Commercial Court in London that held that its power of review was unrestricted under English law, and that a party was free to challenge any of CRISTALs findings. However, after an appeal, the Court of Appeals ruling went in favour of CRISTAL. It was held that subject to there not being unfairness and not showing bad faith or perversity in its determination, the defendant was allowed to be the sole judge. The feeling within West of England was that CRISTAL had been using all their endeavours to avoid paying proper and adequate compensation to anyone whatever their status for as long as possible. But the Appeals Court refused an appeal to the House of Lords. The chief executive of CRISTAL, John Hawkes, emphasised to the press that the reason for contesting the claim was in no way to resist the claim, but to avoid setting an unwelcome precedent. The case was later settled amicably when the P&I club accepted a reimbursement of about USD 17 million to 18 million from CRISTAL. Congress passed the Oil Pollution Act (OPA90) in 1990. Up to that time, the American oil pollution liability and compensation legislation embraced a broad patchwork of federal statutes and laws of various coastal states. The legislation was partly supplemented by the old Limitation of Liability Act of 1851 which had remained part of domestic law for nearly 140 years and partly the two private schemes: TOVALOP and CRISTAL. The Clean Water Restoration Act of 1966 introduced liability for clean-up costs for the first time. The act contained, however, no authority for courts to provide compensation for damage private parties suffered. When CLC69 was sent to the Senate for ratification, the Foreign Relations Committee reported favourably on the treaty, but advised the Senate to await the pending discussion on the Fund Convention before further steps were taken. The message resulted in nothing. Instead, Congress enacted the Federal Water Quality Improvement Act (WQIA) that imposed liability on tanker owners and operators for clean-up costs the federal government incurred, but not for pollution damage private
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parties suffered. The shipowner was made subject to strict liability. The liability limits were linked to the size of his vessel. If the accident was caused by an act of God, act of war, negligence on the part of the US Government or an act or omission of a third party, liability was avoided. On the other hand, the limits could be broken if the discharge was a result of a wilful negligence or misconduct within the privity and knowledge of the owner. In 1972, the law was amended to cover hazardous substances, as well. Thirty-five years later, the discussion in IMO has not resulted in an operational international convention on liability caused by chemical cargoes. The concerns of private parties about the pollution risk represented by tankers carrying oil from Alaska along a sensitive coastline were accommodated in 1973, when the Trans-Alaska Pipeline Authorization Act (TAPAA) was passed. TAPAA contained provisions imposing strict, but limited, liability on tanker operators for all pollution damage caused, including on private property. In the Glacier Bay case, the Ninth Circuit Court of Appeals held: ... TAPAA was designed to supersede any conflicting law Because this scheme is in irreconcilable conflict with the Limitation Act, we hold that TAPAA implicitly repealed the Limitation Act with regard to transportation of trans-Alaska oil. At the time of the oil crisis in 1973-74, it was envisioned that offshore terminals would be built to receive large tankers that because of draft restrictions could not safely enter US ports. Such a facility was the Louisiana Off-Shore Oil Port (LOOP). The enactment of the Deepwater Port Act in 1975 applied to ports outside the three-mile territorial limit of the US. For clean-up costs and pollution damage within designated safety zones, shipowners and operators were held strictly and jointly liable. The liability was limited, but with few defences, to USD 150 per gross ton or USD 20 million, whichever was the lesser. On the other hand, these limitations might be broken if gross negligence caused the discharge. In the midst of hectic legislative activity during the 1970s, both the Nixon and Ford administrations submitted bills to Congress in order to implement the international regimes, but in vain. President Carter placed the ratification process on hold, and the Reagan administration opposed ratification partly because it would increase governmental spending. The main reason for the refusal, however, was the Senates resistance to give up the legislative rights of the individual states. One of the first states to
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provide for special compensation for pollution damage was Florida, which imposed strict and unlimited liability on shipowners for damage caused by pollution in its waters. The state had been sued by various shipping interests because it allegedly had intruded upon federal jurisdiction, but the Supreme Court opined that so long as the federal government had not by its legislation pre-empted the individual coastal states from protecting its own waters, the states were free to legislate. In the light of the Amoco Cadiz and the public alarm Argo Merchant caused, Congress in 1980 was determined to update legislation to address the problem. Some states had at that time indicated a willingness to accept adequate, international limits to benefit from a federal regime, provided they retained the right to maintain their own funds for well-established purposes. But the occurrence of a series of domestic disasters connected with disposal of chemical wastes changed the focus. The result was the enactment in 1980 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), which established a tax-financed Superfund for removing hazardous waste sites. A main target was the cleaning of the contaminated land-based facilities. Among the many other features was the inclusion of a liability regime for vessel operators for about 300 designated hazardous substances. By and by, some 24 individual states had separately enacted comprehensive oil pollution laws covering compensation for clean-up costs and/or damages to third parties. A number of the laws created compensation funds to pay for clean-up operations. License fees, penalties, fines and/or state appropriations financed such funds. Several states, including Maine, New Hampshire, New York, New Jersey and Florida, financed their funds in part by a tax on oil. In 17 states, the liability imposed on the polluter was unlimited. In February 1983, the US General Accounting Office presented a study that concluded that a complex legal patchwork of international, national and state arrangements governed ocean spill cleanup in America. It was claimed that the system did not effectively protect US interests from the risk of ocean pollution. In general, a private American party injured by oil pollution from a ship must now legally depend for compensation either on State statutes or on tort suits in the civil courts. The American Petroleum Institute (API) and the oil industry were frustrated
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about the regulatory framework. In a June 1989 report, API complained: In order to accomplish its operational and logistical goals, the spiller usually must comply with a myriad of federal, state and local regulations and ordinances. Very often compliance requires review and/or approval by a number of political agencies or subdivisions. ... In a catastrophic spill situation, where swift and decisive action is critical, such delay can substantially increase environmental impact.
Notes: Exxon Valdez renamed Exxon Mediterranean, which was renamed again in 2009 to Dong Fang Ocean and spent the 20th anniversary of the oil spill at a Chinese yard to be converted to a dry cargo bulker. See Tradewinds, May 26, 2000, and March 27, 2009. On the polluters Mega Borg, World Prodigy, President Rivera and American Trader, see de la Rue and Anderson: Shipping and the Environment, London, 1998, pp. 58, 226, 462 and 618 and John I Jacobs 1989/1990 Reports. On Glacier Bay, see Lloyds Law Report, 1995, Vol. I, pp. 560-570, Lloyds List Feb. 3, 11, 20 and Oct. 28, 1995. See also Tradewinds, April 4, 1996. On the Deepwater Port Act, see de la Rue and Anderson: Shipping and the Environment, London, 1998, pp. 51-53. On the complex legal patchwork of international, national and state arrangements, see the US General Accounting Office: International Oil Pollution: Current and Alternative Compensation Arrangements Affecting the US, February 1983 and INTERTANKO: Survey of the US Coastal State Law, Oslo, 1995.
III. NEW RADICAL LEGISLATION AFTER EXXON VALDEZ THE TANKER INDUSTRY IN DESPAIR
The Exxon Valdez and American Trader, followed by other accidents in domestic waters, triggered a reaction from Congress in the form of unilateral punitive oil spill regulations. On April 7, 1989, President Bush went on record stating: The Alaska spill is in my judgment conclusive evidence against pre-empting state law. He introduced a plan that included a comprehensive legislative program to address the wide-ranging problems associated with prevention, response and compensation for oil spills. New standards would be required for vessel construction, crew licensing, manning and contingency planning. Federal response capability would be enhanced, enforcement authority broadened, penalties increased, research and development authorized and new liability for oil pollution damage and financial responsibility rules were to be introduced.
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President George Bush

George Bush was the forty-first President of the United States. Serving from 1989-1993, he was also a World War II veteran. He started his own oil company in 1951 and co-founded the Zapata Offshore Company, which first drilled for oil in the Texas basin and then moved on to Houston. After being elected chairman of the company, his ambitions turned political. He was President when Congress rejected ratifying the IMO protocols. He signed OPA90, but regretted that the ratification failure may weaken our leadership in the development of international maritime standards.
Ria Novosti / Boris Kaufman / Camera Press / Scanpix
Within the White House and the House of Representatives, there was nevertheless a widespread desire to restore the credibility of the US with respect to continued cooperation within IMO. Thus, there was support for some type of international solution. Secretary of Transportation Mr. Skinner, in the first session of the 101 Congress, testified before the Senate Subcommittee on Environmental Protection and argued that the Protocols would provide effective coverage for US citizens; jurisdiction and enforceability of US judgments abroad; enhanced settlement of claims; predictability and consistency of limits and costs for ship owners and oil companies; reduced costs to the US for catastrophic spills and expanded US influence in international maritime negotiations. But strong opposition to the 84 Protocols was soon signalled by the Senate and in particular by Senator George J. Mitchell, Jr., a Democrat from coastal Maine. He moved to attack the administration by introducing a bill meant to set up a unique national regime for tanker traffic to the US. Bitterly opposed to any federal legislation that would deprive the coastal states of the right to legislate in respect of environmental issues, he brushed the 84 Protocols aside. In his mind, their scope was too limited and the liability limits far too low. He argued that the only way the citizens of Alaska would have any hope of being fully compensated for their losses was under Alaskan law. Had the protocols and/or pre-emptive federal legislation been in place, Alaskans would have been unable to seek full recovery for their losses. In the wake of the Valdez spill, it was inconceivable to him that anyone would want to pre-empt State legislation. Whether Exxons liability would have been confined by the Protocol limits if these had been in effect is, however, questionable. The company had left the command of a giant super tanker to a master with a sheet of conduct that reflected alcohol abuse. It is not unlikely that claimants in such a situation would have argued that the owner (Exxon) acted recklessly and with knowledge that such damage would probably result. This could have meant that the limitations in CLC would not apply. On the other hand, one may also ask whether the oil company could have escaped part of its liability by proving that the damage resulted from the wrongful acts of the US Coast Guard, whose radar control operation arguably amounted to gross negligence. Speculation aside, the fact remains that nearly all environmental groups supported Senator Mitchell, including the few who initially had been sympa-
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thetic to ratification. Oil was both dirty and a symbol of economic growth. The greens were opposed to both, and gained an increasingly powerful voice as a result of their support for a cleaner and kinder society. An effort to resolve the dispute came about in November 1989 when Congressman Gerry Studds, chairman of the House of Representatives Merchant Marine and Fisheries Committee, introduced a bill. The House voted in November 1989 overwhelmingly to pass Congressman Studds bill, which would strengthen the federal standards. But the bill also contained an ingenious provision letting the US join the international convention - that would enable ratification of the 84 Protocols and yet would avoid pre-empting state laws. It would allow the US to participate within the IMO instruments for five years on a trial basis as soon as sufficient ratifications had been achieved. During this time, US negotiators would work with representatives from other countries to modify the Protocols to bring them in line with US legislation. Although the proposal won the support of the administration and even from some environmentalists, the independent tanker owners quietly asked themselves how such a compromise could work in practice. Fearing that the version with unlimited liability provisions would prevail, Ian McGrath, managing director of the oil major Shell, in early June 1990 announced that his company would stop crude oil deliveries to the US mainland. Shell-owned or managed tankers would go no further than the marine terminal platform LOOP some 20 miles off the Louisiana coast in order to limit the companys exposure to the pollution liability risks. The news caught the headlines of the finance and shipping press. According to June 12 edition of the Wall Street Journal, Shells reaction will make the liability problem more visible and accelerate a compromise.
Sebastian Scheiner / Afp / Scanpix
George J. Mitchell Jr.

Senator Mitchell was the majority leader of the US Senate when Congress agreed on OPA90. Before entering the Senate in 1980, he served as a federal judge and as a longstanding member of the Senate Environment and Public Works Committee, and was thus perfectly suited to spearhead the passage of the Act. Nevertheless, he had to give up the implementation of his favoured principle that all parties involved in a pollution accident should be held accountable for their actions. A stipulation exonerating cargo owners (oil companies) was worked into the bill before it was passed. In 1994, he turned down an appointment to the US Supreme Court. Since then, he has successfully completed several international missions. Most impressive is his work as the US Special Envoy for Northern Ireland, which resulted in the Belfast Peace Agreement signed on Good Friday 1998.
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In a press statement, Mr. Skinner, Secretary of Transportation, expressed deep concern that failure to ratify the treaties would drive responsible owners from our shores. However, the abundant supply of bank loans combined with less demand for transportation had caused the surplus of tankers to grow to dimensions never seen before. The independent tanker owners found themselves in a market obsessed with the bottom line. Not much else mattered except the freight rate. To no avail, voices were raised arguing that the oil industry as charterers of tankers had a duty and responsibility to ensure that the ships they chartered were properly maintained and operated. The development caused strong protests from INTERTANKO. One of its Council members, Bjorn Wilhelmsen, opined that the unlimited liability on tanker owners would mean that well-established shipping companies might hesitate to serve the US and leave the trade to one-ship companies with very little to lose. Thus, he felt tempted to draw a comparison with the prohibition laws in the 1920s: The comparison is not perfect because whisky is certainly a better drink than crude oil, but my point is that if you criminalise an activity, you leave the field open to the bad guys with nothing to lose. And oil is presumably more vital to the nation than whisky. Although the US had taken a leading role in the formation of the 84 Protocols and had signed both, the Senate never consented to ratification. In late June, members of the House and Senate came together to work out a compromise. Senator Mitchells argument that the protocols did not provide advantages over US federal and state law met with very little opposition. It was unanimously agreed to drop the joinder provision, which had contemplated implementation of the 84 Protocols. A provision in the House Bill, which imposed a secondary liability on the cargo owner confined to 50 percent of the removal costs, became one of the most controversial proposals. It was deleted by the conferees in order to complete their work before Congress August 1990 recess. The effective lobbying of oil company representatives had convinced members of Congress that such a provision would have had a devastating effect on small, independent companies which provide home heating oil to citizens of the north east part of the country.
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Whereas the provision in the House Bill which had directed a secondary liability on the cargo owner was deleted, Congress agreed that there would be a national Oil Spill Liability Trust Fund (OSLTF) financed from a 5-cent-abarrel oil tax imposed on imported oil as well as oil produced in the US. A second major source of revenue was the transfers from the previous pollution funds, which had been operating under the Federal Water Pollution Control Act, Trans-Alaska Pipeline Authorization Act, Deep Water Port Act and the Outer Continental Shelf Lands Act. Some revenues would also be received from other sources such as interest on the capital and penalties imposed on the polluter. The reason you need a fund, of course, is maybe you may not have an Exxon that has an accident; you may have a fly-by-night oil company that cracks up on the reef with no assets. And what does unlimited liability mean for them? Not very much. Their only asset may be the ship. These were the words of senator Breaux at the Senate floor debate on Aug. 3, 1989. The Certificate of Financial Responsibility requirements introduced five years later would prevent such incidents that he had in mind. Otherwise, the flight by night term may perhaps in practical life more likely be a one-ship independent tanker owner rather than an oil company. The one billion dollar Fund (OSLTF) would be made available to cover cleanup costs and damages not compensated by the shipowner. Its history went four years back in time. Congress had established a similar fund already in 1986, but had not passed legislation to bring it into effect. OSLTF would be available to cover clean-up costs and damages not compensated by the shipowner or any other responsible party within 90 days unless the damages were caused by gross negligence or wilful misconduct of the claimant. But in normal cases, claimants, whose claims were not settled by the responsible party, might seek compensation directly from the Fund, which in turn could later seek reimbursement from the responsible party by means of subrogation rights. The amount to be paid per incident was assumed not to exceed USD 1 billion. Hence, despite diplomatic pressure and reproach from IMO and all parties within the shipping and insurance industries, Congress saw no reason to bring the US laws in conformity with the Protocols. The Oil Pollution Act (OPA90) was signed on Aug. 18, 1990, by President
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Bush somewhat reluctantly, it may seem, as he after signing also felt compelled to declare that: In most respects the Oil Pollution Act is a responsible piece of legislation... Ultimately the threat of oil pollution is a global challenge, and the solutions we devise must be broad enough to address the needs of all nations. Therefore I urge the Senate to give immediate consideration to the International Protocols and give its advice and consent to ratification of these treaties. He also expressed concern that failure to ratify could create a situation: in which larger oil shippers seeking to avoid risk are replaced by smaller companies with limited assets and a reduced ability to pay for the clean-up of oil spills. We will need to monitor developments in order to protect against such undesirable consequences. Maritime governments as well as the shipping industry were distressed. Despite the fact that no liability was imposed on the cargo-owner, the oil industry was also frustrated, as Congress had failed to harmonize the variety of oil spill liabilities under the complex combination of state and federal law. In the view of Peter H. Ghee, Mobils legal counsel, Congress was posed in the summer of 1990 with a unique opportunity to resolve in a uniform manner the liability for oil spills in US waters, but the situation was left as confused as it had been, with no clear perception as to whether the potential exposures under either prior law or the 1990 Act would or would not be beyond the financial resources of tanker owners, charterers, and their underwriters. The oil industrys frustration is understandable, but the same companies had done their utmost to oppose ratification of the international regimes. The old saying that you cannot have your cake and eat it too comes to mind. A few independent tanker owners followed Shells example and confined their operation to the LOOP terminal. One of them, A.P. Moller of Copenhagen, Denmark, told Tradewinds in December 1990 that they had adopted a policy of not serving US ports with their crude oil tankers, but would continue to call as before with their tankers carrying clean products. But a clear majority of the owners continued as before, including the largest independent operator, World Wide in Hong Kong, who first had told Lloyds List that a decision to halt its shipments to the US probably would be made. Similar statements were
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also uttered by some French and Belgian oil companies, whilst a leading tanker broker, Clarkson & Co. in London, opined there were still enough tanker owners more than willing to serve the US. Two years later, Senator Mitchell gave some lip service to international co-operation on environmental issues. There would be many benefits for his country in a worldwide approach to the problems oil spills caused, he claimed. Thus, OPA90 was not a rejection of future participation in an international oil pollution regime. Instead, the law would be seen as a clear signal that any international accords must provide the degree of protection sought by the American people. At the same time, he acknowledged the value of state law liability rules that motivated the cargo interests to avoid oil spills. He pointed out that if the 84 Protocols had been ratified when the American Trader spilled the large amount of oil off Huntington Beach, BP would have been insulated from liability, as California law would have been pre-empted: The Congress and the states, however, have recognised that channelling liability to shipowners and relying on recourse actions to impose liability on other responsible parties does not provide the same level of deterrence and accountability that is provided by holding each and every responsible party directly and fully liable for their actions ... Much of American and English civil law and criminal law is based upon the principle that persons are accountable for their actions. Our law uses that accountability to create a deterrent to negligent, damaging behaviour. The public interest is not served where charterers, operators, pilots and others who are in the best position to prevent oil spills know that they are insulated from liability for catastrophic oil spills caused by their own gross negligence or violation of federal regulation.
Notes: On the development of US environmental legislation, see de la Rue & Anderson, Shipping and the Environment, London, 1998, and US Coastguard, Regulatory Impact Analysis - Financial Responsibility for Water Pollution (Vessels), CGD 91-005, June 1994. Also see B. Sandvik, What can we learn from US law, Marius no 218, Norsk Institutt for Sjorett, Oslo. On the exoneration of the cargo owner, Chao notes that the omission of the cargo owner was not explained anywhere except in a brief statement given by Mr. Lent, a member of the House of Representatives. See Pollution from the Carriage of Oil by Sea, pp. 234-235. The full text of President George Bushs statement was sent from the White House, Aug. 18, 1990, and is reproduced in INTERTANKOs Annual Report, 1990, p. 23. Mobils legal counsellor Mr. Gees paper on OPA90 was presented April 15-17, 1991, at an international shipping seminar at Oslo Plaza Hotel. On the reaction of tanker owners, see Lloyds List, June 25, 1990, and Wall Street Journal late June 1990. Senator Mitchells article is found in Environmental law, Vol. 21, pp. 236-251.
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IV. OPA90 & THE IMO INSTRUMENTS

A few voices tried to iron out the difference between OPA90 and the international instruments. One of them was Daniel F. Sheehan, director of the U.S. Coast Guard National Pollution Funds Centre in Virginia. The devil is in the details, he argued. In his mind, the regimes were, after all, very similar. At the American 1995 Oil Spill Conference, he substantiated his view with the following generalisations about the two regimes: Both have limits of liability for ship-owners OPA90s is higher. Both have limits that can be broken OPA90s is easier to break. Both describe damages that are compensable OPA90s are broader and more extensive, particularly in the area of natural resource damages. Both require certification of ability to meet potential limits of liability. Both permit third-party direct action against guarantors. Both limit policy defences of guarantors. Both have funds for damages and removal costs in excess of shipowners liability and both are funded by importers. Mr. Sheehans points are perhaps valid, but only to a limited extent. A rough comparison of the two legal systems reveals that the OPA limits increased the tanker owners liability exposure substantially. In the case of a tanker of 3,000 gross tons or more, liability was set at USD 1,200 per grt, or USD 10 million, whichever is the higher. Thus, it is the highest figure that is chosen in contrast to the international instruments that apply the lower figure. A medium-size tanker of 75,000 dwt (roughly 40,000 gross tons), would thereby face a liability of nearly USD 50 million, and for the largest tankers, limits would go beyond USD 240 million. However, due to draft restrictions, the VLCCs could not enter US ports. These super tankers discharged their cargoes far out from the coast by transferring the oil to smaller tankers or to LOOP. If an accident occurred there, the risk of being exposed to huge claims would be considerably reduced, as was pointed out in Shells press release mentioned above. Moreover, the OPA90 defences against liability for an oil spill are weaker. The shipowner may be excused only if the spill is solely caused by an act of God, or an act of war or under certain circumstances an act/omission of a third party or any combination of these factors. There is no reference to the defences such as hostilities, insurrection or irresistible natural phenomenon. Neither is there any exoneration of the shipowner for claims from private parties if the spill was caused by the negligence of any authority responsible for the operation of navigational aids. In such a situation, the
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shipowner is exempted from claims of the Government only if the spill is caused by gross negligence of the same Government. Conflicts of perhaps an even more serious nature exist in relation to other liability aspects. Under the 84 Protocols, the liability limits of a shipowner can be broken only if the damage is caused by his personal fault, committed with the intent to cause damage or recklessly with the knowledge that such damage was likely to occur. In an effort to encourage responsible behaviour, OPA90 made tanker owners exposed to unlimited liability for spills not only caused by gross negligence or wilful misconduct of the shipowner himself, but equally on the part of any of his employees, agents, contractors, the master or a crew member. Moreover, taking into account the masses of rules and regulations issued by the Coast Guard and other American authorities, the shipping and insurance industries were particularly troubled. The law made it clear that the limitations did not apply if there was a violation of an applicable federal safety, operation or construction requirement. Likewise, a failure to report an incident or to provide reasonable co-operation with officials in connection with clean-up operations would break the ceiling and expose the shipowner to unlimited liability.
V. COMPENSATION FOR DAMAGE TO NATURAL RESOURCES

At the 1984 IMO Conference, it was agreed that speculative and frivolous claims should be excluded from compensation, but the definition of pollution damage would remain wide enough to allow recovery for all reasonable claims. To reach this goal, compensable claims were limited to costs of damage caused outside the ship, such as damage to property and direct economic losses, and to the cost of reasonable measures taken to prevent pollution. For damage to the environment, the IMO Protocol compensation was restricted to reasonable measures undertaken (or to be undertaken) to restore the environment after the accident. According to a resolution passed by the IOPCF Assembly in 1980, compensation should not be based on abstract quantification of damage calculated in accordance with theoretical models. OPA90 introduced no such restrictions. The obligation to pay for damage to natural resources included compensation for all lost values, as well as restoration of bringing impaired natural resources back to their original state.
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Furthermore the costs incurred to assess such damages would be compensated. The full, legal effect of OPA90 on this issue still remains to be seen. But it seems clear that the law differs fundamentally compared with the international regimes. In 1989, the Court of Appeals for the District of Columbia held that under CERCLA, so-called contingent valuation was an acceptable yardstick to calculate non-use values. This meant that compensation for lost values could be measured by taking into account the (economic) value set by individuals, irrespective of whether they were users of the resources in question or only passive, potential users. In other words, what non-users were willing to pay for the availability of the natural resource seemed as relevant as the value set by users. The only two exceptions recognized by the Court were if restoration was infeasible or when the restoration costs were grossly disproportionate to the diminution in the value of the damaged resources. With this approach, the shipping and oil industries, and not least their insurers, feared that levels of liability, hitherto unimaginable, had been introduced. In 1990, Congress gave NOAA the task of publishing rules on the assessment procedure to establish the scope of pollution damage. In this respect, one of many problems was that unspoiled natural areas of considerable ecological value often have little or no commercial value. For several years, the international community hoped that NOAA would remove the most extreme feature of the law and return the issue to a practical level. After a delay of nearly three and a half years, the federal agency finally published standards for Natural Resource Damages Assessment (NRDA). The rules had many facets, one being that the Contingent Valuation Methodology (CVM) was authorized as a legally acceptable assessment method. The passive use value seemed thereby to be reconfirmed as a basis for the evaluation. Prior to OPA90, tanker owners were subject to, but less concerned with, the prospects of facing unlimited liability for removal costs and damages associated with an oil spill under US state laws. While such consequences had existed for many years, it was only after the claims against Exxon Valdez that the full implications were acknowledged. Thereafter, it seemed clear that there was a risk that, with a catastrophic spill, liability could exceed both available insurance and the assets of the responsible party. No independent tanker company had the financial resources or insurance to withstand the claims faced by Exxon. Based on an open-ended definition of pollution damage, an oversight
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of a crew member resulting in a serious oil spill could overnight enable an American judge to wipe out the business of any independent tanker company supplying oil to the US. In a submission to NOAA dated Sept. 10, 1992, INTERTANKO claimed that CVM would place an additional intolerable financial pressure on an extremely small sector of the transportation chain. It would benefit only the lawyers and other experts who would be paid millions of dollars to litigate the merits of the methodology. Senator Mitchell had made the point that the threshold, as regards the amount that can be recovered from a polluter in violation of OPA90, could be found in only the US bankruptcy laws. Some shipowners transporting oil to America felt they were engaged in I bet my company lottery. However, several members of Congress by and by concluded that certain realities might have been overlooked when the NRDA provisions in CERCLA and OPA90 were passed. A new bill was introduced in the House that would require resource restoration plans to be cost-effective and cost-reasonable. NOAA was requested to issue specific regulations to take care of the shortcomings. In 1997, it was reported that the US Court of Appeals for the District of Columbia had in principle approved the CVM calculation methods, but had at the same time underlined that the courts had an obligation to independently scrutinize assessments for reliability and validity. Simplified computer assessments, without the development of actual site-specific plans, would not be allowed. Furthermore, it was held that claimants cannot simply estimate the dollar value of damages, but must present calculations showing the exact value of lost services. The next year, NOAA proposed new regulations along the lines the Court decided.
The Contingency Valuation Methodology

An illustration of the shortcomings of an extreme implementation of the contingent value principle was presented at a public meeting of the Contingent Valuation Panel in August 1992: If citizens are polled regarding the value of a single dolphin killed by pollution, the average value would, for example, be maybe ten cents.
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Consequently, if 100 dolphins are killed, the harm valued by that single survey is 10 dollars. Multiplying this number with the total population of the US about 260 million the damages from the killing of these dolphins would be an implausible USD 2.6 billion. Even in the event that a recommended discount factor of 50 percent is used, the damages would still amount to an unbelievable USD 1.3 billion, which is USD 13 million for each dolphin killed.
Notes: On National Resource Damage and Restoration Costs, see de la Rue & Anderson, Shipping and the Environment, London, 1998, pp. 503-558. On the Contingent Valuation Methodology (CVM), see Maritime Update issued by Eckert, Seamans, Cherin & Mellot, Washington, Nov. 6, 1995, and Nov. 18, 1997. For Ohio v. Department of the Interior, see DC 1986 and Collin de la Rue & Charles Anderson, p. 526.
VI. RESPONSIBLE PARTIES CHANNELLING OF COMPENSATION CLAIMS

At the 1984 IMO Conference, Admiral Hollingsworth stressed that the suggested channelling concept was unfamiliar in US law. Also, France had objected strongly to a text that seemed to provide virtual immunity upon a number of identified parties. The formulation would be unacceptable if inadequate amounts of liability were adopted. Several other delegations were of the same opinion, including Canada, Greece and Poland. The final result was nevertheless that claims for pollution damage would be directed against the ship owner alone. The US Congress decided that shipowners should be the responsible parties, but not all other parties in a position to prevent oil spills would be insulated from liability. Thus the responsible parties identified were in the case of a vessel any person owning, operating, or demise chartering the vessel. The Act gives no further guidelines with respect to the interpretation of a responsible party, but as the shipowner may be exonerated if the damage is caused by an omission or act of a third party, this third party may under such circumstances be regarded as a responsible party. The person operating the vessel the operator is mentioned expressly in the law. Based on the rulings of US courts, it seems clear that people or corporations that exercise day-to-day management or control over the vessel are
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operators. Many tanker owners have entered into contractual arrangements with professional management companies and left the operation of their fleet to them. If such a company has assumed the operational responsibility in respect to seaworthiness, maintenance, crewing and other functions relevant to general safety, the company may fall under the term operator. The term operator has been liberally construed by US courts under CERCLA, but the Coast Guard has in the Preamble to the rules on financial responsibility in 1994 presumed that traditional voyage or time charterers are not covered by the term responsible party in OPA. In 1996, Ms. Chao in her book, Pollution from the Carriage of Oil by Sea, commented on the question as follows: ... given that various persons may exercise some degree of control over the ship to a greater or lesser degree, it remains to be decided what degree or control would be sufficient to render a person liable as an operator. It was understandable that several categories of persons within the oil industry were concerned about whether they might be construed as being operators. At the proceedings following the American Trader, the time charterer and the cargo-owner, BP Oil Shipping and BP Oil Supply, argued that the company was neither owner nor operator. The argument was rejected, as it was found possible for the plaintiffs to establish that the charter by BP makes it an operator under the statute by both the district court and the court of appeals. The case was heard under TAPAA, but in this context this is of limited consequence as long as the act contained the same provision as OPA90, making both the owner and the operator liable. Had the 84 Protocols been in place in the US, the time charterer BP Oil Shipping would have been insulated from liability. Based on the two court findings in the American Trader case, it cannot be ruled out that following a future pollution disaster in US waters, a time charterer may be regarded as an operator and responsible party, as well. For the shipping industry, a major concern has been whether a corporation with multiple tanker companies could go down the drain altogether if only one tanker faulted and polluted the American coast. Thus, foreign tanker owners raised the question of whether single-asset shipping companies would provide protection against a veil-piercing/alter-ego inquiry in the event of a catastrophic spill. Another important question was whether individual shareholders and/or members of the board of directors could be held personally liable.
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As a general rule, there is a presumption of separateness between a corporation and its owners. Nevertheless, this is no more than a starting point, or a rule with important exceptions. The legal battle which started after the grounding of Amoco Cadiz in 1984 was in the back of the industrys mind. It was a battle that carried on until the litigation finally concluded in 1992, nearly 14 years after the accident. Both the Federal District Court and the Federal Court of Appeals held Amoco International and Standard Oil Company responsible. The claimants were awarded USD 61 million, plus interest. Standard Oil had exercised such control over its subsidiaries that these entities were considered to be mere instrumentalities. The management had failed to maintain the steering gear in order, and the maintenance had been delayed to avoid disturbing in the commercial operation of the tanker. The judge pierced the corporate veil and decided that the parent company had been substantially involved in the operation, and consequently had contributed to the damage. Thus the judgment led to involvement and controls of operation being critical elements. Following legal advice, the Norwegian shipowner Westye Hegh considered splitting up his company into separate units. He controlled a large fleet, owned and managed by the company Leif Hegh & Co. AS. In October 1990, the press was told that because of the potential liability OPA90 imposed, the parent company would no longer exercise full control over all the activities. Later, the company sold its crude tankers and combined carriers to more courageous operators. At the same time, two Norwegian shipping institutions approached a New York law firm, asking for a legal analysis on the potential liability of shareholders, partners, investors and officers in shipping companies. They were informed that: A shareholder who has the ability to and exercises substantial control over the Company takes a larger risk than one who, having the ability to do so, accedes to greater independent judgement by the company through its officers and directors. In September 1998, the Oil Spill Intelligence Report informed that the US Supreme Court had ruled that a corporate parent might be culpable only if it actively participated in operating the facility responsible for the pollution damage.
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OPA90 does not specifically establish director or officer liability for pollution damage. However, as the definition of the responsible party does not exclude individuals, such officers may be at risk. One may assume, however, that officers or directors will risk liability themselves only if it is proved that they knew of an unseaworthy condition of one of the companys tankers and failed to remedy it, with the result that a major oil spill occurred. OPA90 explicitly states that demise charterers are responsible parties together with the shipowners. Such charterers are commonly called bare boat charterers. The characteristic of such a contractual relationship is that a ship is leased on a bare boat, without a crew. The charterer will thus engage the master and crew and have full control of the operation unless he prefers to engage a professional management company. In short, he will be in command and is thus very much in the same position as the owner. In the drafting stages, OPA90 was to contain an exclusion from liability for lenders, but the exception was dropped. A particular problem is therefore the potential liability for financiers or lenders who have chosen to take control of a shipping company that has failed to fulfil its obligations. In the case United States v. Fleet Factors Corp., an appeals court held that under CERCLA, a lender could be held liable if he actively participated in the financial management of a company to such a degree that it influenced the companys treatment of hazardous wastes. On May 10, 1991, The Journal of Commerce addressed the problem and announced: Ship pollution rules send banks running for cover. The paper reported that banks were buying liability insurance for their entire shipping portfolios as their pollution litigation risks now had increased. Even with no explicit provision in OPA90, it was feared that if a bank or any other lender affirmatively decided to take over the operation of a shipping company to such a degree that it de facto undertook the role as the ship manager/owner, it might be seen by American courts as the responsible party. In the same way, a mortgagee could not feel certain any longer that he would be shielded from pollution damages if he chose to participate in managing the ship in an active way, for example by supervising the employees or directors of the owning company. Peter Stokes, a maritime consultant in London, painted a picture of the risks for banks in an article in Lloyds List, Dec. 31, 1990:
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If, for example, we take the case of a vessel owned by a one-ship company in Liberia and financed mainly by debt rather than equity, we can be reasonably sure that claimants in the US will not waste their time trying to pursue the beneficial owners, unless they are known to be a substantial group. Instead they will be inclined to pursue the mortgage bank, arguing that the equity content in the vessel is negligible and the true controllers of the ship are the secured lenders.
Notes: On responsible party, see de la Rue & Anderson: Shipping and the Environment, London, 1998, pp. 31-32, 179, 616-618, 665-667, 687-690 and W. Chao: Pollution from the Carriage of Oil by Sea, p. 235. See also Hazardous Cargo Bulletin, April 1988, and the legal counsellor Lasse Brautasets article: Piercing the Corporate Veil in Nordic Defence Clubs bulletin for 1990. The mentioned unpublished memorandum to Norwegian shipowners is dated Feb. 1, 1991, and is written by the New York lawyer Richard L. Jarashow.
VII. CERTIFICATE OF FINANCIAL RESPONSIBILITY (COFR)

According to a special section in OPA90, any vessel calling US waters has to establish evidence of financial responsibility to meet the maximum amount of liability to which the owner could be subjected to under the law. It was left to the Secretary to declare further regulations for this purpose. The job to provide evidence of financial capability to satisfy liability claims for removal costs and damages was in turn left to the US Coast Guard, which faced no easy task in its dealing with the shipping industry. The maximum amount of liability was in many quarters within the shipping industry feared to mean a liability without limitations and as such the requirement was unknown and unacceptable. As usual, tanker owners looked to their P&I clubs for liability insurance and assistance. The mutual clubs were owned by a variety of owners: Independent tanker owners, oil company tanker owners, owners of dry cargo ships, liners, passenger vessels, etc. The major clubs were all part of the International Group of P&I Clubs that at the time insured the liability of over 95 percent of the worlds ocean-going tonnage. They in turn reinsured most of their coverage with Lloyds London, a marketplace made up of about 27,000 individual underwriting members. The boards of the various clubs in the International Group responded and offered tanker owners a modest coverage of USD 500 million as protection
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against pollution claims in the US. An additional coverage of USD 200 million was also obtained elsewhere in the commercial market. The International Group had fundamental difficulties providing further assistance, including acting as guarantors under the harsh conditions of OPA90. To accept the exposure as guarantor by issuing certificates of financial responsibility along the lines suggested by the US Coast Guard would mean that the claimants could sue the clubs directly (direct action). It was claimed that such a procedure conflicted with a basic principle for this type of insurance, the essence of which was that the shipowner would remain primarily liable to the claimant, but would be indemnified by his club for the claims he had paid (pay-to-be-paid principle). Another important P&I principle was that any claim for indemnity would be subject to the terms of the insurance contract. If the club in question had a defence under the tanker owners insurance contract, the obligation to indemnify the shipowner ceased. Such defence could include that the owner had failed to pay the insurance premiums, failed to maintain the insured tanker in class or failed to report information material to the insured risk. The implication of the guarantor role combined with direct action meant that the clubs could be sued directly in US courts and be held directly liable for the consequences of a pollution incident. Would an American judge in a heated situation respect statutory limits in the law where the dollar amounts were in the range of the Valdez catastrophe? Due to the non-pre-emption of state liability laws, US courts had ample opportunities to find reasons for imposing liability in excess of the OPA limitations. An additional risk was that insurers conduct not only the polluters could become an issue in the litigation. The clubs final objection was that they had a duty to their whole membership, not only to tanker owners, to preserve and not jeopardise the mutual capital base by exposing it to openended liability claims under national laws. When Terence Coglin, on behalf of the clubs, testified in November 1991 before the House Merchant Marine and Fisheries Subcommittee, he stressed that the clubs had: consistently stated that the position that they would not provide certification under any law which differed markedly from the 1984 Protocols ... The clubs believe the reinsurances which they obtain from the commercial market, and which are vital to their coverage, would be imperilled by the giving of certificates under OPA.
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His statement was confirmed at the same hearing by a marine underwriter at Lloyds, Richard Youell, who claimed that: We at Lloyds wish to respond in a constructive fashion to the insurance requirements which arise anywhere in the world. However, it is impossible to justify employing our capital and resources in an insurance environment where some of the fundamental principles of insurance practice are not allowed to operate. The implementation of the requirements for financial responsibility, COFR, Wilbert Joseph Tauzin, Bill Clinton, Daniel F. Sheehan and Tormod Rafgard
Lloyds List
Wilbert Joseph Tauzin was born in 1943, elected to US Congress in 1980 and was chairman of the Subcommittee on Coast Guard and Navigation at hearings on the OPA90 - proposed rules for evidence of financial responsibility (COFR). In November 1991, his committee listened to the statements presented by the insurance and tanker industry, but was not impressed. Bill Clinton was President of the US from 1993 to 2001. During this period, the US Oil Pollution Act (OPA90) was fully implemented. Daniel F. Sheehan was the first Director of the United States Coast Guard National Pollution Funds Center when it was established in Arlington, Virginia, in 1991. The mission of the center set up in accordance with OPA90 was to provide funding for oil-removal actions, initiate damage assessments, compensate claimants, recover funds owed by responsible parties and certify the financial responsibility of vessel owners and operators. Tormod Rafgard was born in 1937. He joined INTERTANKO after the inaugural meeting in October 1970. Rafgard served as the manager of the association during the first 25 years until the fall of 1995, when he joined a law firm before he became a judge in a Norwegian Appeals Court the next year.
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was delayed time and again because of the protests. In a statement in early November 1991, Admiral Appelbaum of the National Pollution Fund Centre tried to justify the COFR requirements. He told Lloyds List: We are trying to be as flexible as possible. He insisted that direct action was not at all a new concept; it was a feature of TAPAA and CLC69 as well. If a responsible partys liability limit was broken, the guarantor would still only be liable under direct action to the limits of the guarantee, he claimed. Despite such comforting explanations, scepticism prevailed. The spokesmen for the industry had probably not forgotten that direct action was as Appelbaum had said accepted in principle already when CLC69 was agreed on in Brussels in 1969. But the IMO limits seemed much more reliable and far more solid to shipowners. In any case, the insurance coverage offered was grossly inadequate to cover a catastrophic spill that was bound to happen in US waters sometime in the future. Some tanker owners still wanted to boycott the US. However, their organization was placed between a rock and a hard place, as many other owners found that the risk of a total catastrophe had been reduced to acceptable levels by way of the increased USD 700 million insurance coverage. Miles Kulukundis, chairman of a leading shipping company, London Overseas Freighters, was one of them. At a conference in Genoa, he proclaimed that: With additional cover ... and some minor structural changes, we are satisfied as things stand today not only to fulfil our charter commitments, but also to increase our involvement in the US trade. When Mr. Kulukundis later was elected as the chairman of INTERTANKO, a large group of members argued that COFR should be replaced by a mandatory insurance scheme providing cover for a worst case discharge as defined in OPA90. Because funding beyond the market capacity was required, Congress would, according to the proposal, establish a Mandatory Excess Insurance Facility (MEIF) which would be authorized to issue federal debt certificates to secure the capital required. The facility would provide additional oil pollution coverage above the coverage obtained from the clubs. It was estimated that a total of USD 2 billion to USD 3 billion might be available if the US Government accepted the concept. The financing would in the first place be taken care of by the owners themselves who, when calling US ports, would pay premiums to MEIF as port taxes to be refunded by the charterers (oil companies) through the freight rate. Ultimately, the cost would be passed on to
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consumers. The federal governments participation in the scheme would by and by diminish as the public debt was repaid. The plan was met with little enthusiasm in London, which remained the shipping centre of the world. In the opinion of the UK Chamber of Shipping, the scheme was found unworkable - and naive in the extreme. Influential voices in the institution recommended that their members should give no support to the Norwegian/Greek proposal, but refrain from criticising it unless provoked. When the so-called Regulatory Impact Analysis on the COFR was finally prepared and published by the USCG in June 1994, it concluded that of all options available, MEIF would be the most expensive. Furthermore, if adopted, it would require fresh legislation and probably a substantial implementation delay. Nevertheless, there were some positive elements in the proposal, so the USCG concluded diplomatically that it deserved further study. Why not? In practice such time-consuming exercises were never in the cards. Several business proposals had meanwhile been introduced to overcome the impasse stubborn shipowners and their insurers caused. A potential COFR Market alternative to the traditional P&I coverage started to emerge during the spring and early summer of July 1994. Two commercial entities as well as a number of so-called surety companies came forward and declared that they were willing to provide the required guaranties without further delay. The USCG was also delighted. On July 1, 1994, the agency after lengthy hearings and informal discussions with the industry published its long-awaited but controversial Interim Final Rule to implement the provisions concerning financial responsibility. The rules provided that the owner of any tanker calling US ports after Jan. 1, 1995, had to procure a COFR by the end of 1994. The USCG, conscious of the importance of keeping the oil flowing into America, quietly allowed a more flexible interpretation of the rules than anticipated. It was clarified that applications for certification did not have to be submitted to the USCG by the end of the year for tankers that were going to call months later. So in the last hours of 1994, two alternative guarantee offers emerged from the scramble. They were made available by commercial interests under the names First Line and Shoreline Mutual who both had identified COFR as an interesting business opportunity.
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First Line offered to be accountable for the entire amount of financial responsibility for each owner or operator. Premiums would be based on the type of operation and vessel as well as the operators prior shipping record. Shoreline Mutual resembled a P&I club, but covered only US pollution risks. The Coast Guard showed further flexibility when the financially stronger shipping companies were allowed to set up guaranty corporations with the sole purpose of qualifying for COFR. The method was developed by Mobil and adopted by Shell to cover the liability for their large tankers. A few foreign independent tanker owners such as A.P. Moller, Bergesen and Stolt-Nielsen with substantial assets in the US adopted the same solution. Moreover, American bonding companies soon offered their co-operation. Thus, the immediate technical problem was solved albeit it being a very costly solution thanks to the flexibility of the parties involved. Tanker owners had to pay the special P&I oil pollution premium when calling US ports in addition to the COFR premium. The exposure to the potential unlimited liability led to a continued discussion about whether the P&I coverage could be raised to USD 1 billion. This took time, but in March 2000, it was reported that following a decision of the International Group, the clubs would provide members with coverage up to USD 1 billion for each accident in respect to a ship entered by an owner.
Notes: In January 1995, Luke Readman, a director of Thomas Miller P&I, elaborated in an article in Lloyds List about why the P&I clubs rejected the OPA guarantor role. In his opinion, it was conceivable that the US oil pollution risk would become genuinely uninsurable. See also the Hearing in the House Merchant Marine and Fisheries Subcommittee on Coast Guard and Navigation, Nov. 6, 1991, serial no. 102-47, pp. 29-46, where the two English insurance experts, Mr. Coughlin and Mr. Youell, testified. In April 1992, the Greek shipowner Mr. Kulukundis opined that his company, London Overseas Freighters, would continue to call US ports despite the new liability imposed on shipowners. See Lloyds List, April 9, 1992. He (off the record) added that his company contrary to many other owners avoided calling on Kharg Island, which certainly was more than risky. The Norwegian shipping director of Cosmos, Bjorn Wilhelmsen, looked at the problem from a different angle: My lawyers have read the 100 pages of uncertainty (that constitutes the Act) and told me that they see little risk that I will be held personally liable or ruined and be sent to jail. But why should I take any risk at all? (Extract from a speech given at a Marine Log seminar in Washington, DC, on the new legislation. See Seatrade Business Review, Nov/Dec. 1990) For the Mandatory Excess Insurance Facility MEIF designed by Mr. Wilhelmsen, the negative reaction in the unpublished UK Chamber of Shipping Report was a major blow to the efforts of the large group of independent tanker owners who had put forward the scheme.
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VIII. PREVENTION IS BETTER THAN CURE TECHNICAL REQUIREMENTS

The rules on liability enter the stage when administrative and operational control have failed to prevent damage. In light of the growing environmental concern and the projections for increased oil import, OPA90 required that rulemaking should be undertaken on a great number of pertinent issues to enhance safety and reduce the pollution risk. Obviously inspired by the Exxon Valdez experience, a new stipulation was introduced whereby the master could be removed if the next two most senior officers believed that he was under the influence of drugs or alcohol. A more practical component of the Acts measures to prevent and minimise the impact of oil spills was the requirement that owners/operators of tankers would submit their own contingency plan. OPA90 did not provide much guidance exactly on what the legislators had in mind, but eventually the USCG presented the suggested rules. By February 1993, tanker owners trading to every port and terminal in the US were required to lodge detailed contingency plans to cover their ships in the event of any oil spill ranging from the smallest spill to a catastrophic accident: worst case discharge. The demands were complex, and the costs had to be borne entirely by the shipowners. The USCG instigated now for the first time a rulemakingby-negotiation process (reg. neg) to enlist assistance in formulating workable regulations. INTERTANKO and one other overseas shipping organization were invited to participate in the 26-man committee composed of industry groups together with state and federal representatives. Tanker owners would have to contract US oil-spill-removal organisations in the various geographical locations where their tanker would trade and appoint a qualified individual (Q.I). with sufficient experience to handle any emergency to the satisfaction of USCG. The Q.I. would be available on a 24-hour basis and cooperate with a Federal On-Scene Coordinator. During the negotiations, the tanker owners in particular stressed the inadvisability of using ship crews to undertake clean-up activities, on the grounds that they would be more effective when carrying out traditional duties onboard e.g., damage control, stability, stopping oil flow and reporting the discharge.
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The final rules concurred with this view. As no time extension was given with respect to implementation, tanker owners once again felt squeezed from all angles. Existing tank vessel design standards were found to be inadequate. Apart from the liability provisions, none of the new rules proved to be more controversial than the double-hull requirements. Steel is the highest-priced item on a tanker. Mr. Nalder points out in his book, Tankers full of trouble, an extra ton of steel in the hull means roughly that the tanker can carry one less ton of oil. Unless the administration found that equal or better protection would be achieved by other structural arrangements, OPA90 required that all new tankers should be built with double hulls and double bottoms. A second hull had the obvious advantage in case of groundings and collisions, as puncturing one single hull would not allow oil to escape. Existing tankers were required to be retrofitted with double hulls according to a phase-out schedule based on age, the latest to be done by 2010. For tankers trading to offshore terminals, the time limit was 2015. The advantages of double hulls in so-called low-energy accidents were generally accepted by the industry as an expensive solution. If a tanker grounded with low speed on a sandbank, at least the inner hull would remain intact. But the industry opposition, fronted by the Greek shipowner Mr. Embiricos, claimed that double hulls were counterproductive in the event of high-energy accidents when for example a large tanker grounded on a rocky beach or collided with another vessel at a certain speed. Most of the serious oil spills prior to OPA90 were caused by explosions/fire/structural failure. Double hulls could increase the explosion and fire hazard, it was argued. Moreover, structural failures would multiply as a consequence of the increased maintenance burden. The length of a super tanker approximates the height of the Empire State Building, with the depth equal to a 10-story building. Inspections of such colossal additional areas meant serious personnel safety risks. Finally, in the event of a grounding causing penetration, there would be a loss of buoyancy that would make the tanker more difficult to save. Thus it would be wrong to freeze technology by double-hull requirements. Instead the so-called Hydrostatically Balanced Loading systems (HBLS) were promoted. The concept was based upon ideas presented from various sources including two Americans, the naval architect George Blake and the ship-owner C.S. Conway. Both had separately concluded that according to the
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law of physics, hydrostatic pressure was a means to reduce or prevent oil outflow resulting from bottom damage or damage to the side tanks. The oil would run out of the submerged tank, opening only if the interior pressure of the oil at the opening was greater than the pressure of the seawater outside at the same point. Provided that the cargo tanks were not fully loaded, the outside pressure of the seawater would then prevent oil outflow, it was argued. One of the HBLS variations, the so-called Mid-Deck tanker, was promoted by the Japanese shipyard Mitsubishi Heavy Industries. Before the final rules were announced, a total of 17 design concepts were evaluated by a committee set up by the National Research Council. The majority view presented in 1991 was that no design could be identified as superior to the double-hull solution for all accident scenarios. HBLS were untested, and their effectiveness depended on the operators strict adherence to rules, rather than on a permanent feature of vessel design and construction. More than nine years after Exxon Valdez, in July 1998, the environmentalist Sally Ann Lentz in a hearing in the House of Representatives claimed that the USCG had demonstrated a remarkable reluctance to impose any meaningful measures on the existing fleet of single-hull tankers. The opposite view was once again presented when Senator Breaux spoke up in the Senate and opined: ignoring new, innovative technology which has been developed since the passage of OPA90 exhibits bad judgement and, simply put, is bad policy. After a new round of consultations, the USCG announced its final word in April 1999. Double hulls had come to stay. No extension of the time limit for double hulls would be granted. Shipowners realized that double hulls were the config-
(Seigo) Shigeyuki Suzuki

Shigeyuki Suzuki was a director of the Japanese shipping giant Mitsui O.S.K. Lines Limited when he was elected Chairman of INTERTANKO in 1989. He was the first Japanese to chair an international shipping association. It is arguable that if there ever was a time not to volunteer to take over such a post, this must have been it. But Mr. Suzuki completed his threeyear term in 1992, promoting the view of independent tanker owners in Washington, DC, on the problems the Exxon Valdez catastrophe caused and the subsequent implementation of the new and radical US Oil Pollution Act of 1990. The views of how tanker owners should react to the multiple regulations issued under the Act were in no way homogenous within the membership. But Mr. Suzukis message that accidents happen not because of lack of regulations but lack of compliance with the existing rules and that quality must be paid for was shared by all members.
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uration at least for the next decades. A number of double-hull tankers were ordered. The first VLCC with the new design, Arosa, was ordered by a Greek shipowner, Lykiardipolu & Co. Ltd., and delivered in Japan in January 1993. The next VLCC, Eleo Maersk, was ordered by A.P. Moeller and built at Lindoe Shipyard in Denmark. In 1997, however, a large Swedish tanker, Stena Convoy, was converted and certified for HBLS. In the meantime, the existing single-hull tankers continued to trade. Mid-2007, Tradewinds reported: Large charterers take single hulls. Some big names have taken more than 400 single-hull tankers on charter this year. ExxonMobil, the US oil group at the heart of the Exxon Valdez spill in Alaska which led to double hulls for tankers, is still one of the biggest charterers of single-hull tonnage...
Notes: On the discussion on tanker design, see National Research Councils Tanker Spills: Prevention by design published by the National Academy Press, Washington, 1991. See also E.Nalder: Tankers full of trouble, pp. 216-219 and Philip A. Embiricos: The quest for the environmental ship. About the first VLCC built with double hulls or converted to hydrostatic balanced loading, see Dr. Raymond Solly: Supertankers Anatomy and Operation, Witherby & Company Ltd, London, 2001, pp. 409 and 563.
IX. OSLTF IN TROUBLE

The five-cent OSLTF import tax imposed on the oil cargo was suspended in 1993, and the authority to collect the tax expired at the end of 1994. During that year, the Fund was down to USD 842 million, mainly because of an oil spill on Nov. 26 in the Delaware River caused by a Cyprus singlehull tanker, Athos I. Some 30,000 gallons of heavy Venezuelan crude oil leaked out. The US Coast Guard warned that OSLTF was likely to be exhausted by fiscal year 2009 if the present rate of depletion continued unchecked. Then the largest spill in US waters since Exxon Valdez occurred in November 2000, when the oil tanker Westchester lost power and ran aground near Port Sulphur in the Mississippi River, south of New Orleans, Louisiana. Five hundred sixty-seven thousand gallons of crude oil went into the river. Four years later, a major December storm pushed a dry cargo vessel onto a rocky beach in an Alaskan bay. The vessel broke in two, and 337,000 gallons of oil were released. In May 2005, the British shipping magazine Fairplay brought details about OSLTF and the tax to be paid by the oil industry:
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The US Congress is trawling for money, which means that the maritime industry had best watch its wallet. Two key programmes need funding sources. USCG warned on May 12 that the OSLTF would be bankrupt by 2009. Then a key senator suggested taxing imports to fund maritime security efforts. The spill trust set up by OPA90 is the ultimate insurer for clean-ups in US waters. It has had more than one billion in its coffers, but rising costs, compounded by a rash of major spills, have diminished the Fund. By the Energy Policy Act of 2005, Congress reinstated the import tax and increased the maximum size of the Fund to USD 2.7 billion. Well aware of misgivings from the industry that the current rules might result in liability claims out of all proportion to the losses suffered, Congress also passed a provision to the effect that no more than USD 500 million of government money would be available per incident for natural resource damage expenditures in the future. To alleviate the oil industry further, the House of Representatives passed a bill in 2005 raising the liability limits for shipowners single-hull tankers by 2007, with nearly 100 percent and roughly 50 percent for double hulls.
Notes: On OSLTF, see Oil Spill Intelligence Report, May 19, 2005, and the USCG National Pollution Centre, University of Delawares Internet, reported in 2006.
X. DEEPWATER HORIZON OIL SPILL

The US Oil Pollution Act of 1990 limits the liability of an offshore drilling facility for non-clean-up costs of USD 75 million unless gross negligence is proven. All removal costs are additional. When the suggested liability rules were discussed in the US Senate 30 years ago, four Senators expressed deep concern: Chaffe, Lieberman, Graham and Durenberger. They stressed that accidents occurring with Outer Continental Shelf (OCS) facilities might be infrequent, but like airline tragedies, they will be catastrophic. The size of such a spill might be enough to fill hundreds or even thousands of tankers the size of the Exxon Valdez, they argued. Moreover, leakages will be particularly difficult to control. To weld steel plates below the water line of a leaking super tanker is an extraordinary, but still a minor, problem compared to efforts to cap a well that has blown out several miles beneath the ocean surface. Two
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OCS spills were used to illustrate the thrust of the statement: The Santa Barbara blowout in 1969 and the even more dramatic IXTOC I spill (3.3 million barrels), which occurred 20 years later, leaking more than ten times as much oil in the Gulf of Mexico as was lost in the grounding of Exxon Valdez. The Deepwater Horizon oil spill, also known as the BP oil spill or the Mega Gulf of Mexico oil spill occurred on April 20, 2010, in the Macondo Prospect reservoir in the Gulf of Mexico. The culprit was no tanker and falls therefore strictly speaking outside the framework of this book. But the disaster overshadowed by far any other accidental spill in the history of the oil industry and cannot be ignored. The leaking oil stemmed from the explosion of a nine-year-old oil-drilling rig, killing 11 platform workers and seriously injuring 17 other workers onboard. The other workers were evacuated by lifeboats or airlifted by helicopter from the rig that was located about 66 km off the Louisiana coast. The damaged Horizon, owned by a company named Transocean and leased to BP, sank, dragging its equipment and pipes to the bottom of the ocean 1,500 meters below. (The worlds biggest oil spill, however, was intentional and happened in Kuwait during the Gulf War, when Iraqi forces dumped an estimated six billion to eight billion barrels of oil into P.G. to set it on fire to stop the progress of US forces.) President Obama soon pledged that if laws were broken, the responsible would be brought to justice. The Justice Department was then focusing on criminal charges under federal legislation including the Clean Water Act and the Outer Continental Shelf Act as well as other laws aimed at the protection of endangered species. Moreover, it was considered to pursue charges under the Seamans Manslaughter Statute to address the workers deaths. In BPs initial exploration plan in March 2009, the oil company announced it is unlikely that an accidental spill would occur. No adverse effects were expected for the fishing industry. But they happened. It took close to three months to stop the leak after Deepwater Horizon had released an estimated 4.9 million barrels of oil or around 700,000 tons. On its way, the oil caused extensive damage to marine wildlife and to the fishing and tourism industries. In early May, the US Coast Guard estimated that 170 vessels and nearly 7,500 personnel with an additional 2,000 volunteers were engaged in the efforts to protect the coastline and marine environment. The same month, the federal government declared a fishing ban covering more than one third of the Mexico Gulf. In August, the fishing ban was lifted in some areas. In the meantime, a
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Taiwanese super tanker retrofitted as an oil skimmer was found useless to collect any significant amount of oil. The US Government named BP as the responsible party, holding the company accountable for the pollution damage as well as all clean-up costs. BP, owning 65 percent of the Macondo Prospect, was the operator and the developer of the Prospect. The other owners were Anadarko Petroleum Corporation with 25 percent the largest independent gas and oil operator in the US and Mitsui, Japan, with 10 percent. The three partners had contracted a company named Halliburton Energy Services to do the well cementing and other installations on the rig. By July 30, the oil appeared to have dissipated faster than originally expected. Warm weather accelerates the evaporation and microbes consumption of oil. BP was, however, criticised for having failed to disclose the amount and effect of the chemical dispersants used to dissolve the oil. The US Environmental Protection Agency (EPA) feared that the detergents used could reduce oxygen levels and kill microbes in the already-reeling Gulf. It did not help that BP and also the US Government restricted the medias access to the spill area. In early August, the EPA voiced the opinion that the dispersants did no more harm than the oil itself and that they stopped a good deal of the oil from reaching the coast by making it break down faster. Horizon was still a major disaster. But arguably, there were some extenuating circumstances. Unlike the Valdez oil, the Gulf oil is light-degradable. The oil from Horizon was certainly of a heavier blend than most of the oil drilled off Louisiana. But the water there is very warm, which has helped bacteria break down the oil. Moreover, the heavy flows of Mississippi water helped to keep some of the oil away from the coast and finally not to forget the oil is a part of nature, and nature in the Gulf area in this respect takes care of itself better than in chilly Alaska. Several US agencies including the USCG are investigating the accident. Congressional committees arranged hearings. Some crewmembers testified in federal hearings that several alarms had been either bypassed or disarmed on the orders of rig officials. In early August, BP published the first comprehensive report about what had gone so very wrong. According to the report, it was evident that no single factor caused the explosion and that a series of mechanical errors and human failures by BPs own crew had been committed. The
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incoming CEO, Bob Dudley, stated that the explosion was a shared responsibility among several entities. The allegations included that the cement job was bad, the blow-out preventer did not work well and pressure tests were misread. But no admittance of gross negligence or reckless behaviour, which would have opened the door to unlimited liability, were forthcoming. However, Transocean announced that the report was self-serving and rejected the accusations. Halliburton, which did the well cementing, said that there were a number of inaccuracies in the report. The work they had undertaken was in accordance with BPs specifications. BPs partner, Anadarko Petroleum Corporation, was also very critical. Its CEO, Jim Hackett, went on the record and said that research indicates BP operated unsafely and failed to monitor and react to several critical warning signs during the drilling. A report of the Committee set up by the President, which was released in January 2011, concluded that a number of system failures and economizing efforts seemed to have contributed to the accident. According to the US Energy Information Administration, offshore drilling in the Gulf of Mexico represents 23.5 percent of US oil production. Less than a month before the explosion, President Barack Obama announced support for a plan to expand offshore drilling as a part of his energy policy. Instead, a number of initiatives were taken in and out of Congress to curb offshore oil drilling. The Presidents plan seemed at the time to be dead on arrival. Instead, the Department of the Interior announced a six-month moratorium on new drilling in the Gulf and Pacific. A federal judge lifted the moratorium on June 22, but the Department of Justice did not hesitate to appeal the decision to the 5th Circuit Court of Appeal. In the House of Representatives, an energy reform bill was discussed which contained more stringent rules for offshore drilling. One suggested provision would ban BP from offshore drilling for seven years because of an extensive record of serious worker safety and environmental violations. Initially, BP promised to compensate oil spill victims. After a meeting with the President in June, the BP executives probably found it unrealistic to insist on the liability cap laid down in OPA90 and agreed to create a USD 20 billion spill fund to alleviate the pollution damage. Moreover, the Fund would be no cap on BPs potential liabilities. For the Funds payment, BP said it would cut capital spending, sell assets and cut dividends to shareholders. A Gulf Coast Claim facility was set up on Aug. 23. Within a week, 19,000 claims were
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received, and in early September, BP had paid out about USD 375 million. In Canada, stricter rules were discussed after the Horizon disaster, whilst reports from Brussels said that the EU was discussing toughening the regime on offshore liability. In Norway an important European player with respect to offshore drilling Horizon provided left-wing politicians and environmentalists with fresh ammunition in their fight to stop drilling off the sensitive coastline of Northern Norway. A 200- to 300-ton oil spill from a grounded Panama dry cargo ship off the Norwegian coast in 2009 resulted in the internment of the Chinese captain, followed by a six-month jail sentence. So far no Horizon personnel are reported to be jailed. On June 25, Tradewinds reported that BP then-chief executive Tony Hayward may well have had a bruising in the US, but was free to return to the UK and enjoy an outing with his yacht during the following weekend. The legal challenges for the US government, the victims of the pollution and the actors involved in the accident will be messy. It is difficult to imagine that they will come to an end before five to 10 more years have passed. Still, authorization of new offshore drilling activities seems unavoidable with the present huge US oil deficit. Past experience suggests that such activities will hardly be allowed without toughened regulations. The international re-insurance market expects that the liability cap in OPA90 will be raised. Whether the Horizon disaster also will prepare the ground for even harsher liability provisions for oil tankers is a scenario that cannot be ruled out.
Notes: For information on the Senators stances, see 101st Congress, 1st session Senate Report 101-94, pp. 26-27, Time Magazine, May 17, June 21, June 28 and Aug. 9, 2010; Los Angeles Times, September 2010. Fortune magazine, Feb 7, 2011, presentation of Admiral Thad Allen, USCG, in Oslo, March 9, 2011. Information about the Kuwait oil spill during the Gulf War is from Jessica Marshall in Discovery News, June 1, 2010.
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10 IMO wakes up
I. MORE OPA APPROACHES?
When Mr. Chandrika Pasad Srivastava retired in 1989 after 16 years as Secretary General of IMO, the US appeared to have withdrawn from the close cooperation in what would be the closest thing to world authority on maritime safety and environmental protection. The development represented a serious blow to the prestige of the agency. At the time OPA90 was adopted, five years after Amoco Cadiz, only Australia, the Federal Republic of Germany, France and three other small countries had ratified the CLC Protocol. Even worse, only the Federal Republic of Germany and France had become parties to the Fund Protocol. Thus it would take many years before the efforts of the 84 Conference and its chairman Mr. Jacobsson were recognized. The delayed ratifications, together with the unilateral action taken in Washington, DC, raised the obvious question of whether other nations would also work out their own solutions. No great imagination was needed to see the implications of numerous national OPA approaches. Was Canada next? Canadians were infuriated when the Cayman Island tanker Rio Orinico grounded in the Gulf of St. Lawrence in 1990 with a cargo of heated asphalt on board. The National Coast Guard faced an unpleasant challenge. The clean-up operation was difficult because of the bad weather. Once in the water, it was feared that the solid-but-brittle asphalt would break into small pieces and cause the most serious damage by contamination to beaches. No asphalt leaked out, but 150 tons of fuel was spilt. Despite the modest amount, a costly operation was initiated to diminish the pollution damage. Contracted personnel were able to clean the most seriously polluted beaches manually, supported by boats, helicopters and hovercrafts, as there
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were no coastal roads in the area. In November, Rio Orinoco was declared a total loss. The next summer, she was refloated and pulled free without further complications. The cargo of asphalt was partly removed. After it had been refloated and towed to a place of safety, the tanker and the remaining cargo were disposed of. The costs incurred were recovered from the P&I club and from IOPCF by way of preventive measures. Canada did not follow in the footsteps of the US. Perhaps it was realized that inconsistent national regulations of the shipping industry would mean an utterly inefficient transportation system. A shipper would be confined to chartering tankers that complied with the national regulations of his own country. Instead of access to the free world market where all tankers offered their transportation services at competitive rates, he would have very limited possibilities to cover unforeseen transport needs, not the benefit of free competition. Transport costs would surely escalate. Inspired by the development in the US, IMO took fresh measures to reduce accidental pollution from new and existing tankers. New tankers, ordered after July 6, 1993, would be built with double hulls. Not to freeze technology, the door remained open for approval of alternative designs provided they offered the same protection. The design requirements would be phased
Secretaries-General of IMO
IMOs past Secretaries-General includes; Ove Nielsen (Denmark) 1959-1961, William Graham (United Kingdom) 1961-1963, Jean Roullier (France) 1964-1967, Colin Goad (United Kingdom) 1968-1973, Chandrika Pasad Srivastava (India) 1974-1989, William A. ONeill (Canada) 1990-2003 and Efthimios E. Mitropoulos (Greece) 2004-present.
Efthimios E. Mitropoulos
Efthimios E. Mitropoulos was born in Piraeus, Greece, in 1939. His career has included working as a commissioned Coast Guard officer and serving on the Maritime Safety Committee and other subcommittees of the IMO.
IMO WAKES UP
in for existing tankers in accordance with an agreed time plan. Moreover, in July 1995, the amendments to the IMO Convention on Standards of Training and Certification amounted to a complete re-writing. In December 2003, IMO adopted a revised, accelerated phase-out scheme for single-hull tankers by amendments to MARPOL 73/78. The final phase-out of such a tanker built before 1982 was brought forward to 2005 from 2007. The flag state was, however, allowed to permit continued operation if this, after careful consideration, was found justifiable but in no case beyond the date which the tanker reached 25 years old.
II. THE SALVAGE CONVENTION

For salvors, the working conditions had been somewhat improved under the channelling provisions of the unratified 84CLC Protocol. The 84CLC Protocol encouraged them to provide prompt assistance in difficult environmental situations. Thus it was spelled out that no claims could be made against any person performing salvage operations with the consent of the owner or on the instructions of a competent public authority. In the same spirit, IMO in 1989 adopted a new International Convention on Salvage, which included an additional incentive for salvors to minimize the potential for environmental damage tanker accidents caused. A salvage operation had normally been performed on the terms of Lloyds standard salvage contract, Lloyds Open Form. This contract reflected established maritime law as laid down in a convention of 1910. For generations, the rule of the game had been no cure, no pay, meaning that the opportunities were unpredictable, the risks high and the potential reward considerable if the salvage operation was successful; five to 10 percent of the salvaged values ship and cargo were not uncommon. It was called an open form because no amount is stipulated prior to the salvage job. The award to be paid would be decided later by a professional arbitrator. Amoco Cadiz and her cargo have been valued to some USD 40 million. The salvage company could have made millions and the accident could have been avoided or minimized if the Amoco headquarters in Chicago had permitted the master to sign the form the first time he requested permission to do so. To avoid a salvage award, the management took a risk hoping everything would turn out all right. It did not.
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For the salvor, the old principle no cure, no pay could turn out to be disastrous when his efforts were in vain. When Lloyds Open Form was revised in 1980, the old principle was modified in order to prepare the ground for the parties to agree that the salvors cost for rendering assistance to a tanker would be recovered also if he had not been successful. In the revised Salvage Convention, this principle was firmly established to all vessels. The salvor would be entitled to the special compensation whenever his operation had minimised or prevented damage to the environment. It meant reimbursement of his costs plus an extra award of 30 percent of the expenses incurred. The amount could be further increased to 100 percent of his costs under certain circumstances. IMO cannot, however, be said to have played a particular pro-active role in this context. The most important principles agreed on were not revolutionary, but simply conclusions which the private industry by and large had reached several years ago. The Convention took 10 years to develop and another seven years before it came into force. Indeed, some nations are only just adopting it. IMO also left another problem unsolved. It is no simple task to calculate a fair reward for salvors efforts to avoid environmental damage. But it was possible to contractually amend several provisions in the Convention. In the 1990s, the commercial insurance market went a step further to enable salvors to respond to pollution threats with more confidence. Once again a new clause was introduced in Lloyds Open Form, to entitle the salvor provided he in no way was to blame for his operation to at least break even on his costs for maintaining salvage tugs that may be employed for only a short time, when a threat of damage to the environment existed. After the Sea Empress disaster, the salvors have been concerned that they are increasingly exposed to potential criminal liability. Moreover, the Bunker Convention of 2001 does not provide the same protection against liability for oil spills as the CLC protocol. Thus, salvors still feel that they are inadequately rewarded for the environmental benefit of a salvage operation.
Notes: On Rio Orinoco, see IOPCF Annual Reports 1990-1995. On the topic of environmental salvage, see Legal Advisor to the International Salvage Union Archie Bishops presentation at the CMI seminar in Dubrovnik, May 2007.
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III. INTERNATIONAL CONVENTION ON OIL POLLUTION PREPAREDNESS RESPONSE AND CO-OPERATION (OPRC)
After Canadian William A. ONeil took over the job as IMOs Secretary General in January 1990, some quarters found it evident that with the new leadership the IMO would become more active. Already in November 1990, the International Convention on Oil Pollution Preparedness Response and Co-operation (OPRC) was adopted. OPRC was one of a number of measures IMO initiated as a response to the Exxon Valdez oil spill. It was designed to facilitate international cooperation and mutual assistance for preparing for, and responding to, major pollution incidents. Member states would be encouraged to develop an adequate capability to deal with oil pollution emergencies. OPRC is claimed to have proved useful already before it came into force. It received its first test only a few months after the adoption, when a major oil spill occurred in the Persian Gulf as a result of military hostilities. Acting as if the Convention was in effect, IMO in co-operation with other local and international organizations set up a Disaster Fund and an Oil Spill Co-ordination Centre. Even if the impact is difficult to assess, it seemed that the action taken might have prevented major damage to the environment of the Saudi Arabian coast.
Notes: On the change of leadership in IMO, see the above-mentioned report Ships of Shame from the Australian House of Representatives Standing Committee on Transport to the Parliament in December 1992: Inquiry into ship safety Ships of Shame, December 1992, p. 77.
IV. RESURRECTION OF THE PROTOCOLS

In September 1990, just weeks after President George Bush signed OPA90, the International Oil Pollution Compensation Fund (IOPCF) found that time was ripe to undertake a thorough review of the situation. An intercessional working group under the chairmanship of Mr. Popp of Canada got the following mandate: To consider the future development of the inter-governmental oil pollution liability and compensation system by examining the prospects for the entry
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into force of the 1984 Protocols to the Civil Liability Convention and the Fund Convention... The groups report was available in October 1991. It warned that a full revision of the 84 Protocols would be an enormous task. That would mean re-opening a large number of problems that had already found their solutions. A resolution was addressed to the new Secretary General requesting that the organization convened an international conference in 1992. It was recommended that IOPCF should confine the work to modify the entry into force provisions and consider the possible introduction of a cap on contributions payable. After the preparatory work had been undertaken by IMOs Legal Committee, a diplomatic conference convened in November 1992 in London. At the opening session the Secretary-General ONeill made the intentions clear: ... two draft protocols have been prepared to revise the 1969 CLC and the 1971 Fund Convention. In practice, these protocols will replace the 1984 Protocols ... they are however not intended to introduce any changes to the substantive provisions of the 1984 Protocols but merely amend the entry into force provisions. There was considerable support for his view. A submission from Greece read in part: ... The above system (CLC 69 and FC 71) has met with world-wide acceptance and constitutes an adequate international treaty regime, on the basis of which the economic consequences of pollution damage are shared by the shipping industry and by the oil cargo interest. ... For this reason, the need of maintaining the viability of the aforementioned system ... is obvious. ... we wish that the diplomatic conference limit its work only to focus on the earliest possible enforcement of the 84 Protocols. ... the revision must not be used to re-open other issues which had already been given careful attention ... any such attempt could jeopardise the early entry into force of the new protocols ... Not all parties agreed. The US had by the passing OPA90 made its view quite clear. Two other major oil-importing countries, Italy and Japan, had strong reservations. The IOPCF assessment of compensation after two recent major
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oil pollution accidents in Italian waters was on Italians minds. The Italians were at that time ripe for immediately accepting compensation for environmental damage. Moreover the liability ceiling was inadequate especially in cases of disasters occurring in sea areas of high economic and environmental interest. Japan had already signalled that it would be difficult to ratify the revised instruments. As the largest contributors to the IOPCF, the country had in the past roughly paid some 30 percent of the Funds total annual income. On the other hand, the country had received only 15 percent of the total payout from the Fund after spills in Japanese waters. In 1984, only Japan had spoken against the American compromise on which the Protocols were based, and yet its delegation did not vote against their adoption. Despite the minute fee (probably less than one fifth of a US cent per ton, according to Katherine Grey of IOPCF) to be paid per ton on imported oil, the Japanese oil companies felt that they paid too much for pollution damage in other parts of the world. Furthermore, Japan was proud to have developed a very effective domestic response program, which was well-geared both to prevent and mitigate significant oil spill damage. The proposal now was to cap the contributions so that no oil-importing country payment should exceed 25 percent of the total amount of annual contributions to the Fund. Nearly all other delegations preferred the existing system. The suggested capping meant that Japans oil industry would get a five percent rebate and the effect would arguably be a distortion of competition within the industry. Taken into consideration that the fees per ton were minute, the Japanese view was hard for other delegates to appreciate. But the Conference did not have much of a choice. Finally a cap was agreed on, but not quite the one Japan suggested. Agreement was reached on the compromise that no oil-importing country should contribute more than 27.5 percent of the total amount paid to the Fund. The cap was further modified by the inclusion of an extra provision to the effect that the cap would apply only until the total amount of contributing oil to the Fund had reached 750 million tons, or until five years had elapsed after entry into force of the Protocols, whichever occurred first. Agreement was thereby reached. According to the final clauses, the new 92 Fund Protocols would require for its entry into effect ratification at least eight states representing together a total amount of 450 million tons contributing
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oil, instead of the 750-million-ton requirement of the 84FC. Also, the entry-into-force provisions in the 92CLC Protocol were modified. It would enter into force when ratified by 10 states, including four states, each with a tanker fleet of no less than one million grt. This compared with six states previously. With the exception of the entry into force provisions and the cap provision, the 92 Protocols merely became a new name for the 84 Protocols. But when IMO in 1998 reported on its achievements in the publication 50 years of IMO, it was proclaimed that the compensation for victims of oil pollution was greatly increased in 1992. In the mentioned jubilee publication, every agreement of some importance is listed ... except the 84 Protocols, which were worked out after endless meetings and three weeks of heated discussion under the chairmanship of Mr. Jacobsson, who was later the Director of IOPCF. The presentation might perhaps be seen as a clever marketing effort to promote ratifications of the new Protocols. For whatever reason, it was hardly a slip of the pen. The ratification process of the revised instruments progressed slowly, but by and by, support from more governments came along. After Denmarks ratification in 1996, the Protocols from 1984, as revised in 1992, finally entered into force. More than 16 years had passed since the revision began after the Amoco Cadiz disaster. Finally in 1996, the new Salvage Convention went into force, as well. Two sets of IMO compensation schemes were now in force: The 69CLC/FC71 and the 92 Protocols, 92CLC and 92FC. The duplication was not without problems. FC71 was still operational and supported by a large number of nations that had not yet adopted the new instruments. The text of FC71 provided that it would not cease to be in force before the number of contracting states had fallen below three. 92 FC contained a mechanism for compulsory denunciation of FC71. According to the 1996 IOPCF annual report, page 16, the compusory denunciation takes effect when eight parties to the '92 Protocol import 750 million tons of oil annually. The states that had ratified the two Protocols were obliged to deposit instruments of denunciation by May 1997 that would take effect 12 months after that date.
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Before time had solved the problem with the two different and operational funds, a Russian tanker, Nakhodka, broke up in Japanese waters early in January 1997. In bad weather, the vessel carrying 19,000 tons of medium fuel oil broke in two and spilled about 6,200 tons of its cargo. Although much of the oil dispersed naturally at sea, the spill resulted in heavy contamination of the adjacent shoreline. There were important seafood activities in the area, including oyster, fish and seaweed cultivation in sheltered bays and inlets. An investigation commissioned by the Japanese government found that corrosion of the tanker had resulted in a substantial reduction in the original thickness of the forepart hull. The strength of the hull at the point where it failed was about half of what it should be. Had the ship not been corroded so badly, it would have weathered the gale. The 92 Protocols had entered into effect in respect of Japan and were therefore in principle applicable. The Russian Federation was, however, at that time not yet a party to the protocols, but to 69CLC/FC71. In October 1999, the Executive Committees of IOPCFs two funds concluded that the investigation of the tankers hull had revealed that it had been unseaworthy. Thus it was claimed that the owner, Primorsk, should not be able to limit its liability, as the incident resulted from his personal fault or privity. Recovery action was started in Japan both against the classification society, the Russian Maritime Register of Shipping (which had not ensured that the tanker met the applicable safety regulations) as well as the owner and its P&I club (UK Club). In a parallel legal action the Japanese government, nine associations of fishermen and more than 330 additional parties, mainly in the tourism sector, proceeded against the shipowner, the P&I club and the two IOPC Funds for compensation. All in all, the claims amounted to about GBP 190 million (about USD 311 million). The owner rejected the claims on the grounds that the incident was caused mainly by an extraordinary natural phenomenon. A settlement to pay GBP 137 million (about USD 205.67 million) was reached by November 2002. In accordance with the agreement, the owners P&I club reimbursed the IOPCF Funds about GBP 27 million (about USD 40.53 million) in respect of their payments. The question arose of how the recovered amount should be shared. The Japanese delegation took the view that an amount recovered during the transitional period, when both the new and the old instruments were applicable, should be re-imbursed to the 1992 Fund.
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This view was, however, met with opposition from several other delegations. The majority concluded that the provisions in the two legal instruments gave no guidance of how to solve the problem. Five years after the accident, it was finally agreed to support a proposal from the Director. Thus the recovered amount should be distributed in proportion to the respective liabilities of the 1971 and 1992 Fund in yen. Both funds became involved again when a small Korean tanker, Osung no. 3, grounded in April 1997 in the Pusan area, polluting the nearby Korean shore as well as Japanese beaches with heavy fuel oil. The Republic of Korea was a party to 69CLC and FC71, but not yet a party to the 92 Protocols, whilst Japan had ratified the new instruments. On this occasion, the overlap caused fewer problems. The total claims were below GBP 10 million (about USD 16.37 million) and were settled at a lower amount. The Japanese pollution victims had the advantage of a higher maximum amount of compensation than those suffering from the spill along the coast of Korea and were compensated accordingly. IOPCF now had several other problems to deal with. It had become evident that countries were becoming parties to the new instruments in less numbers than desirable. Furthermore, the dwindling support of the old Fund slashed its contribution base. Should a major pollution accident happen in the waters of the FC71 countries and Italy was one of them the FC71 might be unable to fulfil its function. Such failure could damage the credibility of both IMO as well as the new compensation regimes. It had been the hope of many IOPCF members that the FC71 would fall asleep and gradually die away, but the process seemed to take more time than anticipated. The difficulty was that several states whose help were needed to reach an agreement did not even bother to attend the sessions of IOPCF. The predominant feature of these states was that they imported no or little oil. When the FC71 assembly met in October 1999, representatives of only 17 out of 45 member states showed up. The meeting was postponed for half an hour, but in vain, participation was still not sufficient to establish a quorum. The failure to achieve a forum re-occurred in the next year, as well, and the agenda had to be dealt with administratively on behalf of the Assembly. Further complications resulted from the fact that a great number of the member countries had been neglecting to file their oil-import reports despite the requirement on each state to submit such a statement annually.
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All state members of the FC71 were now urged to denounce the old instruments and join the 92 Protocols as soon as possible. In an effort to solve the legal problems, two experts were commissioned by IOPCF to ascertain whether the old fund could be legally wound up before the number of states fell to the statutory minimum. In September 2000, a diplomatic conference amended the rules for winding up the FC71. Hence the 1971 Fund Convention ceased to be in force in May 2002, when the number of member states had fallen below 25. The termination did not result in liquidation. Obligations in respect of pending claims had to be complied with and took several more years.
Notes: For further information on the 92 Protocols, see the Official Records of the International Conference On The Revision Of The 1969 Civil Liability Convention (69CLC) and The 1971 Fund Convention (FC71), held in London from Nov. 23 to 27, 1992, Volume 4, which provide comprehensive reports on the participation, documentation and deliberations. The 92 Conference was initiated when it became clear that the 84 Protocols would not enter into force in the foreseeable future and were intended to maintain the substantive provisions in the 1984 Protocols, but introduce lower requirements for entry into force. See in particular Volume 4, pp. 85-86, 150 and 176. Also see IOPCF annual reports 1991 to 1993. The two major, recent incidents in Italian waters, the Haven and the Agip Abruzzo, caused the somewhat militant Italian position at the 92 Conference. See information below. The IOPCF fees were minimal, probably less than one fifth of a US cent per ton, according to information from the secretariat. On Nakhodka, see Lloyds List, Jan. 20, 2000, and the IOPCF annual report, 1997-2002. On Osung no. 3, see IOPCF annual reports, 1997-2001.
V. TOVALOP & CRISTAL OUT

The question had been raised from time to time whether the private schemes had served as a soporific for governments and contributed to many years neglect of the international agreements and principles introduced after Amoco Cadizs grounding in 1978. The seven sisters had in no way been happy with the outcome of the 1984 Conference. Some had openly lobbied against ratification. Their preference had been to handle the pollution damage potential as a problem to be managed by the industry in the drivers seat. Now it seemed that the relevance of the private schemes would erode as more and more states ratified the IMO agreements. This development accelerated with the entry-into-force of the 92 Protocols in May 1996. The decision to withdraw the private compensation agreements, TOVALOP provided by the International Tanker Owners Pollution Federation (ITOPF)
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and CRISTAL, had already been made the previous year. In June 1996, the Chairman of TOVALOP, Peter John Goulandris, announced the termination taking effect in February 1997: Port authorities, terminal operators and others who have for many years required sight of TOVALOP certificates before allowing a tanker to load or discharge will need to amend their procedures, looking to the stronger legal alternative offered by the Civil Liability Convention and its Protocol. For the victims of oil pollution damage, the IMO instruments offered significant advantages. Unlike the private arrangements which depended upon whether the tanker and cargo owner concerned were parties to the respective agreements the Protocols provided assurance of financial responsibility and made tanker owners and oil receivers legally liable to meet legitimate costs. ITOPF was originally established to administer the private liability arrangements under the TOVALOP agreement, but had during the last decades placed more and more emphasis on the provision of technical services to tanker owners and governments in the field of oil spill preparedness, damage assessment and response. An important aspect of TOVALOP was that each participant had to provide evidence to ITOPF of financial capability to meet his responsibilities under the agreement. Whilst this function now had come to an end, the technical assistance including training and education would continue as before. This role had evolved in response to the growing demand throughout the world in the face of increasing environmental awareness. The majority of clean-up operations involving the 1971 Fund had been monitored and claims assessed in co-operation between the Fund and one of the P&I clubs and ITOPF. Peter John Goulandris was pleased to report in 1996: that the Federation will continue as present to play an
Scanpix
Helmut Sohmen
Helmut Sohmen is an Austrian lawyer and banker who in 1967 married the daughter of Sir Yue-Kong Pao; Anna. In 1970 his family moved to Hong Kong. He is in charge of the World Wide Shipping Group, one of the largest in the world. His many commission of trusts in shipping include President of the Baltic and International Maritime Council, Copenhagen and Chairman of International Tanker Owners Pollution Federation London (TOVALOP) - 2001-2006.
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active technical and advisory role in support of our Membership, their insurers, and those who suffer pollution damage. There seems to be little doubt that this promised professional assistance continued undisturbed, to the satisfaction of governments and industries alike in the following years.
Notes: On the exit of TOVALOP and CRISTAL, see Ocean Orbit, June 1996, and the IOPCF annual report 1996, p. 33.
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NEW SERIOUS INCIDENTS AT TANKER TERMINALS AND IN COASTAL WATERS AROUND THE GLOBE
11 New serious incidents at tanker terminals and in coastal waters around the globe
I. HAVEN
In April 1991, Italy became the theatre of the most spectacular pollution accidents in Europe since 1978. The prologue to the disaster was caused by a VLCC, Agip Abruzzo, with a cargo-carrying capacity of more than 250,000 tons. On the night of April 10, 1991, the super tanker was struck by a cargo ferry, Moby Prince, when at anchor off Livorno. Both vessels caught fire. Two thousand tons of cargo oil escaped from the Italian oil company-owned VLCC, but more important, 143 people on board the ferry were killed. Not many miles to the north, seven miles off the old shipping centre Genoa, the Cypriot flag super tanker Haven (232,000 dwt) was anchored. The tanker had just emerged from an extensive refit. But on the April 11, she caught fire and exploded. On board was a cargo of approximately 144,000 tons of crude oil. Some of it was consumed by fire, but most was spilled into the sea. Five crewmembers were killed. Beaches in the area were polluted. Oil spread as far as France and contaminated four French departments. On April 14, the Italian government declared a state of national emergency. Whereas Amoco Cadiz and Exxon Valdez were new and modern tankers,
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Haven was not. Whereas the two oil-company-owned tankers descended from the old established petroleum industry in the US, Haven was one of many crude carriers the Haji-Ioannou family from Cyprus owned. Pater familias: Lucas Haji-Ioannou was born in 1927 in the mountain village named Pedhoulas. He first moved to work in a trading house in Nicosia. In 1950, he immigrated to Saudi Arabia, where he started as a trader and shipping agent. In 1958, he settled in London and became involved with passenger vessels and dry cargo ships before he realized his dream to transport oil all over the world. With active support from his two sons, Polys and Stelios, his dream came true in April 1991, when Lucas Hadji-Ioannou could claim to be the owner of one of the largest private tanker fleets afloat, including the unfortunate Haven. In terms of legal complexity, the Haven accident turned out to be the European counterpart to Exxon Valdez. Claims for pollution damage were presented from the Italian and French governments for clean-up operations. The Italian government also claimed for damage to the environment. Moreover, demands for compensation were received from about 1,300 affected parties, including 700 hotel owners, more than 40 yacht owners, about 200 fishermen, 230 shop and restaurant owners, as well as nearly 100 operators of beach facilities. All in all, about USD 1 billion in claims were filed in the proceedings against the ship owner. In IMO, the Italian delegation inspired by the consequences of the two major accidents back home obtained little support for the proposal to introduce major changes in the liability provisions. Whilst the delegations discussed the revision of the 92 Protocols in London, the battle between claimants and the owners of Haven and IOPCF began in Genova. Legal action had been taken soon after the accident. It became clear that the damages by far exceeded what could have been recovered even on the basis of the 84 Protocols if they had been in force. An IMO Protocol which in 1976 had replaced the official value of gold francs with Special Drawing Rights (SDR) was in force with respect to CLC69 but not in relation to FC71. In 1978, the IOFCF Assembly adopted an interpretation under which one SDR was to be considered equal to 15 gold francs. Nevertheless the claimants argued that the current limitation amounts, stipulated in gold francs, had to be converted to the local currency, lire, based on the free market value of gold. This method produced a liability limit more
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Photo: www.aukevisser.nl
Haven than seven times the size of what it had been, if the base was SDR. IOPCF rejected the argument for gold franc conversion. Moreover, a number of claimants failed to notify its administration within the three-year time limit in accordance with the provisions in FC71. Finally it was alleged that a number of other claims could not be justified by the current definition of pollution damage. The proceeding went on for several years before the French authorities, together with some private claimants, were prepared to compromise. However, the Italian government still continued to press its claims that amounted to USD 530 million as compensation for environmental damage and a further USD 150 million for clean-up costs. In October 1995, it seemed that the efforts to resolve the most controversial case in the 17-year history of IOPCF had collapsed completely. Despite the gloomy situation, an international consultation group remained in existence to find a solution. Its work was successful when a tripartite global settleThe super tanker that the HajiIoannou family owned was at anchor in Genoa when it exploded in April 1991. On board was a cargo of some 144,000 tons of crude oil which partly were consumed by flames. Most was spilled into the sea. Four crew members were killed. There was massive pollution of the Italian coastline, and the oil slick spread as far as France. The heavy contamination resulted in numerous claims from the pollution victims as well as a major claim from the Italian Government. All in all, claims of about USD 1 billion were filed against the shipping company. The subsequent litigation can be seen as the European counterpart in complexity to the disputes subsequent to the Exxon Valdez disaster in Alaska. Also, a lengthy criminal proceeding was instigated. Finally in 2002, the ship owner was acquitted of the manslaughter charges.
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Bruno Bebert / EPA / Scanpix
Stelios Haji-Ioannou
Born in 1967, Stelios HajiIoannou has had several entrepreneurial ventures. After working for the Troodos Shipping Co Ltd., his father's firm, he founded Stelmar Shipping. He went on to start the airline company EasyJet. He also earned the title of Sir Stelios when he was knighted at age 39.
ment finally was signed in Rome in March 1999 after nearly eight years of negotiations and litigations. The compromise meant that Italy accepted a total compensation package of about GBP 43 million, of which some 30 million was paid by IOPCF with the remaining including an ex gratia payment to come from the owners through its P&I club. The payment was to be made without admission of liability by the owners the HajiIoannou family to the extent it exceeded the limitation amount under CLC69. At the end of May 1999, the long-running saga of the compensation case was brought to a final conclusion when the agreed amount was paid and the compensation proceedings terminated. Despite that compensation had been paid far beyond the legal liability under the conventions - which was GBP 37 million in 1991 - Mr. Jacobsson, director of the IOPCF, did not hesitate to express to Lloyds List that he was happy that a solution was reached, particularly as the settlement respected the two principles the Fund
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had all along: first that the maximum amount is fixed in SDR, and second, that the Fund convention does not allow any payments for environmental damage. However, these claims were not the only major worry for the owners. Criminal proceedings had started after the accident. It was alleged that the master, the chief mate and the chief engineer had been guilty of gross negligence, and the owners right to limit their liability was challenged once more. Crewmembers had been killed. The owners were blamed because they had not ordered the tanker to stop sailing, despite serious technical problems. Furthermore, the prosecutor insisted that the classification had not been notified about an inert gas generator that was out of order. In November 1997, a Genoa court seemed to have ended the seven-year ordeal when Lucas Hadji-Ioannou and his son, Stelios, were acquitted of the charges of manslaughter. Stelios Haji-Ioannou, relieved but bitter, commented to the press that he was highly critical of what he described as the Italian banana republic justice system. But the criminal case had not yet come to an end. The nightmare of the owners continued when they were faced with an appeal against their acquittal on charges relating to the explosion of their tanker. For the appeals court, an expert panel had been set up. A second diving survey of the wreck at the bottom of the Genoa harbour revealed, according to the panel, that the accident was indeed a result of overpressure of inert gas whilst cargo was transferred. The appeal case was now to be administered by a judge who was the Mayor of Genoa when the accident took place. In that position, he had previously condemned the parties involved. A petition was sent to the Italian Supreme Court to have the appointed judge, who was claimed to have political ambitions removed. However, in March 2000, before any decision on his qualifications was made, it turned out that the acquittal was upheld. In the meantime, Stelios Hadji-Ioannou, born in 1967, extended his business interests in shipping as well as other areas, notably airlines. His entrepreneurship and philanthropic achievements earned the young man a knighthood in 1996, when Queen Elisabeth II on her 80th birthday made him Sir Stelios. Further to the lengthy legal battle on the compensation issue, the trade press was, in the following years, filled with speculations about whether the public
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outcry over the disaster would spark off OPA-like regulations in the European Community. Whereas some voices spoke up in favour of such legislation, Haven did not result in any unilateral action. The Europeans seemed to continue to support IMO to coordinate the efforts to improve safety at sea and protection of the marine environment, including the liability question.
Notes: On the Haven incident, the claims and the method of conversion are listed in local currency in the IOPCF annual reports, 1991-1999. Also see Lloyds List, March 6, 1999. On the criminal case, see Tradewinds, Nov. 28, 1997. Also see Lloyds List, Feb. 19, 1999, and March 15 and 21, 2000.
II. ABT SUMMER

Two more serious incidents followed Haven only a month later. The 17-year-old Saudi-owned and Liberian-flag super-tanker ABT Summer exploded in the deck area and sank 900 miles off the coast of Angola. On board was a cargo of 260,000 tons of crude oil. Five of the 32-man crew lost their lives. The oil around the tanker began to burn, and the oil slick was reported to cover 80 square miles. The tanker was recently bought from a Greek owner, had been transferred to the French classification society Bureau Veritas and was due for docking in September. The charterer was the National Iranian Tanker Co., who was also the owner of the super tanker Albortz, which shortly after the accident in Angolan waters was under repair in Cape Town harbour. The Albortz exploded and caught fire, killing three repairmen and seriously injuring six others. Hence during a time span of less than two months, three 1970s-built large tankers had exploded at a cost of 16 lives one of the tankers were chartered to and one owned by the National Iranian Tanker Company. Mohammad Souri, the honest chairman of the company, stated in a speech delivered to the annual meeting of INTERTANKO in Hamburg, Germany, that his group was in general satisfied with the old ships and that the affiliated company, National Iranian Oil Co., did not prefer to pay higher rates for ships certified above minimum class standards. Despite that the ABT Summer spill ranks as the one of the largest ever recorded, the accident received modest attention in the media. Partly perhaps because of the location, the media instead continued to focus on the Haven affair.
Notes: On ABT Summer, see Seatrade Week, May 31 to June 6, 1991. According to ITOPF Data and Statistics 2010, the ABT Summer spill 260,000 tons is the second largest ever.
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III. AUSTRALIA WARNS AGAINST SHIPS OF SHAME - KIRKI

Also on the other side of the globe, the experience with the standard of foreign ships gave rise to serious concern. The anger in Australia culminated on July 21, 1991, when the bow section simply fell off a rusty Greek registered tanker, Kirki, while en route from the Arabian Gulf. She was loaded with 82,000 tons of light crude when she collapsed. The coast of Western Australia and its marine environment faced a major pollution risk that was only narrowly averted. In the event the lives of the crewmembers were put at risk, but with good luck and a major salvage operation, the crew was rescued and the ship saved. Together with the loss in close succession of six bulk carriers in the same waters between January 1990 and August 1991, Kirki resulted in an inquiry from the Australian House of Representatives Standing Committee on Transport. The report, which was presented in December 1992, carried the name Ships of Shame. Kirki, owned by the Thenamaris group, was nicely painted whilst her tanks were horribly corroded. Rust was camouflaged with canvas. The committee pointed out that Kirki was in class with a reputable classification society and had been regularly inspected. Yet the tanker suffered a major structural failure because of corrosion which had gone undetected by all responsible parties including the classification society, Germanischer Lloyd, the ships managers and the charterers. The committee turned its focus on the classification societies and made the point that the industry is unusual in the sense that these societies, which are used to regulate the world fleet, are subject to the same market forces as shipowners. Whilst being responsible for safety at sea, the societies have to maintain market share to be commercially viable. The basic dilemma that it is the shipowner who selects and pays his regulator the classification society for its services was not expressly mentioned. More diplomatically, the committee focused on the wide variance in the quality of classification societies that allowed irresponsible tanker owners to cut corners with respect to investments in safety. A small consolation to the tanker industry is shown in the findings that the dry bulk industry standards were found to be worse. The Australian committee stated:
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It is generally recognised that the conditions of oil tankers is better than dry bulk carriers. ... It is evident that, with the new leadership, the IMO is becoming more active. The recent initiative of the Secretary General in having bulk carrier safety addressed is an indication of a refreshing change of attitude within IMO. ... This attitude must be encouraged. In this connection it was pointed out that between 1988 and 1991, 47 dry bulk carriers sank, with a loss of 381 lives. In 1991 alone, 19 of these carriers sank, with a loss of 149 lives. The Committee recognized that while IMO had proven an effective forum for setting standards, it had generally been ineffective in ensuring the observation of the same standards. Thereby it repeated the message that Sir Yue Kong Pao had sent to IMO from Helsinki 11 years earlier. The considerations in the report also included a reference to the continued crisis in the shipping industry with substantial overcapacity, which enabled the charterers including the oil companies to press freight rates to levels below what was required to maintain decent quality for marine transportation: In response to commercial pressure, substandard ship-owners/managers are accepting lower freight rates, leaving responsible ship/owners/managers that are unable to operate at the lower freight rates with a declining market share. ... Where maintenance is not carried out it may be a case of the captain and crew not being provided with the necessary resources rather than poor onboard procedures. It was found that the continued depression in the market place also had resulted in considerable pressure by the shipowner on the master. Such pressure could include maintaining speed in heavy weather conditions to meet deadlines set by the oil charterers, in which case the Captain was reduced to merely the driver of a ship, rather than its master. The inquiry into ship safety undertaken by the Australian Parliamentary Committee revealed a better understanding of the market forces than seen within other governmental quarters prior to Erika, which grounded seven years after the inquiry was published. When Kirki experienced structural failure, Australia had not taken steps to ratify many IMO conventions, yet the report concluded that international co-
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operation was the most effective lasting solution to ship safety problems. Disaster was never far away, and prevention of pollution of the sea is a far better option than cure. IMO, flag states, port states, classification societies, shipowners and managers, crews, insurance underwriters, charterers and cargo owners all need to participate if short- and long-term solutions were to bear positive results. The possibility of unilateral Australian action was considered, but rejected: What concerns the Committee is that ships which are now inappropriate for the US trade will operate in those areas which are less capable of regulating them. This situation would not improve the ship safety problem as much as pass it on to those nations least able to do something about it. Australias representation at IMO should be strengthened by the inclusion of industry and trade delegates with relevant experience. In a widely published message to IMO and the oil industry, INTERTANKO once more appealed this time through its new chairman, Mr. Suzuki, Mitsui OSK (Japan): accidents happen not due to lack of regulation but due to lack of compliance with the existing rules. ... Quality must be paid for in shipping as in other industries. The oil companies continue to declare their preference for first class tankers, but their chartering departments often pursue a different strategy. In the spot market, the cheapest rust bucket is often treated as the market leader the rate setter! The oil industrys chartering conditions should induce compliance with conventions. Today, however, this is not always the case. ... If charterers pay a premium for quality, they also pay a premium for a better marine environment and, not least, the aging tanker fleet would be renewed on a sound financial basis. Governments can contribute to this renewal process by resisting pressure to over regulate the industry. ... Overregulation would detract from existing standards and, once again, would push quality tonnage into an unfavourable market position. This, in turn, would delay much-needed fleet renewal.
Notes: Seigo Suzukis statement is found in Lloyds List, July 2, 1991. On Kirki, see the above mentioned report Ships of Shame from the Australian House of Representatives Standing Committee on Transport to the Parliament in December 1992, pp. xxi, xvii, 1, 2, 27-29, 32 and 75. See also Jack Devanney: The Tankship Tromedy, Florida, 2006, pp. 56-57.
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IV. AEGEAN SEA

The Iraqi invasion of Kuwait in August 1990 overshadowed any other event in the tanker market. Within months, a land campaign led by US forces under the authority of the United Nations completed the liberation of the country. But Iraq had in the meantime deliberately released an estimated 780,000 to 1,500,000 tons of crude oil into the Arabian Gulf off the tanker terminals in Kuwait. It is listed in the news as the largest oil spill ever. Hundreds of miles of the Saudi coast were smeared black, but had little military significance. It helped that the conditions were excellent for skimming, the weather was nice and a converted tanker, Al Wasit, and two other skimmers managed to recover some of the oil. A few weeks after the IMO delegates had left the conference rooms on Albert Embankment, several major oil spills occurred in European waters. The night of Dec. 3, 1992, a double-bottom combined carrier under the Greek flag, Aegean Sea (114,000 dwt), ran aground while approaching the port of La Coruna, in northwestern Spain. The owner, linked to the LondonGreek company Coulouthros Shipping Agency, had agreed with the Spanish oil company Repsol to carry a cargo of oil from Sullom Voe to one or two safe ports European Mediterranean. Repsol ordered the vessel to go to La Coruna where she arrived on Dec. 1 and waited two days for a berth before she was ordered to proceed. Despite the bad weather, the Greek master, Captain Stavridis, attempted to manoeuvre the tanker into the entrance channel at a point, later found to be dangerously close to the shore. The vessel ran aground, broke in two and exploded. The heavy weather delayed initiatives to start effective recovery of the spilled oil. All 32 crewmembers were rescued by helicopter after the grounding. The last man was still in the air when the tanker exploded. The forward section sank 50 metres from the coastline. Most of the cargo of some 80,000 tons was either consumed by the fire or dispersed into the sea. Only 6,500 tons that remained onboard were successfully removed by salvors. Like Exxon Valdez, the tanker grounded in an area where extensive fishing and various forms of aquaculture took place. A wide-ranging clean-up operation was carried out at sea and ashore. Attempts were made to protect sensitive areas by using booms deployed from ships and from shore. Several stretches of the coast northeast and east of La Coruna were contaminated. The regional Fisheries Council imposed a comprehensive fishing ban in inshore
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waters. Later, the Council presented a claim totalling more than GBP 2 million (about USD 3.53 million) for economic assistance given to fishermen and shellfish harvesters. The oil lost was less than the Urquiola spill in the same waters in 1976. But the spill from Aegean Sea is still listed as one of the major spills. As a result of the nature of the cargo and the vigorous wave action, there was, however, considerable natural dispersion of the oil, and fishing was back to normal in August 1993. Nevertheless, the restrictions had seriously affected 3,000 to 4,000 fishermen, including shellfish harvesters. At the end of 2001, the amount of claims submitted before the Spanish courts represented some GBP 200 million (about USD 287 million). It took more than 10 years to settle all compensation claims. Settlement agreement was finally reached between the government, the IOPCF and the tanker owner and his P&I club in 2002. The last outstanding payment was made in December 2003. In 1992, criminal proceedings had been initiated against the master and the pilot. The Court held that Captain Stavridis had been negligent when he decided to bring the ship into the port in extremely bad weather with poor visibility. He was held liable together with the pilot who had ordered the master to enter port at 2 a.m. in spite of the heavy weather and knowing that the weather would further deteriorate. Contrary to the regulations, the pilot did not meet the ship at the designated boarding station and did not board the ship until she had entered into the port area. The criminal court also considered the compensation claim that had been presented against the owner, the P&I club, the master, IOPCF and the owner of the cargo, the Spanish oil company Repsol. The court held that the limitations in CLC69 were applicable. According to the 92 CLC Protocol, no claim for compensation for pollution damage under the Convention could be made against the pilot. The protocol was, however, not in force and the original CLC69 contained no such exception. Spanish pilots were state employees and in its first ruling the court held that the owner and the pilot were both liable for criminal negligence. It was found that the incident could have been avoided if either of them had acted with proper care. The ruling of April 1996 was appealed, but upheld by an appeal court in June 1997. During the pleadings on the claims for compensation, IOPCF maintained that
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the Commandant of the port should be held liable. He had ignored an order prohibiting this type of tanker from entering port under the prevailing conditions. In the end, the court acquitted him of the charge. Moreover, the tanker company started arbitration proceedings in London against the charterer. The shipowner alleged that Repsol by nominating La Coruna had failed its obligation to nominate a safe port. On this basis the owner sought to recover the substantial compensation he had paid out to pollution victims plus the value of the tanker, her bunkers and the loss of freight. It all amounted to USD 65 million. Repsol refused to pay and contended that in the event the company was liable to pay damages, the liability would be limited under the general 1976 Convention on Limitation of Liability for Maritime Claims. The Convention entitles a shipowner to limit his liability for certain claims listed therein and the definition of the term ship owner (article 1.2) included charterer, manager and operator of a sea-going ship. The English High Court held by way of preliminary issue that the charterers were not entitled to limit liability in respect of a claim based on failure to nominate a safe port under the charter party. De la Rue and Anderson have drawn the conclusion that if oil pollution claims are brought directly against the charterer, he may limit his liability under the 1976 Convention. But if claims are brought against the owner, who later seeks to recover the sums he has paid from the charterer by way of recourse, limitation is not available. The implications of this view may be of particular interest to oil companies chartering tankers to the US.
Notes: On Aegean Sea, see IOPCFs annual reports, 1992 to 2003, and de la Rue and Anderson: Shipping and the Environment, London, 1998, pp. 642-643.
V. BRAER
Europe should soon once again be subject to another spectacular pollution incident. The next occurred in early January 1993, when a Liberian tanker Braer of 89,730 dwt suffered an engine failure, lost her power and went aground in horrendous weather 15 km off the southern coast of the Shetland Islands. She
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was en route from Norway to Canada with a cargo of 85,000 tons of North Sea crude oil. Severe gales prevailed for several days. The ship broke up in three sections. No crewmember was killed, but the entire cargo was lost. During the first week after the spill, TV crews, journalists and other media people flocked to Shetland and reported that this was one of the most serious environmental catastrophes ever seen. The oil spray from the tanker contaminated 45 square km of the local farmers grassland. About 23,000 sheep had to be removed and given special feed. Three days after the accident, the UK Government imposed a fishing exclusion zone in the affected area. A high-level committee under the leadership of Lord Donaldson was appointed to study what went wrong and to come up with recommendations on how marine safety could be enhanced in the area. The 85,000 tons of oil Braer spilt was twice as much as the Exxon Valdez spill and the largest spill in the UK since Torrey Canyon in 1967. Partly because of extremely high wave conditions produced by strong winds and partly because of the low viscosity and dispersibility of the light crude spilled, most of the oil vanished naturally into the sea. Thus there was less pollution of the coastline than feared. It was later estimated that only one percent of the oil cargo had been washed up on beaches. Despite the harm it caused to fisheries and farmland, the accident required a physical clean-up response on a comparatively modest scale. The doomsday forecasts during the first days evaporated little by little. But the compensation claims still amounted to large sums. The tanker owner was a Liberian single-ship company controlled by Norwegian/US interests: Bergvall & Hudner. Its P&I club, Skuld, together with IOPCF set up a joint office on the island to administrate the claims which were coming from various affected interests including farmers, fishermen, property owners and the tourist industry. Moreover, the UK government had submitted a claim for compensation for costs incurred for its clean-up operations, for disposal of oily waste, for monitoring operations carried out for salving ship and cargo and for tests undertaken in the water to establish the extent of hydrocarbon content. In October 1995, IOPCF had to terminate all payments to claimants. According to Tradewinds, a compensation of USD 70 million had so far been paid to the victims, leaving just another USD 18 million before the amounts available under the conventions were exhausted.
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The standstill of further payments led to impatience among the uncompensated claimants, who now saw a breach of the CLC limitations as the only way of resolving the problem. Thus a leading Scottish law firm, Paul & Williamsons, told the press that action might be prepared to break the (near) USD 90 million limit on compensation available. Among the claimants still waiting to have their claims settled were the Department of Transport and the Shetland Islands Council, the salmon farming industry and a number of fish processors. A club spokesman rebuffed the contention and maintained that the two-tier system, including the shipowners right to limit, had been and still was fundamental to the system for handling oil spill. Furthermore, he cautioned the law firm by informing that the single ship company that owned Braer no longer existed. It was now up to his club to consider refusing to meet claims under the pay-to-be-paid rule. According to the press report, his view was that the claimants had no direct action against Skuld. This statement should, however, be seen in the light of CLC69, which entitled the claimant to bring his claims for pollution damage directly against the insurer, but the insurer may avail himself of the limits of liability. A wide range of business interests were affected by the accident, and some felt very strongly that their losses should be taken into account. Landcatch, a company that produced smolt (juvenile salmon), based on the West Coast of Scotland, sold its product to salmon farms, some of them located as far away as Shetland; a distance of 500 km. Landcatch claimed that because of Braer, its buyers in Shetland purchased less smolt than usual. It was argued that compensation had to be granted and that it was sufficient to prove that the loss would not have happened if the pollution accident had not taken place. The claim was, however, rejected both in the lower court as well as by three judges of the Court of Appeals. In its house magazine, Skuld commented on the favourable judgment, stressing that all legal systems have to establish a point beyond which one cannot recover for economic losses. A line has to be drawn somewhere, otherwise - as a judge in the US had put it - there will be liability in an indeterminate amount for an indeterminate time to an indeterminate class. In January 1999, a number of disillusioned Shetlanders felt they had to abandon their compensation claims. It was not worthwhile to pursue the expensive legal action further, as they probably would be able to secure only a fraction of the original amount. One claimant said that he was asked for hundreds of
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Braer
Braer spilled twice as much oil as Exxon Valdez when she broke up in three sections during horrendous weather off the coast of the Shetland Islands in January 1993. The entire cargo of more than 80,000 tons of oil was lost, representing one of the largest oil spills ever. However, partly due to extremely high wave conditions and partly due to the low viscosity and dispersibility of the light crude oil spilled, most of the oil vanished naturally into the sea. Nevertheless, the impact on the coastline was serious, and the claims for compensation from the pollution victims were numerous and huge. Thirteen years after the accident, one claim remained still unsettled. The tanker was owned jointly by US and Norwegian interests and represented by the Norwegian P&I club Skuld.
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Braer oil spill 85,000 tons Exxon Valdez oil spill 37,000 tons
AFP / Scanpix
pounds for lawyers every year and could not afford it. One of them, Martin Thomson, a farmer at Exnaboe, told Lloyds List that he would drop his fivefigure claim because of frustration over the IOPCF policy not to co-operate, but just to play for time. Chemical dispersants had swept ashore in January 1993 and covered his property. Moreover, the asbestos roofs on his farm buildings had been affected and started leaking one year after the accident. You cannot run a farm with leaking roofs. I have to look after my livestock. He claimed that the position of IOPCF was that: the roofs form part of the evidence, and we are not allowed to touch them until the claim is settled. The farmers could not live with that. A representative of an Edinburgh law firm, Eric Scott, said that damage to the asbestos roofs had all happened in one particular area and had affected all roofs of this kind, old and new. He complained that the Fund is using every procedural and technical device to avoid paying the claims. IOPCF seemed to be at pains about what to do. There was only GBP 3.5 million (about USD 5.66 million) left to accommodate the remaining claims. Yet the press was told that its policy was successful. Sally Gregory, spokeswoman, said that the number of court cases had dropped from 200 in January 1996 to 100 cases in 1998. Most of the big claims were not backed up properly, she said, and the Fund would prefer to talk to people in order to persuade them to reach out-of-court settlement. In mid-March 2000, Lloyds List could report that the UK government had dropped its claim. It turned out that the Shetland Salmon Farmers Association, smolt suppliers and several other claimants had also withdrawn their claims after the courts had rejected them. IOPCF should thereby be able to lift its self-imposed moratorium so that legitimate payments long overdue could be paid out. In early January 2005, only one claim remained. At that time, the Fund had paid nearly GBP 46 million (about USD 83.73 million) and the shipowners insurer, Skuld, had paid GBP 6.2 million (about USD 11.22 million) to claimants. The remaining claimant was Shetland Sea Farms Ltd., which contended to have contractual commitments to buy smolt at the mainland. The question arose whether some of the documents offered as evidence were genuine. The court of the first instance concluded in 2001 that officers of the claimant had knowingly presented copies of fake letters in support of the
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claim. The court decided, however, that the company should be given another opportunity to prove that a contract existed before the Braer accident. In May 2003, a new decision was rendered confirming that Shetland Sea Farms Ltd. had indeed been involved in a fraudulent scheme. Nevertheless, the case was allowed to proceed. Skuld and the IOPCF Fund appealed against this decision. In January 2007, a settlement was reached between Sea Farms and IOPCF and Skuld, whereby the claimant withdrew its claim and paid GBP 75,000 to Skuld (USD 150,126) and GBP 20,000 (about USD 40,033) to the 1971 Fund for the legal costs incurred. Fourteen years after the grounding, the case was thereby brought to an end.
Notes: See The Impact of an Oil Spill in Turbulent Waters: The Braer, a report edited by J.M. Davies and G. Topping, London, 1998. See also IOPCF annual reports 1993-2007; Tradewinds, May 31, 1996; Skuld newsletter no. 3, October 1999; and Lloyds List, Jan. 6, 1999.
VI. MAERSK NAVIGATOR

Sixteen days after the Braer accident, a fully laden large Danish crude carrier, Maersk Navigator (255,000 dwt), which had been leased to an affiliate of Exxon Corporation, collided with a Japanese tanker (96,000 dwt). The calamity occurred near the entrance of the Malacca Strait, one of the busiest waterways in the world. Both tankers were registered in Singapore. The Japanese ship was in ballast, but oil leaked out from Maersk Navigator. Mr. Law Hieng Ding, Malaysias environment minister, warned the press that We can expect a disaster whilst a spokesman of the owner played down the danger, saying that a salvage tug reached the tanker the same night and Any leaking oil from the breached cargo is burning off. Before the leakage was stopped, however, about one-tenth of the cargo escaped into the sea. In Malaysia, concern had for some time been expressed about the practice of allowing big tankers use the already congested and relatively shallow straight. The government had proposed that laden super tankers carrying oil from the Arabian Gulf to Japan should proceed through the Sunda Strait, or the Lombok and Makassar Straits, which offered a safer deep-water channel through the Indonesian archipelago. Tanker owners were reluctant to comply with the routing the government proposed, as the oil industry was not prepared to pay the added transportation costs which the extra mileage would mean.
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Notes: See International Herald Tribune, Jan. 22, 1993, on Maersk Navigator. In 1975, Jacob Maersk had spilled more than the double amount of oil 88,000 tons off Oporto, Portugal.
VII. SEA EMPRESS

In February 1996, history repeated itself. Thirty years had passed since the master of the Torrey Canyon ordered a change of course which, all being well, would save half an hour and reach the evening tide in Milford Haven. Once more, a large tanker on its way to this very terminal caused a major spill. Once more it was confirmed that tanker pollution is a media event as long as it occurs close to the media centres and there is bad photogenic news to report. The Milford Haven waterway had a long history as an oil port, chosen during the 1950s for its deep waters and natural shelter, features that make it ideal for large tankers. In 1996, the oil terminal was the second busiest in Britain, taking delivery of crude oil and shipping refined petroleum products worldwide. On Feb. 15 that year, the three-years-old Liberian-flag tanker (149,000 dwt) Sea Empress owned by a Norwegian, John Fredriksen, and managed by Acomarit, Glasgow caused an oil spill of 72,000 tons of crude oil and 360 tons of heavy fuel oil, polluting the waters and coastline in southwest Wales. Four cargo tanks and two ballast tanks had been ripped open on the rocks at the entrance to Texacos terminal. The grounded tanker had been in very good technical condition. But the first mate did not speak English, and communications between ship and shore proved difficult. The ports radar installations had been out of order for some time. A pilot had been on board at the time of the accident, but according to reports available, he arrived just 15 minutes before the tanker grounded. He
Poppe Cornelius / Scanpix
John Fredriksen
John Fredriksen was born in 1944 in Eidsvoll, north of Oslo. At 16 years old, he began as a ship broker and moved to New York, where he proved his talent in the early 1970s. There, he worked closely with oil interests in the Middle East and established his own tanker company. The next decade, he made good money transporting oil from the Persian Gulf during the war between Iran and Iraq. In Oslo, he got his own table, known as Kharg Island, at Theatercafeen restaurant. His many other investments include oil rigs and marine harvesting. Today, he is probably the worlds major tanker owner.
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had failed to follow the leading lights, and it took 12 hours from when the pilot reported that he had lost control with the steering till any action was taken by the authorities ashore. It turned out to be an accident from top to toe. The tanker was refloated, but despite salvors efforts, she grounded again the next day and once again, causing more oil leakage during persistently bad weather. On Feb. 21, Sea Empress was finally towed to a jetty inside Milford Haven, where the remaining 58,000 tons of oil was discharged. The oil came ashore along 200 km of coastline, most of which was a national park. The Milford Haven Waterway represents one of the most productive commercial fisheries in Wales, taking advantage of the abundant shellfish, crab and lobsters, sea bass and other fish. The event prompted widespread fears of an environmental catastrophe. A ban was imposed on commercial and recreational fishing in the region, and there was concern that tourism important for the local economy would be badly affected by the heavy-oiled beaches. The ban was lifted 18 months later. At that time, there were few visible signs of the oil except in a few areas where some clean-up still was required. Critical voices later claimed that the spill could have been reduced significantly if communication had been better. It was moreover claimed that shore personnel had given inaccurate information about the tide. During the investigation that followed, the Minister of Maritime Affairs, Lord Goschen, went a long way to admit that the distress signals from the tanker had not been taken sufficiently seriously. He and his government were harshly criticized by the Labour opposition for not having paid attention to the recommendations in the report Lord Donaldson worked out after the Braer accident. A spokesman for the opposition demanded that Lord Goschen and the secretary of transportation, Sir George Young, should leave their Cabinet posts. A draft report issued by the UK Marine Accident Investigation Branches leaked out in January 1997. Glenda Jackson, Labour transport spokeswoman, said: The (draft) report underlines that the Sea Empress grounding was a disaster, the salvage operation a farce. She also accused the Government of a cover-up after it was revealed that the official report on the oil spill would not be published until after the general election. Also the Government found that the standards of training and examination of pilots at Milford Haven were unsatisfactory and in need of improvement, in particular with respect to large tankers. In hindsight, an accident seemed just waiting to happen. Thus when the Milford Haven Port Authority (MHPA)
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Rebecca Naden / EPA / Scanpix
Sea Empress
On Feb. 15, 1996, the threeyear-old modern tanker on her way to a refinery in Milford Haven grounded and lost 72,000 tons of crude oil and 480 tons of fuel into the sea. The incident proved the old truth that despite a vessel being in first-class technical condition, safety depends on the quality and professionalism of the other actors on sea or shore. In this case, the communication between the ship and the port was not up to par. The port radar was out of order, the pilot arrived too late and it was claimed that inaccurate information had been given about the tide. The Milford Haven Waterway is one of the most productive fisheries in Wales. The damage to marine life was serious. Among the conclusions of a special Environmental Evaluation Committee set up by the British Government was: The main impact occurred at the time of the spill or shortly afterwards - there appear to have been few major long term effects.
was prosecuted by the UK Environment Agency, the Port Authority pleaded guilty to a charge under the new and unfamiliar 1991 Water Resources Act. A fine of USD 6.5 million was imposed by Cardiff Crown Court three years later in January 1999. It was held that pilotage standards were inadequate, and pilot error caused by inadequate training and experience were seen as contributory factors to the accident. The government represented by the head of the Environment Agency, Ed Gallagher, left no doubt as to his satisfaction. He saw the huge fine as an important landmark in environmental protection. The harbour master, Captain Mark Andrews, who had pleaded not guilty, was acquitted on all counts. As an employee of the port authority, he had only acted on its behalf. In the meantime, the new general manager of the port, Ted Sangster, had repeatedly pointed out to the press that the MHPA guilty plea was based on a non-fault basis and was meant to end an extraordinarily expensive lawyer festival. He felt strongly that the court had failed when it imposed the unprecedented fine. In addition to the fine, the port was ordered to pay GBP
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825,000 in legal costs. According to Mr. Sangster, these fees came on top of the GBP 1.3 million the port had spent on enhancing and investing in its safety system over the past couple of years. The judgment was appealed in January 1999. In Norway, a spokesman of the owners defence club Skuld, Arild Wegener, did not quite agree with the views Mr. Sangster expressed. Mr. Wegener told the press that the MHPAs guilty plea was a further confirmation that its shipowner member was not at fault, thus the blame for the accident can be laid at the doorstep of another party. The club consequently hoped to recover all or part of what had been paid out to victims for the spill. Another Skuld spokesman, Jonathan Hare, a senior lawyer, told the press that the likely amount of claims could reach USD 65 million. He would not give an amount of the claims settled but said that a great majority had walked away with an acceptable settlement. In his mind, it seemed clear that the early press reports holding the owner responsible had proved incorrect and that it had been recognized that a safe ship is still a major hazard if shore-side responsibilities are evaded. According to Mr. Hare, the insurers and the shipowner had abided by the rules and that time had come together with the Fund to consider teaming up as plaintiffs seeking redress for the liabilities incurred. Such action would have as its basis the rights acquired by subrogation from the victims of oil pollution to whom it had made compensation payments. Both sides expressed strong opinions. In October 1999, Lord Donaldson felt compelled to publicly attack the disgraceful conduct of the Environment Agency over the prosecution of the Port Authority. In March the following year, Lord Chief Justice Bingham of the Appeal Court found that the port authoritys fine was manifestly excessive. He slashed the fine to GBP 750,000 (USD 1,213,670). But the fine came on top of the GBP 1.3 million (USD 2.10 million) that the port had invested in a safety system the last couple of years. For the new general manager of the port, Mr. Sangster, the reduced fine was still a considerable burden for the port. There had been no winners here, he said. Also, the Environmental Agency was depressed. Its Chairman, Sir John Harman, told the press that the passed judgement was extremely bad news. In his mind, the fine could in no way be compared to the serious impact on the environment that the Sea Empress incident caused. Moreover, the judgement failed to address the vexed issue of responder immunity, which first and fore-
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most concerned the salvage companies. The UK government decided to stand last in queue for its claims to ensure that IOPCF had sufficient funds to pay other claimants. Once again, the Fund had been compelled to suspend payments to the victims of the pollution damage as the claims presented exceeded the amount available under the international conventions. After thorough consideration, the Fund decided to take recoursive action against MHPA in the Admiralty Court in early 2001. The action was delayed, but in February 2002 the proceedings commenced in cooperation with Skuld and on behalf of 786 other claimants. The claims were based on allegations of negligence and/or breach of duty, including failure to put a proper system in place for safe entrance into the port, failure to have in place effective radar, the entrance to the port not being sufficiently marked, the system of pilot allocation being negligent and the system of pilot training being defective. At the same time, Texaco, which operated the oil terminal in Milford Haven, commenced legal proceedings against MHPA and the Milford Haven Pilotage Limited. The compensation claim of Texaco included damage to the cargo (USD 10.5 million), whilst other expenses including salvage costs amounted to more than USD 5.6 million. MHPA rejected all claims in respect of the economic loss suffered. The defence was lengthy and detailed. In short, it was alleged that the port indeed had put in place proper systems to ensure that the entry to the port was safe. During the court proceedings, the parties finally agreed with the proposal of the judge that the parties should explore the possibility of a settlement by mediation. The mediation resulted in an agreement with IOPCF and Skuld that their claims should be fully and finally settled by means of a payment by MHPA of GBP 20 million by the end of 2003. By this settlement, all outstanding claims in relation to the Sea Empress incident had been resolved. An out-of-court settlement was also reached with Texaco. The IOPCF annual report for 2003 concludes that 1,034 claimants had presented claims for damages caused by the Sea Empress accident. The claims represented nearly GBP 50 million. Payments were made to 797 claimants totalling some GBP 37 million, of which 7.4 million had been paid by Skuld and the balance by the Fund.
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The lesson learnt was that a safe ship is still a major hazard if shore-side responsibilities are evaded. The focus was for once turned on port safety, not only on ship safety. One other positive consequence of the spill was recognizing that the chain of command after the serious incident has to be clear with respect to political and operational control. Mid-2002, Milford Haven Port Authority announced that it would escort loaded tankers over 50,000 dwt through the narrow entrance to the port. At Lord Donaldsons suggestion, a Secretary of State representative was appointed by the UK administration to take charge in such incidents. According to observers in London, this has been a resounding success. Moreover the enactment of the UK Maritime Safety Act of 2003 provides powers for the Secretary of State`s Representative for Maritime Safety and Navigation (SOSREP) to facilitate salvage and assist ships in distress outside the English coast.
Notes: On Sea Empress, see IOPCF annual reports 1996-2003; Lloyds List through January 1997; Feb. 15 and 18, 1999 and May 3, 2000; Tradewinds, Jan. 15 and Feb. 26, 1999; Skulds Newsletters 1996-1997 and a final report of the Sea Empress Environmental Evaluation Committee, Cardiff 1998.
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DRACONIAN MEASURES REQUIRED?
12 Draconian measures required? - The viability of IMOs solutions questioned again

I. ERIKA
The break-up of an old 37,000-dwt, single-hull tanker on the morning of Dec. 12, 1999, in the Bay of Biscay 60 nautical miles off the coast of Brittany, France, came as a bolt out of the blue. It happened after an extended period of relative peace and quiet on the maritime spill front. In severe weather, the master sent the first distress signal late Dec. 11, but soon after, he cancelled the message. Then, the next morning at 6:20 a.m., he sent a new distress message. Two hours later, the tanker broke up. Under the Maltese flag, Erika (built in 1975) was en route to Italy from Dunkirk with a cargo of 31,000 tons of heavy fuel oil on board. Nearly 20,000 tons were spilt about 100 km off the mouth of the river Loire. The wreck sank in 120 meters of water. No lives were lost, as the French marine rescue services airlifted all members of the Indian crew to safety. The oil that escaped from Erika was less than seven percent of the oil spilt 22 years earlier when Amoco Cadiz grounded in waters nearby. Nevertheless, the incident stirred up more media interest and political debate than the grounding in Brittany in 1978. The spilt cargo was
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blown east towards the coast, and the first oil polluted the shores of France on Dec. 25. The clean-up efforts continued for two years. The incident illustrated dramatically the difficulties of cleaning up heavy fuel whether originating from cargo or from the fuel from any kind of ship. Because of its highly persistent nature, such oil is resistant to natural clean-up as well as difficult to remove from the surface by booms, skimmers, chemical dispersant or other techniques. Hence, the consequences were immense when the heavy fuel travelled great distances from the spill location and caused widespread contamination of coastlines and damage to fish and fishing gear as well as to aquaculture facilities and wildlife. At the end of 2001, about 250,000 tons of oily waste had been collected from the coast and stored. It took two more years to dispose of the recovered waste. The connected costs alone represented about GBP 33 million. The Savarese family in Sorrento owned Erika through Tevere Shipping Company of Valetta. The technical manager was an Italian company, Panship Management and Services in Ravenna, with Captain Antonio Pollara in charge. She was one of eight tankers built at the Kasado Dockyard in Japan in the mid-seventies, and had been used to carry black-market products at freight rates which a French Permanent Commission of Enquiry into Accidents at Sea (CPEM) in December 2000 concluded were insufficient to cover the maintenance costs. From 1975 to 1994, the tanker changed its name several times, which suggested several changes in ownership. The irony of the disaster was that the three major oil companies on the European continent, the Total/Fina/Elf group, had chartered an old tanker later claimed to be sub-standard spilling a substantial amount of heavy fuel oil and affecting 400 km of shoreline, including some of the best beaches on the French coast. Twenty years ago, Total had sent a large tanker (Betelgeuse) with horribly corroded structures to discharge her cargo at Bantry Bay in Ireland. Here, the tanker exploded in January 1979, with the result of 50 people dying. The tanker was to be sold, and neither the oil company nor the French classification society, Bureau Veritas, had concluded that it was required to spend extra money before the transaction. Following the breakdown of Erika, governments, the media, the public in general and not in the least environmentalists scrutinised Total once again. This time, no crewmember was killed, but the tanker chosen by the company to carry its oil caused one of Frances worst environmental disasters and dominated the media for a considerable time.
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Erika
The 37,000 dwt single-hull tanker, Erika, 24 years old at the time, was en route to Italy with a cargo of heavy fuel oil for the French oil company Total in December 1999 when she sank and spilled nearly 20,000 tons of oil about 60 km from the French coast. The oil that escaped was only a fraction of the spill Amoco Cadiz caused in the same area 22 years earlier, but came as a bolt out of the blue after a peaceful period with respect to marine spills. The incident stirred up more media attention and political debate in Europe than ever seen before. Because of the oils highly persistent nature, it was resistant to natural cleanup and difficult to remove. The fuel travelled great distances and caused widespread contamination and damage to the fishing and tourist industries as well as to the wildlife.
Stephane Marc / AFP / Scanpix
Benoit Tessier / REUTERSP / Scanpix
Giuseppe Savarese
Giuseppe Savarese, the Italian owner of old Maltese tanker Erika, soon faced criminal charges and had huge bail on his head after the accident. He was summoned to the Court in Paris. His defence was that the responsibility for the pollution scandal did not lie with him but with the Maltese authority and the Italian classification society RINA. He argued that he had paid RINA to verify that his ship was in proper condition. This was verified. When given a clean bill of health on his ship, he should be allowed to trade that ship.
The French environmental minister, Dominique Voynet, told the press that it was impossible to approve a system that pushed old ships to their limits, underpaid its seafarers and imposed minimum control. Satisfying oneself with saying that the captain is the sole master onboard after God often amounts to putting the bulk of responsibility on the fall-guy, she said. Transporters and charterers had to assume the responsibility. But Guiseppe Savarese, the owner, claimed that the vessel was in good condition. A reputable company in Ravenna managed it. The Italian classification company, Registro Italiano Navale (RINA), which was a member of the International Association of Classification Societies, an association of high esteem, approved it. Everything was done according to the rules. Moreover, the tanker had recently passed inspections by other leading oil companies, including Exxon and Repsol. According to a press report, at least five major oil firms had approved the 24-year-old tanker for chartering at the time she was lost.
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In a subsequent interview with the newspaper Le Journal du Dimanche, Captain Karun Mathur who had been jailed after being brought ashore claimed that the manager of the vessel had offered little or no cooperation during the fatal hours. The only advice he received was to try to get the stricken tanker to Spain. I think that they feared the French authorities and that they probably hoped to do better with the Spanish authorities, he said. When asked whom he thought was ultimately responsible for the disaster, he replied: An inquiry is in progress. But I think that the most guilty are the Neapolitan owner Guiseppe Savarese and the bank which finances him, The Bank of Scotland. A lawyer representing him claimed that Mathur had discovered and signalled some serious corrosion problems to the owner in November, two months after he took command of the ship. The conditions onboard the tanker had not been good. The crew had not been paid for three months. The master had ordered spare parts that never arrived. Moreover, the crew on three other vessels Mr. Savarese owned had been waiting for their wages for a considerable time. One of these tankers was Maria S, arrested in Augusta, Sicilia, in mid-January 2000 because of unpaid wages of some USD 107,000 and several technical problems. According to a report by RINA issued after two months internal inquiry the residual strength of the vessel at the time of the casualty was sufficient to withstand normal operations, even during the prevailing storm conditions. Captain Mathur and the manager of the vessel had misjudged the problems posed by a small structural failure in the hull, and thereby allowed it to develop into a much more serious structural failure. The crack was from corrosion, it was claimed, but rather it was due to weaknesses in the hull, possibly caused in the course of repair work by the Byelaw shipyard in Monte Negro in August 1998. Moreover, the master had failed to follow the emergency procedures laid down in the International Ship Management Code, and he had not sought advice from RINA. When it became known not long after the accident that several of Erikas sister ships all still trading had suffered identical structural failures in 1990 and 1991, RINAs chief executive, Nicola Squassafichi, countered the accusations and complained that the other classification societies had failed to report the past problems with the sister ships:
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Eight sister ships of the Erika class were built under two different class societies, and have been classed by five different IACS classification societies at some time in their life. ... All of these ships have suffered structural problems. Three of them, other than Erika, were serious. No information on the history of problems was available to RINA. When it was revealed that Erika had changed classification society four times, the public and the media seemed to lose faith in the experts. Instead of an industry educating the public, the reverse now seemed to be the case. A representative of the Green party in France had called a few days after the incident for the freeing of the master, who had been detained in custody: The detention of the captain of Erika is all the more scandalous for the fact that the ones really responsible for this shipwreck and this ecological catastrophe the owner, the shipping company, the charterer Total/Fina, the port authorities of all kind who have judged the ship, worn out by the years, fit for service seem to have slipped through the judicial net. The Greenpeace international oil campaigner was no less blunt: It is another example of the irresponsibility of the oil industry to operate as cheaply as possible. Substandard ships would not be sailing if oil companies did not cut costs by using them, the environmentalists argued. Dagfinn Lunde, managing director of INTERTANKO, backed them up. French shipowners joined the environmentalists and the domestic shipmasters association protesting against the detention of Captain Mathur. The Director of OCIMF, John Hughes, confirmed that the information on Erika in SIRE, a central oil industry database register, had been available to the Total group. SIRE had, however, never been intended to report on the hull condition of a tanker as long as the papers were in order. But the database would be re-considered in light of the accident. On the role of the classification societies in the future, the outspoken shipping financier Paul Slater told the press that in his mind, their days might soon be over. The system whereby class societies were chosen and answerable to shipowners was in his mind monstrously outdated. The better alternative was publicly funded societies with powers similar to the aviation authorities. A leading tanker owner, Lars Carlsson, president of Concordia Maritime,
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accused the oil industry of undermining safety measures that could prevent disasters. He pointed out that if only the oil companies were prepared to change their policies and begin to charter the better ships in the world fleet, this would eliminate the cheats who systematically broke the law and avoided the restrictions. In an interview with Lloyds List, the chairman of the Italian shipowners association Confitarma, Mr. Paolo Clerici, proposed: a broader form of liability if not unlimited for charterers as a measure by the EU to cut the number of aged and substandard tankers in European waters. He was not at all happy with the policies of the charterers and how they were in a position to run the game: There are owners who have quite young vessels in their tanker fleets, but who are keeping in service aged vessels due to the demand from the market. Often, aged vessels are specifically required. The market is prepared to pay only marginal premiums for young tonnage. On this background, it was no surprise that Henry Desmarest, chairman of the Total group, won few friends when he was confronted with aggressive journalists at a press conference in January 2000. When asked about the quality elements in the chartering policy of his group, according to a Lloyds List report, he with his eyes on the groups share price in no way agreed that the oil group had been shaken to its roots by the impact of public opinion. Mr. Desmarest also called for a massive increase in the liability for shipowners for the consequences of casualties like Erika. On another occasion, however, the director of the groups shipping department, Bertrand Thouilin, admitted that the disaster had shaken his own belief that the system in place within the company was good and effective. Frances Green party claimed that the oil groups financial liability bore no relation to the real cost caused by the accident and presented a number of proposals to the Commission, including one which would compel the oil companies to assume the total costs of all environmental damage caused by oil pollution for which they were responsible. Draft legislation to this effect would be presented to the French Parliament. At the same time, the Total/Fina/Elf group under pressure to announce something quickly together with the subsidiaries of Shell, BP, Esso and other local oil companies, worked out a charter committing themselves to introduce tighter checks on vessels aged 15 years and above and to phase out single-hull
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vessels by 2008. They also seemed to agree that vessels 15 years and over would not be used unless they had undergone a thorough hull inspection in the preceding twoand-a-half-year period and could provide inspection reports no more than six years old. The Total group announced that it would no longer employ tankers of 80,000 dwt and above if their age exceeded 20 years. With respect to the smaller sizes, Total maintained that there were not enough vessels below 20 years on the market. A few weeks before the joint announcement, the Total group had reacted furiously to a statement from Shell to the effect that it considered the Erika unfit for charter. The group counterclaimed that Shell was operating a large 300,000 dwt tanker that should rather be scrapped and in no way used for oil transportation. The whole discussion seemed at this stage an open-ended circus. The European Commissions maritime policy director, Georgette Lalis, announced that tougher measures on shipping were in the pipeline. She criticised the classification societies and the flag-of-convenience countries that continued to allow obsolete tankers to be used by the oil industry. It should be considered to phase out old single-hull tankers in line with the US Oil Pollution Act, rather than the current IMO targets. Another item on its agenda was whether the liability of cargo owners was adequate or whether the international compensation fund should be supplemented within EEC. Leading shipping representatives were summoned several times to discuss the various proposals. The agenda included more stringent port state control and for the European Union to become closely involved in authorising classification societies. A proposal to accelerate outlawing of single-hull tankers was controversial. Opponents claimed that such age limits would discourage owners from building into new ships extra strength against fatigue, corrosion margins, the best coating and first-class steel. With radical age limits, why should owners bother to invest in such luxuries? European Transport Commissioner Loyola de Palacio reacted sharply in March 2000 to the opposition of an early phase-out of single-hull tankers, and now revealed that a second package of safety measures was prepared. At a maritime conference in Athens in June, Ms. de Palacio declared: We have found no plausible explanation why the European Commission should not act when it comes to protecting its coasts and its population, especially when the US has already taken similar measures.
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She brushed aside arguments that maritime safety is a global issue and should best be left with IMO. She feared that unless action was taken, the result would be that Europe would be getting all the rust buckets that will be prohibited from US waters. The current liability regime was inadequate and needed a shake-up. Listening to her thunder were IMO chief ONeil who previously had warned against taking action hastily on the spur of the moment and the President of the Greek Shipowners Union, John M. Lyras. After the presentation, Mr. Lyras told the press that he had found the message from Ms. de Palacio rather disconcerting. Erika broke apart while underway at sea. Such occurrences are rare. Analysis carried out after similar incidents had shown that it was highly unlikely that a floating object could have struck the ship with sufficient energy to cause a breach. Whilst the tanker had encountered bad weather throughout the voyage, she should not have been overwhelmed by the wave loads or by the hull loading, even taking into account the reduced steel thickness measured during the last survey. With the safety net to be provided by the international classification societies, it seemed obvious that behind the structural failure, the survey must have failed. Subsequent investigations undertaken by the governments of France and Malta concluded, however, that it was not possible with absolute certainty to establish what caused the accident. But it was most likely that it resulted from structural weakness due to a combination of corrosion, local cracks, substandard repairs and maintenance as well as the questionable quality of surveys previously carried out. The master could have made some mistakes, but it had to be taken into consideration that he had to act quickly. He was not in an office with plenty of time. The achievement in getting his crew off the ship unharmed should not be underestimated. A preliminary report of a marine accident bureau team which had investigated the loss of Erika leaked out in April. This concluded that the state of the vessel and its rapid deterioration in the last hours of its life were such that the master and his crew could probably not have done anything to prevent the disaster. But it did not take long before a subsequent French Senate Commission report criticised the master for not alerting the authorities sooner. He could
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have given information about the crack in the hull from the beginning, reduced speed and waited for the arrival of a tug. A new blow to RINA and to the oil industry as well came in August 2000, when a BBC correspondent wrote the story The scandal of Erika, which includes the following passage: The oil tanker industry argues that Erika was one off, but Correspondent discovered another tanker in an even worse condition and still sailing. Like Erika, the Nunki was flagged to Malta and surveyed by the Italian classification society, RINA. Another judicial report published six years after the incident goes a long way to confirm the conclusions of the first investigation. Corrosion failures meant that Erikas fate was sealed. The report highlights the failure of Panship and RINA to detect and deal with advanced structural corrosion from which the vessel was suffering before its break-up and sinking. At the time of chartering, it did, however, not seem possible for Total to detect the state of corrosion of the internal structures of Erika. Total/Fina chairman Thierry Desmarest had shortly after the casualty publicly undertaken to not pursue any claim for cleanup and other related expenses, to the extent that the total claims exceeded the maximum amount available under the international IMO instruments. The French Government also undertook not to pursue claims which would exceed the maximum amounts available under the international regimes. Moreover, the government provided supplementary compensation for the benefit of suffering parties engaged in tourism, salt-producing and the fishing sector. These special payments from the government totalled about GBP 11 million (about USD 16.67 million). In March 2000, a local court in Nantes determined that the owners and his P&I clubs (Steamship Mutual) tonnage limitation under the CLCProtocol amounted to GBP 8.6 million (about USD 13.03 million). The total maximum amount available for compensation under the international instruments at the time of the disaster was GBP 124 million. As of Dec. 31, 2007, more than 7,000 claims for compensation had been submitted to IOPCF, for a total of GBP 155 million (about USD 310.26 million). By that date, 99.7 percent of the claims had been assessed. Payments
Totals Thierry Desmarest and Bertrand Thoulin

In early January 2000, the chairman of Total, Thierry Desmarest, told the press that Total had set aside 50 million French francs to cover cleanup costs after the Erika accident. Their contribution to the compensation to the pollution victims amounted to about 120 million French francs. Total had chartered Erika to carry its oil, and the chairman called for a massive increase in the liability for shipowners to cover the expenses caused by such casualties. The shipping manager, Mr. Thoulin, conceded that he was shaken in his belief that the 290 TANKERS, BIG OIL & the oil company group was good. chartering system withinPOLLUTION LIABILITY
had been made in respect of some 5,900 claims representing GBP 95 million (about USD 190.15 million). About 1,000 claims totalling up to GBP 23 million (about USD 46.03 million) had been rejected. Several disputed claims resulted in judgements rendered by French courts. Erika was a small tanker. Many of these judgements related to claims for loss of earnings suffered by parties whose property had not been polluted (pure economic losses). In view of the uncertainty as to the total amount of claims arising from the incident, the IOPCF decided in July 2000 that the payments should be limited to 50 percent of the damage actually suffered by the claimants. In 2003, the level was increased to 100 percent. Among the various claims that was approved was one from Frances Brittany Ferries. The shipping company had suffered disruption of its ferry services and succeeded in convincing the Fund that the consequential loss was a direct result of the pollution incident. As a condition for approval, the IOPCF adhered to a number of rules agreed on by its governing bodies. The starting point was that a claim was not admissible for the sole reason that the loss would not have occurred had no oil been spilt. The following elements should be taken into consideration before approval: the geographic proximity between the claimants activity and the contamination, the degree to which a claimant was economically dependent on an affected resource, the extent to which a claimant had alternative sources of supply or business opportunities, the extent to which a claimants business formed an integral part of the economic activity within the area affected by the spill. The judgements rendered by the French Courts related mainly to loss of earnings suffered by parties whose property had not been polluted. Claimants questioned the application and justification of some of the principles listed above. In some cases, IOPCF was ordered to pay compensation. However, in most of the proceedings, the Funds interpretation was upheld. Several claims were, however, still pending in 2007. Separate actions in court were brought against the shipowner by a number of public and private bodies, including Total and the French State. However, most of these claims, other than those of the government and the oil company, were settled. France also brought action against the shipowner, Panship, IOPCF and
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Total, claiming about GBP 128 million (about USD 256.16 million). The picture was most complex, suffice perhaps to add that Total in turn took legal action against the shipowner and IOPCF and others, claiming some GBP 96 million (about USD 192.16 million). Whilst the shores were cleaned and compensation claims discussed, a criminal investigation was commenced by an appointed magistrate in Paris. From 2000 to 2003, criminal charges were brought against several individuals including the master of Erika, a representative of Tevere Shipping, the president of Panship, one of RINAs managers, representatives of the French Navy who was in control of the traffic off the coast of Brittany, as well as RINA and the Total group. They were charged for maritime pollution, endangering life and complicity in endangering life. After four years of investigation, it was announced that the trial would begin in 2005. But there were delays. The criminal proceedings finally started in February 2007 and were meant to last until June. It seemed that everybody was blaming each other of negligence. The case was seen as one of the most complex in French legal history. According to the judges, no final judgement could be expected before the end of 2007 at the earliest. The Court ruled against RINAs bid for immunity on the same terms as the flag state, Malta, whose right as a sovereign nation was not disputed. During the hearing, it was claimed that the amount of steel plating to carry out the repairs in 1998 was massively reduced to cut the bill of the shipyard. The steel plates required had originally been estimated to 273 tons, but the final bill showed only some 73 tons. According to one of the first parties to testify, the Secretary General of the International Federation of Shipmasters Association, Rodger McDonald, port state control in Dunkirk had not done its job properly. It had the authority to prevent the unseaworthy tanker from sailing, but had failed to do so. He implied that the port should be arraigned with other defendants at the trial. There were heated exchanges when the Court was informed that BP had declined to approve the tanker after carrying out a vetting inspection less than three weeks before the accident. Moreover, Total had to accord that the 12 months approval of Erika had run out when it took her on charter for the last time. It probably did not help that the group insisted that this did not mean that it was prohibited from chartering a vessel with a hidden defect not possible to detect. Total was also faced with the assertion that it had effective operational con-
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trol over Erika during its last voyage. Reference was made to the voyage instructions warranted by the charter party and concluded between the oil company and the commercial manager of the tanker. But the head of the shipping department, Mr. Thouilin, insisted that there were only three parties responsible for the calamity: The owner, Malta and RINA. He was supported by the last Total vetting inspector, who visited Erika and told the Court that she was quite well-equipped. When the long-awaited criminal trial of those accused opened, the court heard several expert witnesses who supported RINA and alleged that a hidden weakness in its hull and not corrosion caused the collapse of the tanker. Moreover, she could have been saved if appropriate action had been taken when she first got into difficulties. The masters decision to rebalance the ballast tanks had probably increased the stress on the hull and contributed to the collapse. The owner, Mr. Savarese, who had been largely absent from the media when summoned by the court, was now facing serious criminal charges and a bail of EUR 1 million on his head. He had argued that the responsibility rested not with him, but with Malta, under whose flag Erika sailed, and with RINA. Mr. Savarese saw no reason not to be blunt and stated: A lot of people behaved in an extremely bad way. I paid RINA to certify my ship. I paid RINA to verify that my ship was in proper condition. They did verify that my ship was in a proper condition. If, as some people are alleging, there was a structural problem, they should have been able to spot that there was a structural problem. If they give me clean bill of health on my ship, I am allowed to trade that ship! The owners former technical manager, Captain Pollara of Panship, had been compelled to maintain a fairly high profile during the time passing since December 1999. He had dismissed the official report by the French accident investigation bureau as partly wrong, partly incomplete and partly as an effort to defend domestic institutions. In the courtroom, he became irritated again when was asked for an explanation of why he had flown the crew out of France after the accident. He denied that this was done to escape questioning, claiming that there was a revolutionary climate surrounding the crew at the time and the authorities were looking for heads to cut off.
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A witness with particular expertise in the application of the International Safety Management (ISM) Code told the Court that after his investigation, he had no negative remarks with respect to Panships safety management system. Two technical experts Panship called upon came up with more defence. One criticized the theory that corroded steel structures had caused the breakup of Erika. Instead, he supported Captain Pollaras theory that further to the stormy weather, sloshing violent movements of the cargo and ballast water within the tanks had resulted in a massive crashing back and forth and placed substantive stress on the steel structure. Captain Mathur was briefly detained in a French jail after the loss of Erika. He had been released on bail, but was not present in the Tribunal de Grande Instance in Palais de Justice when he on the first day of the hearing was called by the President of the Court Jean-Baptiste Parlos to give evidence. From his home in Bombay, Mathur had questioned the French legal system, which had singled him out as the person who had to go to prison. When the young captain, who had no previous experience in Atlantic waters, suddenly appeared in the courtroom in March, his lawyer claimed that his defence rights had not been respected. Moreover, penal proceedings against him had also started in India, and he should not be charged twice. But to no avail. He came soon under fire and was faced with an explanation from Admiral de Monval, who told that the Coast Guard centre in Brest had considered Erika as no emergency after Captain Mathur had cancelled his first Mayday signal and informed that he had the situation under control. Valuable time was thereby lost. Other witnesses claimed that the tanker could have been saved had it been handled differently by its master. The Captain sprung a new surprise when he announced that he would sue RINA for having put his life in danger. He said he was also considering claims against Mr. Savarese and Captain Polara. In June 2007, the criminal prosecutors called for a fine of EUR 10,000 (about USD 13,340) for Erikas Indian captain because he noted anomalies from the start, but as his whole crew was saved, the charges of endangering lives were dropped. One year in jail and the maximum of EUR 75,000 (USD 100,800) each were suggested for the tanker owner, Mr. Savarese, and the manager, Mr. Pollara. They were both accused of reckless negligence and putting peoples lives in danger.
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In mid-January 2008, a milestone was passed when the Paris Tribunal de Grande Instance published a clear-cut judgement after more than six months of proceedings. A number of contributory causes were found to have resulted in the loss of Erika and the subsequent pollution disaster. Whilst the master and other individual defendants were acquitted with the exception of the owner and the manager, RINA was found guilty of failure to show due caution when it declared the Maltese registered vessel seaworthy. Total was deemed to have been imprudent from its failure to find the ship unfit for service during its vetting process. The oil company and RINA were each fined nearly USD 560,000. The criminal charges against the head of the Totals shipping department, Mr. Thoulin, as an individual were not approved. The Italian shipowner and the manager, Mr. Savarese and Mr. Pollara, were both found guilty of the oil pollution Erika caused, and a fine was imposed on each of them at the maximum penalty set by law for individuals, which was EUR 75,000 (USD 100,800). It may have been the first time a European court has held a charterer of a tanker responsible for pollution caused by a tanker accident. A London-based lawyer at Clyde & Co commented after the ruling of the French court: Charterers and ship managers of all descriptions should be careful, as they are likely to find themselves more liable for prosecution in pollution cases. The judges did not, however, directly pass sentence on whether Total in its capacity as charterer was immune to sanctions under international maritime conventions (the 84/92 Protocols). They circumvented the difficulty by holding it liable for the ships vetting. Total had neglected the age of the ship, the low standard of its technical management and its maintenance.
Michael Lipchitz / AP / Scanpix
Captain Karun Mathur of Erika

Captain Karun Mathur was the Indian Captain of Erika, fully crewed with Indian seamen. Certain people made efforts to make him a scapegoat of the catastrophe, but as usual in such cases, a number of players were involved. He was one of the very last people to leave the vessel when the crew was rescued. No human lives were lost. The cargo owner Totals office could not be reached when Mathur contacted it in the early morning when it became clear to him what was in offing. A Total executive contacted the Captain about two hours and 50 minutes later. At that time, everyone apart from the maritime authorities knew that the situation was desperate.
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According to newspaper reports, after two weeks of consideration, Total decided to appeal the verdict. This was reported to have caused very strong reactions from environmental organizations that now also would lodge appeals in efforts to obtain higher awards for the damage to nature. One of several other Erika lawsuits which Total faced was in the centre of the media attention in the early summer of 2008. It was reported that the French coastal region of Mesquer tried to use the EU waste directive to hold the oil major further responsible. The claim had no legal relationship to the judgement passed by the Paris Tribunal in January, when Total was ordered to pay for the incident. Mesquer received half a million Euros in that decision. Frances Supreme Court did not dismiss the new claim from Mesquer, but asked the European Court of Justice (ECJ) to decide whether, under the directive, it was for the producer of the oil, the seller or the carrier who had to pay for clean-up. ECJs 13-judge panel ruled in June 2008 that the shipowner should be regarded as having produced the waste, but the national courts could hold Total responsible if it had failed to take measures to prevent such an occurrence, such as measures concerning the choice of the ship. Long before the criminal investigations were commenced, IOPCF concluded that it had to protect its legal position in particular to prevent that potential recourse claims became time-barred. Hence, the Director was authorised to challenge the owners right to limit his liability. In December 2002, recourse actions were brought in a French Civil Court against a number of parties involved, including Tevere Shipping, Panship and Total. The CLC92 Protocol precludes claims for marine pollution damage against a number of other parties than the owner, such as the charterer, but cargo owners and classification societies were not among these parties. In principle, the potential liability of a classification society would normally fall within two categories, either negligence or breach of contract. Thus, the Fund Executive Committee authorized the director to bring action against RINA and the French classification society Bureau Veritas when it became known that the society had inspected Erika prior to the transfer of class to RINA. Further legal steps were, however, postponed until the criminal trial had been terminated. As the buck-passing and finger-pointing continued during the criminal proceedings in Palais de Justice, the EU transport committee had rejected a proposal from an Italian member to limit liability for classification societies.
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A plea from the chief executive of the American Bureau of Shipping (ABS), Robert Sommerville, was also ignored. He feared that unlimited liability would ruin his and other classification societies within a matter of time. ABS was at the time involved in a legal dispute after one of its classed tankers had caused serious pollution in Spanish waters. In response to the public/political outcry for measures that could prevent similar accidents in the future, the French government and the Commission of the EU had in the wake of the accident called for new measures to improve marine safety and the position of pollution victims. In March and December 2000, the Commission put forward the so-called Erika I and II packages to bring about the necessary improvements. Timetables were agreed on for phasing out single-hull tankers, and directives were issued providing for stricter control for ship inspection and classification societies. It was in no way given from above that Europe would wait for IMO to act. The Erika II package established a Community vessel traffic-monitoring and information system and a new European Maritime Safety Agency (EMSA) to monitor the implementation of the safety regulations and standarise the response to accidents. Within the European Union, the discussion continued on regional regulations to improve marine safety and protect the environment. But progress was slow, and in November 2002 the transport and energy commissioner Loyola de Palacio seemed to have lost some of her fighting spirit. According to Tradewinds, she did not think countries would speed up the phase-out programme of elderly tankers. EU-member states are already dragging their feet over existing legislation, she complained. Hence in February 2004, only a handful of EU countries stood ready to introduce the second package of regulations; some had not even managed to implement the first set of safety rules. Nevertheless, the Commission continued its work and presented a third Erika package in November 2005. It comprised seven additional legislative measures, including a re-definition of the pollution liability concept and increased shipowners liability. The ICS urged the EU governments to veto the two most controversial proposals in the Erika III package. Focus was on the civil liability directive that threatened to undermine the principle of limited liability, as it seemed to transfer sovereignty from the flag state to Brussels. The industry felt furthermore particularly provoked by a
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directive imposing criminal sanctions in respect of accidental pollution at sea. Various shipping bodies challenged the validity of the Directive as conflicting with internationally agreed instruments. The coalition scored the first victory when the High Court in London mid-2006 decided that their case should be heard before the EUs Luxemburg-based European Court of Justice (ECJ). A one-day oral hearing was held in the fall the following year. The coalition, which INTERTANKO now led, presented its case. But to no avail, in June 2008, ECJ delivered its judgement, holding the main provisions of the Directive valid. In Spain, the government was encouraged by the Erika judgment and appealed a US First District Court ruling that had dismissed its USD 1 billion lawsuit against American Bureau of Shipping (one of the biggest classification societies) over the Prestige casualty. The appeal used RINAs conviction as case law. In France, further to the appeals, the Criminal Court of Appeals in Paris began hearings in October 2009. During the following seven-week hearings, Total argued that oil companies couldnt be bound to check the work of classification societies. But most appeals were in vain. The Appeals Court upheld the criminal law judgements from 2008 and confirmed the fines imposed. Regarding civil liabilities, the Court held that RINA, in issuing statuary safety certificates, had acted as an agent of Malta the flag state but could not take advantage of the states immunity because it had not been invoked in an earlier stage in the proceedings. The Appeals Court found, however, that Total de facto was the charterer of Erika and could therefore benefit from the channelling provision in CLC Article 4 IIIc. Despite the oil companys sloppy control of the tanker, its failure could not be considered as having been committed with the intent to cause such damage; or recklessly and with knowledge that such damage would probably result. The judgement is not supportive of the guidelines the IOPCF Fund has worked out in order to quantify pollution damage. The French interpretation goes well beyond the strict definitions applied by the Fund. The Criminal Court accepted the right to seek compensation for pure environmental damage. The Erika accident and the subsequent situation were also carefully studied in Japan. A submission to IMO drew attention to similarities with a rusty
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tanker that had collapsed in Japanese waters. It was suggested that tougher requirements should be introduced worldwide on the structural integrity of tankers, including a maximum 15 percent corrosion tolerance limit. IMOs committee on the protection of the marine environment also received proposals from European countries that would accelerate the phase-out of elderly single-hull tankers. The age limits suggested were less than those agreed by IMO in 1992 and included categories of tankers, which, on account of their size, were not covered by the mandatory requirements for double hulls or the approved alternatives. Some sceptics questioned the impact such legislation would have if implemented on the world tanker fleets ability to ensure that supplies of oil could meet global demands. But Secretary General ONeil welcomed the proposals. Fully aware of the preference in some quarters for regional solutions, he stressed: Any attempt to impose regional standards will simply divert the problem elsewhere. If the European Union, for example, imposes its own restrictions on tankers, we should not expect the sub-standard ships that are displaced will go straight to the scrap-yard. They will move to other areas such as Asia and continue trading.
Notes: On Erika, see the IOPCF annual report 1999-2007; IMO publication World Maritime Day 2000; INTERTANKO Briefing Notes for the Monte Carlo Tanker Event April 9 to 13, 2000; BBC News: The scandal of Erika, July 24, 2008; and Lloyds List Tanker Safety Supplement, May 17, 2000. Also see Lloyds List through January 2000, Feb. 9, 11 and 12, March 3, April 10 and June 5, 2000, Oct. 24, 2004, Dec. 16, 2005, July 6, 2006, March 14, 2007 and Jan. 16 and 31, 2008; Fairplay, April 11, 2002, and Feb. 5, 2004; Tradewinds, July 12, Nov. 22, 2002 and Jan. 25, 2008. See the Judgment dated Jan. 16 of the Paris Court Of First Instance, 11th Chamber section 4. In July 2009, it was reported that further to the appeals, a Paris court would begin hearings in October 2009. During the following seven-week hearings, Total argued that oil companies cannot be bound to check the work of classification societies. The appeals were in vain. The appeals court upheld the judgments from 2008. But the last word is not yet said, as it expected that a further appeal to the Supreme Court may be expected. Exchange rates for Euros to USD were calculated based on historical rates found at http://www. oanda.com/currency/historical-rates. For details on EMSA, see home page: Agencies of the European Union
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II. CASTOR AND PRESTIGE - PLACE OF REFUGE

The right of a coastal state to take action to protect its coastline from maritime pollution was now well established in international law. On the other hand, there was no doubt that it was acceptable for a foreign ship to enter the internal waters of another state in a situation of distress to protect human lives. The dilemma came to light on New Years Eve 2000 in Spanish waters, when heavy weather came close to tearing the Liberian flag tanker Castor apart. On a voyage from Constanza to Lagos with a cargo of 28,000 tons of unleaded gasoline, Castor suffered damage to the hull, resulting in a 26-meter crack half way along its length. After the initial heavy damage, the President of the American classification company ABS, Robert Somerville, told the press: this vessel has been subjected to an extreme force 12 gale with wave heights in excess of eight meters without any further deterioration in its structural condition. Over the last 30 days, it had been towed 1,000 miles across the Mediterranean, remaining intact without losing any cargo or causing any pollution. Only a remarkable robust, well-maintained vessel in stout structural condition could withstand such a beating and still deliver its cargo safely. In a subsequent annual report of ABS, the description of the weather was toned down a bit. The coastal states in the area deemed Castor to represent a serious risk of explosion and a serious potential polluter. Hence the authorities of nine countries, including Morocco, Algeria, Greece, Tunisia, Gibraltar and Spain, refused the tanker refuge as salvors towed it through storms in search of sheltered waters. Still, it ended well. Early February 2001, the salvage company Tsavliris could announce that after five weeks of battle and a risky operation, the cargo onboard the stricken ship was safely pumped onto another tanker in the exposed waters of Malta. No oil pollution happened, and no lives were lost. The crew on board was evacuated and brought to Spain. At the end of the day, it turned out that the fatal crack was caused by hyper-accelerated corrosion of the hull. Steel thickness and corrosion had never been on the top of IMOs working agenda. Concerned about the experience with Castor, IMOs Secretary
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General was instead swift to suggest that the organization should deal with the place of refuge problem. The problem had already been discussed in the media. During the salvage operation in March 1967, Prime Minister Wilson had told the press that if Torrey Canyon was refloated, his Government reserved the right to refuse her entry into UK territorial waters. Castor had demonstrated the need to designate places where damaged ships could seek shelter. In the interest of a cleaner environment, the Secretary General invited members of IMO to find a solution: Taking into account the non-mandatory character of the approach envisaged by IMO, I am confident that any concerns can be alleviated and that the matter will be tackled in IMOs usual successful manner, he said. In 2002, a new disaster confirmed the need for such action. Regrettably, however, little or no progress had been made with respect to the place of refuge proposal. The result was that when a Bahama-flag tanker, Prestige, broke in two and later released some 25,000 tons of crude oil into the Atlantic, no progress had been made. Guidelines on places of refuge were in 2003 worked out by IMO (Resolution A.949), but the difficulty with implementation was the lack of incentive for governments to designate such safe havens. To provide a real incentive such as a special salvage award would require changing international law, which is a very time-consuming process. Nevertheless in 2003 the UK Marine Safety Act directed the Secretary of States Representative for Maritime Salvage (SOSREP) to locate places of refuge as appropriate anywhere around the UK coast. It was, however, considered unwise to pre-emptively list the particular places as each incident would have its unique character. According to the legal advisor to the International Salvage Union, Archie Bishop, it is commonly accepted within the industry that Prestige and much of her cargo could have been salvaged had a place of refuge been granted. On Nov. 13, 2002, the Bahamas-registered tanker loaded with a cargo of 77,000 tons of heavy fuel oil suffered structural damage on her way to Singapore, 30 km off Cape Finisterre at the north-west coast of Spain. This was roughly the same area where Aegean Sea had grounded 10 years ago, and the compensation claims had just been settled when the new accident was reported. Prestige went down some 200 miles west of Vigo. This Spanish town happened
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not only to be the base for more than half the domestic fishing fleet, but also the main port for fishing vessels in all of Europe. Also shellfish harvesting and various forms of aqua culture were important industries in the area. The owners of Prestige, a company registered in Liberia, remained veiled, but were believed to be hidden behind a single-purpose company called Mare Shipping, associated with a foundation the late Greek shipowner John Coulouthros set up. Despite the name, the group was not linked with the London-based Coulouthros Shipping Agency, which in the past had suffered the loss of Aegean Sea. The tanker was managed by Universe Maritime through its office in Athens. Here decisions were made by Captain Michael Margetis, who soon proved to be rather reluctant to provide information to the media. There were many initiatives after the accident. Among them, French President Jacques Chirac demanded and Spanish Premier Jose Maria Aznar pushed for greater ownership transparency instead of the current shady structure in international shipping. Prestige was 26 years old, with a single hull like Erika, but double her size about 42,000 gross tons. She was entered with the London Steamshipowners Mutual Insurance Association Ltd. (the London Club) and had been deployed as a storage tanker off St. Petersburg prior to her fateful journey. The charterer Crown Resources was one of the major oil traders in Russia. She began listing and leaking oil and drifted three miles in heavy seas off the coastline before salvors were able to secure lines onboard. Spain flatly refused a plea from the management to allow the stricken tanker to find a place of refuge close to shore. Following orders from the Spanish Government, she was instead towed into deep waters. Whilst under tow, she broke in two and sank, having released about 25,000 tons of the cargo. Oil continued to leak at a declining rate from the wreck. All in all, it is estimated that the leakage amounted to more than 60,000 tons. At the end of 2002, the north-west coast of Spain with numerous beaches had been seriously polluted. The coastline was, and still is, an attractive tourist destination, and the hotels, restaurants and other parties involved feared heavy economic losses. Contamination by the escaped oil made the local government impose a ban on fishing and use of the marine resources in places extending eight to 10 miles offshore. A number of onshore fish farms and other industries that were dependent on regular supplies of clean seawater found themselves in deep trouble. In some cases, the situation was so serious that seafood stocks had to be destroyed. However, in 2003 the situation improved, and in October the authorities had lifted all fishing bans.
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Spanish Navy Press / AFP / Scanpix
Prestige Because of the highly persistent nature of the cargo, the oil had moved as far as the Bay of Biscay, polluting a part of the French coast. For a short period, early 2003, the French authorities imposed a ban on the sale of shellfish from the Arcacon Basin. Even the UK was affected, as some minor traces of oil were detected on the shores of the Channel Islands. An armada of oil recovery vessels from a number of European countries participated in the clean-up operations. About a thousand fishing vessels assisted them. A large workforce comprising local government and military personnel, contractors and volunteers handled manual clean-up of the shoreline. Some 5,500 personnel were engaged in the months following the accident. At the end of 2003, the Spanish government decided to try removing the oil remaining in the wreck. A contract was signed with Repsol, which commenced the work in
The 26-year-old, single-hull tanker Prestige broke in two and released 25,000 tons of its oil cargo in the Atlantic in 2002. The Spanish authorities refused Prestige a port of refuge, and her huge subsequent spill impacted many of the same areas in Galicia (Spain) that were polluted by the Aegean Sea a decade earlier. Also, part of the French coastline was polluted. It thereby seemed clear that the post-Erika legislation had failed to prevent disaster caused by single-hull pariahs. The result was new hefty discussions in IMO and among European politicians about what steps had to be taken.
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May 2004. After four months, some 13,000 tons of cargo were successfully removed from the forepart of the vessel. The remaining oil was treated by biological agents aimed at accelerating the degradation of the oil. But, in February 2004, only a handful of EU countries stood ready to introduce the second package of regulations; some had not even managed to implement the first set of safety rules. Nevertheless, the Commission continued its work and presented a third Erika package in November 2005. Five years later, by Nov. 20, 2010, EEC member states were required to implement it into domestic law. The third package is made up of eight regulations and directives which include measures dealing with quality of flag, standards for classification societies and port state control.
Notes: On Castor and Prestige, see ABS press releases May 16 and 30 and June 2003; Jack Devanney: The Tankship Tromedy, Florida, 2006, pp. 67-72; News Updates Marine log, Feb. 9, 2001; Professional Mariner, April/May 2002; Lloyds List, Feb. 9, 2001, Aug. 5 and 6, 2004, Dec. 6, 2006 and Jan. 29, 2008; Fairplay, May 22, 2003, Nov. 24, 2005 and Nov. 11, 2006; Tradewinds, Dec. 6, 2002, Nov. 29, 2003, Dec. 8, 2006, Jan. 4 and 11, 2008; Reuters, Jan. 2, 2008 and Daily News, Jan. 11, 2008. See also an article on The Prestige In The Courts by Prof. Dr. Miguel Michinel of the University Vigo in Spain, IOPCF annual reports 2002 to 2009 and European Parliament resolutions on Prestige in 2002, Crispin, Gill, Soper: The wreck of Torrey Canyon, London, 1967, p. 39 on Harold Wilsons threat in 1967: To refuse her (Torrey Canyon) entry into British territorial waters. After six years of proceedings, in March 2009, a Spanish Judge concluded: It is not the case that the decision to send the ship was an aggravating factor to the risk already present. ... There was no other option but to deny it (refuge). See Lloyds List, March 25, 2009. In the US, the proceedings were allowed to continue. The US government filed an amicus curiae brief in favour of Spain. See Lloyds List, March 26, 2009 and Tradewinds, March 27, 2009. Regarding Places of Refuge in the UK, see home page Maritime and Coastguard Agency.
III. DRACONIAN MEASURES REQUIRED?

Under the current IMO phase-out programme, the 26-year-old Prestige could have gone on trading for several more years. Now the interest of the media was enormous. It was claimed that the spill was a carbon copy of Erika. Single-hull tankers over 20 years old were labelled single-hull pariahs. Prestige was approved for hydrostatically balanced loading, a technique available to single-hull tankers to prevent oil pollution in case of hull damage. Even if this solution works fine in the event of grounding or bottom damage, it seemed to not function if a breach occurred in the hull plating, which seemed to be the case with Prestige.
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Questions were asked how a tanker classed and controlled by one of the leading classification societies, the ABS, could break up and cause one of the biggest environmental disasters of recent times. The press concluded that the post-Erika legislative programme had failed, or as Labours European transport spokesman Brian Simpson described it: too little, too late. The European port state inspection seemed to have failed, as well. The Commission sent letters to the UK government because it allegedly failed to inspect Prestige in Gibraltar and to Greece for failing to inspect the tanker when it stopped in a domestic port for bunkers. But the countries replied that they had no such duty with respect to vessels in transit when no complaints had been received. Once again, it became clear that a huge gap was opening between the massive claims that were in prospect and the relatively modest compensation available under the IMO instruments. The damages were likely to exceed those of Exxon Valdez. The limitation amount applicable to the owners of the tanker was about GBP 15 million and adding money from IOPCF, the total amount available for pollution victims was about GBP 115 million. The growing pressures on the authorities to be seen to act with more determination persuaded the French President Jacques Chirac to come forward and call for draconian measures. In November 2002, he said, according to Tradewinds: I am horrified by the inability of those in charge, politically, nationally and particularly at the European level, to take action to stem the laxity that permits these ships fit only for the dustbin to carry on. Now we must urgently take draconian measures, even if they harm the interests of certain companies whose interests are not worth defending.
French President Jacques Chirac (1995-2007)

Subsequent to the Erika and Prestige disasters, French President Jacques Chirac did not hesitate to make strong public statements about his perception of the oil and shipping industry with respect to environmental issues. In the photo, he seems to be inspecting ducks which have been exposed to pollution. He called for draconian measures to stem the laxity that permitted such vessels as Erika to carry on.
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At the time, Denmark was the only EU country that had ratified the Erika I package. The transport and energy Commissioner Ms. de Palacio seemed disillusioned and told the press that the recent experience had shown that EU members were dragging. Under her original tough phase-out scheme, Prestige would have been scrapped in 2001. In many quarters, it was claimed that the salvage efforts had been undermined by the desperate action of the Spanish authorities to refuse the vessel refuge and chase her as far away as possible. Spain rejected such accusations, probably feeling that the country once more had to show muscles. Information leaked to the press that the country together with France and Portugal was considering prohibiting single-hull tankers to carry heavy fuels within their 200-mile EEZ. Such steps would be a breach of international law. According to a press report, the ban was implemented and enforced by warships by the three states.
Yves Logghe / AP / Scanpix
Loyola de Palacio y del Valle-Lersundi

Loyola de Palacio y del ValleLersundi (Sept. 16, 1950 to Dec. 13, 2006) was a Spanish politician. She was elected to the European Parliament in June 1999 and joined the European Commission the same year as Commissioner for energy and transport. The Erika incident and the following opposition from the shipping industry to an early phase-out of single-hull tankers made her very annoyed. We have found no plausible explanation why the European Commission should not act when it comes to protecting its coast and its population, especially when the US has already taken similar measures, she said. As a response to the public outcry, the European Commission put forward several legislative passages to improve marine safety and to protect against marine pollution (Erika packages I, II and III).
IV. COMPENSATION CLAIMS AGAINST THE CLASSIFICATION SOCIETY

By April 2003, insurers had paid out USD 7 million for the loss of Prestige. The settlement followed an agreement that the tanker was lost as an insured peril of the sea rather than due to lack of maintenance or other causes that could have prejudiced the claim. The most likely reason, according to the classification society ABS, was that the tanker could have sustained unreported damage to its shell plating during the lightering activities prior to the fatal journey. At the end of 2006, ABS was the third-largest class society, with a classed fleet of over 10,000 commercial vessels and off-shore facilities. The records showed that
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a sister ship to Prestige suffered hull damage back in 1989 after a similar commission. But according to the ABS President Mr. Somerville, the damage leading to the loss was unlikely to be definitively identified either at the time or in the future. Fronted by their organization IACS, the classification societies had consistently argued that they had no legal liability for such consequences of their survey activities. This argumentation did not impress the Spanish government, which hit the company with a USD 700 million gross negligence suit for declaring the tanker seaworthy when it was not. The societys survey of the tanker was claimed to be flawed. The inspection had failed to detect corrosion, permanent deformation, defective materials and fatigue. In short, ABS was accused of gross negligence when granting renewal of the classification certificate. A suit was filed in the Federal Court of First Instance in New York in May 2003. A reservation was added to allow the claim to be increased when the total amount of damages became clearer. The reservation related in particular to the environmental damages which had not yet been assessed, as well as to the loss of earnings from tourism and other costs. In June 2005, lawyers acting for the Spanish government revealed to the press that they would raise the claim against ABS to USD 2.5 billion, more than three times the amount originally demanded. To exclude ABS from doing business in Europe, Spain had moreover announced that it would submit a formal request to the European Commission to have the recognition of the classification company revoked within the European Union. A dossier was in this connection sent to Brussels, listing recent maritime casualties involving structural damage on vessels ABS classed (including Castor). ABS refuted the allegations and presented a counterclaim against Spain, arguing that the pollution damage could be directly attributed to the governments failure to activate an oil spill contingency as required by Spanish law. The government response by not assuming control of the tanker, refusing the request of a place of refuge and not moving the vessel to a place where the cargo could be off-loaded instead ordering Prestige away from the coast in deteriorating weather all amounted to gross negligence. Moreover, Spain contravened its obligations under the 1989 Salvage Convention by delaying access to the vessel by professional salvors. With respect to the ABS counterclaim, however, the New York Court agreed with Spain that the State was entitled to immunity by the Foreign Sovereign Immunities Act. The society suffered a double blow when it failed to have a
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claim brought by the Basque government dismissed by the Federal Court in Houston, Texas. But the decision was later overturned, and the Basques withdrew their USD 50 million claim after an agreement was sealed to join forces with the central government of Spain. All classification societies followed the dispute closely not only because of the huge claim, but because it could set a precedent that would expose the business of the societies to the constant risk of bearing the liability for ruinous compensation claims for big-dollar casualties. During the legal battle, rumours surfaced, according to Lloyds List, that the ABS executives had been hugely rewarded (amounting to millions of dollars), despite an apparent shortage of resources to hire surveyors. An apparent suicide of the chief financial officer of ABS mystified the issue further. The case took a new dramatic turn in January 2008, when it became known that the Southern District Court of New York ruled in favour of a motion for ABS filed in 2005 and threw the billion-dollar claim from the Spanish Government out of court. The judge, Laura T. Swain, came under heavy fire for having let the decision rest for several years and then dismissing it on jurisdictional grounds. Classification societies are not among the parties listed in CLC84/92 expressly exempted from liability like, for example, the charterers. But to seek immunity against pollution liability claims, representatives for classification societies have argued that they should be entitled to the same legal position as flag states, as they are indeed carrying out statutory functions on behalf flag states. Instead, the District Court seemed to accept that ABS fell in the category of any other person who performs services for the ship under Article III.4B of the 1992 CLC and thereby may enjoy protection similar to pilots. However, judge Swain confined herself to declare that Spain as signatory to CLC is bound by the provisions therein and had to pursue its claim under that convention in its own courts. US courts lacked the necessary jurisdiction to adjudicate the case, she said. Lawyers in another case Swain was handling were reported to seek the appointment of a new judge, citing years of delays and decisions which they regarded as similar to her performance in the Prestige case. A strongly worded appeal from Spain followed. Then the press reported that after a brief internal skirmish, Spain decided to engage a new legal counsel to defend its interests. In June 2009, the Court of Appeals reversed both the dismissal of Spains claim as well as ABSs counterclaims. The case was sent
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back to the District Court for further consideration, and a hearing took place in May 2010. ABS argued that there was no evidence of reckless behaviour on their part, and in any case unlimited liability based on ordinary negligence could destroy the international classification system. Spain argued that ABS was aware of certain serious deficiencies in its control system and knowing these risks the company should have addressed the problem. If Prestige had been properly examined, the disaster would not have happened. In a new summary judgment published in August 2010, Judge Swain once more ruled in favour of ABS. She found that a class society performing services for a shipowner cannot be held responsible to an injured coastal state on the basis of reckless certification-related conduct. The next month, nearly eight years after the breakup of Prestige, it became clear that the Kingdom of Spain once more had appealed the decision of Judge Swain to a federal court. The Exxon Valdez legal drama continued for 19 years. The battle about compensation for pollution damages after the Amoco Cadiz spill lasted from 1978 to 1992. The Prestige dispute might go on for years. How long is anybodys guess.
V. IOPCF POSITION
The breakup of the Prestige was expected to produce the biggest claim since the Exxon Valdez. On the basis of the damage reports, the IOPCF director, Mr. Jacobsson, estimated that the potential total claims could amount to nearly GBP 700 million (about USD 1.14 billion). In view of this prediction and the uncertain level of admissible claims, the Executive Committee of IOPCF decided in May 2003 that the level of payment to victims for the time being should be limited to 15 percent of the loss or damage suffered by the claimants as assessed by IOPCF and London Club experts. Seven years later, in May 2010, the Claims Handling Office set up in La Coruna received 844 claims all relating to damage in Spain. The claims totalled more than 1 billion EUR (USD 1.32 billion). Fourteen claims were included from the Spanish government, amounting to 968 million EUR (about USD 1.27 billion). IOPCF rejected more than 300 claims, mainly because the claimants were not in a position to prove their alleged losses. One claim
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totalling 132 million EUR (USD 174.24 million) from a group of 58 associations representing 13,600 fishermen and shellfish harvesters had been withdrawn following a settlement with the Spanish Government. The Funds experts disputed a number of other claims. In France, the Claims Handling Office in Bordeaux had at the same time received 482 claims. The claims had been assessed at nearly 110 million EUR (USD 145.20 million) including a claim from the French government for cleanup expenses and preventive measures. This claim alone represented 67.5 million EUR (about USD 89.10 million). The remaining claims included alleged losses oyster farmers suffered, companies and persons in the fishing industry and businesses engaged in the tourist sector. Also, the IOPCF experts disputed a number of the claims France submitted. In addition, Portugals government had been compelled to engage in clean-up and preventive measures, resulting in a claim for 3.3 million EUR (about USD 4.356 million). In late 2002, a group of European politicians passed a resolution calling for the establishment of an additional European compensation fund of 1 billion EUR (USD 9.84 million) to be implemented immediately. An urgent overhaul of the international liability arrangement was also called for in order to establish a much clearer division of responsibilities between the various actors in the oil transportation chain. Among the actors mentioned were: the shipping company, the captain of the vessel, the state in which the vessel was registered and the owner of the cargo) ..., according to texts agreed on at the sitting of European Parliament on Nov. 21, 2002. At the 2004 October session of IOPCFs Executive Committee, the delegation of Spain reported that the 15 percent limitations the lowest in the Funds history had left the victims in a very unsatisfactory situation. France regretted to report that at home the Funds policy had triggered a reaction of incomprehension and hostility towards the international system. For a number of the smaller calls, this level did not even cover the costs of preparing the claims and the time spent answering questions from the experts. But the Executive Committees decision was not changed. In 2003 and 2004, Spain felt compelled to pass legislation to make available an additional amount of about 250 million EUR (USD 335.35 million) to the
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victims of the pollution disaster. In turn, the compensated victims renounced their rights to compensation in any other way and transferred their claims against IOPCF to the government. Individuals and businesses affected by the oil spill received aid in the form of loans, tax relief and waivers of Social Security premiums. In 2006, the Spanish government reported that the European Commission had decided to make a concession to alleviate the consequences of the pollution. Spain had received aid of about GBP 34 million (about USD 62.64 million), and another GBP 22 million (about USD 40.53 million) was pending. As a consequence, Spain reduced its claim against the IOPCF accordingly. Also, French victims got governmental assistance when a national scheme was introduced in 2004 to provide compensation in excess of the amount IOPCF paid to claimants in the fishery and shellfish-harvesting sector. One hundred seventy-five claims were subsequently approved, for a total amount of 1.15 million EUR (about USD 1.42 million). Then in 2005, IOPCFs Executive Committee authorised the Director to pay another 15 percent, in other words to increase payments to the three countries from 15 percent to 30 percent. As a condition, the Fund should receive such undertakings from the three states that it was protected against any overpayment if this later proved to be the case. In addition, an amount representing the total compensation payable by the Fund, minus a reserve of 10 percent, should be apportioned between the three states. During the previous year, the Executive Committee of IOPCF had considered whether it should take recourse action against ABS. The delegates were very aware of the fact that it has proved to be very difficult to pursue classification societies in court. The societies have relied on the language on the certificates that disclaims liability for any loss arising out of reliance on these documents. Moreover, they have been confident that when they are carrying out statutory functions on behalf of a flag state, they should be entitled to the same immunity as the government they represent. After a lengthy discussion based on the documentation and opinion the IOPCF Director presented, the committee found it premature to take action until the results of the investigations was fully established. Moreover, in view of the high legal costs which would incur in the US, combined with the risk that an
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action could be unsuccessful, it was found preferable to consider such action in only Spain and possibly France. A French lawyer had advised that as the incident occurred on Nov. 13, 2002, a 10-year time bar would be applicable for a recourse action. This meant that here the Fund could wait till November 2012 to bring an action against ABS. Spanish legislation differed from French law and provided other procedural difficulties. In Spain, criminal actions were still pending. When a criminal action had been brought under Spanish law, action for compensation under civil law could not be based on the same facts, not against the defendants and not against other parties, until final judgment had been rendered in the criminal case. Thereafter, the Fund would have one year to bring an action against ABS before any such claim would be time-barred. Furthermore, it was found highly doubtful whether ABS had any significant assets in Spain, and the enforcement of a positive judgement would represent another problem. In view of these and other considerations, the Fund agreed with the Directors recommendation to reconsider the matter at a future session. The flag state, Bahamas, undertook an investigation into the cause of the accident, and the IOPCF Executive Committee reported a summary of the findings in March 2005. The initial failure was found in several starboard tanks. The tanks were in such a condition that they had not been in a position to resist the huge waves. Damage from a recent ship-to-ship transfer of cargo, or stress from large quantities of new metal being attached to old steel could have contributed to the weakening of the tanks. Port state controls and a SIRE inspection gave no cause to believe that an internal inspection of some of the tanks was required. The tanker would probably have survived had it been taken to a place of refuge instead of being chased out into the open waters of the Atlantic. The investigators found it was difficult to blame the master, as Captain Mangouras had acted in a proper seamanlike manner. The Spanish Ministry of Public Works had also carried out an investigation and provided IOPCF with some very frank comments. It was inter alia claimed that the Bahamas report was drawn up to reach conclusions in line with the argumentation of ABS and the auditors of the International Association of the Classification Societies (IACS). Thus, the report could not be considered to be independent or impartial. The Ministry pointed also out that the sea conditions on Nov. 13 could not be considered
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extreme or unusual for the time of the year. There was no evidence of abnormal waves. It was highly likely as the Captain had believed that several bulkheads between the tanks had failed or become badly damaged. No other ship had at the time reported extreme conditions. Thus, the conclusion was that the available evidence, including documentation recovered, allowed Prestige to have been described as substandard. Also, the French Ministry of Transport passed the results of its preliminary investigation to IOPCF. Problems with aging along with successive repairs which could indicate structural weakness and result in corrosion were among the possible causes mentioned. Another factor was the conditions of the tanker market, which were: leading to carriage of a substantial part of such heavy polluting products in old and pre-Marpol ships. In April 2010, the French State brought legal action in Bordeaux against the ABS group to recover costs the French state incurred in the cleanup operations, totalling 67.5 million SDR (USD 87.75 million). It was argued that the mission of ABS was to verify the conformity of ships to safety regulations. The Prestige incident was a consequence of an important structural failure ABS inspectors had overlooked in 2001 and in 2002.
Note: Information about the Resolution on the European compensation fund is from the Confederal Group of the European United Left/Nordic Green Left.
VI. GREEK MASTER ARRESTED

The 67-year-old Greek master of Prestige, Captain Mangouras, with more than 40 years of service on tankers, had been swiftly and summarily arrested on Nov. 15, 2002, by the Barcelona police. Madrid had accused him of hampering early salvage efforts by refusing to take a tow, and he was suspected of not having a valid masters certificate. This line of attack caused a furor within the Greek shipping industry. Some saw it as an effort to pin the blame on him. It took months to verify that the master was properly certified. In the meantime, bail was set at USD 3 million, a higher amount than ever seen in any case of this nature. It surprised even US lawyers, who reminded the press that Captain Hazelwood initially faced a USD 1 million bond when he surrendered to officials in 1989. This figure had soon been reduced substantially. However, the appeal the managing company
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of Prestige, Universe Maritime, lodged to reduce the bail was quickly refused. Interventions to free the veteran master or at least reduce the bail also came from Bahamas and the London P&I club, but in vain. In February 2003, 23 shipowners, including the Greek chairman Mr. Lyras, joined forces and decided to pay the USD 3.2 million to get Mangouras out of jail. He was released, but not allowed to leave Spain. In the P&I clubs annual report for 2002, Mr. Lyras said: It was difficult to reach any other conclusion than the action taken against the captain was designed to shield others responsible for the direction and control of the salvage efforts ... and in particular denial of access to a place of refuge. ... Fear of being flung in jail kept representatives of Universe Maritime from attending public hearings in Brussels. Instead, the manager, Michael Margetis, submitted a written statement claiming that Spanish authorities denied a firstclass salvage team access to the vessel during the critical 12-hour period. He contended that the team had arrived in La Coruna at 2 p.m. Nov. 14, the day after the tanker had suffered problems, but was not allowed onto Prestige until 3 a.m. Nov. 15. After his release, the captain confirmed that Spanish maritime government personnel had, in spite of his protest, ordered the tankers main engine to be restarted and the vessel to be moved away from the coast. Jose Luis Lopez-Sors, head of Spains Merchant Marine Directorate, verified this information to a court in Galicia. He said that he, on the advice of technical experts, had made this decision the day after the Prestige ran into trouble. Mr. Lopez-Sors, together with other two senior officials, was later charged for their handling of the ill-fated tanker. In January 2004, Mr. Mangouras was still not allowed to leave Spain. At the end of the year, the manager Michael Margetis died from heart failure shortly after a Spanish court made a renewed push to have him extradited to answer questions regarding the disaster. Meanwhile, the Justice Minister of Greece urged the Spanish government to allow the captain to come home. Despite the firm assurances from the Greek government that the master, 69, would return to Spain once the date for the trial was set, the request was refused again. A Spanish appeals court gave the old sea wolf a three-month grace period. He went home to Greece and was expected in Spain in February/March 2005. There, he got the good news that he was granted permission to reside indefinitely in his homeland pending the start of the trial proceedings. In 2006, the
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press reported that Captain Mangouras had convinced the European Court of Human Rights to investigate whether the Spanish court had violated international law when it imposed a several-million-dollar bail upon him shortly after his arrest. The shipping industry was dismayed in January 2009, when it became clear that the European Court of Human Rights had found that the long-lasting imprisonment of Captain Mangouras was justified. More depressing news was published in June 2010, when Fairplay reported that lawyers acting for fishers who had lost their livelihoods as a result of the spill called for a nine-year jail sentence for the Captain on the grounds that he had disobeyed the orders of the Spanish Authorities. At the same time, it was reported that a civil rights organization, Nunca Mas, had called for a five-year sentence of Mr. LopezSors, the chief of the Spanish merchant marine authority who had ordered the Captain to take the tanker off the Spanish coast.
Note: See Lloyds List, Jan. 12, 2009, and Fairplay, June 10, 2010.
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SUPPLEMENTARY COMPENSATION FUNDS FORMED
13 Supplementary compensation funds formed Private schemes to replace/delay IMO

I. REVIEW OF THE CURRENT SYSTEM
In 1996, the United Nations Secretary General Dr. Boutros Boutros-Ghali swore in 21 judges of the newly established International Tribunal for the Law of the Sea in Hamburg, Germany. The new court was meant to be a dedicated tribunal for controversies arising from diverging interpretations of the UN Convention of the Law of the Sea. Issues ranging from fisheries and navigation to the prevention of pollution of the marine environment were on its agenda. The Assistant Secretary General of IMO, Dr. Thomas Mensah, who had been with the organisation for a number of years, became one of the judges. The Hamburg tribunal was apparently not meant to interfere with the work of IMO or satisfy IOPCFs strong desire to speed up payments and overcome or alleviate the problems national courts caused with respect to the interpretation of the key provisions in the compensation regimes. Within IOPCF, several delegations felt that the magnitude of the compensation amounts, the greater sensitivity to environmental issues and the diversity of legal systems had made it increasingly difficult to reach settlements and ensure prompt payment of compensation. The time had come to study the possibilities of introducing alternative dispute procedures for cases where out-ofcourt settlements could not be reached.
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At the end of the day, the national courts have the final say with respect to the interpretation of pollution damage and other important concepts laid down in the conventions. Understanding of these concepts could vary from country to country. How far should the liability extend for the alleged consequences of a spill? How to differentiate between real and imaginary losses after a pollution incident? The need for uniformity in the application of the two conventions was clear. In a conflict with a foreign shipowner, it is understandable that some national courts might be tempted to go a long way to protect local interests when dealing with a claim for indirect losses. After all, it is much easier to punish a foreign shipowner who is not a part of a countrys infrastructure than a factory employing local people. Nevertheless, most IOPCF delegates found that the current system had worked well. After all, national courts had by and large based their decisions on the criteria agreed upon within IOPCF. Ways had been found to settle matters amicably. But not always. Hence, the idea of a neutral body surfaced as a possible instrument to secure fair application of the Protocols across borders. The UK delegation had in particular stressed the need for the Fund to be more proactive in encouraging claimants to have their claims dealt with by arbitration. A working group that Canadian delegate Mr. Popp chaired was appointed in 1996 to consider options to reach out-of-court settlements. A proposal to establish an international body (tribunal) received some interest. But after lengthy discussions, the working group found that the idea had to be put aside, as a number of countries found it unacceptable for constitutional and other reasons. The group suggested that if more information were made available to national courts with respect to decisions made by the IOPCF Assembly on the interpretation of the Conventions, this might contribute to uniformity. Thus the Chairman of the Assemblies, Mr. Charles Coppolani, had to admit that it was not yet possible to make any decision on the settlement of claims problem. But the question was of prime importance it is imperative that the IOPC Funds resolve it in the future, he expressed in the 1997 IOPCF annual report. The report reveals that another decision of some importance was made: Compensation should not be withheld to pollution victims if their governments did not fulfil their obligations as members of the Fund.
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The accidents in 1999 and 2002 in the Mediterranean had showed that wellestablished claims for pollution damage could not be expected to be paid in full. IOPCF had found it necessary to resort to pro-rating payment of claims to ensure that all claimants were treated on an equal footing. France and Spain had been compelled to come forward with additional funds. The regrettable situation had resulted in a discussion within the European Union about whether to replace the IMO instruments with a made-in-Europe compensation regime or establish a regional compensation fund to supplement IOPCF. There was no reason why EU citizens should not have the same protection as their US counterparts.
II. COMPENSATION INCREASED

The pressure from Brussels and Paris had an effect. In October 2000, 10 months after the Erika incident, the IMOs Legal Committee adopted two resolutions to increase the compensation to pollution victims. Using the so-called tacit amendment procedure, the liability limits were increased by about 50 percent for incidents occurring on or after Nov. 1, 2003. The minimum liability for tankers (of 5,000 gross tons or less) was increased to SDR 4.5 million (nearly USD 6 million). The maximum liability for the largest tankers was raised to about USD 117 million. The total compensation package for a single accident under both regimes amounted thereby to USD 265 million. It took effect in November 2003. The criticism from the EU, however, not only focused on liability levels. Some of the basic elements in the two aging instruments were also questioned, and the IOPCF Assembly had to respond. In April 2000, an internal review was initiated to assess the adequacy of the current compensation system and identify possible improvements. An intercessional working group, again with Mr. Popp as chairman, was set up to do the job. Its mandate was: a) to hold a general preliminary exchange of views, without drawing any conclusions, concerning the need to improve the compensation regime provided by the 1992 Civil Liability Convention and the 1992 Fund Convention. b) to draw up a list of issues which could merit further consideration in order to ensure that the compensation system meets the need of society.
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When Mr. Popp delivered his report the next year, the Assembly was told that the deliberations had resulted in a proposal to introduce an optional third tier of compensation by means of a Supplementary Fund (SF). The suggestion would be implemented by a new Protocol to the 1992 Fund Convention. This reflected the view of many governments who maintained that in order for the two regimes to retain credibility, the compensation offered should be sufficient to ensure full coverage to victims even in the most serious oil spill incidents. But several other delegations referred to the increases in the limits already adopted by IMO in October 2000. They saw no need for any further increase. Would the oil receivers be prepared to pay up? Not quite. The oil industry argued that the suggestion would distort the current balance between the contributions from the shipping and cargo interests. OCIMF recognized that there was a need to take prompt action, but stressed that any funding of the oil industry should be only an interim solution. It was argued that a permanent supplementary fund financed by oil receivers would shield low-quality ship-owners from the consequences of their actions and would therefore not provide any incentive to improve the quality of their ships or the standard of their operations. Thus, the oil companies demanded that a third tier had either to be partly funded by shipowners, or the liability limits of shipowners had to be substantially increased. Whilst it was appreciated that the regimes could benefit from a review, views differed fundamentally on what steps should be taken to contribute to maritime safety and reduce accidental oil spills in general. In a document submitted to Mr. Popps working group from France, Spain and the European Commission, it was claimed that the virtually unbreakable liability limits of the shipowners had hampered IOPCF from taking effective recourse action against owners of substandard tankers. France also attacked the channelling provisions agreed on in 1984 and proposed that one should revert to the provisions of CLC69, which barred only claims against the servants or agents of the shipowner. Italy went a step further and suggested that the best way to remedy the situation would be to allow claims to be directed against charterers which often were the owners of the polluting cargo. A number of conservative delegations argued on the other hand that whereas safety considerations were most important, the matter should be taken care of by other appropriate IMO instruments. In their view, Protocols aims were to create nothing but an efficient compensation regime.
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Shipowners agreed that an increase was called for. The P&I clubs, representing both oil companies and independent tanker owners, came forward and declared that they were developing a voluntary scheme to increase the liability limits for small tankers.
III. NEW DIPLOMATIC CONFERENCE SUPPLEMENTARY FUND ESTABLISHED

When the Diplomatic Conference convened in May 2003, the most important topic on the agenda was not uniformity of interpretation of the international regimes and/or their speedy application, but the amount of compensation available. Negotiations once again proved to be difficult, but the outcome of the gathering was in line with the proposal of Mr. Popps working group. Delegations adopted a Protocol establishing a voluntary Supplementary Fund (SF) which should provide additional compensation when the amounts available under the 92 Protocols were insufficient. Any state which was a party to the 92 FC could opt to become a member of SF. The total amount of compensation for any one incident within the territories of these members would thereby reach SDR 750 million (about USD 1.1 billion), including the amount payable under the 92 Protocols. The extra compensation would be available to victims only in states that had joined SF. The annual contribution of any state should not exceed 20 percent of the total amount of contributions levied. IOPCF hoped that by means of the increased compensation, one could put an end to the practice of prorating payment of claims, a practice that became unavoidable in the recent years. The conditions for the entry into force of SF required the ratification of eight States, which together imported at least 450 million tons of contributing oil. According to the IOPCF annual report for 2004, the conditions were met already in December 2004, when Spain ratified after Denmark, Finland, France, Germany, Ireland, Japan and Norway. Thus SF became operational in March 2005. Soon, the Netherlands, Portugal and Sweden also joined. In the foreword of IOPCF annual report for 2005, readers were told that: On 3 March 2005, the Supplementary Fund Protocol entered into force and as a result the Supplementary Fund was established, which will provide additional compensation over and above that available under the 1992
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Civil Liability and Fund Conventions. This new Fund should ensure that, in those States that ratify the Protocol, sufficient compensation is available for even the most serious spills and also that accepted claims can be paid in full from the outset. Had time now come to consider a full-scale revision of the international regimes? In March 2005, Lloyds List reported: Discussion on revisions to the Civil Liability and Fund Conventions covering oil spill compensation has ended in stalemate with states evenly split between those for and those against. More than 50 states had put their views forward ... ranging from those in favour of a more radical amendment to the two conventions to those opposed to any revision at all.
IV. STOPIA AND TOPIA

In the depressed period, 1974 to 1990, a large fleet of tankers exceeding 200 million dwt had by and by been removed as surplus tankers and sold for demolition mainly to scrap yards in the Far East. That amount of tonnage corresponds to about 800 VLCCs. Moreover, in 1978, INTERTANKO estimated that cancelling new building orders at shipyards around the world had reached close to 70 million dwt. This massive reduction is best seen in the light of the fact that the current world fleet of tankers above 200,000 dwt per January 1st 2011, totals 548 units, or around 165 million dwt. SSY Consultancy in London (which had taken over John I. Jacobs reviews) described the tanker market conditions during the second half of the year 2000 as the strongest experienced in three decades, which was especially significant as this happened in peace time conditions. Tanker owners and owners of dry cargo ships, as well enjoyed the most favourable freight rates at the time. In the annual report for 2006/07, the manager of INTERTANKOs research section, Erik Ranheim, could inform readers that The tanker market and other shipping market have been enjoying a glorious run. A resilient world economy and a substantial increase in the demand for tonnage followed the brutal slimming of the fleet in the 1970s and 1980s. The oil industrys financial results were at record levels. The previous crisis with a huge excess of tankers seemed to belong to the history books.
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Study of past oil spills had showed that on the basis of the available compensation regimes, the shipping industry had contributed 45 percent and the Fund 55 percent of the total costs of the pollution incidents (except US) that had occurred worldwide. The contribution of the cargo interest was in particular dominant with respect to incidents that ships up to 20,000 grt caused. Thus the shipping industry enjoyed a most favourable market. Their P&I clubs, being in full control of the liability insurance business, felt that the current IMO instruments from their point of view worked very satisfactory in a well-established game. To change the rules, as implied by certain European governments, and introduce radical changes for example impose liability on other parties involved in oil transportation was consequently opposed. Instead, a new private scheme, Small Tanker Oil Pollution Indemnification Agreement (STOPIA), was introduced in order to Demonstrate the commitment of shipowners to the notion of sharing and in recognition of the potential increased burden for contributing oil receivers under the proposal to introduce a third tier of compensation through the Supplementary Fund Protocol and avoid the necessity to amend the Conventions ... The clubs informed the Fund Assembly accordingly. Tanker owners were willing to accept a minimum liability of SDR 20 million (about USD 26 million) for accidents occurring in SF member states. In other words, the Fund would be repaid by STOPIA for any compensation it pays as a result of the ships liability limit under CLC 92 being less than SDR 20 million. A contemporary circular (published in February 2005) from the P&I clubs and distributed to members referred to the new schemes relations to the 92 Fund Protocol and included the following passage: The indemnity will only apply in the event of tanker spills affecting a State in which the Supplementary Fund Protocol is in force and when liability is imposed on the shipowner under CLC 92. Neither the flag of the vessel nor the ownership of the cargo is relevant. Provided that the amount of compensation payable exceeds the shipowners limit under CLC 92, the scheme will operate even if there is no claim upon the Supplementary Fund. STOPIA entered into force on March 3, 2005, on the same date as the Supplementary Fund. One step further was taken when the clubs extended the indemnity to include spills not only in SF states, but to spills in all states that
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had ratified the 92 Fund Protocol. The minimum liability limit for shipowners was thereby increased nearly five times from SDR 4.5 million to SDR 20 million (about USD 26 million) for small tankers not exceeding 29,584 grt. That a tanker of this size is not a small tanker seemed to be of no consequence. Erika was 19,666 grt. The first incident involving a vessel entered in STOPIA occurred in August 2006, when a small (998 grt) Philippines-registered tanker, Solar I, sank off Guimaras Island in local waters. The following oil spill 2,000 tons of fuel oil had a significant impact on the fishing industry and tourist business in the area. More than 30,000 claims for compensation were made, and payments of about SDR 10 million (about USD 13 million) were paid to the victims of the spill. The amount was more than double the small tanker limit under CLC, but did not exceed the STOPIA limitation. The payment procedure agreed on between the 1992 Fund and the P&I club in question was that the Fund assumed responsibility for compensation payments once the club had paid up to the 1992 CLC limitation. The Fund would then seek reimbursements from the club up to the STOPIA limit. Payments would be made to the Fund within two weeks. Through STOPIA, the oil companies goal of having the small ship liability limit substantially increased was realized. But the oil industrys position would be even further improved when the P&I clubs sent a new message to IOPCF. The Fund learned that tanker owners in addition to the increased minimum liability were prepared to indemnify the SF in respect of 50 percent of all compensation amounts which SF would pay out to SF member states. A new scheme Tanker Oil Pollution Indemnification Agreement (TOPIA) would provide this oil industry subsidy. The offers were presented as legally binding on the condition that the revision of the existing conventions should be put on hold. With such private schemes in sight, the majority of delegations to the IOPCF Assembly supported its Chairman J. Rysanek when he in October 2005 summarized the discussion and stated that it was clear that there was insufficient support for the proposal to amend the terms of reference of the Working Group with a view to revising the Conventions. Consequently, the Working Group was disbanded and the revision of the Conventions was removed from the agenda.
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This was not the end. The next year, the very active P&I clubs came forward once again with a new proposal. According to the IOPCF Annual Report for 2006, they were prepared to extend STOPIA even more to apply not only to 1992 Fund Members States but also to those parties to the 1992 Civil Liability Convention which were not Members of 1992 Fund. The Assembly had good reasons to reject the idea. It was felt that such extension would serve as a disincentive to further ratification of the 92 Fund Convention. One may wonder what the real intention of this proposal was an effort to diminish the future role of IOPCF? Was the plan that the Fund some time in the future should be financed by the shipping industry alone? At a meeting in October 2006 the same year, the Fund Assembly approved the framework for the implementation of the two private compensation schemes. The two Funds and the P&I clubs signed a memo of understanding. It was agreed that a review should be carried out in 2016 to consider the fairness and performance of the two schemes in light of the experience obtained with respect to the assumed cost-sharing between the shipping and cargo interests. A new review should be carried out every five years. Provisions were also included for termination if the changed circumstances proved that the agreements were no longer workable. The position of the oil industry/cargo owner was now improved considerably. The decision of IOPCF in October 2005 to postpone any initiative to revise CLC/FC to some point in the not-foreseeable future seemed widely applauded. The environmentalists were apparently engaged on other fronts. The P&I clubs, which formally had only consultative status within IOPCF, seemed now to be in the drivers seat. On their initiative, the Fund Assembly set up a new working group. According to the mandate, it should consider non-technical measures to promote quality shipping and make recommendations to the Assembly upon completion of its work. The focus should be on insurance measures, sharing of information and more transparent co-operation between the interests involved in oil transportation, including the classification societies. It was stressed that the group should not stray into areas of competence of IMO nor duplicate work which had been undertaken by that organisation, and most important not consider issues that would require any re-opening of the discussion regarding a revision of the 1992 Convention.
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The Working Group had its first session in May 2006 and decided to consult Comite Maritime International (CMI) to perform a study that would meet the requirements. A number of other industry associations were also approached. But there were problems. At a CMI Symposium in Dubrovnik one year later, a lawyer who was to explain CMIs role regretted to state that it was not yet clear what the IOPCF working group had in mind. Whereas the promotion of quality shipping certainly was the most worthy cause, more precise instructions were needed before CMI could start its work. The lawyer concluded that only time would tell if, when, how and by whom it would be carried out.
Notes: Dr. Thomas Mensah was appointed Assistant Secretary General of the IMO in 1981 and Judge of The International Tribunal of the Law of the Sea in 1995. One year later, he was elected President of the Tribunal. See IOPCF 25 years, pp. 45-51. On the alternative dispute settlement discussion and the working group Mr. Alfred Popp chaired, see the IOPCF annual report 1996, p. 22 and 1997, p. 36. On the new Alfred Popp committee on the adequacy of the compensation system, see the IOPCF annual reports for 2000 and 2001. The IOPCF annual reports for 2000 and 2003 comment on the compensation increase effective Nov. 1, 2003. The unit of account is Special Drawing Rights (SDR), as defined by the International Monetary Fund, converted into US dollars at the rate of exchange applicable at a certain date. The dollar figures here are based on the exchange rates in 2000 as reflected in the annual report for that year. But if one converts SDR to USD on the basis of the rates on Dec. 31, 2003, when the increase entered into effect, the total compensation package becomes some USD 300 million. For more on STOPIA and TOPIA, see the IOPCF annual report 2006 and Skulds circular to members on Feb. 14, 2005. Several delegations expressed reservations about setting up a group to study alternatives to a review of the liability instruments. See the presentation by the Deputy General Manager of the Nordic Defence Club, Oslo, Karl Johan Gombri, at a CMI Conference in Dubrovnik in May 2007. The group was not able to come forward with any recommendation. However, the chair person reported in October 2008 to the IOPCF Assembly that the work had enhanced awareness and understanding of the issues involved. See the IOPCF annual report, pp. 30-32.
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NEW BIG SPILLS IN 2007
14 New big spills in 2007

To the casual observer, major tanker spills seemed stagnant for several years after the Prestige calamity. There was no serious incident worth mentioning in front-page news. But once again without warning, new major incidents happened during the winter storms of 2007. Two tankers spilled thousands of tons of oil, caused extensive pollution of shore lines and resulted in new complex challenges for IOPCF. None of the recently established compensation schemes the Supplementary Fund, STOPIA and TOPIA were applicable to the spills a Russian tanker caused in the Black Sea or a Hong Kong tanker in the waters of the Republic of Korea.
VOLGONEFT
Anincident that raised unusual legal problems on the IOPCF agenda in 2007 occurred after an accident in the strait of Kerch between the Russian Federation and the Ukraine. In these waters, a Russian registered tanker, Volgoneft, broke in two in November 2007. Volgoneft was a relatively small tanker of 3.463 grt built in 1978. The tanker was not insured by a member of the International Group of P&I Clubs, but by a Russian insurance company, and was therefore not covered by STOPIA. The consequential oil spill of 1,200 to 2,000 tons, polluting the shorelines of the two states, represented the biggest oil spill that had ever happened in this particular area. In terms of legal complexity, it overshadowed previous accidents by presenting new problems in respect of the interpretation of the international compensation regimes. The Ukraine had not ratified or acceded to the 92 Fund Convention whilst
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the Russian Federation had ratified, and was a party both to the 92 CLC and the 92 Fund Convention. The pursuant investigation revealed, however, that it was more than doubtful whetherthe Russian Government had complied with its duty to implement the CLC 92 in its national legislation. Thus based on the liability limits published in the Russian Official Gazette, shipowner JSC Volgotankers insurance coverage was SDR 3 million, well below the minimum liability limit in CLC 92 of SDR 4.51 million. There was, in other words, an insurance gap of about SDR 1.5 million (about USD 1.95 million). The matter was further complicated as the Russian insurance company claimed that a natural phenomenon of an exceptional, inevitable and irresistible character wholly caused the accident, so that no liability could be attached to the shipowner, the Fund should pay up. The Fund experts who investigated the weather conditions at the time of the incident concluded that the storm was timely forecasted, but the master had not acted on the weather forecast. Had he done so, the casualty would have been avoided. Moreover, the accident would not have occurred if the master had respected the trading limits prescribed in its classification certificate. Adding to the problems, it appeared that several claims represented compensation for environmental damage. One large claim was based on abstract calculations; the quantity of oil spilled multiplied by an amount of Roubles per ton. This was the Metodika model. As such claims were not in accordance with the rules of the international regimes, the Fund experts succeeded to convince the Russian authorities to withdraw the Metodika claim. But the parties were far apart. In October 2008, the Russian delegation in IOPCFs Executive Committee expressed itsconcernabout the perceived slowness of the compensation in general, since although the Secretariat had fully cooperated with the Russian authorities, the victims had not yet received compensation for the losses suffered. The chairman of the Committee, on the other hand, claimed that the Russians had not provided adequate information. Until this request was satisfied, payment could not be authorized. The interpretation of the Russian Government with respect to the liability level was confirmed by an arbitration court in St. Petersburg, in February 2008. Since the ruling was in clear conflict of CLC 92 as amended (ratified by Russia), IOPCF appealed the decision to several higher courts. But in vain. Finally, the conflict was brought to the Supreme Court in Moscow.
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To the astonishment of IOPCF delegations, the wording in the Official Gazette was confirmed by the Russian Supreme Court in December 2008. Thus, the applicable limitation figures according to Russian law were SDR 3 million (about USD 3.9 million), not SDR 4.51 million. In an effort to resolve the insurance gap issue, a number of meetings have been held in Russia in 2009, and new hearings were agreed upon. The Russian Ministry of Transport was brought into the picture as a third party. The discussions continued throughout 2010.
HEBEI SPIRIT
On the morning of Dec. 7, 2007, while at anchor, a very large single-hull crude carrier, Hebei Spirit, was struck by a crane barge Samsung no. 1 on the west coast of the Republic of Korea. Close to 11,000 tons of crude oil escaped into the sea from two cargo tanks ripped open above the waterline. The tanker was loaded with 209,000 tons of four different crude oils. Her tonnage was in excess of 140,000 grt, which meant that the liability limit applicable reached the maximum under CLC 92, close to SDR 90 million (about USD 117 million). The amount available under CLC and FC for compensation was SDR 203 million (about USD 263.9 million). On Dec. 24, the Korean Government declared that the spill was a national disaster. In early 2008, a total of 375 km of shoreline had been polluted. The 11,000-ton oil slick generated an unusually high rate of small claims as a considerable number of mariculture facilities, hatchery facilities and oyster farms were affected. By the end of June 2010, the number of claims received by IOPCF was 15 times greater than the Erika casualty in 1999. It soon became clear that the amount available under the international regimes would not cover the losses suffered by the victims of the spillage. Hebei Spirit hoisted the flag of Hong Kong and was owned by a Hong Kong company of the same name. In a three-page report issued by Hong Kongs marine department published in March 2009, a litany of errors by the tugs involved were identified as the main probable causes and contributory factors of the casualty. However, further to a suit of the state-controlled, pollution-controlled response agency, the tanker was arrested. Moreover, despite the fact that Hebei Spirit was at anchor when the barge punctured it, the Indian master, Jasprit Chawla, and his chief officer were jailed shortly after the incident. During the following criminal proceedings, they were found not guilty, but an appeals
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court later overturned the acquittal. About a year after the spill, they were bailed out and released after an unprecedented and concerted campaign on their behalf across the maritime industry, including a protest that 40 members of INTERTANKOs Council signed. Nevertheless, the officers were still not allowed to leave Korea; the release did not mean that their case would be dismissed. Korea was a party to CLC 92 and a member of the 92 Fund, but was not a member of the Supplementary Fund. As the total claims for damages were likely to exceed both the limitation figure in CLC 92 and the 92 Fund Convention, the Fund decided first to limit the payments to 60 percent and then to 35 percent of the established damages. Once more, IOPCF took this step in light of its limited resources to ensure equal treatment of all claimants. Once more, a local Government this time the Republic of Korea was of the opinion that the victims of oil pollution deserved a better treatment. In 2009, the Korean Government took it a step further and decided to ban single-hull tankers from calling its ports by the end of 2011 instead of 2015. Single-hull tankers were on average 20 percent less expensive to charter than their double-hull cousins, and were still in 2009 in heavy demand from many oil companies looking to make savings rather than support the double-hull concept. In October 2009, Tradewinds reported that there were still some 90 non-double-hulls trading, but several of those were expected to be removed from the market in the near future. In May 2009, it was reported that the owner of Hebei Spirit and the insurer, Skuld, of Oslo, were considering launching a multi-million-dollar recourse action against the owner of the crane barge that struck the tanker. For more information, see Appendix II of the 2009 IOPCF Annual report, which gives an extensive review of the challenge the Fund is facing when handling compensation problems after a major oil spill. The review is also found as an appendix to this book on page 356.
Notes: For the 2009 report on the double-hulls still trading, see Tradewinds, April 3 and May 8, 2009; Lloyds List, Feb. 9, May 12 and May 22, 2009. At the request of the South Korean government IOPCF agreed, however, in April 2011 to meet 100 % of the losses resulting from the Hebei Spirit oil spill. The decision was taken at a meeting in Marrakech. (Tradewinds April 21, 2011).
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TANKER OWNERS AND THEIR CLASSIFICATION SOCIETIES
15 Tanker owners and their classification societies

In a press release DNV sent out in 1984, the roles of shipowners and class institutions were set out as follows: The responsibility for the technical standards of ships clearly rests with the owner, but it is also clear that the work of the classification societies has an important impact on technical standards and safety at sea. For several hundred years, shipowners have kept their financial risks at acceptable levels by means of insurance. Because the insurance underwriters appreciate that they are the real risk-takers, they demand that the ships they insure meet acceptable standards. The ships had to be classed, and classification began as a concept in Edward Lloyds coffee house in London in 1760. Lloyds employed surveyors with technical knowledge they had gained through practical experience at sea. The recognition by the surveyors expert eyes enabled shipowners to get insurance coverage for the marine enterprise. In 1950, there were less than 10 classification societies. The number later more than doubled. It is not easy to set up a real classification society. It is claimed that, on the other hand, to set up a new flag of convenience, all you need is to find a government that wants to make some easy money. Neither do you need any specific qualifications to become a shipowner. Thus, maritime governments of all flags rely heavily on the societies to
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Topham Picturepoint / Scanpix
discharge the governments responsibility to have their ships operated and maintained according to IMO standards. Marine safety and environment is thereby dependent upon the performance of the various classification societies, which may or may not be members of the International Association of Classification Societies (IACS). Currently, the SOLAS Convention set out their role: In addition to the requirements contained elsewhere in the present regulations, ships shall be designed and maintained in compliance with the structural, mechanical and electrical requirements of a classification society which is recognised by the Administration ... or with applicable national standards of Administration, which provide an equivalent level of safety.
Lloyds Coffee House

It opened in the 17th century and soon established itself as the meeting place of shipowners, cargo owners and insurance clerks together with captains with salt in their hair as well as young ambitious journalists. As a hub of intelligence and news gathering, the house fostered important institutions like Lloyds Register of Shipping and Lloyds List, to mention some.
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From Florida, one critical voice, Mr. Jack Devanney, pointed out that in the period 1995 to 2005 inclusive, 54 tanker men were killed in tanker casualties, whilst the statistics for dry cargo carriers are even more alarming: 463 crewmen were killed in the same period. He asks: Why would we ever think that a system based on the regulatee, sorry, the client, choosing and paying for the regulator would work? If a building contractor chose and paid the Building Code inspection company, would we not expect substandard buildings? Several years ago, his fellow country man, the financier Mr. Slater, alleged that: It is time that classification societies were as directly answerable to the various governments under whose nationality they operate as are the civil aviation authorities of the same nations. During the last decades, it has been argued that there is ample evidence that the quality of inspections has gone down, whereas competition for clients has gone up. Has the societies focus on profit developed at the sacrifice of marine safety? These are strong words. What seems certain is that the coordination between the various class institutions with respect to safety regulations and implementation of the same has not been without problems during the time since World War II. If we go back again to the early 1950s, the formation of IMCO resulted in a common fear among the societies of being threatened and overshadowed. In particular, the possibility of IMCO taking over or regulating the societies role was scary. At a meeting of the leading societies in Oslo in 1968, the representative of the French Bureau Veritas argued that there was a need for an umbrella because mist and dark clouds had banked on the skyline and that a devastating storm was likely to come. When the representatives soon met again in
Paul Slater
An American banker from First International Corporation with close ties to the North American tanker industry, Paul Slater was the first chairman of INTERTANKOs Communications and PR Committee. His main message to the media was that the private classification system did not work well. The role of the civil aviation authorities of the various national governments should be considered as a possible model for regulating international shipping. But his private view in this respect has not obtained wide support within the tanker industry.
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Hamburg, the IACS was established to streamline their work and prepare for consultant status in IMCO. Dr. Schultz of Germanischer Lloyd was elected as the first chairman of the Council. The next year, IACS Council together adopted certain unified requirements with some guidelines to ensure uniform interpretations of the agreed rules. ABS, Bureau Veritas, DNV, Germanischer Lloyd, Lloyds Register of Shipping, Nippon Kaiji Kyokai and RINA were all members of the new club. At the end of 1968, IACS was granted consultative status with IMCO. Today, the Russian Maritime Register of Shipping, the China Classification Society and the Korean Register of Shipping have also become full members of the association. The members of the association classify more than 90 percent of the worlds merchant marine tonnage. Several classification societies such as Lloyds Register and ABS have remained non-profit organisations. Their charitable status is claimed to be based on work for the benefit of the public by investing their surplus in research to improve marine safety further. Others such as DNV are profit-making companies. After 10 years of litigation, the Norwegian Supreme Court in 1991 decided that DNV was a taxable entity. Classification had at the time become only one of many services offered to a variety of industries. It had become a technology centre and moved into quality control, research and development for the offshore industry as well as a number of land-based companies. It may be illustrative that during the tanker crisis, DNV was seen to market a new tanker design. This caused concern in some quarters. The INTERTANKO philosophy was that there were no tight bulkheads between the various tanker markets. The initiative might provide DNV with some new clients, but could at the same time deepen the overall shipping crisis. The individual societies preferred for many years to remain as Kings of the Hill and rotate the chairmanship within IACS without any joint secretariat, which may have resulted in a more meaningful co-ordination of policies. But the societies were hesitant to delegate any real power to IACS as such. Few paid any attention to the association, and many did not know that it existed. With respect to the relationship between the client and the regulator, one may dwell with the comments from DNV many years after the two large
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Norwegian-owned combination carriers blew up in the 1970s and resulted in a total loss of 70 human lives. No certain conclusion has been drawn as to the cause of the explosions, but explosive gases may have developed in the unwashed wing tanks of the two ships. Whatever the explanation is, it is noteworthy that the classification society DNV in its 125-year jubilee saga in 1989 commented as follows: a change of cargo as often as each trip sometimes made it impossible to carry out sufficient cleaning in all spaces other than the cargo tanks.
Private photo
Dr. Nils Nordenstrom

Dr. Nils Nordenstrom was the Chairman of the International Association of Classification Societies (IACS) from 1984 to 1986. He is a specialist in shipbuilding, and has been the Director of Research and head of the Norwegian Veritas international department. He among other tasks was in charge of the start of the classification societys engagement in quality security systems.
Impossible is a strong word. The International Safety Guide for Oil Tankers and Terminals issued by ICS jointly with the OCIMF spells out that the wing tanks (which have contained oil) should be cleaned and gas freed before loading a dry cargo. A positive effect of the competition between the classification societies is said to be improved safety at sea as well as improved services rendered. But a less positive effect is the temptation to compete by being lenient to attract more clients. In the wake of accidents at sea, classification societies have been accused of trying to appease clients and attract new business by approving sub-standard ships. We remember the 23-year-old Liberian tanker, Argo Merchant, which sank in 1976 and polluted the waters of Massachusetts. She was six months beyond her annual date of inspection when she went down. Another example is the fate of Betelgeuse, which exploded in Bantry Bay in 1979 and cost the lives of 50 people. The classification society knew that the ship was in a deplorable condition, but did not intervene because the owner, Total, intended to sell the ship. At the time of the Betelgeuse accident, IACS appointed a permanent representative in IMCO, Mr. F.N. Boylan. So far, the IACS council meetings had been confined to one meeting per year. IACS was seen as a technical body. To use their own words: Not widely known outside a
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limited group of experts. Keeping their seat warm in IMO, they played a rather modest role. In 1984, Dr. N. Nordenstrom of DNV was elected to chair the IACS Council. He held the chair for two years, struggling to stop the disgraceful practice of second-class ship owners shifting classification society when they were required to meet international standards which they found too costly. In order to put an end to owners shopping around for the most lenient society, requirements for a unified procedure for transfer of class from one member society to another had to be agreed on. IACS members would be obliged to tell each other when a ship leaves its class. Moreover, Mr. Nordenstrom wanted the second society to be obligated to enforce recommendations of the requirements of the previous society. In a presentation to IMOs Marine Safety Committee on May 22, 1985, he announced: In order to prevent owners from changing class to avoid recommendations, it is required that the receiving society checks and deals with all recommendations from the previous society. Proposals for more stringent requirements related to transfer of class will be handled at the IACS Council Meeting in June 1985. When that meeting occurred, the majority of his Council felt that it was sufficient that the second society should deal with an outstanding recommendation without any strict and specific obligations to interfere. Has the situation improved? Well, IACSs Transfer Of Class Agreement (TOCA) of 1996 intended to make it impossible for owners to switch class until the requirements of the outgoing society had been agreed. Still, after the Erika disaster, not everybody was convinced. The chairman of the Italian shipowners association, Mr. Paolo Clerici for one, fired this broadside against class in Lloyds List: I believe that the growing competition between classification societies since the liberalisation of the sector may cause risks for the industry. Some societies are so eager to take new tonnage that the possibility of lowering their guard over the vessels real condition is becoming real. Neither was the EU Commissions marine director, Georgette Lalis, relaxed: The Erika changed classification society four times. Now we are trying to prevent company-hopping. No surprise that the previously mentioned TOCA has been revised several times since then.
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Traditionally, classification societies require an annual survey and a more detailed special survey every five years. IACS took one step further in 1982, when it was agreed to introduce a new special survey aimed to bring about a considerable upgrading of large tankers when they reached the age 15. But no extension had been given in 1991 to the Greek tanker Kirki en route from the Arabian Gulf to a terminal in Western Australia. Nevertheless, the forepeak ballast tank was horribly corroded, and her bow section simply suddenly fell off. She was loaded with some 82,000 tons of crude oil and fully approved five months earlier by her classification society, Germanischer Lloyd. Six years later, the Russian tanker Nakhodka broke in two in the Sea of Japan. Her hull was also significantly corroded, and she was fully in class without any outstanding recommendations by the Russian Classification Society. Since 2002, a European Directive has required that the EMSA controls each authorised society at least bi-annually to ensure that their performance is in compliance with the rules. Whilst there are no IMO rules regulating the robustness of the steelwork in tankers, IACS has during the last years taken several initiatives to improve their services and address problems as far as possible before, rather than after, a major casualty. Most important, in December 2005, members without any reservation agreed to discontinue the rule competition between them by producing Common Structural Rules to ensure that the construction of oil tankers and bulk carriers in the future should be more robust and safe. But some years later, this agreement had to be amended because of the intervention of the Brussels antitrust directorate. Class-hopping on the one hand and the liberal practice of many major societies to permit extensions with respect to renewal of certification were intolerable in the long run. A representative of a major society operating from his office in Piraeus about 20 years ago was called Mr. Extension in informal circles of shipping people in Oslo. They were frustrated about the liberal policies of some IACS members. It seemed that owners in a poor financial situation were allowed to continue to trade regardless of outstanding orders to undertake maintenance and/or repairs, whereas there was no mercy for financially stronger owners. Together with the oil companies constant pressure to force freight rates well below break-even, the liberal policies of the classification societies were a factor which did not seem to promote marine safety. On the contrary.
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Something obviously had to be done to reduce the unhealthy competition and instead facilitate a closer cooperation between the IACS societies. Within the industry, it was rumoured in the late 1980s that a Super IACS was about to be formed by the major societies including ABS, DNV, Lloyds and possibly also Germanischer Lloyd. They all had exclusive surveyors in the most important ports. Now the intention was to coordinate and enforce quality shipping by a stricter control of their entered fleet. The formation of a premium league was, however, never realized, mostly because of commercial and regional implications. But in 1991, long overdue, it was decided in Helsinki to set up a permanent Secretariat. Moreover, an IACS Quality System Certification Scheme was introduced. The next year, Mr. J. D. Bell was appointed as the first permanent secretary of the association. On July 1, 1992, a permanent secretariat was set up in London. In 1993, the members introduced a programme for more stringent inspection of bulk carriers and oil tankers the Enhanced Survey Programme. It required that surveyors should physically reach all areas in the ships which they were supposed to examine. More emphasis should be placed on gauging the metal thickness of the hull. A society could be expelled from IACS if it did not meet the quality criteria in the Charter of the association. On June 1, 2000, the new administration showed its strength when the Polish Register was expelled following the tragic loss of one of its registered ships, which had cost 18 lives. Since then, the hulls of Castor, Erika and Prestige, to mention a few, were later found to be dangerously corroded despite being classed by major societies. Are periods of grace still parts of normal procedure among classification societies? After the Erika tragedy, a representative of Bureau Veritas commented in Lloyds List on the extension practice with respect to the special five-year survey and said that: There was nothing exceptional in the operation It is a normal procedure which exists when an owner is in difficulty because of a commercial operation in progress. Obviously shaken by the attitude of RINA and Bureau Veritas, the IOPCF decided in December 2002 to take recourse in the Civil Court in Lorient, France, because of the their involvement in the Erika accident. Both societies were among the founding members of IACS. None of them had stopped Erika,
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which had changed classification companies four times and ended up at the bottom of the Atlantic. After Erika, Dr. Nikos Mikelis, a well-known Greek expert on marine technical issues, fired a salvo on IACS for the lack of action to rectify the current sad state of affairs. In his opinion, IACS had despite the serious flaws that now so clearly had been revealed confined itself to simply announce more surveys, which according to Dr. Mikelis was a selfserving decision because: 1. More surveys equals more fees. 2. IACS is seen as doing something when the whole of the industry now admits that the existence of substandard ships is a problem of lack of compliance with the existing regulations. He added: The reality is that behind every structural failure of a substandard ship, there is a substandard survey. The question IASC should therefore have addressed is how to eradicate substandard surveys, and to this day we have not heard a word on this matter from IASC. INTERTANKO was far more complimentary. In a report to its AGM in 2000, tanker owners welcomed new IACS measures aimed at removing substandard ships from service. These included: more rigorous check for older ships changing class, the computerisation of class records and the transfer of these to new societies; increased inspection of ballast tanks located next to cargo tanks carrying heated products, more detailed intermediate surveys and closer monitoring of steel thickness measurements. Up to the Erika and Prestige, pollution incidents in 1999 and 2002, IACS had successfully protected status quo. Inspired by Prime Minister Chiracs statement that draconian measures were required, the European Community embarked on a crusade to put the shipping industry in order. One target was the classification societies. As mentioned before, a European Directive on Classification Societies enacted in 1994 was now amended asking the EMSA to control each authorised society at least bi-annually to ensure that the performance complied with the rules.
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The exclusive IACS group had battled complaints about restrictive business practices since adopting its own common structural rules in December 2005. One further step the European Community took was to launch an investigation into the activities of IACS that could possibly be in breach of the regional antitrust legislation. The IACS Code of Ethics soon became a major target. A central provision in the Code stipulated that the services rendered by IACS members: must not lead to compromises on safety of life and property at sea or the lowering of technical standards. Press reports implied that IACS had been compelled by the EU to scrap ethics. This proved, of course, to be a gross overstatement. The result was rather that the IACS code as such had to be cancelled, but each member could continue to operate according to its in-house ethical rules. One cannot help feeling that this exercise caused a lot of bureaucratic ado about very little. In December 2008, delegates to a meeting of IMOs Maritime Safety Committee were reported to be shocked by rumours that the EU would force all classification societies to recognise each others certificates on a no-questions-asked basis. It was felt that this idea would undermine the traditional classification process and impinge on the sovereignty of states to decide independently what society was trustworthy or not. In an unusual move, the Committee instructed the Secretary General of IMO, E. Mitropoulos, to voice concern over the EU plans. IACSs membership had been confined to classification societies which represented a sizeable fleet in international trade. One of the EUs other concerns was that the access to the IACS and its working groups, which discussed and prepared the common rules and procedures, was closed to non-members. An important result of the mentioned anti-trust investigation saw the light of day in June 2009, when Brussels without further ado compelled IACS to open the door to membership ajar. This meant that nonmembers in the future could obtain access to the mentioned working groups. Moreover, any classification society would be entitled to apply for membership in IACS. The new approach to assess applications for membership was to be based more on quality rather than quantity criteria. Following the publication of the new regime, the Polish register PRS confirmed that it would welcome a return to IACS. Another obvious candidate for membership is the Hellenic Register of Shipping, who chose to not comment. Hellenic also had other problems. In March 2009, Lloyds List reported that
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Brussels was planning to prevent the Hellenic Register from taking on new business, as EU members states had decided to give the Greek classification society 17 months to resolve quality issues. In the meantime, no classing of new ships was allowed. What the future brings is always uncertain, but few observers would be surprised if Hellenic is a member before 2012. In October 2009, Tradewinds reported that the EU regulators had ended their anti-trust case against IACS after it had agreed to let rivals access its activities and technical data. For many observers within the tanker industry including the author the fierce competition between the classification societies in the past has been a problem. The result has been lenient practices with respect to certification and representation of substandard surveyors. When the EU has chosen to focus on possible restrictive business practices and opened the door to what may end up in more competition fair or unfair it is in no way given from above that the results will be safer shipping and a cleaner environment. Today, charterers, insurers and other parties interested in the performance and quality of a particular tanker will enjoy the increased transparency that has developed in the shipping business. Safety-related data has become available to all interested parties thanks to an initiative the European Commission and the UK government launched to establish the Equasis database. From 2002, maritime authorities of countries outside the European Community including Japan and Singapore have agreed to support Equasis financially. Thus, it might be hoped that some of the problems we have addressed are now more likely to be addressed before, rather than after, a major casualty. Serious accidents have in the past compelled clients and third parties to hold the societies accountable for alleged mistakes. The claims brought by commercial interests have amounted to billions of US dollars. But it has proved to be very difficult to pursue classification societies in court. The societies have relied on the language on the certificates or reports that disclaim liability for any financial loss arising out of reliance on these documents. Moreover, they have felt confident that when they are carrying out statutory functions on behalf of a flag state, they should be entitled to the very same immunity as the government they represent. Most of the claims against the societies have failed. Speaking on this topic at a maritime law conference (Marlaw) in Ithaca, Greece, in September 2007, a legal adviser to the Lloyds Register put it this way:
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... governments around the world now rely heavily on class societies to discharge the particular governments statuary responsibility to have ships flying its flag designed, constructed, operated and maintained in accordance with its national laws including the applicable IMO conventions and class requirements. That has resulted in classification going from, what at its origin was purely a private function, into what is today, in reality, a public function. But sorry, it is more complicated. When the immunity argument seemed unlikely to succeed in the Prestige case, the American Bureau of Shipping with Mr. Somerville in the drivers seat successfully convinced a New York Court a few years ago that his society could not be held liable because it was a person like any agent or servant of the ship owner. This is the very point of Mr. Devanney, mentioned above. Hence, in accordance with the channelling provision in CLC, ABS was exonerated. It is arguable that class really wants to have its cake and eat it, too. The decision was, of course, appealed by the Spanish government. The outcome of the appeal remains to be seen. The classification societies want the statutory privilege, but not the responsibility, of approving ships that are protected by disclaimer clauses in their standard contracts. Moreover, they maintain that when they are carrying out statutory functions on behalf of a flag state, the societies should be entitled to the very same immunity as the state. When liability has been tested in courts, the societies have also more often than not had the sympathy of the judge. Heavily publicised cases have fuelled the perception in the industry that these institutions do not owe a duty of care to third parties and therefore cannot be found liable to them in tort. A representative ruling of a US court rejected the liability claim and warned: The societies could be deterred by the prospect of liability from performing work on old or damaged vessels that most need their advice. The spreading of liability could diminish owners sense of vessel safety ... In other jurisdictions such as France, the law is based on a simple but fundamental principle that he who causes harm to a third person is obliged to make it good (Article 1382 of the Civil Code). When the French Court delivered its widely published Erika judgment in January 2008, it became clear that the court had swept aside RINAs defence that it had jurisdictional immunity of a foreign state. The Court held that when it consists of checking the implementation of the safety rules by the means if inspections involving the
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structural solidity of the hull (1.1.1. 6), the activity of classification societies are of a private nature, performed at the request of the owner, in accordance with a contract entered into. The fault of imprudence of the inspector was one of the causes of the shipwreck. Nevertheless, the liability questioned remains a problematic issue. The Erika judgment is appealed. There is no international guidance. An effort was made in 1995, when CMI was asked to set up a working committee to draft rules intended to reduce the threat of litigation. Frank Wiswall, a former chairman of IMOs Legal Committee, was asked to serve as chair. His working group rejected the proposal to introduce straightforward limited liability for the societies involvement in shipping casualties. Some suggested standard clauses were drafted, but the issue remains unsolved and has not yet been addressed by IMO. So the question of what the classification societies liability exposure really is in a certain jurisdiction, or should be on an international level, remains unanswered. Any person or company who has incurred losses because of negligent acts or omissions of a classification surveyor is free to sue the society in tort, finds himself in unchartered waters. Neither marine safety nor the environment is served if the principal caretaker of the public interest knows that they are insulated from liability for loss of lives and major oil spills. Years ago, the Norwegian ship owner Knut Kloster presented his dream of quality ships sailing under the flag of the UN. Can a re-organization of IMO and a unification of the major classification societies make his dream come true some time in the distant future? Can the IACS judges one day be judged on their merits by IMO? Theres a long way to go, but a first step could be introducing an international accrediting system for classification societies to which member governments may delegate regulative responsibilities. It sounds utterly unrealistic today just as the vision of Mr. Kloster was, and probably still is, when he delivered his speech in 1987 at an INTERTANKO Council meeting. In any case, here is the last paragraph of his presentation: The maritime industry has a proud history and long tradition of adventure and discovery. As our forefathers did so many centuries ago when they sailed beyond the horizon and opened the world we should once again be guided by a process of vision. In the words of one of my favourite proverbs, we must set our course by the distant stars and not by the light of the passing ships.
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Notes: On the role of class, see the SOLAS Convention chapter II-1, A-1, Reg. 3-1 and Andrew Kennedy: Classification societies & the law - The Inside Story and Roger Miles Class Societies and Liabilities, both papers presented at the Marlaw Conference in Vathy, Ithaca, Greece in September 2007. Mr. Kennedys reference to the statement of the judge is taken from US Fifth Circuit Court of Appeals in the case Otto Candies LLC vs. Nippon Kaiji Kyokai Corp. 346 F.3d 530 (2003). The judge also stated: The spreading of liability could diminish (an) owners sense of responsibility for vessel safety even as it complicates liability determinations See comments on the fully classed Kirki in the Australian report on Ships of Shame, p. 1. On the history and development of IACS, see Eirik Andreassens presentation IACS Organisation at International Affairs, MSTNO232, November 2008 and Det Norske Veritas 125th-anniversary book, Anchor and Balance, Oslo, 1989. Jack Devanneys criticism is taken from his The Tankship Tromedy The Impending Disasters in Tankers, Florida, 2006, pp. 56 and 260-267. On the Berge Istra and Berge Vanga disasters, see Anchor and Balance, pp. 265-268. On the expelling of ships, see DNVs press release reported in Lloyds List on Oct. 15, 1984, Journal of Commerce, Sept. 7, 1984 and comments on IACS in Fairplay, Oct. 18, 1984 and Nov. 30, 2006. On IACS Quality Certification, see Dr. Philippe Bosons paper presented at the 12th SBL Biennial Conference in Paris in September 1995. See the leader on Judging Judges in Lloyds List from July 27, 1995. See the article on the views of Bureau Veritas in Lloyds List, Jan. 12, 2000, and the views of Paolo Clerici in Lloyds List on Jan. 26, 2002. On the revision TOCA, see Lloyds List, Jan. 7 and 26, 2000. On the anti-trust allegations, see the February 2009 issue of Tradewinds. Shipping financier Paul Slaters address was at INTERTANKOs AGM in Rome, 1986.
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16 On Reflection
Is it realistic to expect that the measures to better the marine environment will be more successful than the efforts to halt increasing air pollution and global warming? The sneaking global warming represents no tangible threat comparable with the dramatic grim pictures of a collapsed tanker blackening pristine shorelines and killing birds, fish and wildlife. Air pollution is transparent in comparison with ugly polluted beaches and may for many perhaps represent more of an academic problem. Still, crude oil is Mother Earths own product, and spillage from tankers represents only a minor part of the pollution of the environment. More oil gets into the sea through the drainage system of the world than ever gets in from tankers. But people detest oil spills because of their photogenic attributes. Whereas large spills capture our attention, numerous, smaller, but regular operational spills unnoticed by the media do more cumulative damage to the oceans. But piles of statistics showing encouraging reductions in marine pollution will count for nothing as soon as the next major spill flashes across the TV screens. When it strikes as a bolt from the sky and is covered by the media within minutes, political statements follow. The usual reaction has been to: 1) Refer to human failure 2) Demand that the polluter shall pay up or 3) Impose new regulations on shipowners. In between the big oil spills, there have been long periods without major tanker pollution incidents hitting the headlines. But it would be nave to believe that major spills are not waiting out there. During the last decades, tankers have spilled oil and seriously polluted the coastlines around the world. Marine pollution of the waters of the US, the UK, Japan, France, Spain and Italy proved to be disasters for the effected
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regions. Some coastal states have been spared. The increase in Russian oil moving through the Danish and Turkish straits bodes no good. Off the long western coast of Norway, large tankers with up to 300,000 tons of oil are daily carrying Siberian oil from Murmansk to terminals in Rotterdam and the US East Coast. When the dry cargo ship Full City leaked 290 tons of its fuel in Norwegian waters in July 2009, the local medias focus on the catastrophe was intense, and the cleaning up proved to be a major problem for the government. The Chinese Captain was sentenced to six months in jail despite widespread suspicion that the accident was linked to deceptive information by the local port authority. On the contrary, little attention was given to the large tanker Moscow Universe when she lost her power in 2003 and drifted 20 km off the Norwegian coast. Fortunately, the crew managed to restart the engines. The vision of a large tanker discharging its entire cargo off the coast of one of the Scandinavian countries is a nightmare. In 1996, Sea Empress highlighted that you can operate the best ship and yet you might cause severe pollution because you are vulnerable to shore-based inefficiencies.
Quality commitment vs. lingering legal concerns

In June 1999, marine oil pollution was addressed at a two-day policy conference, Mare Forum, in Amsterdams Grand Hotel Krasnapolsky. In attendance were 300 high-level representatives of flag states, port states, classification societies, insurers, banks, shipyards, ship owners and ship managers, cargo owners and charterers, regulators and legislators within and outside the EU. After having endured some 25 presentations each day, it seemed accepted that they all had important roles to play to enhance maritime safety and a cleaner environment.
Moscow Universe
The main transport for Russian crude carriers from the Barents region in the north, is passing along the western coastline of Norway. The oil is mainly discharged in Rotterdam. A Norwegian research centre believes that Russian oil transport could reach 50 million tons in 2012, but higher estimates have also been presented. It is generally believed that the Russian tankers are high standard, but misgivings have been expressed about the strong growth of these shipments, which makes the probability of an environmental catastrophe a real danger. Norwegian authorities express great confidence in its own contingency planning to cope with such accidents. However, the many small spills of bunker oil from dry cargo ships have not convinced sceptics that Norway is prepared to handle a major spill. A breakdown of the engine of a Russian TANKERS, BIG OIL a warning light. 345 super tanker some years ago was quickly rectified by the crew, but could be seen as & POLLUTION LIABILITY
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The delegated were finally invited by the chairman, the shipping journalist Michael Grey to agree on certain basic principles. Some of them were: Each link in the maritime responsibility chain, on sea or on shore, should make safety considerations an integral part of its activities. Industry participants should take reasonable care to ensure that the ships with which they are dealing are of good standards of quality. Accordingly, they should avoid using, servicing, supplying or otherwise doing business with ships which clearly do not meet the internationally applicable requirements. Whilst Lloyds List the morning after the conference had the heading of its report Quality Charter Born, the text below seemed to tell a story of a still-born baby. Seventeen representatives of the international maritime organizations had signed the charter, but the OCIMF held off. The director explained to the press that his body had lingering legal concerns and had to review the charter further. Two years earlier, the managing director of one of the leading P&I clubs, embraced a paper the EU issued which also expressed that quality shipping was not just a matter of imposing further obligations on the shipowners: Many others in particular flag state administrations and classification societies, cargo owners and insurers have to take their share of responsibilities, the Commission document stated. The Director proclaimed to the press: We would like to see the pragmatism displayed by Brussels reflected elsewhere (Lloyds List, Aug. 17, 1998). But when the International Group of P&I clubs were presented with the mentioned Quality Charter, they had the same lingering legal concerns and explained diplomatically that the path remained open for signature at a later date. Their lingering legal concerns were not alleviated when Erika, a 24-yearold rusty tanker, some months later collapsed off the coast of France. The ecological damage outstripped all previous incidents except the Exxon Valdez and served as an eye-opener to governments and the public. Most important, the disaster confirmed that safety at sea depends on an interaction of a number of parties involved in the transportation sector. Apart from the owner and his manager, the accident pictured the roles played by the other participants in the market. The vessel had been inspected and approved by a major classification
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society two weeks before her final voyage. But perhaps most important, the chartering policy of the oil industry caught the attention of the press and television. Why did a rich oil company hire a rusty old tanker to transport its oil when first-class carriers were available?
If port states around the world were free to regulate the tankers entering and leaving their terminals the way they felt best, the consequence would be chaos. IMOs objective is summed up as follows: Safe, secure and efficient shipping on clean oceans. The support for the organizations work to coordinate marine safety regulations is reflected both by its nearly 160 member countries and by the large number of consultative organisations representing all the interested parties including the industry and the environmentalists. But IMO has a problem within the national bureaucracies. Many member states are dragging their feet with respect to implementing the measures they have agreed on after time-consuming preparations and lengthy debates. Some issues remain talking topics for decades whilst little or nothing is done. One example relates to the 1969 Convention on pollution liability. At the end of the 1969 Conference, a resolution was passed to intensify the work of IMCO on all aspects of pollution by agents other than oil. More than 40 years passed before IMO managed to agree on liability rules for damage that marine transport of chemicals caused. At the time this book was printed in early 2011, the rules have not yet been put into effect. No better is the endless talk on how to deal with residues from tankers. In 1972, the INTERTANKO annual report (p. 10) was proud to announce that: IMCO has recognized the need to provide reception facilities to be utilized by tankers. Sixteen years later, IMOs Secretary General urged governments to consider the adequacy of reception facilities in their ports. After new countless meetings and papers, IMO NEWS could in June 2006 inform readers that: A draft Action Plan to tackle the alleged inadequacy of port reception facilities seen as a major hurdle to overcome in order to achieve full compliance with MARPOL was agreed (on) by the Sub-Committee on Flag State Implementation when it met for its 14th Session ... But no progress seemed forthcoming. In July 2008, a new Secretary General of IMO, Mr. Mitropoulos, had to be reminded of the poor standards of wastereception facilities. The balance between laxity and over-regulation is another major problem.
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Many of the members are flag of convenience states. They have large fleets and considerable voting power, but limited resources are set aside for enforcement of international standards. The technical expertise found in major port states is often superior. One critical voice, David Cockford, General Secretary of the International Transport Workers Federation (ITF), several years ago criticized the current power balance: members from flag of convenience states are far too ready to use their considerable influence to slow down the pace of change ... His words might still be valid. The effects of IMO delays may be OPA-like unilateral initiatives. Moreover, lacking flag state enforcement distorts the rivalry in the highly competitive tanker market. This is a challenge that port states intervention can alleviate. Port state quality audit has been practiced by a large number of European countries for more than 25 years. Canada soon supported their scheme, based on an initiative outlined in the 1982 Paris Memorandum of Understanding (Paris MoU). Furthermore, the USCG, second to none in this respect, has been an active participant in the discussions. Similar cooperation is also found in other regions, notably through the Tokyo Memorandum of Understanding. Despite the much-praised port state control, however, there is obviously room for improvement when tankers like Nakhodka, Erika and Prestige had no difficulty escaping the safety net. The industry took a step in the right direction in 1993, when OCIMF was persuaded by INTERTANKO fronted by the Swedish shipowner Hans Laurin to introduce SIRE for the exchange of the various oil companies tanker inspection reports. Hopefully, the combination of more effective port state control and SIRE may have forced some of the worst operators to either upgrade their vessels or leave the major oil trades. The risk of accidents can be minimized, but never totally eliminated. Rules on liability enter the stage when legislation and administrative control proves ineffective. The public reaction in the wake of huge oil spills is anger. Pollution liability rules are caused by anger. Torrey Canyon resulted in CLC in 1969 and FC in 1971. Amoco Cadiz led to the Protocols of 1984 and 1992. OPA90 was passed as a consequence of the Exxon Valdez. Following Erika and Prestige, the EU pushed IMO to establish a Supplementary Compensation Fund. In the US (and elsewhere) the legislative reaction to the Deepwater Horizon disaster remains still to be seen. Voices have implied that that the gap between the Protocols and OPA90 lia-
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bility rules may at some stage be surmounted. Such harmonization might seem to belong to a distant future. In the meantime, we may ponder what is required to establish effective liability rules for oil transportation at sea. You then need to answer the key question: Which actor or actors should be made responsible for the damage caused?
Foto: Tradewinds
Which actor should be responsible?

In US Federal legislation, the operator and owner are the responsible parties. When the US Congress met in a conference during the fall of 1990, the provision entitling pollution victims to seek compensation from cargo owners was promptly removed, but the party operating the ship remained as a responsible party. In an article written in 1991, the majority leader in the US Senate, Senator Mitchell, stressed that a key objective of any pollution regime should be to prevent spills by inducing a high standard of care. US and English law are based upon the principle that accountability creates a deterrent to negligent behaviour. The public interest is not served where charterers, operators, pilots and others who are in the best position to prevent oil spills know that they are insulated from liability for catastrophic oil spills caused by their own gross negligence or violation of federal regulations. The US never ratified the Protocols. France ratified despite its scepticism and despite the reaction of national legal experts who were astonished when they learned about the revised channelling provisions. According to one of them, at a CMI conference in 1992, Mr. M.
Hans Laurin and his wife

Hans Laurin of Laurin Maritime AB, Sweden, is shown here. The company operates modern tankers that provide maximum flexibility of operation. He was INTERTANKOs driving force in the 1990s to cope with the huge number of vetting inspections carried out at tanker terminals by different bodies. One goal was to persuade the oil companies to harmonize their vetting procedures by an exchange of information systems. An after lunch meeting with oil representatives in London was not encouraging. Mr. Laurin had the habit of smiling broadly when he argued. More opposition meant a bigger smile. I observed some irritation on the other side. Nevertheless, the pressure continued. Eventually the oil industry set up an information centre in London: Ship Inspection Report Programme SIRE. Here, Mr. Laurin smiles again, this time together with his wife.
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Remond-Gouilloud concluded that the list of exceptions suggested by the Protocol no doubt goes too far. At the end of the day, it is the charterer who decides to use a particular vessel that he directs to loading and discharging ports within an agreed range. The ship owner is obliged to perform in accordance with the charter party, which in practical life often corresponds with the oil companies own standard terms. As one other French legal expert, Mr. Du Pontavice, points out: ... the time charterer or bareboat charterer, who will actually be the real masters of the ship in that they belong to the same group as the carrier, will have no need to take precautions since the convention as amended by the protocol declares that they are not liable. In an article on the Norwegian Pollution Control Act, professor Thor Falkanger touches upon the same problem. He accepts that it is obvious that the shipowner should remain in the frontline. However, he concedes: An assertion to the effect that the oil company is a liable party is strengthened if it is assumed that the transportation is performed under a charter party which enables the oil company to influence how the transportation is to be carried out. This becomes very clear if the oil company is a time charterer and decides what kind of cargo should be transported, where the destination is and to a great extent controls or acts on the handling of the cargo.
Looking back to the 1969 Conference, a large number of delegates referred to the particular characteristics of oil cargoes when transported across the oceans. In his opening statement, Donald Jamieson, Canadian Minister of Transport, stressed that pollution is attributable to the nature of the substance carried. In his view, the main point was the notion of joint enterprise: Just as they shared the profits from carrying oil in bulk, charterers and oil companies ought like wise to share the liabilities inherent in that form of transport. ... At the international conference in 1984, it was agreed to channel liability for pollution damage to one party only: The registered shipowner. This solution was required to avoid a breakdown of the negotiations. Since then, not much has happened. IMOs much-publicized 1992 revision was a joke. What
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was changed were the entry into force rule and the granting of a rebate to Japanese oil companies. The compensation amounts have been increased, but the legal framework remains the same. Thereby, all individual actors other than the tanker owner are for practical purposes insulated from pollution liability. It does not help that money is not always available from the Fund when major accidents occur. Then reduced compensation is paid to pollution victims on a pro-rata basis unless additional money comes from elsewhere. Nevertheless, the majority of oil receivers within IOPCF have so far provided a most robust defence for status quo. This is understandable, as they pay only minute contributions to the Fund. Applying their contributions to barrels or litres, they are hardly visible. For the individual oil company/charterer or operator, the exposure of the IOPCF has no preventive effect whatsoever. Oilexporting countries do not contribute to the Fund at all. Should the classification societies contribute to IOPCF? We have seen that class wants the privilege of approving ships, but not the responsibility. When they are proceeded against, they are not shy to explain that they represent the prolonged arm of governments and can in no way be sued for pollution damage compensation. However, when convenient, their argument might be the opposite; they are only servant of the owner and trust the wording of the CLC Protocol, which explicitly forbids such claims. That no one during the 1969 or the 1984 conference ever even dreamt of that class being responsible for safe constructions of ships should at the same time be the shipowners servant seems to be of little consequence. The annual reports of IOPCF reveal that the discussion on the liability framework was re-opened in 2004 to
Alfred H. E. Popp, QC
Alfred H. E. Popp has been a distinguished representative of the Canadian Government in IMO and IOPCF for many years. Apart from his participation in the Diplomatic Conference to revise the oil pollution liability instruments in 1992, he has served as Chairman of the IMO Legal Committee. In IOPCF, he has chaired a number of working parties set up to study various aspects of the international liability regimes, including the need for a fullscale updating of the instruments. In 2007, he was appointed as administrator of the Canadian Ship-Source Oil Pollution Fund.
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enable the Protocols to play a more suitable role in the overall IMO struggle for cleaner seas. A proposal which would open up for compensation claims against other parties involved, including the charterer, was rejected by a majority of delegations. They argued that the Protocols were intended to only create an efficient compensation regime and were not aimed at the quality of shipping .... These are strong words. A convenient way out for IOPCF, who after all would like to be seen as a promoter of safety at sea, was to set up a working party to find other means to improve quality shipping. But after some years of debate, no concrete recommendations came about. Professor emeritus Hisashi Tanikawa
Professor emeritus Hisashi Tanikawa of Sekei University, Tokyo, Japan was a representative of the Japanese delegation to the Brussels Conference in 1969 two years after the Torrey Canyon accident. Later he became a Chairman of the International Oil Pollution Fund`s Executive Committee (1979-1981) and was the first Vice Chairman of the 1971 and 1992 Assemblies. In the 25-year jubilee book of IOPCF from 2003, he concluded: In my opinion the reason for the successful history of the Fund system is that contributors to the Fund have been limited to a manageable number.
The philosophy of the IOPCF majority seems to differ quite a bit from Senator Mitchell. In his essay on OPA90 in Environmental Law (Vol 21-237), he stressed that a key objective of any pollution regime should be to prevent spills by inducing a high standard of care. Accountability might be a key word. IMO regulations should not be allowed to grow up with watertight bulkheads between them. Whether technical or legal, they should aim at the same goal: Safety at sea and a cleaner environment. In an interview with Lloyds List a few years ago, at least one European, Jan Kopernicki (Shell), then-chairman of OCIMF, saw the light when he expressed that: a link can be made between the use of the oil spill compensation and safety at sea. One of the arguments for narrowing the responsible party to the registered shipowner has been saving insurance costs. Insurance for pollution liability has been the business of the P&I clubs for more than 50 years. They have argued successfully that the capacity of the market would shrink if other parties also were compelled to take out insurance against pollution liability. Dr. Tanikawa, a distinguished representative of Japan, at a number of IMO and IOPCF conferences,
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accepted the argument, but admits: it is very difficult to explain the channelling of liability ... In todays shipping, the ship owner is often far removed from the operation of the ship and might therefore not be the most suitable person to be held liable. ... However, in so far as pollution damage is concerned, the registered tanker owner is also one of the persons who create the risk of pollution through oil spills from the tanker, even though this is remote. His conclusion is that if liability was applicable to other people involved, it would be impossible to obtain effective insurance. OPA90 has come to stay. The Act has been in operation for two decades and applies to the worlds major oil transportation routes. No tanker operator in international trade escapes the role of a responsible party any more, and insurance does not seem to be a very serious problem. Substandard tankers would not exist if the oil industry were not inclined to take the risk of hiring them. Increased attention has been directed to the use of obsolete tonnage. When the supply of tonnage is limited, charterers find it too expensive to be choosy. In a depressed market with a surplus of tonnage, the same chartering personnel will not hesitate to squeeze freight rates further down, even below the shipowners operational costs. This does not serve safety at sea, either. In Lloyds List, the senior shipping journalist Michael Grey has compared tanker shipping with the taxi market in the UK: Substandard cabs would not exist without people willing to take the risk of hiring them ... one of the wonders of the century that has just ended is the way charterers have been able to consistently avoid any liability whatsoever for the consequences of their going to the utmost lengths to obtain the cheapest possible marine transport. The introduction of TOVALOP/CRISTAL in 1969/1971 delayed the implementation of the international agreements for many years. As previously mentioned, the International Group of P&I Clubs in 2006 put forward two new private schemes to persuade IOPCF to further postpone the revision of the Protocols. Mr. Ryansak, Chairman of the 1992 Fund Assembly and well aware of the fact that the suggested revision was thereby removed from the
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agenda, expressed the hope that the work so far undertaken would prove a valuable resource in the future when, as seems inevitable, it becomes necessary to reconsider revision in order to ensure that the regime continues to meet the needs of society. IMO, which in the past has tried to clarify the liability position of class without success, should try again. A revised liability system might serve as an instrument to minimize pollution incidents and add to the compensation of pollution victims. To single out one actor as solely responsible can hardly be a productive approach to protect the environment and ensure safe transportation at sea.
Notes: The article by D. Crockford, ITF, was printed in Lloyds List on Oct. 24, 1998. In 2003, the chairman of the Greek Cooperation Committee, Mr. E.G. Embiricos opined: careful analysis of IMOs response to recent shipping casualties shows that this criticism cannot be justified. IMO has responded slowly, it has done so with deliberation, as is its duty, after full and sound technical, legal and economic analysis. IMO News no. 4, 2003. Senator Mitchells article is found in Environmental law Vol. 21, pp. 236-251. The presentation of Mr. Pontavice is reported in more detail in W. Chao: Pollution from the Carriage of Oil by Sea, pp. 172-173. At a CMI conference in 1992, Mr. M. Remond-Gouilloud argues that the list of exceptions suggested by the Protocol no doubt goes too far. See Liability for Damage to the Environment edited by Colin de la Rue, pp 95-96. Thor Falkangers article is found in: Sjotransportoren og den norske forurensningsloven in Festskrift till Kurt Gronfors 1991. The statements of the Canadian Minister of Transport are found in the official IMCO report on the 1969 Conference, pp. 84-86. On the reflections about the taxi market, see Lloyds List, Jan. 12 and March 14, 2000. West of Englands support for the paper issued by the European Union on quality shipping is found in Lloyds List, Aug. 17, 1998. The oil industrys annual contribution to IOPCF depends upon the number and size of the incidents causing pollution damage. During the 10-year period 1996-2005, the levy per ton oil varied from 0.011 pound sterling to 0.054. The statement the Chairman of the 92 Fund, Mr. J. Ryansak, regarding the future need for a reconsideration of the international instruments to meet the needs of society, is found in 2005 IOPCF annual report, p. 9.
APPENDICES With the kind permission of the International Oil Pollution Compensation Fund, Appendix I contains a reprint of a section in IOPCF`s annual report of 2009. It reviews the complex and comprehensive work of the organization. The oil spill stemming from the accident of the supertanker Hebei Spirit in December 2007 illustrates the efforts. Appendix II is a reprint of an article which appeared in INTERTANKOs jubilee book: My 25 years with INTERTANKO, Oslo, 1996.
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APPENDIX I: HEBEI SPIRIT
Appendix I
Hebei Spirit
Republic of Korea, 7 December 2007 The incident The Hong Kong flag tanker Hebei Spirit (146 848 GT) was struck by the crane barge Samsung No 1 while at anchor about five nautical miles off Taean on the west coast of the Republic of Korea. The crane barge was being towed by two tugs (Samsung No 5 and Samho T3) when the tow line broke. Weather conditions were poor and it was reported that the crane barge drifted into the tanker, puncturing three of its port cargo tanks. The Hebei Spirit was laden with about 209 000 tonnes of four different crude oils. Due to inclement weather conditions, repairs of the punctured tanks took four days to complete. In the meantime, the crew of the Hebei Spirit tried to limit the quantity of cargo spilled through holes in the damaged tanks by making it list and transferring cargo between tanks. However, as the tanker was almost fully laden, the possibilities for such actions were limited. As a result of the collision a total of 10 900 tonnes of oil (a mix of Iranian Heavy, Upper Zakum and Kuwait Export) escaped into the sea. The remaining oil in the damaged tanks was transferred to other tanks on board and to another vessel. Once stabilised, the Hebei Spirit proceeded to the Hyundai Oilbank terminal in the port of Daesan (Republic of Korea), where the cargo was discharged. Shortly after the incident the Korean Government declared it was a national disaster and on 24 December 2007 the Hebei Spirit was arrested at the suit of the Korean Marine Pollution Response Corporation (KMPRC), a state-owned pollution response agency. The Hebei Spirit is owned by Hebei Spirit Shipping Company Limited. It is insured by Assuranceforeningen Skuld (Gjensidige) (Skuld Club) and managed by V-Ships Limited. The crane barge and the two tugs are owned and/or
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operated by Samsung Corporation and its subsidiary Samsung Heavy Industries, which belong to the Samsung Group, Koreas largest industrial conglomerate. The Fund and the Skuld Club appointed a team of Korean and international surveyors to monitor the clean-up operations and investigate the potential impact of the pollution on fisheries, mariculture and tourism activities.
Impact of the spill Much of Koreas western coast has been affected to varying degrees. Shoreline composed of rocks, boulders and pebbles, as well as long sand amenity beaches and port installations in the Taean Peninsula and in the nearby islands, were polluted. Over a period of several weeks, mainland shorelines and islands further south also became contaminated by emulsified oil and tar balls. A total of some 375 kilometres of shoreline were affected along the west coast of Korea. A considerable number of commercial vessels were also contaminated. The west coast of the Republic of Korea hosts a large number of mariculture facilities, including several thousand hectares of seaweed cultivation. It is also an important area for shellfish cultivation and for large-scale hatchery production facilities. The area is also exploited by small and large-scale fisheries. The oil affected a large number of these mariculture facilities, as it passed through the supporting structures, contaminating buoys, ropes, nets and produce. The Korean Government financed the removal operations of the most affected oyster farms in two bays in the Taean Peninsula. The removal operations were completed in early August 2008. The oil has also impacted amenity beaches and other areas of the Taean National Park. The Taean Peninsula is a favourite tourist destination for visitors from the Seoul metropolitan area, with an estimated 20 million visitors every year, mostly in the months of July and August.
Clean-up operations The Korea National Coast Guard Agency, a department of the Ministry of Maritime Affairs and Fisheries (MOMAF), has overall responsibility for marine pollution response in the waters under the jurisdiction of the Republic of
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Korea. By the first quarter of 2008, responsibility for overseeing onshore clean up had been passed on to the affected local governments. The Coast Guard coordinated the response at sea. Over 100 vessels of the Coast Guard, the Navy and KMPRC were deployed to carry out clean-up operations. Over 1 500 fishing vessels were also deployed. The Coast Guard applied dispersants from vessels and later helicopters over patches of floating oil. Tens of kilometres of booms were also deployed at sea and along coastal areas. The government-led response at sea was completed within two weeks although a large number of fishing vessels were still deployed in the following weeks to tow sorbent booms and collect tar balls. Some were used to transport manpower and materials to offshore islands in support of clean-up operations until later in the year. The Korean Coast Guard tasked a total of 21 licensed clean-up contractors, supported by local authorities and fisheries cooperatives to undertake shoreline clean-up operations. Onshore clean-up operations were carried out at numerous locations along the western coast of Korea. Local villagers, army and navy cadets and volunteers from all over Korea also participated in the clean-up operations. In excess of one million man-days were worked during the first two months. Clean-up operations involved both manual and mechanical removal of bulk oil and the work of a large number of volunteers wiping rocks and pebbles using sorbent materials. The removal of the bulk oil was completed by the end of March 2008. The major part of secondary clean-up operations, involving, among other techniques, surf washing, flushing and hot water high-pressure treatment, were completed by the end of June 2008. Some clean-up operations in remote areas continued until October 2008.
The 1992 Civil Liability and Fund Conventions The Republic of Korea is a Party to the 1992 Civil Liability Convention (CLC) and a Member State of the 1992 Fund, but not a Member State of the Supplementary Fund. As a consequence, since it is very likely that the total amount of damages will exceed the limitation amount applicable under the 1992 CLC, the Fund will
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be liable to pay compensation to the victims of the spill. The tonnage of the Hebei Spirit (146 848 GT) is in excess of 140 000 GT. The limitation amount applicable is therefore the maximum under the 1992 CLC, namely 89.77 million SDR. The total amount available for compensation under the 1992 CLC and the 1992 Fund Convention is 203 million SDR.
Level of payments The Executive Committee, at its March 2008 session, authorized the Director to settle and pay claims arising from this incident to the extent that they did not give rise to questions of principle not previously decided by the Committee. The Executive Committee also decided that the conversion of 203 million SDR into KRW would be made on the basis of the value of that currency vis--vis the SDR on the date of the adoption of the Executive Committees Record of Decisions of its 40th session, i.e. 13 March 2008 at the rate of 1 SDR = KRW 1 584.330, giving a total amount available for the compensation of KRW 321 618 999 000. At the same session the Committee noted that based on a preliminary estimation by the Funds experts, the total amount of losses arising as a result of the Hebei Spirit incident was likely to exceed the amount available under the 1992 Civil Liability and Fund Conventions. In view of the uncertainty as to the total amount of the losses, the Committee decided that payments should for the time being be limited to 60% of the established damages. In June 2008, the Executive Committee took note of the new information which indicated that the extent of the damage was likely to be superior to that initially estimated in March 2008. At that session, the Committee decided that, in view of the increased uncertainty as to the total amount of the potential claims, and in view of the need to ensure equal treatment to all claimants, payments made by the Fund should for the time being be limited to 35% of the established damages. The Executive Committee decided to maintain the level of payment at 35% of the amount of the established damages, and to review the situation at its next session, at the October 2008 session, as well as in March, June and October 2009.
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As of October 2009, the latest estimate of the total amount of the losses caused by the spill was between KRW 542 000 million and KRW 577 000 million.
Actions by the Korean Government Hardship payments made by the Korean Government The Korean Government informed the Fund that payments totalling KRW 117.2 billion had been made to residents in the affected areas. Out of this amount, the Central Government has provided KRW 76.8 billion, the Ghungcheongnam Province KRW 15 billion and private donors KRW 25.4 billion. The local authorities in the affected provinces have distributed the payments. It has been reported in the press that in Taean County, which is one of the most affected areas, a total of 18 757 households received payments between KRW 746 862 and KRW 2 916 000. In June 2008 the Korean Government informed the Executive Committee that these payments were made as donations to the affected residents. The payments therefore did not constitute payment for compensation of pollution damage and would not fall within the scope of Article 9.3 of the Fund Convention.
Payments by local authorities A number of local authorities in the affected provinces have made payments totalling KRW 4 770 million to claimants in the clean-up sector in respect of the cost of villagers labour in January and February 2008, corresponding to the difference between the amount claimed against the Fund and the Skuld Club and the amount assessed. A number of local authorities in the affected provinces have also made payments totalling KRW 9 569 million to claimants in the clean-up sector for similar costs incurred during the period March to June 2008, corresponding to the amounts claimed against the Skuld Club and the Fund. One local authority has made payment totalling KRW 23.5 million to claimants for villagers labour costs incurred in the period after August 2008. All these local authorities have submitted claims in respect of these payments.
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Special Law for the support of the victims of the Hebei Spirit incident At the June 2008 session of the Executive Committee, the Korean Government informed the Fund that a Special Law for the Support of Affected Inhabitants and the Restoration of the Marine Environment in respect of the Hebei Spirit Oil Pollution Incident was approved by the National Assembly in March 2008. Under the provisions of the Special Law, the Korean Government was authorised to make payments in full to claimants based on the assessments made by the Skuld Club and the Fund within 14 days from the date they submit proof of assessment to the Government. Claimants could therefore receive compensation in full for the losses suffered as a result of the incident based on the assessments of claims by the Fund and the Skuld Club. The Special Law entered into force on 15 June 2008. At the same session the Korean Government also informed the Fund that if the Fund and the Skuld Club paid claimants compensation on a pro-rata basis, the Korean Government would pay the claimants the remaining percentage so that all claimants would receive 100% of the assessment. As at the October 2009 session of the Executive Committee the Korean Government had made payments totalling KRW 29 900 million to 292 claimants in the clean-up sector based on assessments by the fund and the Skuld Club. The Korean Government has submitted a subrogated claim for these payments.
Loans granted by the Korean Government As a measure to assist victims of pollution damage as a result of the incident, the Korean Government has granted loans totalling KRW 1 330 million to 16 clean-up contractors through an agreement with the National Federation of Fisheries Cooperative.
Korean Government decision to stand last in the queue At the June 2008 Session of the Executive Committee the Korean Government informed the Committee of its decision to stand last in the queue to be in the region of KRW 89 billion, but that this figure was likely to increase as the Government continued to incur costs in order to regenerate the local economy,
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including works to reinstate the environment and promote consumer spending. The Fund and the Skuld Club are in frequent contact with the Korean Government to maintain a coordinated system for the exchange of information regarding compensation in order to avoid duplication of payments.
Cooperation Agreements between the Korean Government, the shipowner and the Skuld Club In January 2008, discussions took place on compensation issues which resulted in the First Cooperation Agreement concluded between the shipowner, Skuld Club, KMPRC and MOMAF. The Fund was consulted during the negotiations but is not a party to the Agreement. Details on the contents of the First Cooperation Agreement can be found in document 92FUND/EXC.40/9. The Skuld Club also entered into discussions with the Korean Government in order to resolve its concern that Korean courts dealing with the limitation proceedings might not fully take into account payments made by the Skuld Club and that the Club would therefore run the risk of paying compensation in excess of the limitation amount. In July 2008 a Second Cooperation Agreement was concluded between the shipowner, Skuld Club and the Korean Government (Ministry of Land, Transport and Maritime Affairs (MLTM), which had incorporated part of the functions of MOMAF). Under this Agreement, the Club undertook to pay claimants 100% of the assessed amounts up to the shipowners limit of liability under the 1992 CLC, namely 89.77 million SDR. In return, the Korean Government undertook to pay all claims in full, as assessed by the Club and Fund, as well as all amounts awarded by judgements under the 1992 CLC and 1992 Fund Convention in excess of the limit so as to ensure that all claimants would receive compensation in full. The Korean Government further undertook to deposit the amount already paid out by the Skuld Club to claimants into court should the Limitation Court order a deposit of the limitation fund.
Claims Office In January 2004, in anticipation of receiving a large number of claims, and
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after consultation with the Korean Government, the Fund and the Skuld Club opened a Claims Office (the Hebei Spirit Centre) in Seoul to assist claimants in the presentation of their claims for compensation. The office became fully operational on 22 January 2008. The Hebei Spirit Centre has a manager and six supporting staff members.
Claims for compensation As at the October 2009 session of the Executive Committee the Skuld Club and the Fund had received 7 960 claims totalling KRW 1 503 billion on behalf of 51 970 claimants. A further 30 155 claims, totalling about KRW 325 billion, were being registered. Out of all the claims reviewed by the Skuld Club and the Fund, 929 had been approved for the KRW 77 171 million and 978 claims had been rejected. Interim payments totalling KRW 65 926 million (GBP 36.4 million) had been made by the Skuld Club in respect of the 740 claims, including payments made to the Korean Government totalling KRW 25 105 million in respect of the 260 claims paid under the Special Law. These payments had been made at 100% of the assessed amount. The remaining claims had been queried and were awaiting response from the claimant. Most claims were submitted with very poor or no supporting documentation. As of the October 2009 session of the Executive Committee the Fund had received 82 125 claims, most of them from small-scale fishermen affected by the oil spill. These claimants are represented by fishery cooperatives or committees. In the past incidents in the Republic of Korea, the fishery cooperatives or committees submitted the claims on behalf of their numbers and the Fund registered and assessed the collective losses of each cooperative or committee who would then distribute the compensation to its members. The practice of previous incidents in the Republic of Korea cannot however be applied in the Hebei Spirit incident as a consequence of the Special Law, which entitles any claimant, who has submitted a claim for the compensation and has not received an offer of compensation within six months of the submission of their claim, to receive a loan from the Korean Government.
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In order to comply with the provisions of Korean Law, the Fund has to register the names and details of each fisherman member of the cooperative or committee individually. The Fund has therefore had to redesign the Web-based Claims Management System (WCMS) to enable registration of each claim individually while maintaining the possibility of assessing the loss of the cooperatives or committees as single groups.
Fisheries restrictions Following the incident, the Korean Government established a number of fisheries restrictions. The restrictions began to be lifted in some areas in April 2008. The last restrictions were lifted in September 2008. Details of the process followed by the Korean Government to lift the restrictions can be found in document IOPC/OCT09/3/8/1, paragraph 2.3. Examination of the data provided by the Korean Government regarding the basis on which the fisheries restrictions were imposed and lifted indicated, in the Secretariats view, that on the basis of the scientific and technical information available, all of the fisheries should reasonably have been reopened before the actual date when the restrictions were lifted. In June 2009 the 1992 Fund Executive Committee decided that the assessment of claims in the fisheries sector should be based on conclusive scientific information available to the Fund. Therefore, any losses suffered by fishermen after a point in time when the Korean Government could have reasonably had the opportunity to lift the restrictions should not be considered due to the contamination caused by the incident and should, in principle, not be considered admissible for compensation. The Skuld Club and the Fund are assessing claims from fishermen affected by the fisheries restrictions in accordance with the Executive Committee decision.
Investigations into the cause of the incident Investigation into Korea An investigation into the cause of the incident was initiated soon after the incident by the Incheon District Maritime Safety Tribunal in Korea. In September 2008, in a decision rendered by the Incheon Tribunal, both the two tugs and
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the Hebei Spirit were considered at fault for causing the collision. The Tribunal found that the Master and the Duty Officer of the Hebei Spirit were also partly liable for the collision between the crane barge and the Hebei Spirit. A number of defendants, including Samsung Heavy Industries, the Masters of the tug boats and the Master and Duty Officer of the Hebei Spirit have appealed against the decision to the Central Maritime Safety Tribunal. In December 2008 the Central Maritime Safety Tribunal delivered its decision. The decision of the Central Tribunal is similar to the one of the Incheon Tribunal in that the two tugs were found mainly responsible and the Master and the Duty Officer of the Hebei Spirit were also found partly liable for the collision between the crane barge and the Hebei Spirit.
Investigation in China (Hong Kong Special Administrative Region) (China (HKSAR)) An investigation into the cause of the incident had also been initiated by the ships flag State administration in China (HKSAR). The results of the investigation have not yet been published.
Legal proceedings Criminal proceedings In January 2008, the Public Prosecutor of the Seosan Branch of the Daejeon District Court (Seosan Court) brought criminal charges against the Masters of the crane barge and the two tugs. The Masters of the two tugs were arrested. Criminal proceedings were also brought against the Master and Chief Officer of the Hebei Spirit. The Master and Chief Officer of the Hebei Spirit were not arrested, but they were not permitted to leave the Republic of Korea. In June 2008, the Seosan Court delivered its judgement to the effect that (i) the Master of one of the tugboats was sentenced to three years imprisonment and a fine of KRW 2 million, (ii) the Master of the other tug boat was sentenced to one year imprisonment, (iii) the owner of the two tug boats (Samsung Heavy Industries), was sentenced to a fine of KRW 30 million, (iv) the Master of the crane barge was found not guilty and (v) the Master and Chief Officer
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of the Hebei Spirit were also found not guilty. The Public Prosecutor and the owner of the tug boats filed an appeal against the judgement, pending which the Master and Chief Officer of the Hebei Spirit were still not permitted to leave the Republic of Korea. In December 2008, the Criminal Court of Appeal (Daejeon Court) rendered its judgment. In its judgment, the Daejeon Court reduced the sentence against the Masters of the two tugboats. The judgement overturned the not-guilty judgements for the Master of the crane barge and the Master and Chief Officer of the Hebei Spirit. The owner of the Hebei Spirit was also given a fine of KRW 30 million and the Master and Chief Officer of the Hebei Spirit were arrested. In April 2009, the Korean Supreme Court annulled the Court of Appeals decision to imprison the crew members of the Hebei Spirit and they were allowed to leave the Republic of Korea. The Supreme Court, however, upheld the decision to imprison the Masters of one of the towing tugs and of the crane barge and confirmed the fines imposed by the Court of Appeal. In June 2009 the Master and Chief Officer of the Hebei Spirit were released from arrest and left the Republic of Korea.
Civil Proceedings Limitation proceedings by the Owners of the Hebei Spirit In February 2008, the owners of the Hebei Spirit made an application to commence limitation proceedings before the Seosan Branch of the Daejeon District Court (Limitation Court). The Limitation Court decided to postpone its decision on the shipowners right to limit his liability since the shipowners had not provided evidence that claims in excess of the limitation amount had been submitted and since the results of the criminal investigation had not been presented to the Court. In August 2008, at a hearing, the owner of the Hebei Spirit requested the Court to issue an order granting the shipowners right to limit its liability. The court however, decided not to grant the request and to give time to the victims of the oil spill to register their claims.
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In February 2009, the Limitation Court rendered an order for the commencement of the limitation proceedings. According to the Limitation Order, the persons who have claims against the owners of the Hebei Spirit had to register their claims by 8 May 2009, failing which the claimants would lose their rights against the limitation fund. Also in February 2009 a number of claimants appealed to the Daejeon Court of Appeal against the decision of the Limitation Court to commence limitation proceedings. In July 2009 the appeal was dismissed. A number of claimants appealed to the Supreme Court. The appeal is still pending. One hundred and twenty six thousand three hundred and sixteen claims totalling KRW 3 597 billion were submitted to the Limitation Court. The Limitation Court indicated that it would not accept further claims. The claimants would however still have time to modify the amount of their claim until such time as the Limitation Court would complete the assessment of the claims. The Limitation Court held a first hearing in June 2009. The Korean lawyers acting for the Skuld Club, the Fund and for a number of claimants, attended the meeting. It was agreed among the parties present that the Court Administrator would review the assessments by experts engaged by the Skuld Club and the Fund as well as the assessments by the experts engaged by the claimants, rather than appointing Court experts. In August 2009, the Limitation Court indicated its intention to monitor on a regular basis the progress in the registration and assessment of claims, and to schedule its subsequent hearings when the claims assessment process was more advanced. The 1992 Fund, through its Korean lawyers, is following the developments in the limitation proceedings.
Limitation proceedings by the bareboat charterer of the two tugboats and the crane barge In December 2008, the bareboat charterer of the two tug boats and of the crane barge, Samsung Heavy Industries (SHI), filed a petition requesting the Seoul Central District Court to issue an order granting the right to limit its liability in the amount of 2.2 million SDR.
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In March 2009, the Limitation Court rendered the order for the commencement of the limitation proceedings. The Court decided to grant SHI the right to limit its liability and set the limitation fund to KRW 5 600 million (GBP 2.9 million) including legal interest. SHI deposited this amount in court. The Limitation Court also decided that claims against the limitation fund should be registered with the Court by 19 June 2009. In June 2009, a number of claimants appealed to the Seoul Court of Appeal against the decision of the Limitation Court to grant the bareboat charterer the right to limit its liability. The Seoul Court of Appeal has not made a decision yet.
Claims by fishery interests In December 2007, a group of fishery claimants belonging to the Seosan Fisheries Cooperatives made an application to Seosan Court requesting the Court to order the preservation of evidence and to appoint a court expert to assess the losses. In March 2008, another group of fishery claimants from the area of Boryang City and Hongsung County made a similar application to the Hongsung Court. The 1992 Fund has instructed its Korean lawyers to intervene in the proceedings to ensure that the interests of the Fund are protected. In January and April 2008 respectively, the Courts of Seosan and Hongsung appointed the Maritime Research Institute of Pukyong National University and the Fishery Science Institute of the Jeonnam University as the court expert tasked with the assessment of the damages arising from the Hebei Spirit incident. The Courts ordered that any material that the court experts receive from the claimants is made available to the experts engaged by the Skuld Club and the Fund who should have unrestricted access to any material necessary to conduct the assessment of losses.
Injunction against the experts engaged by the Club and Fund In March 2008, three fishermen and two owners of raw-fish restaurants filed
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an application for an injunction with the Seoul Central District Court. This was aimed at preventing the experts appointed by the Club and the Fund from carrying out the assessments on the grounds that they were not qualified under Korean Law to carry out such work. In April 2008, the Court dismissed the application since the claimants still had the right to bring the claims into court if they did not agree with the assessment. The Court stated that under Korean law the experts engaged by the Club and Fund were authorised to carry out the investigation and assessment of damages arising from an oil pollution incident. The claimants appealed against the decision. In March 2009, the Seoul Court of Appeal rejected the appeal and confirmed the decision by the Seoul Central District Court. In April 2009, the claimants appealed against the decision to the Supreme Court of Korea. In July 2009, the appeal was dismissed by the Supreme Court of Korea. This decision is final.
Recourse action against Samsung C&T Corporation (Samsung C&T) and SHI In January 2009, the owners and insurers of the Hebei Spirit commenced a recourse action against Samsung C&T and SHI the owner and operator/bareboat charterer of the two towing tugs, the anchor boat and the crane barge, in the Court of Ningbo in the Peoples Republic of China, combined with an attachment of SHIs shares in the shipyards in China as security. In January 2009, the Director decided that in order to protect the interests of the 1992 Fund, the Fund should also commence its own recourse action against Samsung C&T and SHI in the Court of Ningbo in the Peoples Republic of China, combined with an attachment of SHIs shares in the shipyards in China as security. In January 2009, the Ningbo Maritime Court accepted the two recourse actions filed by the owner/Skuld Club and the 1992 Fund. The total amount claimed in each action is RMB 1 367 million or US $200 million. The Court also accepted the two applications for attachment of SHIs shares in the shipyards and issued orders accordingly. In relation to the attachment of SHIs shares, the Fund arranged for the deposit
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of the required countersecurity, corresponding to 10% of the amount claimed or US $20 million (GBP 12.3 million) through the Skuld Club. At its session in March 2009, the 1992 Fund Executive Committee endorsed the decision taken by the Director in January 2009 to commence recourse action against Samsung C&T and SHI in the Ningbo Maritime Court in China at the same time as the owner and the insurer of the Hebei Spirit. The Committee also decided that the Fund should continue the recourse action. Service of proceedings on both Samsung C&T and SHI was effected in September 2009 but both have filed application objecting to the jurisdiction of the Court of Ningbo and, in the case of SHI, objecting to the attachment. Submissions in response to the applications have been lodged on behalf of the 1992 Fund and the decision of the Court of Ningbo on all applications is expected shortly.
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APPENDIX II: MY 25 YEARS WITH INTERTANKO
Appendix II
My 25 years with INTERTANKO

Looking back on my 25 years with INTERTANKO, what first comes to mind now 10 months after retirement is that I as manager perhaps first and foremost played the role of merchant by and large successfully but also of diplomat perhaps not always so successfully! Together with devoted chairmen, colleagues and a no less devoted membership, the Association grew from a modest start to one of the most respected spokesmen for the shipping industry. The first budget for 1971 was set at USD 45,000, whereas by 1995 the budget was USD 3,850,000, and we had our own small office building which, at the time I retired, was written down below market value. Erling Naess has a chapter about INTERTANKO in his autobiography where he rightly underlines the great value of the support from the very start from the Norwegian Shipowners Association. Nevertheless, when we were able the buy our own little office building in 1989; this was felt to be a step forward. We had always been independent - but with our own address we were now also clearly seen to be independent! The wholehearted support from the Greek side, in particular the Greek Shipping Co-Operation Committee in London, was also a very important factor, not least because its chairmen personally were so keenly interested in a closer co-operation between independent owners world-wide. INTERTANKOs touch of uniqueness was from the very start its basic concept: an association for tanker owners and only for the independents. This was the strength, but, one may say, with an inherent weakness, as the very independence on some issues could make co-operation difficult. This book should, however, prove that we had a long agenda with a number of topics of
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INTERTANKOs h.q. in Gange-Rolvs gate at the time mutual interest. Of course there were limitations. Available resources was one. Secondly, no company is prepared to sacrifice its own business interest to make a better world for its competitors. But even within difficult areas, true statesmanship sometimes surfaced and INTERTANKO could take a large step ahead. During most of the period the market was very poor. Tanker owners lost money and some went bankrupt. In this situation it was often difficult to make outside commentators appreciate the overriding principle in the Articles of Association of support for free competition. Not only would any efforts that smacked of market manipulation have brought us in trouble with the law in many countries, but our credibility would have suffered dramatically if we had been seen to restrict competition whilst at the same time in UNCTAD proclaiming how consumers world-wide benefited from the free competition in the bulk market. Still, it takes time and hard work to be recognized. During the first years some US oil companies would not even speak to INTERTANKO. One of the shortest and most concise messages ever received was a telex from a top oil executive replying to a request for a meeting as follows: I do not want to see you here. When acting as a commercial traveler soliciting membership support
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in London, I was sometimes told: INTERTANKO is a dirty word. Not an easy remark to forget. Today this is all past history. Oil companies are associate members and participate at the AGMs. The dream of the late Per Gram, who was one of the top maritime lawyers of his time and chairman of our Documentary Committee for many years, was to have the oils standardize the great number of conflicting charter party clauses in existence particularly in regard to the technical descriptions of tanker operations. Recently a dialogue took place with The European Petroleum Institute, thanks to the efforts of Trygve Meyer. The outcome, however, remains to be seen. The value of the information service is perhaps sometimes overlooked when INTERTANKO is discussed. Information flows to shipowners from many sources. To distinguish the INTERTANKO circulars from those of other organizations, we took Neil Freelands simple advice and gave them colours. Realising that the tanker owners priority is to try to make money and not to read circulars, we strictly practiced the rule that no topic should extend beyond a single page. The shipping industry has been traditionally secretive and we tried to be very open. The trade Press supported us but the financial Press was less interested. Despite advice to the contrary, a Freight and Demurrage Pool was established and since the start, claims for nearly 60 million US dollars have been settled. The environmental challenge has increasingly played a more important part on the agenda. Accidents are bound to happen, whatever form or shape transportation takes. Unfortunately, a tanker accident is often a very spectacular event attracting more media attention than disasters involving air planes, ferryboats etc., where hundreds of lives may be lost. Tanker owners can be proud of the improved safety record during the last decades. Nevertheless there will be a temptation for owners who have burned their fingers by contracting new and very expensive tankers to press for tougher rules for the existing ones. I would like to take this opportunity to go back to 1980 when the Council passed a resolution to IMCO stressing that implementation of existing rules must be given higher priority and also warning against the trend to change technical rules before they had been tried out. IMCO did not reply directly, but passed in the same year the well-known assembly resolution A500, which stated that amendments to existing conventions should only take place in case of compelling need - and implementation of what had already been signed must take priority. The work for effective and even implementation of safety legislation has always been high on INTERTANKOs agenda. A particular challenge was the
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penalization of double hull and SBT tankers through higher port costs and to some extent high P. and I. premiums due to their higher gross tonnage. Thanks to a member of the Norwegian Parliament, who being a shipowner himself understood the problem, it was solved in Norwegian ports and by and by in many other ports as well. The environmental problems can be solved. It would help if the users of tonnage were more selective with the tonnage they chartered in or were prepared to pay up for quality. In practice it has been argued that it is the owners with the most expensive tankers who press the market down - they cannot afford to let their tankers lay idle and wait for better rates. It would also help if governments implemented the safety conventions somewhat more quickly and more effectively than seen so far. In this book on the first 25 years from the inaugural meeting in Oslo on 21st Oct 1970, there will also be comments on the future strategy, as put forward by the new Chairman and Managing Director. During 1995 a number of new initiatives have been taken, sub-offices have been set up and the staff has been strengthened. For me the strategy was not to go forward quickly and keep the financial situation in good order, so that no member, regardless of the size of his fleet, could use his contribution to unduly press for certain policies. Looking back I feel privileged to have been allowed to work together with so many gifted and interesting people. My warm feelings go first and foremost to my INTERTANKO colleagues, past and present, to the chairmen and members in more than 40 countries, but also to colleagues in other private and governmental associations with which we co-operated, to the Press people and all the industry representatives who gave inspiration and colour to an exciting time in my life. Tormod Rafgard
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BIBLIOGRAPHY
Bibliography
Bakka, Dag Jr.: Hoegh Shipping through Cycles, Oslo, 1997 Bishop, Archie: Places of Refuge presentation CMI seminar in Dubrovnik, May 2007 BP: Fifty years in pictures, London, 1959 Braer: Impact of an oil spill Editors: J.M. Davies and G. Topping BP Company: Our Industry private circulation, third edition Bugge, Alex. a.o.: Den norske Sjofartshistorie, Steenske forlag, Oslo, 1933 Chao, Wu: "Pollution from the Carriage of Oil by Sea: Liability and Compensation," Kluwer Law International, London, 1996 Clarke, Keith: Santa Barbara Oil Spill: Retrospect - Kluwer Law International, London, 1996 Cowan, Edward: Oil and Water, William Kimber, London, 1969 Danielsen, Rolf: Frakteskuter og Fraktemenn, Fylkesmuseet Telemark, 1993 De la Rue, Colin, editor: Liability for Damage to the Marine Environment, Lloyds, London press, 1993 Det Norske Veritas: Anchor and Balance, Cappelen, Oslo, 1989 Devanney, Jack: The Tankship Tromedy, The CTX Press, Florida, 2005 Embiricos, P. A.: The Quest for the Environmental Ship, INTERTANKO, Oslo, 1991 Egeland, John O.: Kongeveien II, Aschehoug, Oslo, 1973 Evans, Peter: Onassis, Hjemmets bokforlag, Oslo, 1987 Falkanger, Tor/ Bull, H. J.: Innforing i Sjorett, Forsikringsakademiet, Oslo, 1995 Falkanger, T.: Sjotransportoren og den norske forurensningslov saertrykk, Oslo, 1991 Frischauer, Willy: Onassis, Dreyer, Oslo, 1968 Gibb, D.E.W: Lloyds of London, Macmillan & Company Ltd., London, 1957 Gill & Booker & Soper: The Wreck of the Torrey Canyon, David & Charles, New York, 1967 Harlaftis, G.: A history of Greek-Owned Shipping, Routledge, London and New York, 1996 Howarth, Stephen: Sea Shell, Thomas Reed, Wiltshire, 1992 IMCO: Official Records - The International Legal Conference on Marine Pollution Damage 1969, London, 1973 IMO Library Services Current Awareness Bulletin, 1998-2007 IMO: Procedings of the Marine Safety Council, 1995 IMO News: No. 1, 1998 INTERTANKO: The first twenty-five years, Oslo, 1996 IOPCF: 25 years, Impact PR & Design, Canterbury Jacobsen, Alf R.: Dynastiet Bergesen, Atheneum Forlag, Oslo, 1984 John I. Jacobs & Company: Semi-annual reports, London Jacobsson, M.: "Compensation for costs of removal of oil from sunken tankers," Shipping & Transport International, 2007, p.8 Jacobsson, M.: "Diplomatic Conference adopts Protocol to the 1996 HNS Convention," Shipping & Transport International, 2010, No. 2, p. 8. Jacobsson, M.: "El Rgimen Internacional de Responsabilidad e Indemnizacin de Daos Debidos a la Contaminacin por Hydrocarburos: Evolucin Reciente," Revista de estudios martimos, published by Associacin Argentina de Derecho Martimo, 2005 Jacobsson, M.; Ndiaye, T. M., and Wolfrum, R., (eds): "Uniform Application of the International Regime on Liability and Compensation for Oil Pollution Damage," Law of the Sea, Environmental Law and Settlement of Disputes, Liber Amicorum Judge Thomas A. Mensah, Leiden/Boston: Martinus Nijhoff Publishers, 2007, p. 421. Jacobsson, M.: "Le rgime international d'indemnisation des victimes des mares noires en pleine volution," Le Droit Maritime Franais, No. 652, October 2004 Jacobsson, M.: "L'exprience franaise du FIPOL," Le Droit Maritime Franais, 2007, p. 968 Jacobsson, M.: article in the publication Journal of International Maritime Law, 2009, p. 21.
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BIBLIOGRAPHY
Kennedy, A.: "Classification Societies and the Law" presentation, Greece, Sept. 2007 King, G.A.B.: Tanker Practise, The Maritime Press Limited, London, 1960 King, G.A.B.: A Love of Ships, Kenneth Mason, 1991 Klaestad, H.: Rederansvaret, Cappelen, Kristiania, 1920 Leggett, Jeremy: "Carbon War: Global Warming and the End of the Oil Era," Routledge, 2001 Lloyds List: 250th Anniversary Supplement; Lloyds of London Press, 1984 Longhurst, Henry: "Adventure in Oil," Sidgwick & Jackson, London, 1959 Lucas, W.E.: Eagle Fleet, Weidenfield & Nicolson, London, 1955 Michelet, Hans Petter: Last og Ansvar, p. 62-66, Oslo, 1993 Miles, Roger: Class societies and liabilities, Marlaw Conference, Greece, Sept. 2007 Mitchell, C. Bradford, "Touching the Adventures & Perils," United States Salvage Association Inc., New York, 1970 Montefiore, S.S.: Young Stalin, Phoenix, London, 2007 Mostert, Noel: Supership, A.A. Knopf, New York, 1974 Naess, Erling D.: Autobiography of a Shipping Man, Seatrade, Colchester, 1977 Nalder, Eric: Tankers Full of Trouble, Grove Press, New York, 1994 National Research Council: Tanker Spills Prevention by Design, Washington, 1991 Nelson-Smith, A.: Oil Pollution and Marine Ecology, Elek Science, London, 1972 Newton, John: A Century of Tankers, INTERTANKO, 2002 Parliament of Australia: Ships of Shame, Canberra, 1992 Petrov, Richard: The Black Tide, Hodder & Stoughton, London, 1968 Platou, Oscar: Sorett, Christiania, 1900 Plimsoll, Samuel: Our Seamen - An Appeal, Virtue & Co., London, 1873 Ratcliffe, Mike: Liquid Gold Ships, Lloyds of London Press Ltd., 1985 Reksten, Audun: Slik var det, Gyldendal, Oslo, 1983 Research Council: Tanker Spills, National Academy Press, Washington, 1991 Risanger, Otto: Skipet som ikke kunne synke, Cappelen forlag, Oslo, 1976 Sampson, A.: The Seven Sisters, The Viking Press, New York, 1976 (Bantam) Sea Empress U.K. Governments Environmental Evaluation Committee, London, 1998 Senate report 101 Congress 1st Session, July 28, 1989 Solly, Dr. Raymond: Supertankers, Witherby, London, 2001 SSY Consultancy & Research: World Oil Tanker Trends, London, 2000 Taylor & Welty: The Black Bonanza, McGraw-Hill, New York, 1950 Tolf, Robert W.: The Russian Rockefellers. The Saga of the Nobel Family and the Russian Oil Industry, Sanford, California, 1976 Zischka A.: Krigen om Oljen, Stenersens forlag, 1941 Ozaiyr Z. O.: Liability for Oil Pollution and Collisions, Sedgwick, London, 1998 Welty & Taylor: The 76 Bonanza, Lane Magazine Book Co., California, 1966 Wheelright, Jeff: Degrees of Disaster, Simon & Schuster, New York, 1994
377
SHIP INDEX
Index of Ships
A Albortz: 262 ABT Summer: 262 Aegan Captain: 147 Aegean Sea: 13, 266, 267, 268, 301, 302, 303 Agip Abruzzo: 254, 257 Allegro: 80, 106 Al Wasit: 266 American Trader: 208, 213, 220, 226 Amoco Cadiz: 13, 109, 119123, 140, 143, 147, 148, 174, 175, 198, 212, 227, 244, 246, 251, 254, 257, 280, 283, 309 Antonio Lavalleja: 80 Argo Merchant: 13, 115, 116, 140, 212, 334 Arosa: 238 Arrow: 80, 85, 106 Athos I: 238 Atlantic Empress: 13, 147 B Barcelona: 139 Berge Adria: 110 Berge Brioni: 110, 113 Berge Istra: 84, 110, 111, 112, 113, 114, 155, 343 Berge Vanga: 84, 110, 112, 114, 155, 343 Betelgeuse: 54, 57, 146, 152, 281, 334 Braer: 13, 268273, 275 C Castillo De Bellver: 148, 152 Castillo De Monte Aragon: 193 Castor: 300304, 307, 337 D Derbyshire: 136, 148, 152 E Eburna: 28 Eleo Maersk: 238 Elizabeth Watts: 20 Exxon Mediterranean: 207, 213 Exxon Valdez: 13, 16, 89, 116, 122, 150, 151, 157, 195207, 213, 223, 235, 237, 238, 239, 240, 248, 257, 258, 259, 266, 269, 271, 305, 309, 346, 348 Erika: 13, 17, 151, 193, 264, 280299, 302, 304, 305, 306, 318, 323, 328, 335, 337, 337, 341, 342, 346, 348 Estonia: 150, 152 F Full City: 345 G General Colocotronis: 54, 57 Gluckauf: 21, 22 H Haven: 13, 254, 257262 Hawaiian Patriot: 117 Hebei Spirit: 328, 329, 358372 Herald of Free Enterprise: 150, 151, 152 Horta Borbosa: 109 I Idemitsu Maru: 43 Independenta: 148, 152 Inverpool: 46 Irenes Serenade: 148 J Jacob Maersk: 110, 274 Jahre Viking: 192 Jules Henry: 25 K Khark 5: 193 Kirki: 13, 18, 263, 264, 265, 336, 343 Kong Haakon VII: 80, 83, 84 L Lake Palourde: 48, 55 Limburg: 192, 194 M Mactra: 80, 83, 85 Maersk Navigator: 273274 Manhattan: 196 Maria S: 285 Marpessa: 80, 82, 83, 85 Mega Borg: 150, 208, 213
378
SHIP INDEX
Metula: 109, 110 Moscow Universe: 345 Murex: 22, 23 N Naess Norseman: 43 Nakhodka: 252, 254, 336, 348 Nissho Maru: 43 O Ocean Eagle: 57 Odyssey: 193 Olympic Bravery: 116, 159 P Pacific Glory: 80, 106 Patmos: 193 Polycommander: 80 President Riviera: 208 Prestige: 13, 298, 300309, 313, 314, 326, 337, 338, 341, 348 R Ramsey: 20 Rio Orinoco: 245, 247 Risobank: 20 S Samho T3: 358 Samsung No 1: 328, 358 Samsung No 5: 358 Sansinena: 48, 54, 58 Santa Maria: 196, 199 Scandinavian Star: 150, 152 Sea Empress: 13, 247, 274279, 345 Sea Star: 109 Seawise Giant: 191 Selandia: 27 Silja: 8184 Sinclair Petrolore: 41, 47 Silverlip: 25 Solar I: 323 S/R Long Beach: 207 Stena Convoy: 238
T Tanio: 122, 123, 147, 166, 178 Titanic: 12, 36, 48 Torrey Canyon: 12, 13, 14, 15, 4857, 60, 61, 63, 65, 68, 76, 80, 94, 106, 107, 116, 198, 269, 274, 301, 304, 348, 352 U Universe Apollo: 41 Universe Ireland: 43 Urquiola: 117, 267 Utrecht: 51 V Ville de Majunga: 81 Volgoneft: 326328 W Wafra: 80, 85 Westchester: 238 World Petrobas: 140 World Prodigy: 208, 213 World Saga: 130 Z Zoraster: 22
379
INDEX OF ORGANIZATIONS AND KEY COMPANIES
Index of Organizations and Key Companies

A Acomarit, 274 Advisory Committee on Pollution of the Seas, 164 American Bureau of Shipping (ABS), 10, 296, 298, 341 American Committee for Flags of Necessity, 41, 45 American Hull Insurance Syndicate, 57 American Petroleum Institute (API), 10 Amnesty International, 16 Amoco International Oil Company, 120, 175 Amoco Transport Corporation, 119, 120, 175, 190 Anglo American Oil Company, 27 Anglo-Norness Shipping Company, 42 Anglo Persian Oil Company, 27, 29 Anglo-Saxon Petroleum Company, 27, 30 Apex Oil Company, 199, 209 B Bank of Scotland, 285 Barracuda Tanker Corporation, 48 Bergvall & Hudner, 269 British Maritime Law Association, 63 British Petroleum (BP), 25, 29, 40, 48, 50-54, 56, 79, 82-83, 129, 153, 190, 195, 199, 208-209, 220, 226, 240-243, 287, 292, 356 Bureau Veritas, 147, 262, 281, 296, 332, 333, 337, 343 Bureau Wisjmuller N.V, 51 C Chevron, 40, 79, 144, 190 Comite Maritime International (CMI), 10, 59, 63-64, 67, 71, 74, 85, 87, 123, 163, 187, 247, 301, 325, 342, 349, 354, 356 Concordia Maritime, 286 Consolato Del Mare, 59 Coordination Committee on Oil Pollution at Sea, 47 Coulouthros Shipping Agency, 266, 302 Crown Resources, 302 D Det Norske Veritas (DNV), 10, 113-114, 144, 146, 330, 333-337, 343, 356 E Eagle Oil Transport, 29 East Asiatic Company, 27 Environmental Protection Agency (EPA), 241, 260, 276 Esso Petroleum/Exxon/Mobil, 23, 40, 46, 79, 81, 127, 190, 287, 7-8, 13, 16, 79, 89, 116, 122, 150151, 157, 190, 195-213, 202, 204, 206-207, 215, 219-220, 234, 238, 243, 248, 257-259, 266, 269, 271, 273, 284, 305, 309, 346, 348, 378 European Community, 18, 262, 338-340 European Court of Human Rights, 315 European Maritime Safety Agency (EMSA), 297, 336, 338 F Fearnleys, 15, 45, 130, 152-155 Federal Water Quality Administration, 61 Federation for American-Controlled Shipping, 42 Fleet Factors Corp., 228 Friends of the Earth International (FOEI), 10, 164, 169, 172 G Gard, 81, 135,150, Germanischer Lloyd, 263, 333, 336-337 Greek Shipowners Union, 190, 289 Greek Shipping Cooperation Committee, 39 H Hellespont Steamship Corporation, 137 Hilmar Reksten, 80, 82-84, 126 HM Strategies, 45, 153-155, 198 House of Lords, 47, 210 Hugo Neu Corporation, 110 I ICS, 78 Inter-Governmental Maritime Consultative Organization (IMCO), 6, 10, 15, 45-48, 50, 52-53, 55-57, 60-63, 66, 67, 71-73, 75, 78, 80-81, 85, 87, 89, 91, 101, 103, 106, 117, 119, 122, 141-142, 147, 156, 158-159, 177, 190, 332-334, 347, 354, 356, 375 International Association of Classification Societies (IACS), 10, 286, 307, 312, 331, 333, 340, 342-343 International Association of Independent Tanker Owners (INTERTANKO), 9-10, 17, 23, 31-32, 42, 64, 71, 78, 127-133, 137, 140-142, 144, 172, 180, 190, 192, 194, 213, 217, 220, 224, 231, 232, 235, 237, 262, 265, 286, 298, 321, 329, 332, 333, 338, 342-343, 347-349, 354, 356-357, 373-376 International Association of Lighthouse Authorities (IALA), 10, 171 International Association of Ports and Harbours, 171 International Chamber of Shipping (ICS), 10, 6364, 78-79, 112-113, 182, 297, 334 International Federation of Shipmasters (IFSMA),
380
INDEX OF ORGANIZATIONS AND KEY COMPANIES
292 International Maritime Industry Forum, 128-129 International Maritime Organization (IMO), 8, 9, 15-16, 18, 64, 67, 71-72, 77, 79, 114, 116, 129130, 132, 144, 151-152, 156-159, 165, 177, 180, 182, 185, 188-189, 193-194, 202, 211, 214-216, 218, 221-222, 225, 232, 244-256, 258, 262, 264266, 280, 288-290, 297-301, 303-305, 316, 318320, 322, 325, 331, 335-336, 339, 341-342, 347-348, 350-354, 356-357 International Tanker Owners Pollution Federation (ITOPF), 10, 15, 152, 254-255, 262 International Transport Workers Federation (ITF), 10, 41, 45, 348, 354 International Union for Conservation of Nature and Natural Resources (IUCN), 10, 174 Irish Shipping Limited, 65 J John I. Jacobs & Company Limited, 47-48, 119, 126, 130-131, 134, 140, 146, 213, 260 L Liverpool Shipowners Association, 35 London Steamshipowners Mutual Insurance Association (the London Club), 302, 309 M Milford Haven Port Authority (MHPA), 11, 275-278 N National Fisheries Services, 204 National Oceanic and Atmospheric Administration (NOAA), 11, 209, 223-224 National Iranian Tanker Company, 138-139 National Transportation Safety Board (NTSB), 11, 199 Northern Shipowners Defence Club, 69 Norwegian Shipping and Trade Mission (Nortraship), 38-39, 42 O Oil Companies International Maritime Forum (OCIMF), 11, 64, 78, 85, 88-89, 94, 100, 104-106, 112-113, 160, 174, 179-180, 184, 191, 286, 319, 334, 346, 348, 352 Organisation for Economic Cooperation and Development (OECD), 18, 180 P P&I Clubs, 18, 63, 69, 73, 78, 89, 104-105, 135,
146, 150, 152, 165-166, 169, 174, 177, 181-182, 192-193, 209-210, 229-230, 233-234, 245, 252, 255, 260, 267, 269, 271, 290, 314, 320, 322-324, 326, 346, 352-353 Pennsylvania Rock Oil Company, 20 R Registro Italiano Navale (RINA), 284-286, 292298, 333, 337, 341 Repsol, 266-268, 284, 303 Royal Dutch, 22 S Sea River Maritime Co., 207 Shell Oil, 22-25, 27-30, 40, 79, 80, 82-84, 100, 109, 119, 124, 127, 190, 216, 219, 221, 234, 287288, 352 Shetland Salmon Farmers Association, 272 Shetland Sea Farms Ltd., 272-273 Sigval Bergesen, d.y., 62, 84, 110, 112, 114, 234 Skuld, 63, 269-273, 277-279, 325, 239, 356, 357, 360-362, 364, 367-370 Secretary of State's Representative for Maritime Salvage and Intervention (SOSREP), 279 Standard Oil Co. of Indiana, 22-23, 25, 119, 120, 175, 227 Suez Canal Company, 22 T Tevere Shipping Company, 281, 292, 296 Texaco, 40, 79, 190, 274, 278 Total, 146-147, 281, 283, 286-288, 290-293, 295296, 298-299, 334 U Ugland Nordic Shipping AS (UNS), 150 UK Chamber of Shipping, 233-234 UK Department of Transport, 270 UK Environment Agency, 276 Union Carbide, 16 Union Oil Company of California, 48, 52, 54-57, 61, 195-196 United Nations, 46, 137, 266, 316 UN Security Council, 137, 192 US Court of Appeals, 55-56, 122, 202, 223-224, 226-227, 270, 343 W West of England Shipowners Mutual Insurance Association, 209-210 Wilh Wilhelmsen, 30 World Wide Shipping Group, 219, 255
381
INDEX OF PEOPLE
Index of People
A Alkemade, J. van Rijn van, 66, 86, 97, 98, 101, 104, 277 Anders, P., 175 Anderson, Charles B., 106, 115, 123, 168, 173, 207, 213, 220, 225, 229, 268 Andrews Mark, 276 Appelbaum, Admiral, 232 Aubin, David, 61 B Bievre, Aline de, 14, 164, 182 Bingham, Lord Chief Justice, 277 Bissel, George H., 19 Bardari, Captain Pasquale, 119 Blackwood, I., 184 Blake, George, 236 Blom, B., 86 Boe, Carsten, 144 Boudreaux, Mark, 204 Boutros-Ghali, UN Secretary General Dr. Boutros, 316 Bonfiglio, Silvano, 50 Breaux, Senator, 189, 218, 237 Bredholt, Jorgen, 108, 192 Brigstocke, G.R.W., 86, 91, 94, 97, 102, 104, 105, 107 Bruzelius, K.M., 162 Bryant, Charles, 20 Bush, George Sr., 136, 200, 213, 214, 218, 220, 248 C Carlsson, Lars, 286 Carly, M.R., 169 Carter, Jimmy, 116, 211 Carven, Chris J., 190 Chalos, Michael, 206 Chao, Wu, 62, 72, 79, 99, 159, 168, 170, 176, 191, 194, 220, 226, 229, 347, 354, 356 Chirac, Jacques, 302, 305, 338 Churchill, Winston, 27 Clerici, Paolo, 287, 335, 343 Clinton, Bill, 231 Cockford, David, 348 Coglin, Terence, 230 Cole, J.A. Jr., 190 Coppolani, Charles, 317 Coulouthros, John, 266, 302 Curzon, Lord, 29 D DArcy, William Knox, 29 Danielsen, Rolf Kr., 23 De Fazio, Peter, 14 De la Rue, Colin, 87, 106, 115, 168, 173, 187, 207, 213, 220, 225, 229, 268, 354, 356 Desmarest, Henry, 287 Desmarest, Thierry, 290 Deterding, Henry, 24 Devanney, Jack, 115, 123, 140, 265, 304, 332, 341, 343, 356 Devlin, Lord P.C., Lord, 63, 67, 74 Diesel, Rudolf, 26 Djavad, J., 107 Dole, Elizabeth H., 188 Donaldson, Lord, 269, 275, 277, 279 Doraiswamy, R., 89, 92 Douay, Claude, 67, 72, 73, 91, 95, 96, 103, 207, 108, 162, 171, 173, 175, 181, 182 Doud, A.L., 86 Drake, Edwin, 19, 20 Dyvi, Jan Erik, 129 E Eeg, Edmund, 20 Embiricos, E.G, 354 Embiricos, Philip, 17, 236, 238, 354, 356 F Foley, Maurice, 52 Ford, Gerald, 211 Fredriksen, John, 146, 274 G Gallagher, Ed, 276 Ganten, Reinhard, 162, 163, 168, 176, 188 Gesmar, E., 173 Ghee, Peter H., 219 Gibson, E.A., 20 Goad, Sir Colin, 85, 245 Goh, P.C., 105 Goldstein, Steven, 202 Goschen, Lord, 275 Goulandris, Peter John, 127, 255 Gram, Per, 71 Graham, William, 245 Gregory, Sally, 272 Grey, Michael, 346, 353 H Haji-Ioannou, Lucas / Polys / Stelios, 258, 260, 261
382
INDEX OF PEOPLE
Hall, James, 35, 36 Hallberg, C.R., 103 Hammer, Jarle, 45, 153-155 Hansen, Gustav Conrad, 21 Hansen, Thormod Holt, 114 Hansson, Herbjorn, 131, 150 Hare, Jonathan, 277 Harlaftis, G., 39 Harman, Sir John, 277 Hartigan, Ian G.S., 190 Hazelwood, Captain, 197, 200, 205, 313 Healey, Denise, 52 Heyerdahl, Thor, 128 Hitler, Adolf, 37 Hollingsworth, B.F., 161, 164, 175, 182, 185, 225 Horrocks, Chris, 182 Howard, Stephen, 25 Hudig, Jan, 42 Hughes, John, 286 Hussein, Saddam, 136 Hoegh, Leif & Co., 30 Hoegh, Ove, 8 Hoegh, Westye, 8, 227 I Ivanov, G., 186 J Jaafar, Dr. A.B., 165, 171 Jackson, Glenda, 275 Jacobsson, Mns, 87, 157, 159, 168, 178, 183, 184, 244, 251, 260, 309, 356, 357 Jahre, Anders, 62 Jahre, Jorgen, 127, 128, 129, Jamieson, Donald, 65, 350 Jeannel, M.R., 104 K Kalpin, Dr. A., 81, 89 Keeler, R. von, 92 Kelley, Juan, 98 Kennedy, Andrew, 343, 357 Kennedy, C.K., 98, 99 Kerry, M.J., 66, 69, 70, 93 Kessler, Jean, 22 Khomeini, Ayatollah, 25, 189 King, George, 52, 57, 357 King, Stephen, 14 Kirby, John, 100, 124, 127 Klingsborn, E., 164 Kloster, Knut, 342 Kulukundis, John, 32, 232, 234 Kulukundis, Miles, 232, 234 Kurzman, Dan, 16 Kvenvolden, K.A., 203
L Langley, J.C., 87, 92, 104, 161 Laurin, Hans, 349 Leathard, Peter, 204 Leggett, Jeremy, 357 Lentz, Sally Ann, 237 Leon, Imeldo Barreto, 111 Liar, Albert, 64, 65 Livanos, Stavros, 39 Lockyer, Bill, 208 Lopez, Epifanio, 111 Lopez-Sors, Jose, 314, 315 Ludbrook, L.J.W., 169 Ludwig, Daniel K., 41, 47, 127 Lyras, John M., 289, 314 M McDonald, Rodger, 292 Makowsky, A., 97 Malone, Bob, 201 Mangouras, Apostolos, 312-315 Margetis, Michael, 302, 314 Mathur, Karun, 285, 286, 294, 295 Maslov, George, 76 Massey, E.A., 94, 97, 98 McCammon, Molly, 203 McGrath, Ian, 216 McGovern, J.N., 65, 69, 87 Medcraft, P.A., 88, 104, 105 Mensah, Thomas, 170, 316, 325 Meyer, Trygve, 132, 373 Mink, Walter C., 190 Mitchell, C. Bradford, 57, 357 Mitchell, George, 215-217, 220, 224, 349, 352, 354, 357 Mitropoulos, Efthimios E., 245 Moestue, Sven, 9, 81, 85 Mohamed, A.A.K., 73 Montefiore, Simon Sebag, 25 Mostert, Noel, 13, 14, 57, 85, 357 Muller, W., 64, 86, 88 Moller, A.P., 30, 31, 62, 219, 234 Moller, Maersk McKinney, 31 Mossadeq, Dr., 25 N Naess, Erling Dekke, 41-43, 133-134 Nalder, Eric, 13, 16, 57, 119, 207, 236, 238, 357 Newton, John, 23, 39, 131 Niarchos, Stavros, 41 Nicholas II, Tsar, 24 Nicholson, W.B., 95 Nielsen, Ove, 46, 245 Nixon, Richard, 211 Nobel, Ludwig, 22, 24 Nomura, I., 100
383
INDEX OF PEOPLE
Nordenson, Ulf, 66, 74, 86, 87, 92, 93, 103, 106, 107 Nordenstrom, Nils, 334 O Onassis, Aristotle, 40 ONeil, William, 245, 248, 249, 289, 299 P Palacio, Loyola de, 288, 289, 306 Pao, Sir Yue-Kong, 127, 141, 144, 255, 264 Papachristidis, Basil, 137, 192 Papadopolos, Georgios, 115 Paust, Dagfinn, 31 Perrakis, I., 98, 182, 186 Perrett, J.R., 161, 176, 186 Petrow, Richard, 54, 57, 127 Pevlevi, Reza Khan, 25 Philip, Allan, 74, 95, 101, 105 Plimsoll, Samuel, 34-37, 357 Pompidou, Georges, 53 Pontavice, Du, 350, 354 Popp, Alfred H.E. (Q.C.), 175, 248, 317-320, 325, 351 Poulsson, Annar, 63, 89, 101 R Rajwar, L.M.S., 66 Ratcliff, Mike, 25, 48 Raymond, Lee, 201 Reagan, Ronald, President, 141, 188, 211 Reksten, Hilmar, 126 Remond-Gouilloud, M., 350, 354 Rentz-Petersen, Carl, 127 Reza, Mohammed, 25 Riedemann, Heinrich, 21 Riley, J.C.W., 181 Rockefeller, John D., 23 Roullier, Jean, 245 Rugiati, Pastrengo, 48, 50, 53-54 Ryansak, Jerry, 353-354 S Salisbury, Lord, 23 Salvesen, Emil, 20 Sanders, E.A., 20 Sangster, Ted, 276-77 Samuel, Marcus, 22-24 Savarese, Guiseppe, 284-285, 293-295 Schierwater, Harry T., 30-31, 44 Schmidt, Helmut, 141 Scott, Eric, 272 Sebek, Dr. V., 164 Sheehan, Daniel F., 221, 231 Shikama, Rikiwo, 71 Silliman, Professor B., 19
Simpson, Brian, 305 Sinaga, H., 184-185 Skinner, Samuel S., 188, 215-216 Slater, Paul, 286, 332, 343 Sohmen, Helmut, 255 Sommerville, Robert, 297 Souri, Mohammad, 138 Spiliopoulos, Professor K., 69 Squassafichi, Nicola, 285 Srivastava, Chandrika P., 244-245 Stal, Hans, B., 51-52 Stalin, Josef, 24 Stavridis, Captain, 266-267 Stokes, Peter, 228 Stopford, Dr. Martin, 135, 140 Studds, Gerry, 216 Suzuki, Seigo, 237, 265 T Tanikawa, Dr. Hisashi, 160, 181, 185, 352 Tauzin, Wilbert Joseph, 231 Thatcher, Margaret, 141 Thompson, Matthew, 52 Thomson, Martin, 272 Thouilin, Bertrand, 287, 290, 293 Tolfe, Robert W., 25 Tollefsen, Even, 21 Trotsky, Mr., 24 Trotz, Dr. N., 160, 165 Tung, Chee-Jva, 62, 127, 191 V Voynet, Dominique, 284 W Wegener, Arild, 277 Wershof, Max, 72 Weyergang-Nielsen, A., 23 Wheelwright, Jeff, 123, 204, 207 White, B.H., 86, 94, Wilhelmsen, Bjorn, 217, 234 Wilhelmsen, Halfdan, 28 Wilson, Harold 52, 76, 301, 304 Wiswall, Frank, 342 Wolcott, D.C., 190 Y Yamada, T., 184 Yamani, Zaki, H.E. Sheik of Saudi Arabia, 125 Youell, Richard, 231, 234 Yost, Paul, 200 Z Zervudachi, Nolly, 190 Zhaoqi, Shen, 182 Zhuanghuai, Captain S., 186
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Tankers, Big Oil & Pollution Liability

TANKERS, BIG OIL & POLLUTION LIABILITY

TANKERS, BIG OIL & POLLUTION LIABILITY

Tankers, Big Oil & Pollution Liability

TANKERS, BIG OIL & POLLUTION LIABILITY

Tankers, Big Oil & Pollution Liability

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v. vi. vii. viii. ix. x.

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257 262 263 266 268 273 274

280 300 304 306 309 313

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326 328 330 344

371 376 378 380 382

TANKERS, BIG OIL & POLLUTION LIABILITY

FOREWORD & ACKNOWLEDGEMENTS

Foreword & Acknowledgements

TANKERS, BIG OIL & POLLUTION LIABILITY

FOREWORD & ACKNOWLEDGEMENTS

Asker, May 2011

TANKERS, BIG OIL & POLLUTION LIABILITY

TANKERS, BIG OIL & POLLUTION LIABILITY

TANKERS, BIG OIL & POLLUTION LIABILITY

THE BIG BANG

1 THE BIG BANG

TANKERS, BIG OIL & POLLUTION LIABILITY

THE BIG BANG

TANKERS, BIG OIL & POLLUTION LIABILITY

THE BIG BANG

TANKERS, BIG OIL & POLLUTION LIABILITY

THE BIG BANG

II. INDUSTRY RESPONSE

TANKERS, BIG OIL & POLLUTION LIABILITY

THE BIG BANG

III. POLLUTER PAYS?

TANKERS, BIG OIL & POLLUTION LIABILITY

THE BIG BANG

TANKERS, BIG OIL & POLLUTION LIABILITY

THE BIG BANG

GOVERNMENTS LAW COURTS P&I CLUBS, CARGO AND HULL UNDERWRITERS

TANKERS, BIG OIL & POLLUTION LIABILITY

PETROLEUM AND TANKERS

2 PETROLEUM AND TANKERS

TANKERS, BIG OIL & POLLUTION LIABILITY

PETROLEUM AND TANKERS

TANKERS, BIG OIL & POLLUTION LIABILITY

TANKERS, BIG OIL & POLLUTION LIABILITY

PETROLEUM AND TANKERS

Sir Marcus Samuel

PETROLEUM AND TANKERS

The Print Collector / Heritage-Images / Scanpix

John Davison Rockefeller

II. OIL COMPANY FLEETS

TANKERS, BIG OIL & POLLUTION LIABILITY

PETROLEUM AND TANKERS

TANKERS, BIG OIL & POLLUTION LIABILITY

PETROLEUM AND TANKERS

Reza Khan Pevlevi

III. COAL OR OIL?

TANKERS, BIG OIL & POLLUTION LIABILITY