Notes on

INTERNATIONAL CONVENTION ON
THE ESTABLISHMENT OF AN INTERNATIONAL FUND FOR
COMPENSATION FOR OIL POLLUTION DAMAGE

ADOPTED --- 1971

ENTRY INTO FORCE --- 16-10-1978

PROTOCOLS --- Adopted --- 19-11-1976 ; In force --- 22-11-1994

Adopted --- 27-11-1992 ; In force --- 30-05-1996

APPLICATION

• It applies to any oil pollution damage, including preventive measures taken to minimise
such damage, caused in the exclusive economic zone of a contracting State.
• It does not apply to a war ship and any other ship owned or operated by a State and used
only on government non-commercial service.

DEFINITIONS

Ship --- Oil tanker which is actually carrying bulk oil cargo or oil residues of previous cargo.
Oil --- Any persistent hydrocarbon mineral oil cargo and bunkers.
Fund --- International oil pollution compensation fund 1992.
Pollution damage --- Damage caused due to the escape or discharge of oil outside the ship,
provided that compensation payable shall be limited to the following costs :
• Reasonable measures taken for re-instatement of the environment.
• Preventive measures taken to reduce or mitigate pollution.
• Loss of profit incurred by any party due to such damage.

COMPENSATION

The Fund shall pay compensation to any person suffering pollution damage if such a person
has not been able to obtain full and adequate compensation under the CLC convention,
because of any of the following reasons :
• No liability for the damage arises under the CLC convention.
• The owner is financially not capable of meeting his obligation and the insurance cover
available is not sufficient to satisfy all claims.
• The damage exceeds the owner’s liability under the CLC convention.

EXEMPTION

The Fund shall not be liable for pollution damage if it is due to any of the following acts :
• War, hostilities, civil war or insurrection.
• Sabotage by a third party. (The Fund shall not be liable for damage claim of this party
but shall still be liable for claims from the other parties)

LIMITS OF LIABILITY
• Maximum 135 million Units of Account which includes the amount actually paid under
the CLC convention.
• Maximum 135 million Units of Account exclusively payable by the Fund, if the damage
was due to a natural phenomena of exceptional, inevitable and irresistible character.
• In special circumstances the amount stated in both the above paras. can be increased to
200 million Units of Account.
• Unit of Account is Special Drawing Right (SDR) as defined by the International
Monetary Fund (IMF) and applicable to those States who are members of the IMF.
• The payment shall be made in the local currency in accordance with the method of
valuation of the SDR as applied by IMF.
• If the total claims exceed the limits stated above then the amount payable shall be
distributed amongst the claimants in proportion to their claims.
• Compensation claims shall be settled in the same court as for the CLC convention.

STATUTORY LIMIT

If action for compensation is not brought within 3 years of the date of the pollution incident,
then all rights for such claims are extinguished. In any case no action can be brought 6 years
after the date of the incident.

CONTRIBUTION TO THE FUND

• Annual contribution shall be made by all person importing crude and fuel oil within a
contracting State which has received more than 150000 tons of such oil in a calendar
year.
• Amount to be contributed by each oil-importing person of each State shall be
proportionately divided by the Assembly of the Fund, after taking into account the annual
budget of the expenditure and income of the Fund and the total amount of such oil
received by each State.
• The State shall be responsible for the persons importing such oil within its territory, to
make the appropriate contribution to the Fund.
• If a State defaults in making the payment, it shall pay an interest on the balance amount
due, as decided by the Assembly of the Fund.

ORGANISATION OF FUND

The Fund shall be controlled by an Assembly consisting of all States who are party to this
Convention. There shall be a secretariat headed by the Director.

AMENDMENT OF CONVENTION

This convention can be amended by a conference convened by IMO at the request of not less
than one-third of the contracting States.

AMENDMENT OF LIMITATION AMOUNT

Procedure for amendment shall be as follows :

• At least one-quarter of the contracting States may submit a proposal to IMO who shall
circulate the same to all the States.
• At least 6 months after the circulation, the proposal shall be submitted to the legal
committee of the IMO for consideration and adoption.
• All States shall be entitled to participate in the proceedings of the committee.
• Amendment shall be adopted by a majority of two-third of the contracting States present
and voting, provided that at least half of the contracting States are present.
• The adopted amendment shall be notified by IMO to all the contracting States and it shall
be deemed to have been accepted at the end of a period of 18 months, unless within this
period at least one-quarter of the contracting States communicate to IMO that they do not
accept the amendment.
• The amendment shall enter into force 18 months after it is accepted as stated above.
• All contracting States are bound by the amendment unless they denounce the 1992
Protocol at least 6 months before the amendment enters into force.
• Original limit may be increased by the above amendment procedure by a maximum
amount as follows :
• 6% of the original amount per year, calculated on compound basis from 15-
01-1993.
• Three times of the original limit.