Last month tanker owners allowed to lapse two voluntary pollution liability agreements, which were thought to be no longer needed or cost-effective.
However, insurer Sedgwick Energy & Marine Ltd. warns that nobody is sure what will happen now: "It is likely to be only after some months and a number of incidents that any real pattern of responses will emerge."
The two codes were Tanker Owners Voluntary Agreement Concerning Liability for Oil Pollution (Tovalop) and Contract Regarding a Supplement to Tanker Liability for Oil Pollution (Cristal).
Under Tovalop, tanker owners and bareboat charterers assumed obligations for oil pollution compensation in states that have not adopted the Civil Liability Convention (CLC), for which they might not otherwise be legally liable.
Cristal was instigated to provide additional compensation to Tovalop, and this fund was also financed by oil purchasers.
Sedgwick said Tovalop members comprised 97% of the world's oil tanker tonnage, while Cristal covered 80% of all bulk cargoes covered by sea.
Redundant
An International Maritime Organization (IMO) official said the tanker industry has found Tovalop and Cristal to be redundant, and that a decreasing number of countries are covered as CLC is increasingly adopted.
"IMO has been saying for 20 years," said the IMO official, "that if you want oil pollution coverage the best is the IMO system, which protects against civil liability for accidental oil pollution and provides a pollution compensation fund."
Under IMO's two-tier system, liability protection is paid for by ship owners, while pollution compensation is funded by oil importers. It is similar to Tovalop, but backed by governments rather than industry.
"The two systems had been running in parallel for more than 25 years," said the IMO official, "so Tovalop and Cristal outlived their usefulness."
Confusion
But Sedgwick said it is conceivable that a tanker spill can now occur in the waters of a country outside the CLC, after which the owner and his insurers "walk away" from responsibility.
This could leave "...the state to prosecute its claim against a worthless wrecked tanker and a nominee flag of convenience-registered company with no assets, with the result that oil pollution victims go uncompensated."
IMO has 155 member countries, and 97 of these have adopted the CLC. Oil producing countries that have not signed include Iran, Iraq, Angola, Libya, Argentina, and U.S., although the U.S. is protected by the Oil Pollution Act of 1990.
"Many interested parties," said Sedgwick, "hope that the disappearance of Tovalop and Cristal will force those countries, which have not agreed to the CLC, to ratify the convention in short order.
"It had always been intended that Tovalop and Cristal should be transitory arrangements, leading to a full international convention. This is, perhaps, the ideal.
"In the meantime, there is likely to be a period of considerable confusion, which will call for clear advice and innovative approaches to risk assessment and transfer."
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