Oil spills can have devastating impacts on everything from marine wildlife to local economies. And the clean-up costs associated with this kind of pollution can be just as catastrophic.
Because of the increasingly steep financial implications of oil spills, there was a need for legislation that would assign financial responsibility to those involved. That’s how the International Convention on Civil Liability for Oil Pollution Damage came to fruition.
Below, we’ll address this policy and explain what shipowners of oil tankers need to know in order to be compliant.
Understanding the International Convention on Civil Liability for Oil Pollution Damage
In 1969, the International Maritime Organization (IMO) designated the International Convention on Civil Liability for Oil Pollution Damage (CLC) to establish compensation for those impacted by oil pollution.
Known as the CLC, it introduced liability for shipowners of oil tankers. Requiring ships carrying more than 2,000 tons of oil to have insurance that would cover the maximum cost of one spill. According to the CLC, shipowners are considered liable even if the leak or discharged oil was unintentional.
Now, if the shipowner is found guilty of the oil spill, there is no liability cap. But if the shipowner is not deemed guilty, the CLC caps liability within a specific range according to the ship’s gross tonnage.
Since its inception, the CLC has had several amendments that have raised the compensation limits and expanded the scope. The most recent 2001 revisions limits are as follows, based on Special Drawing Rights (SDR):
- For oil tankers under $5,000 gross tonnage, liability is capped at 4.51 million SDR.
- For oil tankers between 5,000 and 140,000 gross tonnage, liability is capped at 4.51 million, plus 631 SDR for each additional gross ton over 5,000.
- For oil tankers exceeding 140,000 gross tonnage, liability is capped at 89.77 million SDR.
The Role of Blue Cards
To ensure shipowners of oil tankers were compliant with the CLC liabilities, the IMO introduced Blue Cards. Issued by insurance providers, these documents include a CLC certificate. Providing proof that the vessel is carrying the proper insurance to cover oil spill incidents. In many countries, this proof of insurance coverage is required. And if a vessel is caught without it, shipowners could face fines, vessel detention, or other legal implications.
Regardless of whether they’re intentional or not, oil spills, leaks, and discharges are all too common, and shipowners don’t want to be caught without the proper insurance coverage. Contact us here at Falvey Insurance to learn more about CLC liabilities and how to obtain a Blue Card.
