BALTIC SEAENVIRONMENT PROCEEDINGS No. 59 - Helcom

An important issue is whether and, if so, to what extent claims for environmental damage are
admissible. This question has been discussed within the IOPC Fund in view of claims of an
abstract nature presented in connection with an incident occurring in the Soviet Union. The claims
related to damage to the resources and costs of restoring the polluted water to a clean condition.
In 1980 the IOPC Fund Assembly adopted an important Resolution on the admissibility of claims
relating to damage to the environment. In the Resolution it is stated that the assessment of
compensation “... is not to be made on the basis of an abstract quantification of damage
calculated in accordance with theoretical models”. In other words, compensation can be granted
only if a claimant, who has a legal right to claim under national law. has suffered guantifiable
economic loss,
Damage to the marine environment cannot be easily assessed in monetary terms, as the marine
environment does not have a direct market value. In recent years models have been elaborated in
many countries for the assessment of damage to the marine environment. It is submitted that any
assessment of ecological damage to the marine environment in monetary terms would require
sweeping assumptions regarding relationships between different components of the environment and
economic values. Any calculations of the damage suffered in monetary terms will by necessity be
arbitrary. For this reason, it is maintained that it would be inappropriate to admit claims for
compensating damage to unexploited natural resources which have no owner.
Another important question in this context is the impact of the 1992 Protocols on the definition of
pollution damage. The Protocol to the Civil Liability Convention contains an amended wording of
the definition of pollution damage. A proviso was added to the effect that compensation for
impairment of the environment (other than loss of profit from such impairment) should be limited to
costs of reasonable measures of reinstatement actually undertaken or to be undertaken.
It is obvious that a uniform interpretation of the definition of pollution damage is essential for the
functioning of the regime of compensation created by the two Conventions. This is particularly so
in respect of the Fund Convention, since under that Convention oil receivers in one Contracting
State contribute to the payment of compensation for damage sustained in other Contracting States.
6 CONCLUSIONS
When the Fund Convention was adopted in 1971, the Diplomatic Conference created an innovation
in international law. The IOPC Fund is, basically. a mutual insurance company for oil pollution
incidents set up by Governments but financed by oil interests. It was impossible to foresee how
such a body would function.
It is fair to say, in the light of fourteen years of experience, that the system of compensation
established by the Civil Liability Convention and the Fund Convention has worked well. This is of
course due, to a large extent, to the spirit of co-operation shown by Governments of Member
States as well as by shipowners, P & I Clubs and the oil industry.
Looking more particularly at the IOPC Fund itself, it has succeeded in creating procedures for rapid
compensation to victims of oil pollution incidents at low cost. It has also contributed to the
harmonisation of law and legal practice in the field of compensation for oil pollution damage.
Although the 1992 Protocols to the Conventions will not come into force for a number of years, the
regime of compensation established by the Civil Liability Convention and the Fund Convention
provides a cover for oil pollution damage which is adequate, except in very rare cases. The two
Conventions together provide a cover of US $85 million per incident. There have been only a
couple of cases in the world where the aggregate amount of pollution damage exceeded this
amount. For this reason, it is likely that practically all incidents in States members of the IOPC
Fund will be dealt with under the Conventions for a number of years to come. On the other hand,
in States not Party to the Fund Convention, the amount available under the Civil Liability Convention
will in many cases not be sufficient to compensate the victims in full.
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