Oil pullution victims short-changed again?

Tourism and fishing industries were badly hit by the Prestige disaster [1] , however those affected are currently only receiving compensation at 15% of their losses. Today’s decision by Member States of the International Oil Pollution Compensation Funds will come as the environmental charity, Friends of the Earth, renews its call for company directors to be held liable for damages.

In Britain, Friends of the Earth, with allies in the CORE Bill coalition, is pressing for changes in UK company law to make directors liable for damage caused anywhere in the world. This would allow victims of oil pollution created by British companies, or companies with British directors, to seek compensation in the UK.

BACKGROUND INFORMATION:

The compensation funds were set up for victims of oil pollution disasters by Governments though the UN. However victims of the Prestige, which sank off Spain last year, and other disasters may face a long wait for their money:

• Payments for losses from the Prestige disaster are currently being paid at 15% of their total value, as the total amount payable from the Funds has been limited to £123 million.
• Payments to Venezuelan fisherman for losses suffered from the Nissos Amorgos in 1997 were only being made at 40 per cent of their value till this July and are still limited to 65 per cent.
• Victims of the Erika, which broke in two on 12 December 1999, only heard that their claims would be fully met in April this year. 365 victims with claims worth £18 million were still waiting, as of 10 October 2003, for news on whether their claims would be paid.
• Pakistani fishermen suffering losses as a result of the Tasman Spirit this August may get no compensation at all as their Government is not a member of the Funds.

International Oil Pollution Compensation Funds (IOPC Funds) The International Oil Pollution Compensation Funds (IOPC Funds) were set up through the 1969 International Convention on Civil Liability for Oil Pollution Damage and the 1971 International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage.

The Conventions limit the liability of ship owners for the losses caused by oil pollution episodes but provide compensation for victims in countries who have joined the Fund. Compensation is paid by importers of oil in Member States in proportion to the amount of oil they import.

There are currently two IOPC Funds, set up in 1971 and 1992. They have different members and different rules. Over time, as more members have joined the 1992 Fund, it has largely superseded the 1971 Fund. The 1971 Fund is therefore being wound down and now will only settle payments for certain incidents that have already happened – such as the Nissos Amorgos. A new supplementary fund is likely to be set up in the near future. Its aim will be to provide extra compensation to victims of future spills in member countries who have paid into the supplementary fund. Recently, after a decision by its Members, the Fund Secretariat has begun to pursue agencies that it believes are at fault for oil pollution disasters. Earlier this week, it announced it had reached an out-of-court settlement with the Milford Haven Port Authority over compensation paid to victims of the Sea Empress disaster in Pembrokeshire in 1996. This raises the possibility that the Fund may seek recompense from the Spanish or Gibraltarian authorities – both of whom have accused of failures in respect of the Prestige.

FOR MORE INFORMATION CONTACT:

Friends of the Earth in London:
Roger Higman +44-207 566 1661 Mobile: +44-7780 661 807 or +44-20 7566 1649 Email : press@foe.co.uk
More at www.foe.co.uk

For CORE please contact Brian Shaad +44-20 7566 1665 Mobile: 07 930 453 728

NOTES FOR EDITORS:

[1] The Prestige
On 19 November, 2003, the Prestige sank off the coast of Galicia in north west Spain. It had been leaking oil for six days having been damaged in heavy seas. Slowly over the weeks and months afterward more and more of the 77,000 tonnes of heavy fuel oil it contained leaked to pollute the coasts of Portugal, Spain and France.

The Prestige’s sinking threw light, yet again, on the failure of Governments to regulate international shipping and the complex web of ownership arrangements set up by oil and shipping companies which impedes regulation of their operations. The ship was registered in the Bahamas (whose shipping agency is based in London) but owned by a Liberian company, Mare International, which itself was reputedly owned by the Greek Coulouthros shipping dynasty. The oil it carried was owned by Crown Resources, a Swiss company owned by the Russian Alfa Group, but operated from the west end of London.

The Nissos Amorgos
On 28 February 1997, the Greek-owned Nissos Amorgos fractured its hull in Lake Maracaibo, an almost completely enclosed bay in western Venezuela. The Lake is used by about 130 tankers a month and has repeatedly suffered from oil spills . On 15th May, 1997, hundreds of fishermen blocked the entrance to the lake in an action they described as the ‘Third Battle of Lake Maracaibo’.

The Erika
The Maltese-registered Erika broke in half 70 miles south west of Brest, Brittany on 12 December 1999 while carrying oil for the French company TotalFinaElf. Some 19,800 tonnes of fuel oil were spilled polluting 400 kilometres of the French coast . Following pressure from the French Government, TotalFinaElf offered to pay about £4m for the clean-up and about £40m to pump out oil remaining in the boat, but compensation payments have been left to the Ship’s insurer (up to £8.4 m) and the Funds (£109m) .

The Tasman Spirit
The Maltese-registered Tasman Spirit was grounded of Karachi, Pakistan in August, 2003 while carrying oil for the Pakistan National Shipping Corporation. About 28,000 tonnes of crude oil spilled from the tanker and polluted local beaches. Pakistan is not a member of the International Oil Pollution Compensation Funds but is reported to be seeking compensation from Polembros, the boat’s Greek owners .

The polluter must pay
Friends of the Earth believes there are fundamental flaws in the regime set up by Governments to compensate the victims of oil pollution disasters.

• Victims are often forced to wait years for payment.
• Victims are only protected by the Funds if their Government has had the foresight to join.
• Oil companies have no individual direct liability for pollution caused by ships they charter, although they pay collectively for the damage their oil causes in countries which are Members of the Funds. As a result, companies have little incentive to ensure that the ships they use meet the highest design and maintenance standards.

Governments in northern countries are attempting to rectify the system’s failures by instituting a supplementary fund to pay higher compensation for pollution in Member countries and by instituting regional regulations on shipping entering their waters. However, the fundamental problems of the system go unaddressed. The lax regime for regulating shipping, through the IMO, is being allowed to continue and nothing is being done to put direct liabilities on Directors of companies found responsible for causing the pollution.

The Corporate Responsibility (CORE) Coalition was formed in response to the Government’s failure in the Modernising Company Law White Paper to specify rules requiring companies to be more transparent and be held accountable to their wider stakeholders. The founding members of CORE were Amnesty International, Christian Aid, Friends of the Earth, New Economics Foundation and Traidcraft. The coalition is now supported by over fifty organisations, including NGOs, church groups and trade unions. www.corporate-responsibility.org

References
International Oil Pollution Compensation Fund http://www.iopcfund.org

See http://abyayala.nativeweb.org/venezuela/ven2.html for A report on the Nissos Amorgos.

BBC News (17 December 1999) “Clean-up crews battle ‘thick’ oil slick” http://news.bbc.co.uk/1/hi/world/europe/568941.stm

BBC News (31 December 1999) “Oil firm offers clean-up cash” http://news.bbc.co.uk/1/hi/world/europe/584445.stm