Guidance For Member States: Measures To Facilitate The Claims Handling Process
Guidance For Member States: Measures To Facilitate The Claims Handling Process
Guidance For Member States: Measures To Facilitate The Claims Handling Process
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Guidance for Member States Guidance for Member States
Contents Preface
This Guidance document contains measures which Member States might wish to consider
Introduction 4
in preparation for, or in the event that they suffer, pollution damage as a result of an oil spill.
What are the IOPC Funds? 4 Such measures are aimed at facilitating the claims handling process following an incident.
Who can claim compensation and how? 4 The text was developed by the 1992 Fund sixth intersessional Working Group and adopted
How can this Guidance document help a Member State following 5 by the 1992 Fund Administrative Council, acting on behalf of the Assembly, at its 11th
session held in October 2013.
an oil spill incident?
Measures for Member States to consider taking 6 The measures and examples presented in this document draw upon the experience of those
ANNEXES 15
Annex II Model MoU between the Member State and the insurance industry 18
Annex III Model MoU between the 1992 Fund and the insurance industry 20
Annex IV Model MoU between the Member State, shipowner’s insurer and the 21
1992 Fund
Guidance for Member States Guidance for Member States
insurer and the 1992 Fund; and disseminated to other Member States.
In addition, Member States are encouraged to
● Access to statistical data; provide information on any new, modified or
● Standard reference prices; alternative measures employed in incidents,
not only where the IOPC Funds are involved
● Coordination between IOPC Funds’ delegates
but also where they are not.
and national response agencies; and
● Annex I
Central features of an agreement between
a Member State, the shipowner and the P&I Club
● Annex II
Model MoU between the Member State and the
insurance industry
● Annex III
Model MoU between the 1992 Fund and the
insurance industry
Guidance for Member States Guidance for Member States
government claimants to ‘stand last in the respectively, were eventually able to recover all Non-Government claims Fisheries 165
queue’ (SLQ). This device has been exercised their assessed costs. In the case of the Erika, the Tourism 75
1.5 The chart below shows the effect of SLQ in relation to the proportion of government claims for the same
two scenarios set out on page 7.
2. S ubrogation of 3. C
ooperation
claims settled agreements
by the State 3.1 After the Hebei Spirit incident in the Republic
Government
claims
Level of pro-rated claims with SLQ FC Limit for this incident of Korea, the Government of the Republic of
2.1 In the Prestige incident, off the Spanish coast
Korea, the shipowner and the P&I insurer of
in 2002, the insurer of the vessel followed the
the Hebei Spirit, the Skuld Club, made two
provisions of the 1992 Civil Liability Convention
cooperation agreements, the second of which
(1992 CLC) and deposited the ship’s limitation
fund with the Corcubión Court in Spain. Since was concluded in July 2008. The Club was
this discharged the shipowner’s liability, no concerned that Korean courts dealing with the
further payments were due from the shipowner limitation proceedings might not fully take into
100% or his insurer and this had the potential effect account payments already made by the Club
of excluding any payments of compensation and that it would therefore run the risk of paying
to claimants until the limitation fund could be compensation in excess of the limitation amount.
distributed. In order to avoid this situation, the Under this agreement, the Skuld Club undertook
8 Spanish Government settled claims against to pay claimants 100% of the assessed amounts 9
75% the shipowner and the 1992 Fund. up to the shipowner’s limit of liability under the
1992 CLC, namely 89.77 million SDR. In return,
2.2 In June 2003 and July 2004 the Spanish
to ensure that all claimants would receive
Government adopted legislation in the form
45% of two Royal Decrees making available a total
compensation in full, the Korean Government
undertook to pay in full all claims as assessed by
amount of €249.5 million to compensate, in full,
5% certain categories of claimants who had suffered
the Club and Fund once the 1992 CLC and 1992
Fund Convention limits were reached as well as
Scenario 1 Scenario 2 pollution damage. To receive compensation the
all amounts awarded by judgements under the
claimants had to renounce the right to claim
1992 CLC and 1992 Fund Convention in excess
compensation in any other way in relation to
of the Fund limit. The Korean Government further
the Prestige incident. The Spanish Government
undertook to deposit the amount already paid out
appointed a team of national experts to assess
by the Skuld Club to claimants in court should
1.6 At the time the decision is made to set a time elapsed after the incident is not too long these claims with the assistance of experts
the Limitation Court order the limitation fund
level for pro-rating the settlement of claims, before government claims are examined. engaged by the shipowner’s insurer, the London
to be deposited in court.
the 1992 Fund Executive Committee usually Rather than waiting to see if there is sufficient P&I Club, and the 1992 Fund. However, it was not
adopts a cautious approach allowing a money remaining, claims and supporting until 2013 that the Spanish Government was in 3.2 This second cooperation agreement provides
safety margin of some 5-10% on top of the documentation should be submitted as a position to commence proceedings to reclaim a possible model for future incidents where
anticipated aggregate amount claimed. soon as possible. With the passage of time, these subrogated claims from the limitation there are both large numbers of small claims
As time progresses and claims are assessed governments may find it more and more fund in court. and a risk that the 1992 Fund limit will be
and settled, the level of payments is reviewed difficult to provide the necessary additional exceeded in a country that has not yet ratified the
2.3 This approach demonstrates one way in which
by the Executive Committee and may be documentation to satisfy queries raised by Supplementary Fund Protocol. The arrangement
the potentially lengthy wait for the distribution
raised in a number of steps as the level the IOPC Funds’ experts and to locate personnel described above allowed the Skuld Club to pay
of the limitation fund can be overcome. It allows
who were involved at the time and who may assessed amounts up to the ship’s CLC limit
of confidence in the total amount claimed for the rapid settlement of claims shortly after an
also be able to assist in answering these without further delay. Such an arrangement could
and assessed increases. incident and avoids victims of an oil spill being
queries. be useful in future incidents in settling large
1.7 Once all non-government claims have been subject to undue financial hardship. However, a
numbers of small claims because the P&I Clubs
settled there is sometimes sufficient money 1.8 T
he downside of SLQ is that the Government government risks being unable to recover all the
have the facility to pay claims relatively quickly.
of the Member State in question risks not compensation it has paid to claimants if there is
remaining to settle government claims at However, it should be noted that the agreement
receiving compensation for the losses it has a difference in the outcome between government
least in part or, as seen in the cases of Sea still required claims to have been properly
incurred to the benefit of the private citizens assessments and those of the Club and Fund.
Empress and Nakhodka, in full. It often takes assessed before payments could be made.
and companies in that country. This would be of particular concern if government
several years to settle all the non-government
assessments were to be made on the basis of 3.3 The salient features of the second cooperation
claims and so it is most important that the
different criteria to those applied by the 1992 Fund. agreement and the principles upon which it ›
Guidance for Member States Guidance for Member States
4.1 A possible development either in addition to, or and personnel of domestic insurers to assist the other things, the types of claim admissible
responsible for the equitable distribution of the
as part of, a cooperation agreement as described 1992 Fund following an incident. This measure is under the 1992 Fund Convention and the
compensation awarded. The Chairman and his
in section 3 would involve a Member State and a intended to facilitate the mobilisation of additional materials necessary to support a claim. Such
staff will be aware of which members are no
shipowner’s P&I Club reaching agreement under experts to meet the common concern expressed national experts would need to be well-versed
longer, or only slightly, active and which members
which the government guaranteed repayment following many incidents, namely the lack of in the requirements of the IOPC Funds for the
are the most industrious and will be in a position
of any overpaid interim payments made by the suitably qualified and experienced experts. submission of claims and the criteria used to
to allocate compensation accordingly.
P&I Club. Interim payments are sometimes assess them, as set out in the Claims Manual.
5.2 I f a Member State were willing to make the 6.3 In the case of the Hebei Spirit incident, of the
made on the basis of interim assessments while 7.2 The IOPC Funds draw upon the expertise of
10 resources of the domestic insurance industry 59 000 hand gatherer claimants in the artisanal 11
queries raised by the experts engaged jointly both national and international experts to
available to the 1992 Fund, the specific details of the fisheries sector, only a small proportion belonged
by the P&I Club and the 1992 Fund (Club/Fund assist in the assessment of claims and both
arrangements agreed between the 1992 Fund and to fishery associations. In any event, the individual
experts) are addressed and it can be said with
the insurer/loss adjusting company would form the are selected on the basis of their competence
confidence that a claim will be established at loans and subrogated rights to the Korean
basis of one of two required MoUs (see Annexes II and experience in the field in which claims
a higher amount than the interim assessment. Government meant that it was not possible to
and III). The first MoU, attached at Annex II, provides are being assessed. The provision of a list of
Clearly, such circumstances should not lead to group these claimants, resulting in the enormous
a framework for agreement between the Member national experts to the Funds’ Secretariat with
an overpayment. effort to assess each claim. However, the grouping
State and the insurance industry, whereas Annex details of their qualifications and experience
of claimants against certain criteria in the
4.2 The 2013 edition of the 1992 Fund Claims III provides a draft MoU proposing cooperation would provide a larger pool of expertise from
Solar 1 incident (Philippines, 2006) allowed
Manual includes a ‘fast track’ process where between the 1992 Fund and a specific insurer/loss which the Secretariat could draw following an
substantial numbers of claims to be reviewed
small claims may be settled on the basis of a adjusting company. incident.
and either assessed and paid quickly or, for those
brief investigation by the Fund and the experts of
the circumstances of the loss. The investigation 6. Grouping claims/ found to be invalid, to be screened out of the 7.3 Member States may also wish to submit details
claims handling process. of experts they believe would be well-qualified ›
must include confirmation that such losses did
claimants Local experts engaged by the 1992 Fund surveying pollution damage to oyster farms following the Hebei Spirit incident (Republic of Korea)
actually occur and that there was a clear link of
causation to the incident. The intention of this 6.1 T
here is a tendency for large numbers of small
amendment is to facilitate the rapid settlement of claims to be submitted by large groups of
small claims. However, the process could equally individuals with similar losses. Grouping such
lead to an interim rather than final settlement. claimants into categories allows a large number of
An agreement on reimbursement of overpaid similar claims to be assessed as one body of claims
interim payments, backed by guarantee, would against the same criteria with the outcome that
provide the facility for small claims to be paid grouped claims can be dealt with more quickly than
quickly, recalling that P&I Clubs are usually able if they were presented individually. In addition and
to transfer funds relatively swiftly. It should be particularly for small claims, the cost of assessing
noted that the government concerned would be these claims individually is likely to exceed the
obliged to repay the shipowner’s P&I Club any assessed value. Member States may therefore wish
amounts if, in the light of a more comprehensive to consider facilitating the grouping of claimants
investigation, it were found that interim payments or working together with the P&I Club and the IOPC
had been overly generous or that claims were Funds to identify categories of claims which could
unproven. If, however, after a full investigation, be treated in this way.
further payments were due, final settlement of 6.2 T
he IOPC Funds have a long experience of dealing
each claim could be made but within the longer with claims presented by groups of claimants, in
timeframe of a comprehensive investigation. particular, fishery associations such as those in the
Guidance for Member States Guidance for Member States
insurer and the may be able to assist the shipowners’ insurer determined without the need for protracted assessment process and with whom the
research and associated delays in assessment Club and Funds are most likely to deal when
1992 Fund and the 1992 Fund’s experts would be to
facilitate contact with claimants and reassure of claims. settling claims. There is frequently disquiet
8.1 For the compensation regime to be effective them that by providing information and 10.2 P
re-determined costs of government spill- on the part of such response agencies at the
and to provide compensation to victims of oil cooperating with the experts, claims can response assets (vessels, aircraft, specialised level of detail required to assess a claim and
pollution damage promptly, the claims handling be dealt with more quickly. equipment and personnel) might also be similarly there can sometimes be a mismatch
process must be seamless and efficient. included by establishing a pre-agreed schedule between expectations and the compensation
There are a number of factors that determine 9. Acc
ess to of rates. The MoU concluded between the that is provided under the Conventions. In
how quickly a claim can be processed but
statistical data order to promote a wider understanding of
<1>
Maritime and Port Authority of Singapore and
putting in place a clear mechanism to facilitate ITOPF and supported by the International Group how the compensation regime functions
the handling of claims is likely to improve As noted above, in the event of a major of P&I Associations and the 1992 Fund provides and the constraints within which it works to
a claimant’s experience of the process. incident the shipowner’s insurer and the a useful model which other administrations settle claims, Member States might therefore
A mechanism which includes not only those 1992 Fund jointly engage both national and may choose to follow. The agreement wish to encourage fostering a close working
parties responsible for paying compensation international experts to advise them on the documents reasonable rates for vessels and relationship between those agencies or
but also representatives of the Member State reasonable level of losses in the sectors specialist equipment in advance of an incident departments attending IOPC Funds’ meetings
affected by the incident is likely to lead to greater affected. Member States can assist these in Singapore waters. and those government organisations
cooperation and to a process in which claimants experts by enabling access to requested responsible for submitting claims for spill
<2> ‘ Méthode pour la détermination des charges d’emploi des
can have confidence that their concerns will information sources whether they be, for response costs, if such a link does not
principaux matériels de génie civil ’ published by Fédération
receive a fair hearing. <1> See document IOPC/JUN10/5/6. nationale de travaux publics. already exist.
Guidance for Member States
13. Information
provided by
the IOPC Funds
13.1 The IOPC Funds and other bodies involved in
payment and assessment of compensation
make available information, publications,
guides and training materials which Member
States may find useful. In the case of the
IOPC Funds, the website includes information
on all past incidents, decisions of the governing
bodies and information for claimants
(www.iopcfunds.org). A wide range of
publications are available to download or
to request in hard copy via the publications
page of that website.
Guidance for Member States Guidance for Member States
ANNEX I
Central Features of an agreement between a Member showing the amount assessed and approved by Owners to limit liability is preserved and that
State, the Shipowner and the P&I Club the Club and the 1992 Fund as well as a receipt claimants’ entitlement to compensation is
and release transferring to the Owners, the Club satisfied without the need for a Limitation
Based on the Second Cooperation Agreement concluded following the and the 1992 Fund, the benefit of his rights Fund to be deposited in court.
Hebei Spirit incident, Republic Of Korea (2007) of compensation under 1992 CLC and Fund
3.8 The written request to enact the
Convention up to the amount of the payment.
provisions of the Agreement and any other
3.4 The aggregate amount paid by the Club under communications relating to the Agreement
1. The Parties of compensation as quickly as possible. In 3.2 above, together with any other amounts are to be addressed to the Member State and
addition if the aggregate of all admissible paid by the Club as compensation for pollution sent to the competent Ministry.
The three parties to the agreement are:
claims is anticipated to exceed the overall limit damage caused by the incident, is not to exceed
3.9 The Agreement is governed by the laws of
(i) The Owners of the vessel; of both Conventions, the 1992 Fund Executive a maximum amount of the applicable CLC limit. the Contracting State and any dispute arising
(ii) The P&I insurer of the vessel involved; and Committee is likely to restrict any interim
3.5 For the purpose of the Agreement, the CLC limit therefrom is to be subject to the exclusive
16 payments of compensation to a percentage 17
(iii) T
he government of the affected Member is to be converted into national currency at the jurisdiction of the [Contracting State].
of assessed amounts.
State represented by the competent Ministry. exchange rate prevailing on the date when the
4. Signatures
2.5 The
P&I Club states that it is willing to make Limitation Fund is established.
2. Preamble
compensation payments without delay up to Dated:
3.6 In the event of the Club or the Owners being
2.1 The circumstances of the incident are briefly a total amount not exceeding the CLC limit.
required to deposit with the competent Court a Signed
described; its cause and the consequences It is willing to establish a Limitation Fund by
cash amount representing the Limitation Fund:
of the resulting widespread pollution leading guarantee rather than a cash deposit, subject to
to substantial clean-up costs and economic safeguards to ensure that all claimants receive (a) the Club’s obligations in respect of payments
losses to the people in the affected areas. the same proportion of their admissible claims under the Agreement would cease;
and that the total amount paid by the Club (b) the Club and/or Owners would pay into the
2.2 The applicable national law enacting the two
does not exceed that total amount which would Court, the CLC limit converted into national
Conventions, the 1992 CLC and the 1992
have been payable into the Court in national currency less the aggregate amount of
Fund Convention, is identified under which the
currency had no interim payments been made compensation paid by the Club and/or
vessel owners accept strict liability up to the
and had a Limitation Fund been established at Owners to claimants;
applicable 1992 CLC limit. It is also noted that
the commencement of Limitation Proceedings
additional compensation is available under the (c) the Member State, on receipt of the Club’s
by means of a cash deposit. The Member
1992 Fund Convention up to an overall limit of written request to do so, would pay into the
State therefore enters into the Agreement with
203 million SDR (including the CLC limit) but, Court such further sum as may be required
the Owners and the Club for the purpose of
should admissible claims exceed this combined to bring the total sum paid into the Court
providing the Club with such safeguards.
limit, the compensation payable to the full amount which the Court required
to claimants would be apportioned pro-rata. 3. The Agreement to be deposited in respect of the Limitation
2.3 In order to avail themselves of the right to 3.1 The Club agrees to continue, together with the Fund; and
limitation under 1992 CLC the Owners are 1992 Fund, to review and assess claims for
(d) if the Court was unable to accept payment
compensation in accordance with the Fund’s
required under national law to commence by the Member State, then payment would
criteria for the admissibility of claims.
limitation proceedings and establish a instead be made to the Club so that the
Limitation Fund with the competent Court. 3.2 The Club agrees to provide the funds required Club itself would be able to make a timely
for the prompt payment of compensation in payment into the Court of the full amount
2.4 In an incident involving a substantial number
respect of claims which it and the 1992 Fund required.
and magnitude of claims there is likely to be a
has approved as admissible.
considerable delay before the Limitation Fund 3.7 The parties agree to cooperate in using
can be distributed by the Court. The parties 3.3 Payment by the Club is conditional upon the best endeavours to conduct the Limitation
to the Agreement wish to facilitate payment execution by the claimant of documentation Proceedings such that the right of the Club and
Guidance for Member States Guidance for Member States
ANNEX II
Model Memorandum of Understanding between
the Member State and the insurance industry
and payment of claims for compensation to
1. This Memorandum sets out an agreement 7. The Contracting State requests that the insurers
be made. The insurers will therefore use their
between the Government of […..] (“the make available their resources and personnel in
best endeavours to assist with the process of
Contracting State”) and its insurance industry order to assist the 1992 Fund Secretariat with
assessing large numbers of claims using the
(“the insurers”). the investigation and assessment of losses
relevant criteria.
arising from the incident as defined in Article I
2. The Contracting State is a Party to the
of the CLC, if so requested by the 1992 Fund 12. T
he rates for the insurer’s services are to be
International Convention on Civil Liability for
Secretariat. agreed by the 1992 Fund Secretariat with the
Oil Pollution Damage, 1992 (1992 CLC) and the
insurers prior to the insurers commencing work
International Convention on the Establishment 8. The costs of the provision of such assistance by
for the 1992 Fund or Supplementary Fund.
18 of an International Fund for Compensation the insurers are to be paid for by the 1992 Fund 19
[and the Supplementary Fund if the Contracting 13. A
ny claims or disputes in relation to this
for Oil Pollution Damage, 1992 (1992 Fund
State is a Member of the Supplementary Fund]. Memorandum shall be governed by [Contracting
Convention) [and the International Oil Pollution
State] law and be subject to the exclusive
Compensation Supplementary Fund 2003 9. The insurers do hereby acknowledge and
jurisdiction of the [Contracting State].
(the Supplementary Fund)] (together the recognise that the 1992 Fund Secretariat
“International Compensation Regime”). must apply the criteria (“the relevant criteria”)
3. The International Compensation Regime determined by the 1992 Fund Assembly, as Dated:
provides a mechanism for the provision of specified in the 1992 Fund Claims Manual
For the insurer
compensation for persons who suffer damage when assessing claims for compensation.
caused by oil pollution resulting from the Accordingly, the insurers agree to use and apply Signed
the relevant criteria under the direction of the
escape or discharge of oil from ships (as For the Government of [Contracting State]
1992 Fund Secretariat, when retained by the
defined in Article I of the 1992 CLC).
1992 Fund Secretariat to assist with assessing Signed
4. The 1992 Fund Secretariat is tasked with losses and claims for compensation arising
administering the 1992 Fund and the from an incident.
Supplementary Fund and approving claims
10. The insurer also recognises and agrees that the
for compensation from claimants affected
final decision as to the level of compensation to
by the oil spill incident.
be paid to claimants rests with the 1992 Fund
5. Often following a major oil spill incident, a large and therefore any assessments conducted by
number of claims for compensation are filed the insurers or any recommendations made are
with the 1992 Fund Secretariat. This places of an advisory nature only and are subject to the
a large burden on the 1992 Fund Secretariat, 1992 Fund’s and shipowner’s insurer’s (P&I Club
which could potentially lead to delays in the or otherwise) final approval.
assessment of claims process.
11. In a major incident, the time required for all
6. In order to ease this administrative burden, claims to be presented, substantiated and
the Government of the Contracting State assessed, and for more contentious claims
proposes to enter into this Memorandum of to be finally resolved, may typically run to a
Understanding with the insurance industry period of some years. The Contracting State is
within [Contracting State] in order to prepare convinced of the need for prompt payment of
for any incident which may impact upon compensation. Accordingly, the aim of retaining
its territory. the insurers is to enable the swift assessment
Guidance for Member States Guidance for Member States
Notes
(vi) Share information, to the extent permitted
under privacy and other relevant
information legislation, which will assist
in the assessment of claims and in the
communication of progress in the claims
handling process. Specifically the State
should provide information on actions
which it took which might have resulted
in the prevention or restriction of normal
business activity and which individual
claimants cannot be expected to be able
to justify. The Insurer and Fund will provide
information on the number and quantum
of claims submitted, assessed and settled
such that the State may monitor progress.
Dated:
Signed
Insurer
Signed
Signed
Guidance for Member States
Notes
24
International Oil Pollution
Compensation Fund 1992
Portland House
Bressenden Place
London SW1E 5PN
United Kingdom