Oil fund meets entry criteria

Oil fund meets entry criteria

INCREASED levels of compensation for victims of oil pollution from oil tanker accidents will be available following Spain’s recent ratification of the 2003 Protocol establishing an International Oil Pollution Compensation Supplementary Fund. Spain’s ratification means the protocol has now reached the entry into force criteria of at least eight states who have received a combined total of 450 million tons of contributing oil. The new fund will be effective from 3 March, 2005.

The fund will supplement the compensation available under the 1992 Civil Liability Convention (CLC) and Fund Convention with an additional third tier of compensation. Participation is optional although the fund is open is all states which are parties to the 1992 Fund Convention. The fund will apply to damage in the territory, including the territorial sea, of a contracting state and in the exclusive economic zone of a contracting state.

The total amount of compensation payable for any one incident will be limited to a combined total of 750 million Special Drawing Rights (SDR) – just over $1,152 million – including the amount of compensation paid under the existing 1992 CLC/Fund Convention.

Annual contributions to the fund will be made in respect of each contracting state by any person who, in any calendar year, has received total quantities of oil exceeding 150,000 tons. However, for the purposes of the 2003 Protocol, there is a minimum aggregate receipt of 1,000,000 tons of contributing oil in each contracting state. The assembly of the supplementary fund will assess the level of contribution based on estimates of expenditure (including administrative costs and payments to be made under the fund as a result of claims) and income (including surplus funds from previous years, annual contributions and any other income).

IMO hopes that the 2003 Protocol will ensure that, for the foreseeable future, victims of oil pollution damage will be fully compensated for their losses. It is also expected that the increased compensation will put an end to the practice of pro-rating of payment of claims, which, although it has been unavoidable, has led to criticism of the 1992 convention.
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Brussels flexes its muscles

NON-EUROPEAN nationals who wish to register their vessels in the Netherlands will be able to do so more easily because of a recent decision rendered in the European Court of Justice (ECJ). The ECJ ruling also has wider implications for ship registration rules in all countries within the European Union, according to Taco van der Valk and Haco van Der Houven van Oordt, of Netherlands-based law firm AKD Prinsen Van Wijmen.

Last October’s ECJ ruling, in a case brought by the European Commission against the Kingdom of the Netherlands, showed that ship registration requirements, as laid out in the Dutch Code of Commerce and in the Dutch Civil Code, were a contravention of European law. As a result, Dutch law will be changed in the near future to make ship registration easier for non-European nationals.

In bringing the case, the European Commission was dissatisfied with several rules for ship registration. Specifically at issue were the Dutch requirements that the vessel must be two-thirds owned by European nationals and that the vessel must be predominantly managed by a person with EC or EEA (European Economic Area) nationality.

It was ruled that such requirements were not compatible with European law and should be removed on the grounds that Holland’s ship registration scheme restricts the freedom of establishment of shipowners. Non-EU nationals also have the legal right to access the European market if they conform to European law.

Dutch law will be changed to take these points into account and ship registration requirements will become less onerous. However, it will still be the case that the operator of a vessel wanting to fly the Netherlands flag must have an enterprise in the Netherlands and must have a representative there, who is fully authorised to take all management decisions in respect of the ship.

In AKD’s opinion, this is a good ruling for international shipping interests and for the Netherlands because it makes for more flexible investment possibilities and may result in an increase in the size of the Dutch fleet.

This judgment also has Europe-wide implications. All EC countries, not just the Netherlands, must observe the right for free establishment and not be seen to hamper trade between European countries with overly burdensome flag registration laws – otherwise, the wrath of Brussels may descend.

SUA up for adoption

A diplomatic conference to adopt amendments to the 1988 SUA (Suppression of Unlawful Acts) Convention and Protocol has been set for October 2005. The convention is designed to ensure that appropriate action is taken against persons committing unlawful acts against ships, including seizure by force, acts of violence against persons on board ships, and the placing of devices on board a ship which are likely to destroy or damage it.

According to IMO, the 2005 conference will consider the adoption of two protocols incorporating substantial amendments aimed at strengthening the SUA treaties to provide an appropriate response to the increasing risk posed to maritime navigation by international terrorism.

BIMCO clauses on ice

BIMCO has recently revised its stand-alone ice clauses, distilling them into two standard clauses – the BIMCO Ice Clause for Voyage Charterparties and the BIMCO Ice Clause for Time Charterparties. The amendments have been made because the existing ice clauses were felt to be deficient in a number of ways, particularly because they were silent on the issues of forcing ice and following icebreakers. It was also felt that provisions were needed to protect owners against the risk of ice being experienced on the approach voyage.

A provision common to both clauses has been included that makes it clear that the vessel should not be obliged to force ice, but may reasonably be expected to follow icebreakers where other vessels of the same size, class and construction are doing so. For more information visit www.bimco.dk.

Newbuilding clarification in Turkey

YACHT building is a growing business in Turkey, but a number of legal issues remain uncertain. One of these is the status of newbuildings. Although, under Turkish law, Turkish-flagged vessels are treated as immovable property, this has not yet been tested for newbuildings. A recent case handled by Istanbul-based law firm, Inal Law Office, may change all that.

The case involved a yacht owner building a yacht in Turkey who faced considerable attachments over the yacht arising from unpaid wage claims by yard workers. Although the yacht had been registered in the owner’s name in the local ship registry, the attachments for debts of the yard were implemented on the presumption made by the bailiff that the yacht in the yard’s possession constituted movable property.

It was arguable under Turkish law whether movable property in the hands of a third party could be attached for the debts of the third party. This had particular relevance for newbuilding vessels in Turkey, which are generally registered in the newbuilding registry in the owner’s or yard’s name.

“After considerable efforts we were able to rid the yacht of these attachments, the decision eventually turning upon the first instance court’s acceptance of the yacht to be immovable, rather than movable, property,” explains Seyma Inal, founder and partner of Inal Law Office. “While the yacht’s entry in the ship registry helped substantiate our arguments, the existence of a mortgage over the yacht in favour of the financiers no doubt also persuaded the court.”

If upheld on appeal, the judgement would not only be welcomed for clarifying the status of newbuildings under Turkish law, but would also secure a fair result for the owner who has no outside control over the distribution of pre-delivery instalments paid to the yard.