To the Members
Tanker Charterparties - Oil Pollution Addendum
We refer to the Club’s circular, reference B267 dated May 1997 which, following the termination of the TOVALOP Agreement, notified the Members of the consequent unacceptability of the TOVALOP charterparty clause with effect from 20th February 1997.
Under the old TOVALOP clause recommended by the Clubs, owners warranted that their vessels were participating tankers in TOVALOP and gave the Charterer the right in certain circumstances to take measures at the owner’s expense in response to an oil spill from the tanker or threat thereof. The granting of this right was consistent with the whole voluntary compensation system set up by the TOVALOP and CRISTAL agreements. On the termination of the TOVALOP agreement it was no longer appropriate for the Charterer to have such an express right, since it was incompatible with a number of the provisions of the 1969 Civil Liability Convention (CLC), 1971 Fund Convention and the protocols thereto
It has come to our attention that some oil majors have recently attempted to reintroduce clauses based on the wording of the old TOVALOP charterparty clause. These clauses authorise the Charterer to take steps to prevent or minimise pollution from the tanker on behalf of the Owner and at the Owner’s expense, and may expose the Owner to pay clean-up or threat removal expenses which may not be recoverable from the Club.
These clauses could effectively allow the Charterer to circumvent the provisions of the Convention on Civil Liability for Oil Pollution 1992 (CLC). Under CLC claimants, including the Charterer, have a right of recovery against the ship owner for pollution claims including the cost of preventative or clean-up measures, subject to certain constraints. If the total of acceptable claims exceeds the CLC limitation amount, the compensation received by claimants will be reduced proportionately, and in the meantime payment to claimants may be delayed whilst the total of acceptable claims is established. However, these clauses entitle the Charterer to obtain a full and immediate reimbursement of his expenses no matter what the total of all CLC claims may be.
Furthermore, the Owner's liability under CLC is always financially limited; no such proviso is included in these clauses and whilst some clauses state that their provisions are not in derogation of other rights the Charterer or Owner may otherwise have or acquire by law or any international convention, this is a somewhat opaque wording which may not be sufficient to limit the Owner’s liability to the Charterer. The Rules of the Association provide that an Owner should not assume responsibility under contract for claims in respect of which, under applicable law, he would otherwise be entitled to limit liability. Should the Owner be liable under the oil majors’ clause for expenditure greater than the CLC limitation amount, the excess amount may not be recoverable from the Club.
Managers’ London Representative
STEAMSHIP INSURANCE MANAGEMENT SERVICES LIMITED Authorised and Regulated by the United Kingdom Financial Services Authority
AQUATICAL HOUSE 39 BELL LANE LONDON E1 7LU
tel: 020 7247 5490