WRITTEN QUESTION E-1752/03

by Eija-Riitta Korhola (PPE-DE) to the Commission

(27 May 2003)

Subject: Use of impact assessment and liability insurance to deal with oil damage

Disasters at sea are not just an environmental problem, but also do immense economic harm. Oil damage might, for example, undermine the utility value and by the same token the asset value of seaside property and land. It could impede the operation of industrial plant and power stations situated on the coast. For instance, sea water-cooled nuclear power stations would have to be shut down for a long time, even years, because oil could clog up the cooling systems, leading to serious consequences.

The provisions applicable to accidents at nuclear power stations might serve as a model to deal with potential damage. The impact of an oil tanker accident would be assessed to help determine the cumulative probability distribution of costs and other consequences. Secondly, oil liability insurance similar to nuclear liability insurance would be needed to cover the wide-ranging consequences described above.

In what ways, over and above existing legislative measures and those being drawn up, does the Commission think that impact assessment and liability insurance, as mentioned in the preceding paragraphs, might be useful in gauging and remedying the wider consequences of oil damage?

Answer given by Mrs Wallström on behalf of the Commission

(8 July 2003)

The Commission would like to draw the attention of the Honourable Member to the fact that the situation and type of damage she refers to are covered by the International Convention on Civil Liability for Oil Pollution Damage (the Civil Liability Convention or CLC) and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (the Fund Convention).

These two conventions, amended in 1992, constitute a regime that covers pollution damage caused by spills of persistent oil from tankers in the coastal waters (up to 200 miles from the coastline) of the participating States. The loss and damage covered by the regime includes property and, to some extent, economic losses and costs of environmental restoration as well as preventive measures, including clean-up costs. 85 States, including all Member States, except Luxembourg and Austria, are Contracting Parties to the 1992 Conventions.

The first liability tier, the liability of the registered ship-owner, is governed by the CLC. The ship-owner's liability is strict and thus not depending on fault or negligence on his part. The owner is normally allowed to limit his liability to an amount that is linked to the tonnage of the ship, presently maximum EUR 80 million for the biggest ships. The CLC also requires ship-owners to maintain liability insurance and gives claimants the right of direct action against the insurer up to the limits of the ship-owner's liability.

The CLC regime is supplemented by the International Oil Pollution Compensation Fund (the IOPC Fund), which was established through the Fund Convention in order to compensate victims when the ship-owner's liability is insufficient to cover the damage. The maximum compensation by the IOPC Fund is currently around EUR 175 million. The IOPC Fund is financed by contributions from companies or other entities receiving oil carried by sea.

On 16 May 2003, a Diplomatic Conference convened under the auspices of the International Maritime Organization adopted a new Protocol to the existing oil pollution liability and compensation conventions. This Protocol establishes a Supplementary Fund, which signifies a five-fold increase of the compensation available to victims (up to EUR 910 million).

The Commission has welcomed the establishment of the new supplementary fund, as it will greatly help to ensure the full and expeditious payment of victims of future oil spills. It has urged the Member States to ratify the new protocol immediately in order to have it fully operational before the end of 2003.