Web alert: Winding up of the 1971 Fund – Future of Liabilities under the Fund conventions
News & Insights 22 April 2014
The International Group is supporting legal action started by Gard against the International Oil Pollution Compensation Funds
The International Group is supporting legal action started by Gard against the International Oil Pollution Compensation Funds (the Fund) in the High Court of London in respect of a tanker spill which occurred in 1997, when the “Nissos Amorgos” grounded in Venezuela’s Maracaibo Channel.
Gard is seeking a High Court declaration that a claims handling and compensation agreement concluded between Gard executives and the Fund in 1997 is still valid and binding, and that a decision by the administrative council of the 1971 IOPC Fund not to reimburse compensation above the shipowner limit under the 1969 Civil Liability Convention (CLC) constitutes a breach of this agreement.
The Fund’s legal immunity under English law is likely to be the highest hurdle for Gard to overcome. The IOPC Fund is also expected to rely on: a) the Venezuelan courts’ recent decision that the shipowner is eventually not entitled to limit liability under the CLC to US$7.3m and b) the fact that the claim is against Gard and the shipowner.
Since the outcome of the case will have a substantial impact on the future of the respective liabilities under the CLC and Fund conventions, the International Group has decided to take a supportive stance and assist Gard in establishing that, although the 1971 Fund ceased to be in force in 2002 and there has already been a decision to wind it up, the Fund is still obliged to pay compensation for spills which occurred prior to 2002.
We shall be monitoring the developments and will keep Members informed.