Ship-source Compensation Funds

Ship-Source Oil Pollution Fund (Canada)

Under the Marine Liability Act, the Ship-Source Oil Pollution Fund ( SOPF ) is liable to pay claims for oil pollution damage or anticipated damage at any place in Canada, or in Canadian waters including the exclusive economic zone, caused by the discharge of oil from a ship. It is Canada's national Fund.

The SOPF is intended to pay claims regarding oil spills from ships of all classes and is not limited to sea-going tankers. In addition to persistent oil, it covers petroleum, fuel oil, sludge, oil refuse and oil mixed with wastes.

The SOPF is also available to provide additional compensation (a third layer) in the event that compensation under the international funds (see below), with respect to spills in Canada from oil tankers, is insufficient to meet all established claims for compensation.

The classes of claims for which the SOPF may be liable include the following: claims for oil pollution damage; claims for costs and expenses of oil spill clean-up, preventive measures and monitoring; and claims for oil pollution damage and clean-up costs where the cause of the oil pollution damage is unknown and the Administrator of the SOPF has been unable to establish that the occurrence that gave rise to the damage was not caused by a ship.

A widely defined class of persons in the Canadian fishing industry may claim against the SOPF for loss of income caused by an oil spill from a ship and not recoverable otherwise under the Marine Liability Act, Marine Liability Regulations.

Further details on the SOPF Fund can be found in their annual reports.

International Oil Pollution Compensation Fund / Civil Liability Convention (International)

The 1992 International Oil Pollution Compensation Fund ( IOPC Fund) and the 1992 Civil Liability Convention ( CLC ) provide the international liability and compensation regime for pollution damage resulting from spills of persistent oil from tankers, whether carried on board as cargo or in bunkers. Under the CLC regime the owners of a tanker are liable to pay compensation up to a certain limit for oil pollution damage following an escape of persistent oil from their ship. If that amount does not cover all the admissible claims, further compensation is available from the IOPC Fund if the damage occurs in a contracting state. The IOPC Fund is financed by levies paid by entities that receive certain types of oil in the ports of a contracting state.

In 2003, an optional third tier for higher compensation under the IOPC / CLC Fund Convention, the Supplementary Fund Protocol was adopted by the International Maritime Organization. This Protocol came into force in 2005 and Canada ratified it on October 2, 2009. It comes into force in Canada on January 2, 2010.