10 Things You Should Know About Fund Convention 92

I have earlier discussed at length about the civil liability convention. If you want to know about fund convention, I would strongly recommend reading the civil liability convention first as both are connected.

Here are few of the points to recap about civil liability convention.

• CLC applies to the pollution incidents of persistent oils.
• Leaving few exceptions, it is ship owner who needs to pay for the damages resulting from the oil pollution incidents
• The maximum liability of the ship owner in any one pollution incident would be limited to 4,510,000 SDR for the vessel up to 5000 GRT. For vessels more than 5000 GRT, maximum liability would be SDR 631 per addition GRT. Maximum liability, in any case, will not be more than SDR 89,770,000.
• All ships that carry more than 2000 T of oil as cargo need to maintain insurance equal to the ship owner’s liability as per CLC 92.

Let us come straight to the point. If we have the CLC convention then what is the need of fund convention?

1. Why Fund convention ?

Now let me tell you a story (I always like stories !!!).

There is a loaded oil tanker of 5000 GRT and it gets aground. The oil spilled into the water because of this grounding. The estimate of the damages because of this oil spills are more than 10 million SDR.

We all know that ship owner need to pay as per CLC convention. But as per CLC convention, his liability is limited to 4.51 Million SDR.

So who would pay for rest of the 5.49 Million SDR? That should be a cause for concern, isn’t it?