French Decree Requires Ship Owners to Carry Insurance to Cover Liability for Fuel Spills

By Rick Mitchell

PARIS--France April 22 published a decree (No. 2011-435) that writes into national law the requirements of a 2001 international treaty that introduced strict liability for pollution damages caused by ship bunker fuel spills at sea.

The International Convention on Civil Liability for Bunker Oil Pollution Damage requires registered owners of vessels of more than 1,000 gross tonnage to maintain insurance or other financial security, such as a guarantee from a bank or similar financial institution, to cover liability for bunker fuel spills.

The convention was adopted under the auspices of the International Maritime Organization (IMO) and took effect in 2008. France ratified the treaty with Law No. 2010-831 of 2010.

Yvon Martinet, a Paris-based partner at law firm Savin Martinet Associates specializing in international environmental law, told BNA April 27 that the decree's most important aspect is the requirement for vessel owners to have insurance coverage or another financial guarantee. “That is absolutely the most important result” for companies, he said.

The decree translates the entire treaty into French law and includes French text of a certificate of insurance or other financial guarantee against civil liability for damages linked to bunker fuel spills.

According to IMO's website, as of March 31, 58 countries had ratified the bunker oil pollution treaty, accounting for some 88 percent of world tonnage. The convention was adopted to ensure adequate, prompt, and effective compensation to victims of spills of oil carried as fuel in ships' bunkers, it said.

Another key provision in the treaty is a requirement for direct action, allowing a claim for compensation for pollution damage to be brought directly against an insurer, IMO said.

According to IMO, the convention defines “pollution damage” as loss or damage caused outside the ship by contamination resulting from escape or discharge of bunker oil from the ship, wherever such escape or discharge may occur, provided that compensation for impairment of the environment other than loss of profit from such impairment shall be limited to costs of reasonable measures of reinstatement actually undertaken or to be undertaken.

Damage also includes the costs of preventive measures and further loss or damage caused by preventive measures, it said.

(Appeared May 11, 2011)