Liability and compensation for ship-source oil spills

From Transport Canada

In Canada, the shipowner is always responsible for paying for an oil spill cleanup, up to the ship's limits of liability. This includes third party losses and damage.

Three different sources of compensation are available to cover damages from oil spills. Combined, they could provide up to $1.36 billion for a single oil spill. This includes the shipowners' liability, International Oil Pollution Compensation Funds, and Canada's Ship-Source Oil Pollution Fund.

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Shipowners' liability for spills

The International Convention on Civil Liability for Oil Pollution Damage makes shipowners liable (legally responsible) for a spill of persistent oil (crude oil or fuel oil) from tankers.

The International Convention on Civil Liability for Bunker Oil Pollution Damage makes shipowners liable for bunker oil (from ships' engines) spills from any type of ship.

In both cases, the liability depends on the size of the ship, and must be backed by the shipowner's insurance. If damages exceed the liability, international and Canadian funds provide more compensation.

International Oil Pollution Compensation Funds

Canada is a member of the International Oil Pollution Compensation Funds. It administers two international compensation funds for oil pollution damages caused by persistent oil (oils that do not break down easily after a spill). The 1992 Fund and the Supplementary Fund are made from levies collected from the oil cargo companies. Combined with the shipowner's liability coverage, these funds provide about $1.3 billion in compensation for a tanker spill of persistent oil.

The Ship-Source Oil Pollution Fund (SOPF)

The SOPF is a Canadian fund created from levies collected from oil cargo companies.

It provides compensation for damages caused by spills of any type of oil from any type of ship. It also applies to mystery spills in which the identity of the ship causing the leak cannot be established.

Any person in Canada, including private corporations or the Crown, may file a claim for losses or expenses caused by oil spills from ships.

Read more information about the Ship-source Oil Pollution Fund in Questions and Answers.

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