The International Maritime Organization (IMO) has issued a circular to Member States containing guidance on the impact of the situation in the Black Sea and the Sea of Azov on insurance or other financial security certificates, relating to the conflict in Ukraine (LEG.1/Circ.12).
The circular, which was already circulated to the IOPC Funds’ governing bodies at their March 2022 sessions, lists IMO instruments that are affected by the conflict in Ukraine, including the 1969 and 1992 Civil Liability Conventions. It states, in particular, that the absence of insurance or other financial security in accordance with the requirements of the conventions may lead to insufficient compensation for States and victims of pollution and other incidents. It may also expose the IOPC Funds and its contributors to the risk of having to pay all of the compensation for oil spills from tankers because there is not sufficient insurance to cover the shipowner’s liability.
With this in mind, the circular sets out a number of action points for States. The IOPC Funds governing bodies have fully endorsed those action points and encourage Member States to adhere to the recommendations in the circular.
The Director also urges IOPC Funds Member States to note the circular and follow the recommendations. He has pointed out that over recent years, the 1992 Fund has already been dealing with a growing number of incidents involving unreliable insurers that have required the Fund to pay compensation from the outset, missing the first tier of compensation which should be payable by the shipowner’s insurer under the 1992 Civil Liability Convention.
As set out in the circular, the IOPC Funds could be further exposed to such situations as a result of the latest sanctions imposed since they have increased the risk of larger tankers sailing without any or insufficient insurance coverage.
As instructed by the governing bodies, the Directly is closely monitoring the situation and plans to report back at the next IOPC Funds meeting in October 2022.