Bunker Convention

Bunker Convention
The Bunker Convention comes into force in November 2008.
The Bunker Convention brings pollution from bunker spills within an international
regime of liability, limitation and mandatory insurance that complements the regime
that has been in place for many years with respect to spills of persistent oils from
tankers, the International Convention on Civil Liability for Oil Pollution Damage, 1992
(CLC). While the CLC has always applied to bunker spills from tankers subject to it,
until the entry into force of the Bunker Convention, bunker spills from dry cargo and
other types of ships are subject only to national regimes.
Comparison of the Bunker Convention with the CLC
CLC applies to bunker spills from tankers subject to it. The Bunker Convention does
not apply in circumstances where the CLC applies, so there is no overlap between the
two and any vessel already subject to the CLC will not be affected by the Bunker
Convention. The Bunker Convention applies to any sea-going vessel and seaborne
craft, of any type whatsoever, which is carrying "bunker oil", defined as any
hydrocarbon mineral oil, including lubricating oil, used or intended to be used for the
operation or propulsion of the ship, and any residues of such oil. Unlike the CLC, the
Bunker Convention is not limited to persistent fuel oils and will apply to any mineral oil
used to operate the ship, including lighter marine diesel.
The CLC channels all liability to the “registered owner”. The Bunker Convention has a
much wider scope as it defines “shipowner” as “the registered owner, bareboat
charterer, manager and operator of the ship”. The intent is to broaden the scope of
liability including scenarios where more than one party is responsible. Each is jointly
and severally liable. Only the registered owner, however, is required to maintain the
mandatory insurance.
Compulsory insurance and certification

The Bunker Convention imposes the requirement to arrange compulsory insurance or
financial security on the registered owner of a ship of more than 1000 GT. The liability
provisions apply to ships of less that 1000 GT, but these smaller ships are not required
to have insurance.
The registered owner is required to obtain the cover for pollution damage in an amount
equal to the limits of liability under the applicable national or international limitation
regime, but in all cases not exceeding an amount calculated in accordance with the
Convention on Limitation of Liability for Maritime Claims, 1976, as amended.
The insurance provider is subject to direct action which is intended to do away with
“pay to be paid” provisions within P&I insurance.
Where a ship is registered in a state party to the Bunker Convention, a State Certificate
must be obtained from the appropriate state authority. Ships registered in non-
signatory states will need to obtain a certificate from a state that is a party.
The certificate shall be in the form of the model set out in the convention’s annex and
shall contain the following particulars:
(a) name of ship, distinctive number or letters and port of registry;
(b) name and principal place of business of the registered owner;
(c) IMO ship identification number;
(d) type and duration of security;
(e) name and principal place of business of insurer or other person giving security
and, where appropriate, place of business where the insurer or security provider is
established;
(f) period of validity of the certificate, which shall not be longer than the period of
validity of the insurance or other security.
The certificates need to be in English, French or Spanish, or the text should be

translated into one of these languages.
P&I cover
Following consideration by the ruling bodies of the various members of the

International Group of P&I Clubs (IG), it has been agreed that the IG Clubs will issue
the required Bunker Convention “Blue Cards” to enable signatory states to issue
certificates from August 2008.
Defences to liability
The Bunker Convention provides a complete defence if the shipowner proves:
the damage resulted from an act of war, hostilities, civil war, insurrection or a natural
phenomenon of an exceptional, inevitable and irresistible character;
or
the damage was wholly caused by an act or omission done with the intent to cause
damage by a third party;
or
the damage was wholly caused by the negligence or other wrongful act of any
government or other authority responsible for the maintenance of lights or other
navigational aids in the exercise of that function.
The intentional act or omission of a third party would seem to include terrorist acts,
although the burden of proof may be difficult to meet in that the cause has to be
“wholly” attributable to the third party.
Limitation rights of shipowners and insurers
The Bunker Convention, unlike the CLC and OPA 90, does not itself contain any
provisions entitling a “shipowner” to limit his liability. What it does say, however, is that
if a “shipowner” has a right to limit his liability under the 1976 Convention on Limitation
of Liability for Maritime Claims (LLMC), that limit can be used in respect of claims made
under the Bunker Convention. The Bunker Convention is based on strict liability and
provides for direct action against the insurer who nonetheless maintains the rights and
defences of the insured as well as a right to limit his own liability to the amount of the
insurance certificate (the limit under the LLMC). This holds true even in circumstances
where LLMC limitation is not available to the shipowner.
The convention provides that claims can only be brought in the state party where
damage has occurred. This differs from the LLMC where the shipowner may set up a
limitation fund in any jurisdiction in which proceedings under the LLMC have been
commenced. In single event scenarios involving personal injury and property damage
in addition to pollution from bunkers, the total limitation for all claims will be set by the
LLMC, if applicable in the country in question, so all types of claims will compete for
payment.
The LLMC limit is in two parts: a higher amount for personal injury and a lower amount
for property claims. For property claims, including bunkers spills, the tonnage limits
are determined as follows:
Vessels of 2,000 GT or less = 1,000,000 SDR

Each GT from 2,001 – 30,000 = 400 SDR
Each GT from 30,001 – 70,000 = 300 SDR
Each GT in excess of 70,000 = 200 SDR
Example:
For a vessel of 40,000 GT the limitation would be:

(1,000,000SDR) + (400SDR x 28,000) + (300SDR x 10,000) = 15,200,000 SDR
15.2 million SDR = about 24 million USD.11
For a vessel of 10,000 GT the limitation would be:

(1,000,000SDR) + (400SDR x 8,000) = 4,200,000 SDR
4.2 million SDR = about 6.65 million USD.

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Bunker Convention

The Bunker Convention comes into force in November 2008.

Comparison of the Bunker Convention with the CLC

Compulsory insurance and certification

The certificates need to be in English, French or Spanish, or the text should be

Following consideration by the ruling bodies of the various members of the

The Bunker Convention provides a complete defence if the shipowner proves:

Limitation rights of shipowners and insurers

Vessels of 2,000 GT or less = 1,000,000 SDR

For a vessel of 40,000 GT the limitation would be:

For a vessel of 10,000 GT the limitation would be:

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