Orisinal. FR.ENOR - International Maritime Organization

~-GOVERNMENT
AL MARITIMEMARITIME
INTER-GOVERNMENTAL
LmG/COltF.2/C.l/sn.22
1, /¢11973
Orisinal. FR.ENOR
~ULTATIVE
ORGANIZATION
CONSULTATIVE
ORGANIZATION
IMCO
COlUj'EUENCE ON THE EST1U3LISEMEl'1T
OF MT IN'J.1ERNATIONAL COMPJ.UNS.t;.TION
FOND FOR OIL FOLLtlTION OOIll.Gl!l, 1971
Committee ot the
~lole
held at the Falsie des Co~s, Brussels
on Tuesday, 14 Deoetlber, 1971. at ; p.m.
MffLLER (8\.,1 tzerland)
Chail:man:
!-1r. l'l.
Exeoutive Seorete.r,y:
l'-lr. T.1I.. Ki?NSAH (000)
A. list of partioipants is Given in LOO/CONF.2/IlW.1/Rov.1
- 2 -
LEG/COO. 2/0.1/sa. 2?
~
... Consideration ot draft Art10l~8 and
related proposals an the establishment
ot an international oOqlensation tun4
for 011 pollution dama6e (oontinued)
,
- 3LI!."G/CONF.2/C .l/SR. 22
.AGENDlt. l'TEIIt
4 - CONSIDERATION OF
lllUlP!' 1\RTICLES .lUID RELll'l'ED PROPOSALS ON mID
ESTJU3LISHMmNT OF .AN :mT.I!mIATIONAL COMPENSI~'l'ION FUllD FOR OIL
POLLUTION JllOO).GE (oontinued)
Art+Jle 5 (oontinued) (LEG/CONF.2/3 and LEG/CONF.2/C.l/WP.64)
!the GH4.IRM4N inv:l. ted the Cot:a::dttee to -bake up Artiole 5 aeain, pn.l.'Q6Xt\ph by
pamgmph, bearing in o1nd tb: prinoiple of the 0OtlPronise proposed by the
Working Group on Candi t1o.ns for Sh1powners' Rel1e:t' (LEG/CONF. 2/C .1,l\fP. 64) cmd
ta.k1ng into nooount all the vnrious acendoente whioh hAd been suboi tted.
M
indioative vote eight be taken on eaoh plI.ragrapb.
Parae'Ph 1
The CHt..llU4't\.."I' said the. t a nuober of acendDents had been proposed to
paragraph 1. !Ille first, subcit-ted by the United States (LEG/CONF.2/" pQgG 50)
and supported by the Un! ted KirJ8doo, was for the add! tion of the Ben tenoe :
"Tl.a Ft.md. shall incur no obligations under this pnmg.ro.ph whore the· pollution
da.t::la.ge resul'ted froc. fault or privity of the o\\'ller." Tho other two, BUbo! tted
by the Netherlands (LEG/CONF.2/C.1,l\of.':I.31) and the United Kingdon
(LEG/CONF/2./C.l/l·1P.74) respectively were for aoendnants to the figures in
brackets in sub-pare.g.ra.ph (a).
Mr. KE!RRY (UK) said that his Governoent
Fund. :Lfthe owner WIlS lliDself
be
abnor.ma~
in favo1.1r of exonerating the
WlI.S
sunty of fault.
Indeed he thought it would not
if the owner did not have to bear the
oonsequenc~~
of his fault.
Moreover, 1£ there were no cention of personal fault, the owner would be
subjeot to different regioes aocording to whet~er the lillb:Llity fell ahort of
or exoeeded the Usuras given in sub-paragroph (b).
FinAlly, the owner lolouJ.d
be liable only i t he were gui! ty of oertain speoified infringanents and not 1£
he cODDitted other equally serious aots.
Mr. HALLBERG (USA) said he thought the coopron1ae suggested by the
Wor1d.ng
G~
established a fair balance between the interests involved.
delesntion was therefore ready to auppart
Hie
1~.
Mr. mOOH (Norway) said his . delegation, whioh was against the introduotion
of the oonoept ot porsonal fa.ult,
\''8.S
prepared to discuss the question on the
basis ot the text prerared by the Worldng Group.
- ..;.
--
Mr. PIIILD? (DelUJl\rk) said he supported the vieus of tho rep1."esentatives
of tho United l.:.tates and NOrl'lOY.
Hr. F.4.:.LU1l. (Yueoslo.vio) said thnt if the ocnoept of deliberate fault lms
o.ooepted the result \,lculd be tM. t the 11o.bi11 ty of
tho.n that of the owner cf
0Jl
ordimry ship;
could be interpreted in di£.forent
\'IOYS
0.
to.nker C\'mar would be less
I:loroover, it ws
under different
0.
ocncopt that
10.\,IS.
Mr. FnA.NTll. (Fedeml Republio cf Gom£UlY) said he wos o.aninst the o.dditicn
cf the sentenoe suggested by the United S1;o.tos, because the Fund ",ould then
ho.ve tc decide \mether
131'
not there ho.d been perscno.l fault cf the Ollllor.
Hr. u:nES (Finland) said he was in favcur cf keepinu the ori8'iml text.
Ur. van RIJN van ll.LI<Er1.t\l)E (Netherlo.nds) said he thcught the Cotltli tteo
should keep tc the ocopromse proposed by the Hcrking Group.
Hr. HAKOVSKY (ussn) said it ,·IO.S inportont to ooJ.ce a distincticn be'tl'leon
the Olmor t s 11o.bi11 ty tc the victioa a.nd his liability tc tho Fund.
Un(ler
Article V, porarr.ro.ph 2, of the 1969 Convention, the Ollller
WO.S
o.vn.il hiDaelf of the lim to. tions providod for i f the inoident
not entitled to
"1013
co.Uflod by
his 0\'Ill fo.ul t, but in Artiole VII, on coopulscry insuronce, there "ms nc lcneer
MY quooticn of perscnal fault, o.nd since the Fund hnd tc o.ct 0.£1 o.n insurer,
1 t would be wise to refer here only to l.,ilful fault subject to the excepticns
I:lenticllod in the cCI:lpronise.
The CllAnn·Itll'T co.llod for an indicative vote on the United Stntes pl."Opoool
tc o.dd, at the end cf paro.araph 1, the sentenoe:
obliaations under this
faul t
131'
po.rn~~l '~lere
"The Fund sOOll incur nc
the po11uticn daDoca resulted froo
privi ty cf the Clmel.'."
The United 3tates Rro.:e.oso.l was re.ieoted by 20 votes to 7. l.,i th vEt E.\bstentions.
The CllAIru·rAN inv! ted the CoIJD! ttoe to oonsider the aoendDent by tho U:ni tad
Kingdom doleantion (LllXi/COIIF.2/C.1;1TP.14) for the oubsti tution in sub-p.."U."O.G'L'Uph
(0.) cf "1,700 frnncs" for "1,000 francs" o.nd. "150 Dillicn francs" fcr "105
Dillion froncl;)".
Thn t o.oendI:lEmt was turthor f1."OO the oricr!no.l than the
Netherlands noendoont a.nd should therefore be considered first.
- 5-
ltr. :BRIGSTOCKE (UK) s0.1c1 thtlt his deleantion had a.t !1rat taken the vie\{
that there was no justifioation for
tho oil companies.
~U5
to iDpOBO an additional burden on
It he.d, hO'-Iovar, reviewed its position during the present
Conferenoe, a.nd now thoU6ht it would be o.ppropriate to to.lce
lUI
a basis the
TOVALOP plan whioh provided for a 11o1t of the dollar equivalent of 1,725 fronos,
and to ooopt the round £18'u:1.'e of 1,700 franoe.
The upper 1iI:l1'!i would then h£l.ve
to be raised from 105 to 150 0111ion francs.
l'fr. von lUJN van ALKEU1DE (Netherlands) said he h£l.d no doubt that the
Conferenoe, ",l1ioh h£l.d aJ.ready IDWlL\.ged to agree on several oo:oprooise solutions,
would
1"01.\00
ag.reenent on that itlpOrtc.ut question,
wha t i t had been in 1969:
The situation was no loncer
the 'I(NALOP plan h£l.d oo:oe into force sinoo thon, the
r1s}~
insuranoe oarket today seemed prepared to aooept
whioh at that t10e
it
had refused and the COIlIli ttee should not therefore allo\{ i tael:!' to be tiod down
by the letter of the 1969 Resolution.
The teenl
Co~ttee
had itself e:ophasized
the need to loovo the shipol'mers and the oil industry free to reoonoile their
interests a.oong thensolves.
lirJ1 t should be
betw(.j~n
sottle the question
It sooDed that they were at leo.st o.ffZ'Ged that tho
1,500 o.nd 1,725 franos;
wi~tin
those lirJ1ts.
it
\'IO.S
no", for Governoonts to
There could oertainly bo no quostion
01' taldll(! the fiGUre of 1,000 franos as a basis for discussion;
never been seriously oonsidered in
~1e
wen1 CotlLli ttee.
thn.t fieura h£l.el
The ioportnnt point to
be deoideC was to woo t extel'lt shipolmers should be exonero. ted freD o.ny o.ddi tio:no.l
firu:moial b\U'den inposed on the:c by the 1969 Convention llnd not ",hether oil
tmnsport oould be mo.do ohoo.por by t:JO.ld.ng the 011 industry to.ke over tho
insurer1s business.
Mr 4 MEIDCR.aJi'lI ( OC DIF ), spealdne at the inv! to. tion of the ChD.i:roo.:n, said tl1Ll. t
in tl'le info:roa.tion pnpor, subDitted by OCIMF, (r.oo/CONF.2/C.1/W'P.14) it ,m.a
pointed out ~l£\. t i t was possible to insure the lillbili ty a.risinG under the 1969
Convention, o.nd toot tho oost of th£I.t insuranoe beoo.De an aleoent in tlte freight
otruoture Qnd 'Was passed on to the oil oocpany oharterer.
burden "ms not neoessarily borne by the shipowner.
Thus tho o.ddi tionAl
.As the 1969 Convention
hnd not yet entered into foroe, there oould be differenoes between i.nsuranoe
:rotea follo'''inG its applloation and lower rotas whioh o1ght be esto.bUshed
- 6-
thxough adopting the prinoiple of shipo\·m.er r s relief.
In view of the very
marlced rise in insuranoe during the last few years, and in the liBbt of the
TOVA'OOP plan, ooINI!' oonsidered it reasonable to take as a basis the amounts
fixed by the latter, namely, 100 dollars per grose register ton (150 dollars
per limitation ton) with a maxiIlUm of 10 rJillion dollars, but without oo::oeecl.ir.l8'
].34 dollars as the lim t per ton and 14 m1llion dollare for the aboolute lin! t.
Because of inflation, there
\'laS
a serious rislt that i f a figure laid down in
1951 \'Iere talcen as a basis, mmers lIould not be adequately oovered.
Hr. :BRooH (l'l'orway) said he wanted to explain why his Government advooated
the figu.res included in the dra£t.
It \'laS important that the 1969 COllvention
~le
and the presont Convention should enter into foroe as soon as possible,
relief propo~ed in the draft would males the 1969 Convention fully aooeptable.
The figure of 1,000 franos had probo.bly not been thorouehly disoussed in the
I£eal ColJJllittee, but it ''Ia.s natural to ta.ke it as a ba.sis when taJ.d.ng into
account the resolution of 1969.
11oreover, the JJajori ty of delego.tions had
been in favour of a very olose link between relief and so.:£ety sta.nd.ards;
'>/as therefore appropriate that
penalized.
thOBO
it
\'1ho fo.iled to observe thaD should be
A relief down to 1,000 froncs l'1ould represent a heo.vy pel1!l.lization
of the ships who would not receive that relief.
I!'ir.ID.lly, from the economic
point 0.:" view it ws iuportal1t to find the clC.'lution that would provide
caqpensation at
~le
least cost.
Exoess insurance on the private insurance
no.rkot ,rould be Dore eXJ;>ensive tl1!l.n an illternational fund.
It could definitely
not be said that a. reduotion in freight oosts was of no inportanoe, because
ul tim tely it "Tas the oonsuners who would bener! t froe it.
lIr. POULSSON (Norwny), ootmlenting on dooUI:l.ont LEG/COHF.2/C.lj\Y.P.3 said
he estiDated that the difference bet\.,een shipowners t insurance preoiUtlS
oalculated on the basis of the liabilities ioposed by the 1969 Convention,
wi thout relief by the Ji\md, and those baaed on the Franc 0" Swedish oouproLlise
would be froo 11 to ll?r oonts per g'XOss register ton, or about 10 nillion
dollars a year.
BeweGl1 1960 and 1970 the only cases in whioh the lil:l.its
fixed by the 1957 Convention had heen substantially oxoeeded had beoll the
TORnEY CANYON and the ARR01'I incidents, for whioh ooopensation pB.ycents had
- 7-
LEG/CONF. 2/C .l/SH-. 22
totalled a little under 11 million dollars, of which the shipowners' 1957
It was therefore reasonable
limitation represented a greater proportion.
to suppose that, even under the three·.year taxa.tion system .of the London
Market, the Fund would be able to make substantial eoonomies and would b~
in a distinotly better position than an ordinary insurer.
2i
Finally, the difference of
cents mentioned in the OCIMF paper
~/CONF.2/C.l/WP.l4) between the cost of insuring TOVALOP ships and that of
insuring other ships, which was based on an estimate of pollution risks before
1969, would be considerably inoreased from February 1972 onwards.
Mr. PHILIP (Denmark) said he agreed with the Norwegian delegation; they
should keep to the proposals by the !MCO Legal Committee as set out in the
draft Articles (LEG/CONF.2/3, page 35).
His delegation would be prepared to oompromise but it was difficult to
reach a compromiae on what was already a compromise.
In 1969 it had been a
compromise decision that "The Fund should in principle relieve the shipowner
of the additional financial liability imposed by the present Liability Convention".
A first step away from this compromise had been taken in that the principle of
strict liability ~n which the syatem of compensation in the 1969 Con"ention was
based constituted an addi tiona! burden for which the owner ,·!,:."..;.ld not be
relieved under the draft.
Some people said there was no longer any need for relief of the shipowner
by the Fund because he was covered under the TOVALOP plan which ha.d c('Ime into
force after the 1969 Conference.
That view was quite unfounded because the
TOVALOP plan had in fact come into force be£o~e the 1969 Conference and the
participanta in the Conferenoe had been aware of its existence, in partiuular
they had known that it was a provisional system.
In 1969 a oompromise had been reaohed on the question of who should bear the
additional financial burdena they had not wanted to char-egG the whole draft in
order to shift the burden from the owner to the oil industry; it had ther~fore
been decided to lay the burden on the owner subject to his being relieved above
- aLEG/CONF.2/C.l/SR.22
a certain figure.
It would be going back on that compromise if they were
to raise considerably the figures suggested by the Legal Committee: the
higher the figures the fewer pollution oases the oil industry would have to
oover, because few cases of damage would reach the lower limit, so that in
the end the shipowner would have to carry the financial burden alone.
Some delegations talked about supposed negotiations between the shipping
companies and the oil ~ompanies.
Both had no doubt been anxious to reach
a oompromise but they had not yet managed to do so and the details of the
negotiations were not known.
The Conference could therefore only base
itself on the 1969
~~.
princi~les.
WHITE (Liberia) said that in order to establish the figures to be
inserted in paragraph 1 of Article 5 all that was needed was to decide how
the liability and the accompanying financial burden could reasonably be
divided between the carriers and the oil companies; whatever the figure this
should not affect the compensation paid to victims.
Liberia considered it was fair to ask the oil industry to pay its proper
share.
After all, it was the consumer who paid, ruld since the oil companies
were closer to the consumer than the shipping companies, they could more
easily pass on to him the burden imposed on them.
In
196~
the
Conferp~ce
had not hesitated either to imposo on the owner a
strict liability, or to raise, as was to be expected, the figure laid down in
tho J.951 Liability Convention, cr to demand compulsory insurance.
Fairness
required that that liability should be looked at from the financial stand-point.
That strict liability was due to the nature of the cargo.
In those conditions,
his deleg-d.tion unreservedly supported the figures proposed by the rrr.co Lega:.
Committee, which were in themselves a compromise which had been adopted on the
proposal of France and
S~eden.
The compromise solution put forward by the
Working Group on Conditions for Shipowners' Relief (LEG/CONF.2/C.l/WP.64) would
impose additional burdens on the shipowner who in any case was going to bear
the whole of the first a·9ven millions' worth of damage.
- 9-
LEG/CONF.2/C.l/SR.22
Mr. GOB (Singapore) said he supported the United Kingdom amendment.
The development of the situation since the 1969 Conference, in other words
the adoption of the TOVALOP pJan, made shipowners' relief lU1necessar,y.
The Fund should not take over the role already pl~ed by the TOVALOP plan,
becaus~ that would involve it in an enormous amount of administrative work.
To those who pleaded for a oompromise, he would say that h~ could
agree, as a oompromise, to the retention of paragraph 1, provided the
figures were raised.
Mr. McGOVERN (Ireland) said he must point out to the Singapore
representative that unless the 1969 Convention was not duly supplemented
1971 by a convention relieving the shipowner from part of his finanoial
in
burden, it would not be ratified by States with tanker fleets.
He asreed
with the comments of the Liberian representative and added that the shipping
companies had acknowledged that they must carry a part of the burden.
They
were prepared to adopt the Frenoh-8wedish compromise proposed by the Legal
Committee in the draft artioles; they could hardly do more.
Mr. DORAISWAMY (India) said he agreed with the view of the Norwegian
delegation that it was best to abide by the figures proposed by the Lesal
Committee.
That was not to say that thp. finanoial burden should just be
shifted from one industry to anothers it should be possible for governments
to reach agreement with the oil companies to prevent the consumer from having
to pay the bill in the end.
The!re were good grounds for fearing, as some
speakers had argued, that if the 1971 Convention did not offer shipowners
relief neither the 1969 nor the 19'71 Convention would be ratified.
Mr. NORDENSON, Rapporteur, Elaid that he noted the Netherlands
took the view thai; it was not the purpose of the Conference to
bring down the price of oil.
But the Conference's main purpose was to
provide oompensation for the victims and the viotims were in fact consumerS.
In the end i t was the public whiclh would pay the bill.
It was rather
irresponsible not to consider thel finanoial and economic consequelloes of the
representa~ive
solu ,,,,-on to be adopted.
-
1(' .-
LEG/CONF.2/C.l/SR.22
Furthermore. the problem was not merely eoonomic or political.
The
spontaneous way in waioh Conference partioipants had looked to the 011
industry to shoulder its sh8.l.'e of the risks r-f pollution showed that they
were well aware that the liability was oonneoted with the very nature of
the oommodity.
It was not aqlestion of dividing the risks between two
industries.
Without taking sides for one fJgure or another, he felt that
the financial burden should be shared in such a way as to offer victims the
best possible oompensation at the lowest possible cost.
Mr.
LANGL£Y~anada)
said that the Convention did in faot provide that
oil oonsumers the world over should subsidize ships whi~h, because there
were no relevant national rules applied, were guilty of pollution.
If the
Fund was to provide relief in suoh oases, therefore, it should subsidize
shipping proportionately to the insuranoe premiums the ships had actually
paid.
His delegation had agreed that the Fund should take on that role
provided that safety standards were adopted whioh were adequate to deal
with pollution risks and capable of immediate amendment.
But the Working
Group on Conditi0ns for ShipownerR' Relief had now submitted its proposal
regarding safety standards, and his delegation regarded it as unsatIsfactory,
As the potential victims' protection would be
V€ry
slight indeed under the
rules already included in the text, and as the Fund would have very little
proteotion against claims from shipowners in respect of aocidents whioh need
not have occurred if p~oper precautions had been taken, his delegation could
not agree to more than a minimum degree of subsidy in favour of the shipowner.
Mr. MAKOVSKY (USSR) said he shared the views of the delegations of Norway,
Swedan, India Emd Ireland and supported the proposals of !MCO's Legal Committee.
Mr. SAGARl1 (Japan)
Kingdom and that of the
was preferable, because
the Japanese delegation
said that, of the two amendments, that of the United
Netherl&lda (LEG/CONF.2/C.l/WP.3l), that of the Netherlands
the figures proposed by the Netherlands were considered by
as reflecting a fair balance between the burden of the
shipowners on the one hand Nul tho 'bu.rCl.on" ot thQ oil conpo.nioo
lwlCl.
aD
boil'lf>' subfJtant1a.ll:"
u~
to th.o ahipownere.
011
tho oi;!'lo::'
-11-
LEG/CONF.2/C.l/SR.22
Mr. PERRAKIS (Greece) said that somf of the arguments advanced against
the figures proposed by the Legal Committee were fallaoious.
While i t was
true that the 1957 Convention needed revising, it was equally true that
there was no longer any link between the 1957 Liability Convention and the
1969 Conv'ention, since the Conferenoe had broken that link by adopting the
principle of striot li~bility.
And other delegations had shown why the
TOVALOP scheme could not be aooepted as conclusive evidence.
Furthermore,
it was incorrect to claim that an attempt was being made to shift the
financial burden from one industry to aMther: what in fact wa.s being done
was to place J.t on the shoulders of the contributors alone instead of several
industries at the same time.
Lastly, It must not be forgotten that the
reason why the 1969 Convention had finally been adopted was that there had
been attached to it a resolution containing two basic principles.
His delegation supported the figures
prop~sed
by the Legal Committee.
Mr. LARES (Finland) said he also supported the Legal Committee's
proposals.
Higher figures would place a heavier
~urden
on the consumer.
Mr. van Rijn van ALKEMADE (Nethe~lands) said he noted fhat several
delegations were afraid that shipowners woU:~ reject the Convention unless
they were granted relief as proposed by the Legal Committee.
That argument
held good for the oil companies also, for they considered the proposals too
harsh so far as they were concerned. His delegation considered it its duty
to protect the interests of both industries.
He suggested that the OCIMF
representative be asked to explain the technical justification for the figure
of 1,500 francs proposed by the Netherlands delegation, just as the Norwegian
expert had explained the technical arguments for the contrary view.
Mr. BROCH (Norway) said that the representative of OCIMF had already
given the necessary explanation.
It was decided by 12 votes to 7 with 16 abstentions not to hear a further
statement from the representativ1 of OCIMF-!
- 12 -
LEG/CONF.2/C.l/SR.22
In an indicative vote the U~ ..Kir1gdom amendment (LEG/CONF.2/C ••:u.\iLl4)
was reJected bl 23 votes to 10 with 4 abstentions.
In an indicative vote the Netherlands amendment (LEG/CONF.2/C.l/WP.3l)
was rejected bl 16 votes to 13 with 8 abstentions.
Paragraph 2
The CHATIllVtN asked the Committee to disregard for the time being all
drafting or minor amendments and to consider only those which proposed the
deletion of the paragraph.
Those were the amendments by Romania
(Lm/CONF .2/C.l/WP.,40) and the Netherlands, the Fede"..al Republic of Germany
and SWeden (LEG/CONF.2/3).
Mr. ECCNOMU (Romania) referred to his delegation's views on the second
function of the Fund, whioh he had explained in the general discussion.
Sinoe a majority olearly wished to Bee the Fund assume responsibility for
the relief of the shipowner and his guarantor, his delegation had withdrawn
its proposal contained in LEG/CONF.2/C.l/WP.ll, and would similarly forbear
to press for its proposed amendment to paragraph 1 of Article 5 .
(LEG/CONF.2/C.l/WP.40) provided that the Drafting Committee acoeded to its
request to add the words "and his guarantor".
On the other h£uld, it would persist in its ~roposal to delete paragraph
2 of Article 5, on the grounds that the prooew~e in question would introduce
needle.ss complications and increased expenditure.
The Fund could best
discharge its duties in its capacity as re-insurer.
Both on financial and
on legal grounds, it would be unwise to allooa.te to it the functions of an
insuranoe company.
In the course of private conversations, representatives
of the FORUM had stated that oontributions t~ the Fund would be at least
five times greater if the Fund were called upon to act as an insurer.
Mr. KERRY (UK) concurred in the views of Mr. Econonr.....
The Fund could
not become a direct insurer except at the price of complicated and costly
machinery attendant un procedures necessitating permanent liaison with
shipowners and governments.
Moreover, .in the event of an accident, the
- 13 -
LEG/CONF.2/C.l/SR.22
viotim would n0 longer know with whom to lodge his claim for oompensation.
Nor was it even oertain that the system would cost the shipowner materially
less than independent insuranoe.
Mr. JACOBSSON (Sweden), seoonded by Mr. van Rijn van ALKEMADE
(Netherlands) and Mr. FRlJi~ (Federal Republio of Germany) likewise asked
for the deletion of the second paragraph as it seemed likely to offer no
advantages but would be very difficult to apply and would increase ~le
working expenditure of the Fund.
~~.
HIRSCH (Prance) reminded the Committee that the Conference had been
called to decide on the conditions under which, pursuant to the second prinoiple
of the 1969 Resolution, which had requested the establishment of the Fund,
shipowners could be relieved of the additional financial burden imposed on
them by the 1969 Convention.
The Preamble to the Resolution made it olaar
that the compensation of victims would be provided under a compensation
scheme based on the existence of an international fund.
The additional
financial burden was that which exceeded the liabilHy in respect of which·
the shipowner was normally insured.
The supplementary scheme was that
whioh would take over from the routine insurance system in respect of the
exceptional risks involved.
It had doubtless been thought neoessary to devise such a system because
it was impossible to cover the new risks on normal insurance terms, and also
because it was desired to cover the new risk in question by an international
organization that would act impartially with regard to the economic interests
involved (insurance, oil, shipping).
Of the two oonsiderations, moreover,
the latter was the more decisive.
How was the impartial internationaJ. organization to operate? Other
international funds, and in particular the World Bank, could be referred to
as examples.
That body had only agreed diffidently and after much delay to
allow its funds ~;o become involved with those of States and private banks,
as it was anxious to remain neutral with respect to the banks and to preserve
the international and public character of its funds.
- 14 -
LEG/CONF.2/C.l/SR.22
It would be quite normal for a similar approach to oommend itself to
those who had favoured the establishment of the Fund.
The idea of the
Fund as re-insurer had only been suggested at a rather late stage in the
work ~d no-one had dared to assert that this had been done for oonsiderations
of prinoiple.
Its proponents had oonfined themselves to arguments based on
facility, logio and eoonomw whioh he himsolf challenged.
In particular,
he pointed out that if re-insuranoe were adopted, the companies would have
to advance the additional portion.
The cost of that advanoe would be
added to insurance costs.
In other words, the eoonomics of the system
were debatable.
The system would not hold in any case if a disf"\te arose,
onoe it became apparent that the interests of the insurance companies were
better protected than those of the Fund.
Further, i f the Fund acted only as
re-insurer, there could be no question of its claiming the tax benefits
r£ferred to in Article 34, which were only applicable to international
public activities.
Convinced as it was that re-insurance was not necessarily the most
economio method and that the publio charaoter of the ~und should be protected,
his delegation should have requested the deletion of Article 5, paragraph 1.
In a spirit of oompromise, however, it had not done so and it had agreed to
the dra:t containing referenoes both to direot insuranoe and to re-insurance.
It had sh<.-wn the sams oonslderation for the interests of the insurers, the
shipowners and the oil companies.
It hoped that ita efforts would be
appreciated and that a majority of delegations, similarly inspired, would
vote for the retention of paragraph 2.
Mr. MAKOVSKY (USSR) requested delegations not to be guided when deciding
for or against the paragraph by considerations of the interests of the
insuranoe oompanies.
Mr. WHITE (Liberia) said that he had little confidence in the benefits
of re-insuranoe in the fo.rm of lower premium rates.
When la1mching into a
brand new venture, it was as well to retain a degree of flexibility and that
was what the options given in paragraph2 guaranteed.
In any case he did not
believe that direot action by the Fund would oreate the aooounting difficulties
which were feared by some.
- 15 -
LEG/CONF.2/C.l/SR.22
Mr. JEANNEL (France) asked whe'l;her a Fund was being established in
order to make more profits for the insurance companies or to relieve
shipowners of the additional burden imposed on them in 1969. He urged
adherenoe to the oompromise formula which allowed for the coexistenoe of
direo't insuranoe and a system of re-insurance.
His delegation hoped that
a big majority would vote to preserve that oompromiser it would note with
lllterest how that m~jority was oonstituted.
1& an indicative vote, the Committee decided. by 16 votes to 14 with
7 abstentions to delete
parasra~h
2!
Paragraph 3
The CHAIRMAN asked the Committee to deoide on the proposals put forward
by Canada, Norway and Romania (the Swedish delegation having withdrawn its
prvposal) to delete paragraph 3 subject to an amendment to Article 9, paragraph 2.
Mr .. BROCH (Norway) said that the paragraph was of 11 ttle signifioanoe, but
feared that if retained it might prove difficult to carry out.
Mr. ECONOMU (Romania) advooated deleting the paragraph which would give the
Fund discretionary powElra to infliot additional costs on shipowners.
In an indicatiye vote, the Committee ,9,ecided bl
abstention~
to delete paragraPh
16 _Y.2.i2! to 6 wHh 14-
3~
CHAIRMAN suggested that the various other proposals submitted with
respect to Article 5 were matters of drafting (the French and Norwegian
proposals) or were no longer relevant in view of the positions taken Up by the
Committee.
As for the Canadian oomments, the Canadian delegation had set them
all out in an amendment proposal c0ntained in LEG/CONF.2/C.l/WP.35.
The
He assumed that delegations would wish to take the various indioative
votes as a starting points for construotive discussions between the present
meeting and the next Plenary session.
The meeting rose at
6,10 p.m.