Ports and Infrastructure

The Impact of the IMO Bunker Convention

Richard H. Hobbie III, President and CEO of Water Quality Insurance Syndicate (WQIS), answers questions about the IMO Bunker Convention and the impact it may have on cargo fleets.

The International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001, went into effect on November 21, 2008. It establishes shipowner liability and compensation to affected parties for spills of oil when carried as fuel in ships’ bunkers.
We turn to Richard H. Hobbie III, president and CEO of Water Quality Insurance Syndicate (WQIS) for a look into the importance and the impact of this Convention.

Question: Who is affected by this Convention?

Hobbie: The convention affects vessel owners, bareboat charterers, and managers or operators of vessels that are over 1,000 gross tonnage, flagged under or entering ports of any of the signatory states.

These vessels are required to maintain insurance or other financial security to cover the liability of those shipowner interests for pollution damage in the amount equal to the limits of liability under the applicable national or international limitation regime.

Question: What is the environmental importance of the Bunker Convention?

Hobbie: It addresses a significant gap in compensation for damages arising from oil spills, as existing international regimes covering oil spills have not included bunker oil spills from vessels other than spills of persistent oil from tankers. We know that even when taking proper precautions, spills can happen. This Convention further ensures that those responsible for cleaning up the environment after a spill will be properly insured.

Question: Is the United States participating in the Bunker Convention?

Hobbie: The United States is neither a signatory nor party to the Convention. Therefore, the United States government cannot issue certificates relating to the Bunker Convention and will not enforce the Convention on foreign ships visiting the United States.

Question: What does the IMO Bunker Convention mean for U.S. flagged ships traveling to signatory states?

Hobbie: Registered owners of any vessel over 1,000 gross tonnage entering or leaving a port in the territory of a State party will be required to maintain pollution insurance, which meets the requirements of the Convention, and they must obtain a certificate demonstrating that such insurance is in effect. The certificate must be carried on board at all times.

Question: What are the possible repercussions to ships transiting to signatory states that do not have the requisite insurance and certification?

Hobbie: Each signatory state will decide how they will enforce the Convention. We have read early reports of threats of fines to the ship’s master for those who do not have the required pollution insurance or who cannot provide proof of that insurance. We expect to hear more reports of enforcement as ports of signatory members put their processes in place. These could include fines, delays, or denial of entry.

Question: How do ships flagged under non-party states obtain certification?

Hobbie: Ships not registered in a State Party, such as those flagged under the United States, may receive a certificate by the appropriate authority of any State Party upon proof of proper insurance. Some pollution insurance carriers have also been authorized by flag states to issue the certification of financial guarantee that vessels need to produce.

Question: Which States are party to the Convention?

Hobbie: As of December 5, 2008, the States party to the Convention are the Bahamas, Bulgaria, the Cook Islands, Croatia, Cyprus, Denmark, Estonia, Germany, Greece, Hungary, Jamaica, Latvia, Lithuania, Liberia, Luxembourg, Marshall Islands, Norway, Poland, Russia, Samoa, Sierra Leone, Singapore, Slovenia, Spain, Tonga, The United Kingdom, and Vanuatu.

Of course, additional States may join at any time. WQIS is maintaining an updated file of signatory states on our website, www.wqis.com, as they are announced.