Circular to all tanker owner members
Although the TOVALOP Agreement came to an end in 1997, charterparty clauses remain in circulation which seek to maintain some features of the Agreement.
In December 1996 and May 1997 we issued Circulars notifying members of the termination of the TOVALOP Agreement and of the consequent unacceptability of the TOVALOP charterparty clause with effect from 20th February 1997.
Under the old TOVALOP clause recommended by the Clubs, owners gave charterers the right in certain circumstances to take measures at the owners’ expense in response to an oil spill from the tanker or threat thereof. The granting of this right was consistent with the voluntary compensation system set up by the TOVALOP and CRISTAL agreements. On the termination of the TOVALOP agreement it was no longer appropriate for charterers to have such an express right, since it was unnecessary and also incompatible with the Civil Liability Convention (CLC) and Fund Convention.
Some oil majors have recently attempted to reintroduce clauses based on the wording of the old TOVALOP charterparty clause. These clauses authorise charterers to take steps to prevent or minimise pollution from the tanker on behalf of owners and at owners’ expense, and may expose owners to pay clean-up or threat removal expenses which may not be recoverable from the Association.
These clauses could allow charterers to seek to circumvent the provisions of CLC. Under CLC claimants, including charterers, have a right of recovery against the shipowner for pollution claims including the cost of preventive or clean-up measures, subject to certain constraints. If the total of acceptable claims exceeds the CLC limitation amount, the compensation received by claimants will be reduced proportionately. However, these clauses may enable charterers to obtain a full and immediate reimbursement of expenses no matter what the total of all CLC claims may be.
Furthermore, the shipowner's liability under CLC is always financially limited; no such proviso is included in these clauses and, whilst some clauses state that their provisions are not in derogation of other rights charterers or owners may otherwise have or acquire by law or any international convention, this is a somewhat opaque wording which may not be sufficient to limit owners’ liability to charterers. The Rules of the Association provide that members should not assume responsibility under contract for claims in respect of which, under applicable law, they would otherwise be entitled to limit liability. Should the owners be liable under the clause for expenditure greater than the amount for which they would be liable under CLC, the excess amount may not be recoverable from the Association.
We recommend that members do not accept these clauses. However, there is no objection to members allowing the charterers to take preventive measures at their own expense, or to owners confirming that that they will remain a member of ITOPF. The following clause is put forward to provide owners with an alternative to charterers’ clauses. The clause also makes clear that, if there is a requirement under applicable law for provision of a Certificate of Entry in a P&I Club, this is to be provided by owners. The clause is approved by the International Group clubs and supported by BIMCO and Intertanko.
Oil Pollution Clause
1. Owners undertake
(a) that the Vessel will throughout the period of this charter be owned by a member of the International Tanker Owners Pollution Federation Limited, and
(b) that they will provide a Certificate of Entry in a P&I Club for production on board the vessel if required under applicable law or by the relevant authorities.
2. When there is an actual or threatened escape or discharge of Oil from the vessel which causes Pollution Damage or which creates a grave and imminent danger of such Damage, Charterers shall upon notice to the Owners or Master have the right (but not the obligation) if permitted under applicable law and by the relevant authorities, to
(a) place a representative on board the Vessel to observe the measures being taken to prevent or minimise Pollution Damage, and
(b) provide advice, equipment or manpower and undertake such other measures as are reasonably necessary to prevent or minimise such Pollution Damage, at Charterers’ risk and expense and subject to the approval of the Owners (which shall not be unreasonably withheld).
3. Nothing in this clause shall prejudice Owners’ or Charterers’ rights to claim compensation under any applicable law.
4. For the purposes of this Clause, the meaning of the terms “Oil” and “Pollution Damage” shall be as defined in the International Convention on Civil Liability for Oil Pollution Damage (CLC) 1992, except where Pollution Damage takes place within the territory of a state which is party to CLC 1969, when the meaning shall be as defined in CLC 1969.