Oil Pollution Indemnity Clause For Penalties And Fines
(a) Subject to the terms of this Charterparty, as between Owners and Charterers, in the event of an oil pollution incident involving any discharge or threat of discharge of oil, oily mixture, or oily residue from the Vessel (the "Pollution Incident"), Owners shall have sole responsibility for responding to the Pollution Incident as may be required of the vessel interests by applicable law or regulation.
(b) Without prejudice to the above, as between the parties it is hereby agreed that:
- i. Owners shall indemnify, defend and hold Charterers harmless in respect of any liability for criminal fine or civil penalty arising out of or in connection with a Pollution Incident, to the extent that such Pollution Incident results from a negligent act or omission, or breach of this Charterparty by Owners, their servants or agents,
- ii. Charterers shall indemnify, defend and hold Owners harmless in respect of any liability for criminal fine or civil penalty arising out of or in connection with a Pollution Incident, to the extent that such Pollution Incident results from a negligent act or omission, or breach of this Charterparty by Charterers, their servants or agents, provided always that if such fine or penalty has been imposed by reason wholly or partly of any fault of the party seeking the indemnity, the amount of the indemnity shall be limited accordingly and further provided that the law governing the Charterparty does not prohibit recovery of such fines.
- iii. The rights of Owners and Charterers under this clause shall extend to and include an indemnity in respect of any reasonable legal costs and/or other expenses incurred by or awarded against them in respect of any proceedings instituted against them for the imposition of any fine or other penalty in circumstances set out in paragraph (b), irrespective of whether any fine or other penalty is actually imposed.
(c) Nothing in this Clause shall prejudice any right of recourse of either party, or any defences or right to limit liability under any applicable law.
(d) Charterers shall procure that this Clause be incorporated into all sub-charters and contracts of carriage issued pursuant to this Charterparty.
Source: International Group
Published: March 2013
Oil Pollution Indemnity Clause - Commentary
Suitable for
Charterparties
Purpose
This Clause is a revised version of a Clause originally published by the International Group in October 2012. The Clause was drafted to address concerns raised by owners and charterers in respect of Australian legislation introducing increased penalties for pollution from ships and damage to the marine environment. The legislation gave rise to a number of unbalanced charterparty clauses and the above Clause is designed to provide shipowners and charterers with an more acceptable alternative. The Clause is of general application and not limited to Australian fines and penalties. The Clause was also adopted by BIMCO Documentary Committee in May 2013.
For further information see International Group Circulars dated 13 March 2013 and 24 October 2012.