The Canadian Compensation Regime

The Canadian Compensation Regime

The Canadian regime of liability and compensation for ship source oil pollution consists of both national and international rules. The international rules originate in international conventions to which Canada has acceded. Those conventions are implemented in Canada under Part 6 of the Marine Liability Act (MLA). The national rules, also contained in Part 6 of the Act, follow closely the international rules. A key feature of the Canadian regime is the Ship-source Oil Pollution Claims Fund (SOPF). The rules setting up the SOPF and governing its administration are contained in Part 7 of the MLA. By far the most claims dealt with by the SOPF are purely domestic in origin and are consequently dealt with in accordance with the national rules contained in Part 6 of the Act. Most of those claims fall outside the scope of the international rules.

National Rules

Under the national rules, shipowners are primarily liable for oil pollution damage caused by their ships up to a limit of liability based on the tonnage of the ship. The rules governing the limitation of liability of shipowners for these claims are contained in Part 3 of the MLA. The liability of the owner is strict, meaning that liability can only be avoided on the basis of a limited number of defences specified in subsection 77(3) of the MLA. To the extent that compensation from the owner is inadequate or not available, a claimant may submit the claim to the Administrator of the SOPF for any amount not recoverable from the owner.

International Rules

The international rules are very limited in their application. The rules are contained in the 1992 Convention on Civil Liability for Oil Pollution Damage (CLC), governing the liability of the shipowner, and the 1992 Convention on the Establishment of an International Fund for Oil Pollution Damage (Fund Convention). Those rules are limited in their application because they only apply to oil spills caused by tankers carrying persistent oil in bulk as cargo. The owner is primarily liable for oil pollution caused by the ship. Liability of the owner is strict, meaning that liability can only be avoided on the basis of a limited number of defences specified in Article III.2 of the CLC. For the text of the convention, see Schedule 5 to the MLA. As under the national rules, the owner may limit liability, calculated on the basis of the tonnage of the ship, in accordance with the provisions set out in Article V of the CLC.

To the extent that compensation from the owner is inadequate or not available, the claimant may submit the claim for uncompensated damage to the International Oil Pollution Compensation Fund (IOPC Fund), set up under the Fund Convention. Canada is also party to the Supplementary Fund, established under the 2003 Protocol to the 1992 Fund Convention, which provides an additional layer of compensation.

Finally, Canada is a party to the 2001 Convention on Civil Liability for Bunker Oil Pollution (Bunkers Convention) which provides a strict liability regime for bunker spills, meaning that the shipowner can only avoid liability on the basis of a number of defences, similar to the defences provided under the national and international rules, referred to above, specified in Article 3.3 of the Bunkers Convention, see Schedule 8 of the MLA. The owner may limit liability on the basis of the tonnage of the ship in accordance with the rules contained in Part 3 of the MLA.