The Ship-source Oil Pollution Fund (SOPF or the Fund), a special purpose account in the accounts of Canada, is established under Part 7 of the Marine Liability Act to facilitate the indemnification of claims for ship-source pollution in Canadian waters while protecting the taxpayer. Canada’s compensation regime is based on the fundamental principle that the shipowner is primarily liable for oil pollution damage caused by the ship — that is, the polluter pays principle.
The Fund may be accessed in two different manners; the choice is that of the claimant:
- The claimant may file a claim against the owner of the ship responsible for oil pollution damage(up to the owner’s limit of liability) and can then submit to the Fund a claim for compensation for damages or for a portion of damages that haven’t been reimbursed to him (this could be due to the fact that the limit exceeded the owner’s liability limit, or because the owner was not financially solvent to compensate the claimant). Note that Response Organizations (as defined in the Canada Shipping Act, 2001) may access the Fund only this (indirect) way.
- The claimant may submit a claim directly to the Fund. The Administrator has the obligation of investigating and assessing the claim. If the claim is established, the Administrator will offer a settlement to the claimant, who will then have 60 days to accept the offer.
When the shipowner is insured, the Administrator advises the claimant to first submit his claim to the insurer and only present a claim to the Fund if the claimant and the insurer are unable to agree within the statutory deadline to submit a claim to the Fund.
The Fund covers all classes of ships that discharge persistent and non-persistent oil, including oil spills from unknown sources which are commonly referred to as “mystery spills”. The SOPF is notably available to pay compensation for reasonable claims for oil pollution response costs, or preventive measures taken to minimize damage caused by the discharge – or the risk of a discharge – of oil from any class of ship in Canadian waters. Any occurrence caused by an oil tanker carrying persistent oil as cargo would also be covered under the international regime (https://www.iopcfunds.org/).