Questions and Answers

What is the purpose and function of the SOPF?

The SOPF is the Canadian fund established for the purpose of ensuring the payment of claims for marine oil pollution that originates from ships. The system is designed to cover the risk of non-payment by the shipowner who is responsible for pollution. It also covers claims for damage and clean-up costs where the identity of the ship that caused the discharge of oil cannot be established, i.e., a mystery spill. Finally, as fund of first recourse at the election of the claimant, the SOPF provides an alternative access to justice: it receives, assesses and settles claims, then goes against the shipowner for recovery of the amount paid.

Who may file a claim with the Administrator of the SOPF?

As provided by legislation, any person in Canada including private corporations, municipalities, provinces or the Crown, may file a claim with the Administrator respecting loss, damage, costs and expenses resulting from ship‑source pollution. After the Administrator investigates and pays a claim, he or she has a duty to take reasonable measures to recover from the owner of the ship, or any other applicable source, the compensation paid to claimants from the SOPF.

What was the original funding mechanism for the SOPF and how is the Fund currently maintained?

The SOPF succeeded the Maritime Pollution Claims Fund (MPCF) established in 1973. The money in the original MPCF – collected by levy on oil imported into or shipped from a place in Canada from 1972 to 1976 – was transferred to the new SOPF in 1989, a special account established in the accounts of Canada to which interest is credited monthly by the Minister of Finance.

How much money was paid out of the SOPF to settle Canadian claims during the fiscal year?

During the year 2017-2018, the Administrator paid out $763,708 for Canadian claims and further committed close to $2 million ($1,967,658) in the form of offers for some other Canadian claims for which the delay for acceptance had not expired as of March 31, 2018. Altogether, the Administrator paid or offered payment for a total of some $2.7 million.

How many claims did the Administrator receive in 2017-2018 and for what aggregate value?

The Administrator received 32 claims for an aggregate value of over $7M.

What was the average and spread of claims received in 2017-2018, by amount?

The average value per claim was $228,824; however two-thirds of the claims received were below $50,000 and three claims were over one million dollars each. The highest claim received this year was for over $2.4M. Table 1 of the Annual Report, for the spread of the 32 claims received in 2017-2018, by amounts, refers.

Who has claimed with the Fund in 2017-2018?

The Canadian Coast Guard (CCG) was the claimant in the majority of cases (23 out of 32), while five claims came from ports and four from municipalities. Table 2 of the Annual Report, Spread of the 32 claims received in 2017-2018, by claimants, refers.

What was the success rate of claimants in terms of percentage of their claim?

On average, claimants were offered 79% (and were paid 85%) of what they asked for. Municipalities had the best success rate (being paid 94% of what they asked for) and CCG the lowest success rate (being paid 84% of what they asked for). Table 6 of the Annual Report: Ratio of amount offered and paid vs. claimed by type of claimant, refers.

Why is there a difference between the amount offered and the amount paid (which is always higher than the amount offered)?

Section 116 of the Marine Liability Act provides that claimants are entitled to interest on their claim from the day their damage occurred. The interest is calculated and paid at the time of the payment by the Administrator and on the basis of the amount of the offer made by the Administrator and accepted by the claimant. Due to the compounded delays of filing the claim, assessing it and agreeing to the offer, interest may accrue over a period of several years.

What is the geographical spread of the Fund’s portfolio?

The Canadian Incident Portfolio Map found at pp. 34-35 of the Annual Report shows the geographical spread of the Administrator’s active files in 2017-2018. British Columbia is the province where the Administrator has the highest number of active files.

How much time does it take a claimant to receive an offer after his/her claim has been received by the Administrator’s Office?

In 2017-2018, one-third of the offer letters were issued by the Administrator’s Office within one month of receiving the claim, and 75% were sent within three months. All in all, in 2017-2018, 88% of the offer letters were sent within six months after receiving the claim. The remaining 12% of the Offer letters issued in 2017-2018 were issued between six and twelve months after receiving the claims and were for large and complex claims, involving back and forth discussions between the claimant and the Administrator’s Office and the issuance of a draft offer. Note that statutory interest accrues in favour of the claimant during the claim assessment process (Question 9 above refers).

What was the SOPF balance in the special accounts of Canada on March 31, 2018?

The balance in the Fund was over $405 million ($405,609,031).

What is the maximum liability of the SOPF for all claims from one oil spill?

The maximum liability per incident was about $172 million ($171,692,521) during the fiscal year 2017-2018. This amount is indexed annually. Since April 1, 2018, the maximum for the current fiscal year is $174 million ($174,611,294).

If the Minister now re-imposed a levy on shipments of contributing oil, what would be the amount of the levy?

First of all, no levy has been imposed for the SOPF and its predecessor MPCF since 1976. However, in accordance with the Marine Liability Act, the Minister of Transport had statutory power to impose a levy of 51.50 cents per metric tonne of contributing oil during the fiscal year 2017-2018. The levy is indexed annually to the consumer price index and has been adjusted to 52.38 cents per metric tonne as from April 1, 2018.

What are the benefits of being a Member State to the 1992 International Conventions and to the Supplementary Fund Protocol?

  1. The Conventions provide for three cumulative layers of liability in case of tanker spills in the waters of a state party to the convention:
  • the 1992 CLC provides for the shipowner’s mandatory insurance up to its limit of liability;
  • the 1992 IOPC Fund Convention provides for up to approximately $534 million per incident (including the shipowner’s limit of liability);
  • the 2003 Supplementary Fund provides for up to an additional $900 million (approximately) per incident.

Together, these three layers of indemnification provided by the international conventions provide for up to some $1.4B per tanker spill incident involving persistent oil.

For such incidents, the SOPF is also available as a fourth layer of cover, up to $174M. The aggregate cover therefore would cover over $1.5 billion for a tanker spill incident involving persistent oil.

How much did the SOPF pay to the International Fund in the fiscal year 2017-2018?

$1,335,314 – Section 1.2 of the Administrator’s 2017-2018 Annual Report refers.

How much has the SOPF paid to the International Funds since Canada first became part of the international regime in 1989?

Some $56 million ($56,619,852).

How much has the International Regime paid out for Canadian oil spill incidents since 1989?

$11,791,848 was paid for costs and expenses incurred respecting the Rio Orinoco, which grounded on Anticosti Island, October 16, 1990.

How is the SOPF different from the International Funds to which Canada is a party?

The International Funds are available only to spills of persistent oil from sea-going tankers. The SOPF is unique in that it not only covers sea-going tankers, but it is intended to pay claims regarding oil incidents from all classes of ships such as, general cargo vessels, cruise ships, ferries, tug or barges, fishing vessels or pleasure craft.. The SOPF covers any type of oil incident from ship-source, for both persistent and non-persistent oil. In addition, the SOPF also applies to so-called mystery spills, where the identity of the ship that caused the discharge cannot be established.

What is the benefit of being party to the Bunkers Convention?

Canada is party to the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (Bunkers Convention).

The implementation of the international bunker rules in Canada requires that all ships having a gross tonnage greater than 1,000 must maintain insurance or other financial security that allows claimants for oil pollution caused by such ships to go directly against the insurer or other person providing financial security. This feature is of some significance in non-tanker spills handled by the Fund.

How much was recovered by the Administrator against responsible parties, and in how many files?

In 2017-2018, the Administrator recovered a total of $258,691 across five different files. Some 45 files were at various stages of recourse action during the year, including 11 of the 17 court cases which were against shipowners (pages 14-15 of the Annual Report refer).