Prior to 1970, establishing liability and pursuing compensation for ship-source oil pollution damage and for the costs and expenses for related clean-up and preventive measures presented difficult issues. For instance in Canada, in order to establish the liability of a responsible party, there was generally a requirement to prove negligence, nuisance, etc. Even then issues such as judgment proofing, bankruptcy, insolvency, jurisdiction and one-ship companies presented difficult to insurmountable recovery challenges. Such issues cried out for statutory solutions.
The catalyst for a made-in-Canada solution occurred in 1970 when the tanker Arrow grounded on Cerberus Rock in Chedabucto Bay, Nova Scotia. After the Arrow incident, major amendments were made to the Canada Shipping Act (CSA). The new oil spill legislation in Part XX of the CSA became part of Canadian Law on June 30, 1971. Predating the entry into force of the international 1969 Civil Liability Convention by more than four years, and the international 1971 IOPC Fund Convention by more than seven years, the new Part XX was one of the first national comprehensive regimes for oil spill liability in the western world. The principal elements of Part XX were:
Establishing the strict liability of shipowners to be responsible for costs and damages for a discharge of oil.
Allowing the shipowner, in certain circumstances, to limit his liability.
Creating a new fund, the Maritime Pollution Claims Fund (MPCF), to be available for claims in excess of the shipowner’s limit of liability.
Giving the Minister of Transport the power to move or to dispose of any ship and cargo discharging or likely to discharge oil.
The Ship-source Oil Pollution Fund (SOPF) was established by Part XVI of the amended CSA on April 24, 1989. The SOPF, a special account in the accounts of Canada, succeeded the MPCF which had existed since 1973. The monies in the MPCF were transferred to the SOPF. The SOPF is Canada’s national Fund.
Additionally, Canada had decided to increase its oil tanker spill cover by becoming a Contracting State in the international regime. On April, 24, 1989, the 1969 International Convention on Civil Liability for Oil Pollution Damage (1969 CLC) and the Convention on the Establishment of an international Fund for Compensation for Oil Pollution Damage (1971 Fund Convention) came into force for Canada. Under Canadian law, the two Conventions made available compensation for oil pollution damage resulting from spills of persistent oil from laden oil tankers.
Amendments to the two Conventions (1969 CLC and 1971 Fund Convention) were made by the Protocols of 1992 and the amended Conventions; the 1992 Civil Liability Convention and the 1992 Fund Convention came into force for Canada on May 29, 1999. By Canadian law, these two Conventions made available compensation for oil pollution damage caused by a sea-going vessel constructed or adapted to carry oil in bulk as cargo (normally a tanker).
The Conventions apply only to spills of persistent oil, for example crude oil, fuel oil, heavy diesel oil and lubricating oil.
Regardless, Canada’s national SOPF is available to pay compensation for spills of persistent and non-persistent oils from ships of all classes (including tankers).
This compensation regime (national and international) is governed by the Marine Liability Act, Statutes of Canada 2009, Chapter 21.