Canada has adopted the polluter pays principle and will look to the shipowner as being primarily responsible for the payment of compensation for ship-source oil pollution damage. In pursuance of an access to justice perspective, the Ship-source Oil Pollution Fund was established to serve claimants. It is available to pay for claims for oil pollution damage or anticipated damage caused by the discharge of oil from all classes of ships on inland or coastal waters, including the exclusive economic zone of Canada. Once compensation is paid to a claimant, the Administrator is obligated to take all reasonable measures to recover that payment from the shipowner or any other responsible party.

Administrator’s Mandate

Since August 8, 2001 the Ship-source Oil Pollution Fund (SOPF) is governed by Part 6 of the Marine Liability Act (MLA), as modified by Statutes of Canada, 2009, Chapter 21.

The Administrator, appointed by the Governor-in-Council:

  • Consults with the Minister of Transport with regard to the release of necessary emergency funding of up to $10 million per fiscal year (or additional funds to a maximum of $50 million per fiscal year, if required) to the Minister of Fisheries and Oceans (DFO), to respond to a significant incident involving the discharge of oil from a ship;
  • Has inspection and inquiry powers with respect to contributors’ data reporting obligations, infringement of which may cause Administrative Monetary Penalties (AMPs);
  • Holds office during good behaviour and, as an independent authority, must investigate and assess all claims filed against the SOPF, subject to appeal to the Federal Court of Canada;
  • Offers compensation to claimants for whatever portion of the claim the Administrator finds to be established and, where a claimant accepts an offer, the Administrator directs payment to the claimant out of the SOPF;
  • Prepares an annual report on the operations of the SOPF, which is laid before Parliament by the Minister of Transport;
  • Has the powers of a Commissioner under Part 1 of the Inquiries Act;
  • May take recourse action against third parties to recover the amount paid out of the SOPF to a claimant and may also take action to obtain security, either prior to or after receiving a claim;
  • Becomes a party by statute to any proceedings commenced by a claimant against the owner of a ship, its insurer, or the International Oil Pollution Compensation (IOPC) Funds, as the case may be after having been served with the document commencing the proceedings;
  • Has the responsibility under the MLA to direct payments out of the SOPF for all Canadian contributions to the IOPC Funds (such contributions are based on oil receipts in Canada reported by the Administrator to the Director of the IOPC Funds);
  • Participates with the Canadian delegation at meetings of the Executive Committee and the Assembly of the IOPC Funds.