Frequently Asked Questions
The information below is meant to provide Canadians with general information about the Fund.
What is the purpose and function of the Fund?
The Ship-source Oil Pollution Fund (the Fund) is available to compensate victims of oil pollution damage caused by any type of oil, from any type of ship or boat, anywhere in Canadian waters. The Fund is a special purpose account in the accounts of Canada, established under Part 7 of the Marine Liability Act (the MLA).
Canada’s compensation regime is based on two principles. First, compensation should be available to those affected by an incident. Second, shipowners are responsible for oil pollution incidents, regardless of fault. This is the polluter pays principle.
Those who suffer damages can submit a claim directly to the Fund. Damages can include costs incurred to prevent, mitigate or remedy oil pollution damage. The Fund also covers mystery spills – oil spills from an unknown ship. We assess and offer compensation for eligible claims. Once a claimant receives payment, we take all reasonable measures to recover from the shipowner or other responsible persons.
What was the original funding mechanism for the Fund and how is the Fund currently maintained?
The Fund 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 Fund in 1989, a special account established in the accounts of Canada to which interest is credited monthly by the Minister of Finance.
Why are numbers in the financial statement not always the same as in the annual report?
Totals may differ due to rounding or the basis of accounting used (cash method vs. accrual method).
Who can submit a claim?
Any person in Canada that has suffered damages, including:
- Canadian Coast Guard
- Ports, harbours and marinas
- Fishing & tourism industries
- All levels of government
- Indigenous communities
- Coastal landowners and owners of impacted ships or boats
How difficult is it to submit a claim and can you get help to do it?
Our Claims manuals are easy to use and will help you through the process. In March 2022, we also launched our new claims form. It’s an easy-to-use document to help claimants in preparing and submitting claims.
Most claimants are able to submit their claims without the need for professional help. However, with large or complex claims, it may be helpful to obtain the advice or assistance of a lawyer or other professional. If this assistance is reasonably necessary, it may be eligible for compensation.
Must a claimant suffer property damage to claim for economic loss?
No. For example, if a community suffers an economic downturn as a direct result of a ship-source oil spill, any local businesses that can demonstrate an economic loss will be eligible for compensation.
Is compensation available for cultural losses within Indigenous communities?
Economic loss covers cultural and ceremonial uses, to the extent that such usage is negatively affected by a ship-source oil pollution incident. Compensation would extend to the cost of reasonable replacement alternatives. When processing such a claim, the assistance of an expert may be required to better understand and quantify the loss.
How much money was paid to Canadian claimants in 2021-2022?
$763,289 was paid to Canadian claimants.
How many claims did we receive in 2021-2022 and for how much?
We received 20 claims. The total amount claimed this year, at $26,386,935, is the highest in the Fund’s history. It included a $25,731,208 claim for the Kathryn Spirit incident.
What was the average and spread of claims received in 2021-2022, by amount?
The claims submitted this year ranged from $2,956 to $25,731,208. Despite the largest claim submitted in the history of the Fund, most claims were for relatively small amounts. Three out of four claims were for $50,000 or less. Roughly half of the claims were for less than $35,000.
See Figure 1 of the annual report for the spread of the 20 claims submitted by amounts.
Who submitted claims to the Fund in 2021-2022?
The Canadian Coast Guard is still the main claimant. 18 out of the 20 claims submitted came from the Canadian Coast Guard, representing 90% of the total number of claims. One claim was from a business and one from an Indigenous claimant. No claims were submitted by local governments, or ports and harbours.
See Figure 2.1 of the annual report for the number of claims submitted by type of claimant.
What is the geographical spread of the Fund’s portfolio?
Claims were more evenly distributed across the country. Claims continue to arise more frequently from incidents in British Columbia, but to a lesser extent than in prior years. The distribution was:
- British Columbia (8);
- Ontario (4);
- Quebec (3);
- Newfoundland and Labrador (3); and,
- Nova Scotia (2).
See the Map of the Fund’s Active Portfolio in 2021-2022 of the Annual Report for more details.
What was the success rate of claimants in terms of percentage of their claim?
Amounts offered were 34% of amounts claimed, a continued decrease from previous years. However, a number of claimants obtained a high percentage of their amount claimed. Despite the overall low success rate, close to one in three was assessed at 90% of the amount claimed or better. Two claimants obtained the full amount claimed.
See Figures 6 and 7 of the annual report for additional details.
Why is there a difference between the amount offered and the amount paid (which is always higher than the amount offered)?
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. Due to the delays in submitting the claim, to the processing and payment, interest may accrue over a period of several years.
How long does it take on average to process claims?
Claims for less than $100,000 were processed in less than six months, on average. Nine out of ten claims were processed in less than nine months. Only one claim took more than a year to process. In general, the bigger the amount claimed, the more complex the claim and longer its processing time.
See Figure 5 of the annual report for the time to process claims based on the amount claimed.
How much money was recovered from polluters in 2021-2022?
$419,500 was recovered from polluters, the 4th highest amount in our history. We successfully recovered funds in six matters this year. This includes $375,000 from the owners of the Cormorant, which polluted the waters in Bridgewater, Nova Scotia in 2015.
See Figure 8 of the annual report for the list of files where financial recovery was secured in 2021-2022.
What was the Fund’s balance on March 31, 2022?
Approximately $409 million.
What is the maximum amount the Fund can pay for one oil spill?
There is no limit to how much the Fund can compensate. In the event of a disaster, the Fund has access to additional money.
If the Minister now reimposed a levy on shipments of oil, what would be the amount of the levy?
No levy has been imposed for the Fund and its predecessor MPCF since 1976. However, the Minister of Transport had the power to reimpose a levy of 55.05 cents per metric tonne of oil during (fiscal year 2021-2022). As of April 1, 2022, the levy is 56.32 cents.
What are the benefits of being a Member State to the 1992 International Conventions and to the Supplementary Fund Protocol?
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 $358 million per incident;
- The 2003 Supplementary Fund provides for an additional layer of compensation of approximately $1 billion.
Together, these three layers of indemnification provided by the international conventions provide for approximately $1.4 billion per tanker spill incident involving persistent oil. The exact amount depends on the exchange rate in effect at the time of the incident.
How much did we pay to the International Oil Pollution Compensation Funds (IOPC Funds) for the year 2021?
In 2022, we paid $890,314 out of the Fund to cover the Canadian contribution to the IOPC Funds. The contribution is based on the oil report submitted in 2021.
An additional amount of $69,272 was paid following the submission of an amended oil report for the year 2017.
See Section 1.3 of the Annual Report for more details about the activities related to the IOPC Funds.
How much has the Fund paid to the International Funds since Canada first became part of the international regime in 1989?
How much has the International Regime paid out for Canadian oil spill incidents since 1989?
$11,791,848 was paid for expenses incurred for the Rio Orinoco incident, on Anticosti Island on October 16, 1990.
How is the Fund 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. Our Fund is unique in that we cover any type of ship or boat, including:
- Cargo, container, and passenger vessels
- Tugs and barges
- Fishing vessels
- Pleasure craft
- Ex-fishing vessels
The Fund also covers mystery spills – oil spills from an unknown ship.
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.
Now that the Nairobi International Convention on the Removal of Wrecks is in force in Canada since 2019, would claimants need to seek compensation from the insurance held by the shipowner first, then go to the Fund?
Any person in Canada that has suffered damages can submit a claim directly to the Fund.
Alternatively, they can also choose to negotiate, or sue the shipowner and insurers (as in cases covered by the Nairobi Convention). Where claimants decide to go directly to an insurer, our office keeps the claim file in abeyance. We will proceed with the assessment only if the claimant does not reach a satisfactory settlement with the insurer.