MERCHANT SHIPPING (OIL POLLUTION) BILL [H.L.] (Hansard, 28 January 1971)

§ LORD DRUMALBYN
My Lords, I beg to move that this Bill be now read a second time. It deals with another aspect of oil pollution, which we have just been considering in the Oil in Navigable Waters Bill. While that Bill is concerned with prohibiting the discharge of oil, this Bill is concerned with questions of liability and compensation should pollution occur. The subject is not an easy one, and I hope your Lordships will excuse a certain amount of technicality in introducing the Bill. It is quite deliberate that these two Bills are being taken on the same day at the same time, so that it will be possible for your Lordships to see how the whole situation is being considered. In another place, through nobody's fault, they dealt with one Bill only, and in due course they will, I hope, get this Merchant Shipping (Oil Pollution) Bill, if your Lordships pass it.
I understand that this is a subject which even lawyers do not find simple, but I will do what I can to explain what the Bill sets out to do. None of us, certainly, can have forgotten the "Torrey Canyon" disaster which occurred in March, 1967. As a result of that disaster, involving huge expenditure in clearing up contaminated beaches and in trying to ensure that oil on the sea did not reach shore, a number of studies were started in IMCO (Inter-governmental Maritime Consultative Organisation) at the instigation of Her Majesty's Government. One of these was a study by the Legal Committee of IMCO of the question of legal liability in cases of this kind. The Comité Maritime International, an international organisation comprising a large number of national maritime law associations and responsible for a considerable number of international Conventions in the maritime field, simultaneously set up a sub-committee, under the chairmanship 1080 of the noble and learned Lord, Lord Devlin, to consider this problem. The IMCO Legal Committee and the C.M.I. sub-committee worked in close collaboration with each other, and the draft articles ultimately produced by the Legal Committee for consideration at the Brussels International Legal Conference on Maritime Pollution Damage of November, 1969, owed much to the work of the subcommittee.
Although approximately half (about £3 million out of £6 million) of the Government expenditure was eventually recovered in the "Torrey Canyon" case, it was plain that the existing state of the law was far from satisfactory. In particular, there were doubts whether in some circumstances clean-up costs were recoverable as damages, especially if the proceedings were based on negligence. Again, the figures at which shipowners were currently entitled to limit their liability were too low; and again there were considerable jurisdictional difficulties in bringing proceedings at all. I am sure the noble Lord, Lord Brown, remembers all these things only too vividly.
The International Legal Conference at Brussels was attended by 48 countries. The United Kingdom delegation was led by the noble and learned Lord, Lord Devlin, and a great deal of the credit for the successful outcome of the Conference is due to him personally. It is unfortunate that he is out of the country at the present time. No doubt he would have added much to our consideration of this Bill to-day. The Conference adopted a Convention on Civil Liability for Oil Pollution Damage. The purpose of introducing this Bill is to enact the legislation necessary to enable Great Britain to ratify the Convention. The main provisions of the Liability Convention are as follows. First, there is strict liability on the shipowners for oil pollution damage caused by escapes of oil from ships carrying oil in bulk as cargo—that is, loaded tankers. This liability extends not only to loss or damage caused by oil pollution but also to reasonable cleaning-up costs and to damage caused in the course of cleaning up. It is, however, subject to certain exceptions, such as act of war, act of God, et cetera. Liability of an owner is unlimited if the discharge or escape was his fault. Secondly, there is an increase in the level of limitation of owner's 1081 liability for oil pollution, in the absence of fault or privity on his part (that is, an element of personal fault as opposed to responsibility for the acts of others). The limit is 2,000 gold francs (about £56) per ton, subject to a ceiling of 210 million gold francs (about £5.8 million). His limitation fund for oil pollution will be available to victims of oil pollution damage only and will be separate from any other limitation fund he may be entitled to establish; for example, in respect of personal injury or other property damage under the Merchant Shipping Acts. The third of these points is compulsory insurance with direct recourse by the claimant against the insurer. These are the three elements involved.
At various stages during the International Legal Conference, proposals for a Convention in different forms were put forward and were discussed at length. It was only towards the end of the conference that the United Kingdom was able to gain acceptance for the present compromise Convention. Like any compromise, the Convention does not satisfy everyone completely. In fact, the United Kingdom delegation opposed strict liability on the owner and also the provisions for direct recourse against insurers, particularly the provision which deprives the insurer of almost all the defences he would otherwise have against his insured. It is, however, the view of the Government that the advantages to the United Kingdom of securing the ratification of the Convention outweigh the disadvantages of the provisions we dislike.
The advantages are as follows. First of all, the rules for liability and limitation under the Convention are both considerably more advantageous to the claimant than under existing maritime law. They represent a reasonable maximum burden on shipowners. Secondly, entry into force of the Convention will improve the chances of pursuing and making good claims by Her Majesty's Government and local authorities and other States party to the Convention. Thirdly, British shores will be better protected from loss through pollution from ships not destined for British ports. A substantial proportion of the tankers passing our coasts are foreign and are bound for Western European ports. We should hope that if the Convention 1082 entered into force most West European Governments would subscribe to it. In this event, the tankers bound for any of their ports would have to be insured against polluting the shores of all contracting States, including those of the United Kingdom. Fourthly, there will be greater uniformity in the law as between one country and another. There are increasing signs that some Governments are taking unilateral action. If that happened on a wide scale, our shipowners would be subject to widely differing and in some cases, no doubt, more exacting rules in the various countries with which they trade. On the other hand, if the Convention is brought into force, that would help to forestall unilateral action and to bring about unification of international maritime law affecting oil pollution damage. Such unification would be of advantage to our shipowners and insurers alike.
The Convention is to enter into force ninety days after ratification by eight States, including five with at least one million gross tons of tankers each. It was signed by nineteen countries in November, 1969, and a further ten countries have signed since that date. No country has yet ratified. This Bill will enable the United Kingdom to ratify the Convention. It goes beyond the Convention in two respects. First, it contains a special provision relating to claims for the cost of preventing or mitigating damage caused by oil spilled in certain cases not covered by the Convention—for example, fuel oil from a dry cargo vessel. Second, it will apply to all ships (including non-seagoing ships), whereas the Convention applies only to seagoing vessels.
With that background, perhaps the best way of explaining this Bill will be to outline and comment on the principal provision in it, clause by clause. My Lords, Clause 1 makes the shipowners liable for oil pollution damage in the United Kingdom and in the Convention countries resulting from the escape of oil from a ship carrying it in bulk as a cargo—which means, roughly speaking, tankers. It also makes the shipowner liable for the cost of measures taken to prevent or minimise such damage. Clause 2 provides for the exceptions I have already mentioned. These two clauses establish a form of strict liability on the 1083 owner of the vessel carrying oil—a liability which may be compared with that of an occupier of land in England who stores a dangerous or unpleasant thing on his land, if that thing escapes or does damage. Placing this liability on the owner of the vessel will encourage him to make every effort to prevent oil spills. Strict liability on a specified and easily identifiable person also makes it easier for the victim, in that he will automatically know against whom to proceed. In cases involving the negligence of third parties, such as the owner of another ship with which the tanker has been in collision, this claimant will be able to proceed directly against the tanker owner or his insurer without waiting for the determination of responsibility between the tanker owner and the third party.
Clause 3 restricts the owner's liability for oil pollution damage in circumstances covered by Clause 1 to liability under the Bill, and prevents his servants or agents from being liable for such damage. Clauses 4 and 5 restrict the owner's liability for oil pollution damage to the amounts contained in the Convention, and provide for the payment into court of a limitation fund and for the subsequent distribution of this fund. Clause 6 provides for the release of ships and other property under arrest when the limitation fund has been paid into court.
Clauses 7 and 8 deal with two special cases. Clause 7 contains special provisions where proceedings are brought both against an owner under the Bill and some other person under existing principles of law. Clause 8 lays down what is to happen if an owner sets up a limitation fund in another Convention country where damage has occurred both here and in that country. Clause 9 provides that no action shall be brought under Clause 1 more than three years after the damage occurred or more than six years after the original incident.
Clauses 10 and 11 of the Bill deal with the arrangements for introducing the compulsory insurance aspects of the Convention. They are as widely framed as possible, having regard to the limits of United Kingdom jurisdiction. They provide that ships, other than Government ships, carrying cargo of more than 2,000 tons of persistent oil in bulk, shall not enter or leave United Kingdom ports or 1084 terminals without having in their possession a certificate of insurance or other financial security, and that such ships, when registered in the United Kingdom, shall carry a certificate wherever they dock throughout the world.
Ships requiring a certificate of insurance fall into three categories: United Kingdom ships, ships registered in other Convention countries, and ships registered in non-Convention countries. So far as ships registered in other Convention countries are concerned, the issue of certificates to these ships is the responsibility of their Governments, and the appropriate United Kingdom authorities will accept these certificates. It will be for the Secretary of State for Trade and Industry to issue certificates for United Kingdom ships, and Clause 11 provides the necessary powers to do so. These arrangements respect the international character of the marine insurance market; United Kingdom shipowners may place their insurance where they wish—in this country or abroad. But, as the Secretary of State has to be satisfied as to the reliability of the insurer concerned before issuing a certificate, he is to have discretion over the granting of such certificates. As to ships not registered in any Convention country, Clause 10 provides that the Secretary of State may issue certificates to such ships, and may also make regulations recognising countries for the purpose of issuing certificates.
Clause 12 gives effect to the provision in the Convention allowing for direct action by a claimant against the insurer. It entitles the insurer to limit his liability to the figure appropriate to the owner whether or not there was fault or privity on the part of the owner, but allows him only to invoke the defences available to the owners and not to plead defences which would be open to him as an insurer other than that the damage was caused by the wilful misconduct of the owner. Clause 13 gives effect to the provisions relating to jurisdiction in the Convention. It makes it clear that the Admiralty Court has jurisdiction over claims arising out of the Act but precludes our courts from hearing claims for oil pollution damage occurring in other Convention countries if no such damage occurred in the United Kingdom as a result of the same incident. It also provides for the enforcement of judgments for oil pollution damage given 1085 in Convention countries. Clause 14 excludes from the Bill warships and ships used by Governments for non-commercial purposes and slightly modifies the compulsory insurance provisions in relation to other Government ships.
My Lords, Clause 15 is an important and rather novel provision. It is designed to help a claimant in cases not covered by Clause 1—for example, when fuel oil is discharged or escapes from the bunkers of a dry cargo ship through the carelessness of the crew. In such a case the Convention does not apply, and there does not seem any need to apply its special provisions, such as a separate fund and compulsory insurance. On the other hand, the Government or a local authority which has cleaned up the oil might, if it took proceedings based on negligence, be met by the argument that it was not under a duty to clean up the oil, nor was it protecting a proprietary right; and that consequently it had not in law suffered any damage and could not recover its expenses. The clause will provide that if anybody has suffered or may suffer recoverable damage as a result of the spill, the cost of reasonable cleanup measures will be recoverable, no matter who took them.
I do not think that there is anything in Clauses 16 to 20 which I need mention, except subsection (3) of Clause 20, which enables the different provisions of the Bill to be brought into effect on different dates. In particular, we shall be able to implement immediately the provisions for strict liability and to make the costs of preventive and clean-up measures recoverable. The whole Bill cannot be implemented until the 1969 Convention enters into force, and in addition we may have to reach some arrangement with any signatories of the 1957 Convention who do not adhere to the 1969 Convention. The way in which we deal with these difficulties depends on progress being made at IMCO on the setting up of an international compensation fund for oil pollution damage to be financed by the oil industry.
While the compensation limits provided in the Bill are twice those provided by the 1957 Brussels Convention on Civil Liability, it is possible that the limits may still not be adequate to cover all the damage that could result from a catastrophic mishap. However, the 1969 1086 Civil Liability Convention is not the only step being taken internationally in this field. It was accompanied by a resolution which requested IMCO to prepare a scheme for setting up an international fund to compensate victims of oil pollution damage. The United Kingdom is co-operating fully in the Working Group which is dealing with this question. There are, furthermore, two important voluntary schemes. First, already in force is the Tanker Owners' Voluntary Agreement concerning Liability for Oil Pollution, called TOVALOP. As its title suggests, it is an agreement between tanker owners to pay larger sums in compensation (£4.2 million or £42 per ton) for oil pollution damage than they are obliged to pay under international law currently in force. Second, the international oil industry have already announced the setting up, from April 1, 1971, of a voluntary fund to pay compensation beyond what is available under national legislation and TOVALOP up to a maximum of 30 million dollars per incident—that is about £12¼ million. This scheme is called CRISTAL—which is short for Contract Regarding an Interim Supplement to Tanker Liability for Oil Pollution—and is a kind of super TOVALOP. The tanker owners and oil industry are to be congratulated on the setting up of these funds.
In all stages leading up to the 1969 Convention, in the negotiation of the Convention and in the preparation of this Bill, there have been full consultations with the shipping industry and with the commercial interests involved. The re-insurers dislike the provision of direct recourse against the insurers, but otherwise the various interests appear to be reconciled to the Convention. The United Kingdom has a strong interest in promoting the entry into force of the Convention as soon as possible—the "Allegro"—"Pacific Glory" incident and more recent incidents in the English Channel, along with the recent collision in San Francisco Bay, have highlighted the dangers—and we feel that this essential step towards ratifying will encourage others to follow suit. In this we hope to be first in the field. If we delay until the negotiations at IMCO on the setting up of an international fund are more advanced, there is danger that the momentum will be lost.
1087 Moreover, I think your Lordships will agree that the present state of the law relating to oil pollution is far from satisfactory, and that although the Convention and this Bill do not result in a claimant being absolutely guaranteed a recompense for damage or losses suffered from oil pollution, they will go a long way to improving his position without imposing an impossible or unreasonable burden on the shipping industry. As a substantial improvement of the law in this field I commend the Bill to your Lordships. I beg to move.

§ LORD BROWN
My Lords, may I start with four congratulations? The first is to the Government for introducing this Bill at all, and to the noble Lord for his clear exposition of its meaning; and the second is to the Government for introducing it first in this House, Thirdly, I congratulate the Advisory Committee on Oil Pollution, which has already been mentioned by my noble friend Lord Hurcomb. I think I ought to mention again the names of the Chairmen, because he left out one, which seems unfair; and it is a pity to miss anybody out of this praise. They were the noble Lord, Lord Shackleton, the noble Earl, Lord Jellicoe; the present Chairman, my noble friend Lord Kennet, and Mr. Callaghan. Fourthly, I think we ought to associate ourselves with congratulations to the tanker companies on setting up these two compensation funds and on the general part they have played in helping to get this legislation framed, and also in covering the dangers with this finance during the formative periods.
In general terms we welcome this Bill. My noble friend Lord Kennet, who as I explained is indisposed to-day, will probably seek to introduce an Amendment concerning an administrative aspect of it. The Bill gives figures of amounts which constitute total liabilities, and so on. I understand that one of these amounts, the figure of £5.8 million, is already under review internationally, and the 2 Amendment will probably relate to the idea of taking out of the Bill the precise figure at present incorporated in it, and providing the Government with powers, under regulation, to introduce 1088 figures that are appropriate as time moves on.
The second aspect which causes my noble friend some worry—and we are considering this matter—is the provisions in Clause 2 for the defence of people. Under these, I understand, exceptional storms might be a defence; or actions of saboteurs. We want to examine this Bill very closely from those two points of view in order to prevent the courts from being put in the difficult position of having to decide what is or is not an exceptional storm.
With this advance warning of minor difficulties with what we regard as an excellent Bill, I end by repeating that we welcome this Bill very much indeed. I have taken on the task of commenting from these Benches on this Bill at very short notice. I have a previous engagement, and I hope the noble Lord will excuse me if I now absent myself.

LORD HAWKE
My Lords, I hope that we shall examine this Bill very carefully in Committee, it having come to us first, because it seems to me that it has possibly far-reaching consequences to the insurers where we are having to consider liability under foreign law as well as our own law. There are numerous Committee points that arise. As the noble Lord mentioned, there is the question of the sabotage of pipelines under the sea by foreign war vessels, and the like. Nevertheless, we shall look at all these points very carefully in Committee.

§ LORD DRUMALBYN
My Lords, I am grateful to the noble Lord, Lord Brown, for giving such a warm reception to this Bill. We most certainly excuse him for dashing off. I entirely agree with my noble friend that there are points in this Bill which ought to be looked at very carefully, more particularly because it has come to this House just for the purpose of our looking at it very carefully. I am obliged to the noble Lord, Lord Brown, for having referred to the Amendments which he or his noble friend Lord Kennet have it in mind to introduce, and I take note of the proposed Amendments. It is unusual, and quite agreeable, for the Opposition to press extra powers on to a Government. We shall look forward to examining his Amendments to see whether they could fall in with the Convention.
1089 It might be helpful if I just commented on his other point. The noble Lord talked about "exceptional storms"; the actual phrase used is: exceptional, inevitable and irresistible natural phenomenon; It may help him and his noble friend Lord Kennet to know that that phrase is taken from Conventions in the nuclear field and is the best expression that could be found in the circumstances. My Lords, I should again like to thank noble Lords for their response to this Bill.