9. Functions and Management of the Fund Convention
The Fund Convention operates the International Oil Pollution Compensation (IOPC) Fund. IOPC is independent of the IMO while FUND92 is administered by the UN. To create an impartial body capable of fairly distributing compensation and damage payouts, the IOPC has its own body of auditors, officers, and other functionaries. It functions outside the purview of the IMO and UN, although annual meetings are held at the IMO headquarters in London.
The first function of the IOPC and FUND92 is a collection of the annual fund contributions from each contracting state. As discussed above, only some states need to pay this contribution.
The second function is to ensure that appropriate compensation is paid to any and all victims of oil pollutions. This is only to the contracting states and subject to insufficiency of CLC compensation funds.
Lastly, the third function is to hear and pass judgement on any disputes or grievances relating to the Fund, the collection of annual fees, and the payment of compensation.
10. Supplementary Fund – 2003 IOPC Protocol
Despite having a 2-layer compensation framework for any oil spill-related damages, certain nations felt that there should be an additional layer. For this, the Supplementary Fund was created as a part of the 2003 IOPC Protocol. It created an additional fund from which any damages and compensations could be paid out from.
This fund is only used when both the CLC and FUND92 are not able to cover damages. It is part of the IOPC Protocol but is optional. So, contracting states have an option to join and contribute to this fund. The principles and operations for this Supplementary Fund are similar to the other 2 funds. It covers any pollution within the territorial waters and Exclusive Economic Zone (EEZ).
11. Who Uses and Contributes to the Supplementary Fund?
Since the Supplementary Fund is a protocol of an existing convention, it follows the same basic rules as the FUND92. Contracting states that have an annual import of 150,000 tons of oil are eligible to contribute.
An additional condition for states to join this Supplementary Fund is that the country must import a minimum of 1 million tons of oil in a year. Only then will it have to contribute to the fund.
This fund works in a split and deferred manner. This means that a part of the contribution has to be mandatorily paid. The deadline for this is 1st March. The rest of the payment only has to be made should the fund require it. The portion paid is to finance the administration and basic operations of the Supplementary Fund. Till date, no compensation has been paid from this Fund.
12. Limit on Supplementary Fund Compensation
Unlike the CLC and Fund Convention payouts, the Supplementary Fund is very specific and rigid in terms of compensation. Irrespective of the incident, damage cost, quantity of oil carried, or gross tonnage of the carrier, this compensation is fixed at 750 million SDR. Note, this amount includes any payments from the CLC and Convention funds i.e., it is not 750 million over and beyond the initial compensations.
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