Incidents - The Erika Incident : IOPC Funds

On 12 December 1999 the Erika broke in two off the coast of Brittany, France, whilst carrying approximately 30 000 tonnes of heavy fuel oil. Some 19 800 tonnes were spilled. The sunken bow section contained 6 400 tonnes of cargo and the stern a further 4 700 tonnes.

Operations to pump the remaining oil to the surface were carried out during the period June - September 2000.

Clean-up operations took place along some 400 kilometres of polluted coastline and over 250 000 tonnes of oily waste was collected from the shoreline.

Compensation is available to any individual, business, private organisation or public body who has suffered pollution damage as a result of the Erika incident. Compensation is payable under the 1992 Civil Liability and Fund Conventions as enacted into French law.

Approximately €13 million (£9.5 million) compensation is available from the shipowner's liability insurer, the Steamship Mutual P&I Club. Additional compensation of approximately €172 million (£128 million) is available from the International Oil Pollution Compensation Fund 1992 (1992 Fund). In other words, a total of €185 million (£138 million) is available.

Compensation is payable for expenses actually incurred and for loss or damage actually suffered as a result of the oil pollution. All claims must be properly supported by documentation - a well-substantiated claim can be processed more quickly than one which is not.

The Steamship Mutual and the 1992 Fund established an office in Lorient to assist claimants who wish to make a claim for compensation for pollution damage under the 1992 Conventions, and to receive and examine compensation claims.

As at 30 August 2007, 6 998 claims for compensation had been submitted for a total of €388.5 million (£288 million), which included a claim for a total of €179 million (£134 million) by the French State for clean-up operations carried out as a result of the incident. By that date 99.7% of the claims had been assessed. Some 1 048 claims, totalling €32 million (£24 million), had been rejected.

Payments of compensation had been made in respect of 5 751 claims for a total of €129 million (£85.1 million), out of which Steamship Mutual had paid €12.8 million (£8.6 million) and the 1992 Fund €116.2 million (£76.5 million).

The total claims arising out of this incident by far exceeded the amount of compensation available, some €185 million or £138 million. In order to enable the 1992 Fund to make substantial payments to claimants, the French Government and the French oil company Total SA undertook to pursue their claims only if and to the extent that all other claimants were compensated in full, the claim by Total SA to rank after the Government's claim. Initially, as a result of the uncertainty as to the total amount of the admissible claims, the Fund had to limit its payments to a certain percentage of the loss or damage actually suffered by the respective claimants. However, as that uncertainty diminished, the level of payments for claimants other than the French Government and Total SA was increased to 100% in April 2003.

In December 2003 the Director decided that there was a sufficient margin to enable the 1992 Fund to commence payments to the French State and the Fund initially paid €10.1 million (£7 million), corresponding to the French Government's subrogated claim in respect of the supplementary payments to claimants in the tourism sector. In October 2004 a further payment of €6 million (£4 million) was made relating to the French Government's supplementary payments made under a scheme set up to provide emergency payments to claimants in the fishery, mariculture and salt producing sectors. In December 2005 the 1992 Fund made a payment on account to the French State of €15 million (£10 million) towards the costs incurred by the French authorities in the clean-up response.

The total claim by the French State in respect of costs incurred by French authorities in the clean-up response is for €179 million (£134 million). Since the maximum amount likely to be available for payment to the French State after all other claims (other than that of Total SA) had been settled and paid is some €65 million (£49 million), the Director had sought a pragmatic way of assessing the French State's claim in order to determine the lowest conceivable admissible amount.

The Executive Committee noted that, based on a broad assessment of the three major components of the Government's claim, the minimum total admissible amount was estimated at some €81 million (£60 million), well in excess of the maximum amount that was likely to be available to the French State. Whilst a full assessment of the claim by the French State would inevitably result in the admissible amount increasing substantially, in the Director's view such a full assessment would not be justified given the enormous amount of time that would be required to complete the work and the limited amount of money that would be available to pay the claim.

The Executive Committee gave its unanimous support for the Director's approach to the assessment of the French State's claim for clean-up costs, although it was recognised that this would be without prejudice to the French Government's position in any recourse action against third parties.

Four hundred and twenty legal actions against the shipowner, his insurer and the 1992 Fund have been taken by 796 claimants. The courts have rendered 113 judgements and 64 actions involving 150 claimants remain pending.

A uniform application of the Conventions is vital for the functioning of the international compensation regime. The IOPC Funds' governing bodies have therefore adopted a number of criteria for the admissibility of claims for compensation. In May 2003 the 1992 Fund Administrative Council adopted a Resolution emphasising the importance that the decisions of the Funds' governing bodies are taken into account by national courts.

A number of claims, which have been rejected by the 1992 Fund on the grounds that they do not fulfil the criteria for admissibility laid down by the Fund have been brought before the French Courts. The claims were submitted by individuals or businesses whose property was not contaminated by the oil from the Erika, but had nevertheless allegedly suffered economic loss (so called pure economic loss).

The majority of the judgements rendered by the French Courts related to issues of admissibility. The judgements were in general very favourable for the Fund, since the Courts in most cases where the Fund had rejected claims as not admissible concurred with the Fund's position. In some cases the Courts applied the Fund's admissibility criteria, in other cases the Courts did not apply them but took them into account, and in some cases the Courts stated that the Fund's criteria were not binding and that the admissibility should be decided by the application of French law but reached the same results as the Fund on its rejection of the claims by applying the requirement that there must be a link of causation between the event and the damage. The Court of Appeal in Rennes in two judgements stated that the 1992 Fund's criteria for admissibility were not binding on the national courts, but could serve as a reference ("une référence d'ordre indicative") for the national judge. A few judgements related to issues of quantum. Where the Courts did not agree with the Fund's assessments, the Fund did not appeal unless the amounts awarded by the Court were significantly different or appeared arbitrary.

Detailed information on the judgements can be found in the documents presented to the Executive Committee at the following sessions:

The 1992 Fund has taken legal action, for the purposes of recovering the amounts paid by it in compensation, against the parties who may be found liable as a result of the ongoing investigations into the cause of the incident, namely against the owner and the manager of the Erika, their liability insurer, the charterers and the classification societies which had inspected the Erika. The Fund will pursue or withdraw the actions against the various parties (or against some of them) in the light of the results of the above-mentioned investigations.

Erika

France, 12 December 1999