17 February 2017 STOPIA 2006 and TOPIA 2006 – review and amendments for 2017 Background As advised in our circular of 20 February 2006, the Small Tanker Oil Pollution Indemnification Agreement (STOPIA) and the Tanker Oil Pollution Indemnification Agreement (TOPIA) were put in place to reflect the desire of Members of International Group Clubs to ensure the continuing success of the international oil pollution compensation regime. With the 2003 Supplementary Fund Protocol having been recently introduced at that time, there was a desire to ensure that the costs of responding to spills of persistent oil from tankers should be more equitably borne by shipowners and the receivers of oil. STOPIA provides for shipowners to make payments to the IOPC Fund which are designed to adjust the financial effect of the limitation of liability provisions contained in the 1992 Civil Liability Convention (CLC 92) for spills from tankers of less than 29,548 GT. TOPIA provides for shipowners to indemnify the Supplementary Fund for 50% of the compensation it pays under the 2003 Supplementary Fund Protocol for pollution damage caused by tankers in States party to the Protocol. To date, there has been only one STOPIA case and no TOPIA cases since 2006 across all of the International Group Clubs. STOPIA and TOPIA review Both agreements contain identical review clauses that provide for a review of CLC 92, IOPC Fund and Supplementary Fund claims data from the period from 20 th February 2006 (when both agreements became effective) to 20 th February 2016. The International Group initiated this review at the start of 2016, with the participation of the IOPC Fund Secretariat and the Oil Companies International Marine Forum (OCIMF) representing the cargo contributors. The outcome of the review highlighted that the total cost of claims paid by shipowners under the international conventions in this ten year period was significantly higher than the total cost of claims paid by cargo contributors in the same period. 2 Both agreements contain clauses to adjust the financial burden where such an imbalance arises. However, following consultation with the relevant shipowner representative bodies (the International Chamber of Shipping and Intertanko), the International Group decided on this occasion not to implement any of the measures in the agreements to adjust the financial burden. The International Group recognised that the data collated during the period did not fully reflect the total payments to be made by the IOPC Fund in the “Hebei Spirit” case, which will be covered by the next ten year review. When the expected payments on that case are taken into account, the burden is shown to have been more evenly shared. However, the International Group retained the right to consider any necessary adjustment if any future review reveals a continued imbalance. 2017 amendments to STOPIA and TOPIA During the review, several amendments to the 2006 agreements were made in order to address both the introduction of sanctions legislation and the procedure for future reviews. These amendments will have the effect of: 1. Protecting shipowners and the International Group Clubs in circumstances where, for reasons beyond their control, they are prevented from reimbursing the 1992 Fund and/or the Supplementary Fund in accordance with the agreements, as a result of legislation preventing shipowners and/or insurers from making payments that would fall within the scope of any applicable sanctions