1 February 2006 TO ALL MEMBERS Dear Sirs Small Tanker Oil Pollution Indemnification Agreement 2006 (STOPIA 2006) Tanker Oil Pollution Indemnification Agreement (TOPIA) We refer to the Association’s Circular to All Members 5:345 of 9 February 2005 advising Members that the Boards of all International Group Clubs had agreed to put in place a binding contractual agreement, known as STOPIA (Small Tanker Oil Pollution Indemnification Agreement), which has had the effect of substituting the limit of liability under the Civil Liability Convention 1992 (CLC 92) of SDR4.51 million (approximately US$6.5 million) for a tanker not exceeding 5,000gt with a limit of SDR20 million (approximately US$29 million) for a tanker not exceeding 29,548gt. STOPIA operates by indemnifying the 1992 Fund for the difference between a tanker’s limit of liability under CLC 92 and SDR20 million. STOPIA took effect on 3 March 2005 in recognition of the additional compensation obligation placed on oil receivers by the 2003 Supplementary Fund Protocol and in order to demonstrate shipowners’ support for the successful compensation scheme established by the 1992 CLC and Fund Conventions. When the 2003 Protocol came into force in March 2005, the Working Group which was set up by the 1992 Fund Assembly in 2001 in order to examine the possible need for revision of the 1992 Conventions had not been able to reach any clear consensus and the issue was therefore referred back to the Fund Assembly. The IOPC Fund Assembly met in October 2005 to consider whether or not to proceed with revision of the 1992 Civil Liability and Fund Conventions and made the following decisions: 1. That there was insufficient support to continue the revision process which will now be removed from the Assembly’s agenda. The Working Group set up to consider revision will be disbanded. 2. The proposal authorized by Club Committees and Boards shortly before the meeting to put in place a binding contractual scheme in order to share the overall cost of claims 50/50 with oil receivers in the event that revision was abandoned was noted and the Fund Director was instructed to collaborate with the International Group acting on behalf of shipowners and with OCIMF on behalf of oil receivers in order to put forward a package of voluntary agreements for consideration by the Assembly at its next meeting in February or March 2006. For many States, the decision to halt revision was made in reliance on the offer made by shipowners to share the overall cost of claims equally with oil receivers. Since October, a number of meetings have taken place with the Fund Secretariat and OCIMF in order to find an acceptable mechanism to give effect to the offer made by shipowners. In addition, there have been regular consultations with the International Chamber of Shipping and Intertanko in order to ensure that the content of the new agreements is acceptable to as wide a cross section of the shipowning industry as possible. - 2 These discussions have resulted in the attached two agreements, named STOPIA 2006 (Small Tanker Oil Pollution Indemnification Agreement 2006) and TOPIA (Tanker Oil Pollution Indemnification Agreement), which the Association’s Committee considered and approved at its meeting on 25 January 2006. A detailed summary of the content of each Agreement is contained in each Agreement’s Explanatory Notes. STOPIA 2006 and TOPIA are intended to have the effect, over time, of ensuring that the total cost of oil pollution c