Fund Convention

The original Convention, although adopted in 1971, did not take effect until 1978, since it was not until then that the condition precedent to it coming into force was fulfilled – namely that eight states had ratified its provisions and that those parties who, as the Convention provided, would be liable to contribute, had received during the preceding calendar year a total of at least 740 million tons of ‘contributing’ oil. As in CLC, for the Fund Convention to apply the vessel involved in the incident must be carrying persistent oil in bulk as cargo at the time, although the oil which spills and pollutes may be either cargo or bunkers. The funds are build up from contributions made by importers of crude and fuel oil who are resident in the states which have accepted the Convention. How large the contributions are of each individual importer depends on the annual tonnage of oil each individual importer receives. The imports must have been carried by sea to the country of import. Contributions shall be made by any person who has, in the preceding calendar year, received a total aggregate quantity in excess of 150,000 tons. An Assembly, constituted under Article 4, is empowered to assess the contributions (based on a fixed sum per ton of ‘contributing’ oil received by the party liable to contribute) and is entrusted also with the duty to maintain sufficient liquid funds, by dint of estimating in budget form Expenditure and Income (Article 12). The funds are destined to compensate anyone who has been unable to obtain full and adequate compensation under the CLC for the following reasons: Because no liability for damage arises under CLC. Because an owner liable under CLC is financially incapable of meeting his obligations in full and any financial security – guarantees he may have provided in accordance with CLC fall short of capability to fully satisfy for the damage caused as a result of the incident. Because the damage/loss suffered exceeds the tanker owner’s maximum liability under CLC. Damage in this particular context includes expenses reasonably incurred or reasonable sacrifices made to minimise pollution damage.