contracts in the world. As stated in the Group's submission in response to the NPRM: "There is no alternative reinsurance market." It is significant that Lloyd's of London provide a substantial proportion of this reinsurance. of choice on the part of the Clubs but one of necessity since major insurers elsewhere in the world are reluctant to participate in the risk at all. This is not because of price but because of the exposure the contract gives in particular to pollution risks and liabilities in the United States. By way of example, the current participation of insurers in the United States is less than 7 per cent. The Clubs' search for other untapped capacity elsewhere in the world has been unsuccessful. The Coast Guard, in its FRIA, has pointed out that under OPA 90, "all of Lloyd's and other reinsurers' $470 million plus all of Lloyd's excess $200 million is potentially at greater risk" than under the 1969 CLC. FRIA, at 32. The Coast Guard also explains that "[p]ursuant to OPA 90, Lloyd's can expect to pay out substantially more for claims in the United States than it will under the 1969 CLC exposure for the rest of the world." Id., at 33. one or It will be readily appreciated then that the issue is not but of willingness to participate at any price. In vics of the importance to the Clubs of their worldwide reinsurance contract and the current difficulties being experienced in preserving this reinsurance contract as a whole for the benefit of all the members of each of the P&I Clubs, it is inevitable that the P&I Clubs must have proper regard for the preservation of as much reinsurance capacity as is possible. C. The Clubs Have Not Taken Their Position Concerning Certification In The Belief That the Congress Will Adopt the Protocols A theme repeated by the Coast Guard in both the Interim Rule and the FRIA is that the Clubs' position concerning certification is an attempt to promote the repeal of OPA 90 and the adoption of the Protocols. The Clubs recognize Congress has not ratified the Protocols; and, while, for the reasons previously stated, the Clubs have always supported and will continue to support the prompt clean-up of spills under international regimes, the Clubs do not anticipate the Congress will suddenly reverse course and adopt the Protocols. In this regard, it is important to note that, despite their disappointment at the passage of OPA as written, the Clubs have not withdrawn cover for oil pollution in United States waters. The Clubs' position concerning certification and guarantor status was taken relative to the substance of those issues and their effect on the Clubs, their Members and the worldwide P&I Club system. D. Shipowners Trading to the United States Are Fully Aware In both the preface to the Interim Rule and the FRIA the Coast Guard asserts repeatedly that shipowners trading to the United States will require the Clubs to become guarantors. This assumption is misconceived as it ignores the fact that shipowners want to see the integrity of the P&I Club system preserved worldwide. In this regard, strong statements of support of the Clubs' position have been given to the Coast Guard by shipowners, including those trading to the United States, in response to the Coast Guard's Preliminary Regulatory Impact Analysis. As stated above, the decision not to provide evidence of financial responsibility was made by each individual Club at the level of its Board of Directors or Committee. These Boards or Committees are composed of shipowner representatives of the membership of each Club and are representative of the shipowning community worldwide. There is no basis to assume Board or Committee members would automatically put at risk the worldwide P&I system to address the unique requirements concerning those vessels in the United States oil trade which represent only some of the vessels covered by the Clubs. The final sentence of the FRIA asserts: "Accordingly, the economic disruption predicted by the Clubs and their shipowners will not occur without a concerted effort by shipowners severe to purposefully cause that disruption." This statement is completely unfair and highly prejudicial to the Clubs and their shipowner members. The shipowners have no interest whatsoever in causing such disruption. They and their Clubs have consistently cooperated to the best of their ability with the Coast Guard in seeking to provide the best protection possible to the United States environment. They cannot, however, allow their Clubs to provide financial guaranties which in effect put the whole worldwide P&I insurance structure at risk of destruction. Written Testimony to the Sub-Committee on Coast Guard and Maritime Transportation Submitted by Måns Jacobsson International Oil Pollution Compensation Funds 1971 and 1992 Introduction The International Oil Pollution Compensation Fund 1971 (1971 Fund) was set up in October 1978. It is a worldwide intergovernmental organisation which provides compensation for oil pollution damage resulting from spills of persistent oil from laden tankers. The Organisation operates within the framework of two international Conventions: the 1969 International Convention on Civil Liability for Oil Pollution Damage (1969 Civil Liability Convention) and the 1971 International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage (1971 Fund Convention). The 1969 Civil Liability Convention deals with the liability of shipowners for oil pollution damage. The 1971 Fund Convention, which is supplementary to the Civil Liability Convention, creates a system of additional compensation. The 1971 Fund Convention set up the 1971 Fund (normally referred to as the IOPC Fund) to administer this system. Protocols to the 1969 Civil Liability Convention and 1971 Fund Convention were adopted in 1992. The Protocols came into force on 30 May 1996. There are now two Organisations with different memberships: the 1971 Fund and the 1992 Fund. The 1971 Fund and the 1992 Fund will be administered by a joint Secretariat headed by one Director, at least so long as the States with major receipts of contributing oil remain Parties to the 1971 Fund Convention. As at 15 July 1996, 96 States were Partics to the 1969 Civil Liability Convention and 70 States were Parties to the 1971 Fund Convention and thereby Members of the 1971 Fund. As at the same date, 18 States had ratified the 1992 Protocol to the Civil Liability Convention and 17 States had ratified the 1992 Protocol to the Fund Convention. Further details on the Conventions and the Protocols can be found in the written testimony submitted by the International Maritime Organization (IMO). Function of the 1971 and 1992 Funds The IOPC Fund pays compensation to any person suffering oil pollution damage in an IOPC Fund Member State if that person is unable to obtain full compensation under the 1969 Civil Liability Convention or, where appropriate, under the 1992 Civil Liability Convention, because: no liability for pollution damage arises under the Civil Liability Convention, because the the owner is financially incapable of meeting his obligations under the Civil Liability |