The 'NISSOS AMORGOS' - Court Dismisses P&I Club’s Claim For Indemnity From The IOPC Fund 1971

In a recent decision1, the English High Court held that the 1971 International Oil Pollution Fund was immune from a P&I Club's claim for indemnity as there was no contract between the parties that amounted to a loan or a transaction for the provision of finance. This decision, and the subsequent conduct of the 1971 International Oil Pollution Fund, will affect oil pollution compensation payments until a legally binding agreement can be reached.

Background

Assuranceforeningen Gard Gjensidig (the Club) commenced legal proceedings in England and Venezuela against the 1971 International Oil Pollution Compensation Fund (the Fund) seeking declarations that the Fund should be liable to indemnify it in respect of liability the Club had incurred towards Venezuela, courtesy of a judgment at first instance in Venezuela in which the Club and its member, owners of the vessel "NISSOS AMORGOS", were found liable for some USD 60 million plus indexation and costs for the 1997 grounding of the vessel and resulting oil pollution.

As previously reported, the English Court had granted the Club a freezing order in respect of the assets held by the Fund, finding that the Club had "a good arguable case" in respect of its English proceedings.

The Fund's subsequent challenge of the jurisdiction of the court is the subject of this legal update. The challenge was brought on the grounds that the Fund was immune from the jurisdiction pursuant to article 6(1)(c) of the International Oil Pollution Compensation Fund (Immunities and Privileges) Order 1979 (the Order). The court accepted this argument and held that the Fund was immune from the Club's action, and that the court had no jurisdiction over the claim.

The decision

The Club argued that it had a contract with the Fund, made partly orally and partly in writing, so that the established practice and procedure would be followed in relation to the "NISSOS AMORGOS", whereby the Club would fund the agreed interim payments and joint costs, up to an amount equivalent to the limit under the Convention on Civil Liability for Oil Pollution Damage of 1969 (CLC Limit), following which the Fund would meet any further payments, up to the limit of the International Fund for Compensation for Oil Pollution Damage 1971.

The Club argued that the contract was a loan or an agreement for the provision of finance, and, as a result, the Fund was not immune from suit and legal process pursuant to article 6(1)(c) of the Order.

Existence of the...