Canada has shown considerable foresight over the years in fashioning a unique well-functioning compensation regime for compensation for oil spills from ships.
A few decades ago in most countries the legal options for seeking compensation for marine oil pollution damage and the recovery of costs and expenses for clean-up and monitoring were limited. In Canada in order to establish the liability of a responsible party there was generally a requirement to prove negligence, nuisance, etc. Even then issues such as judgement proofing, bankruptcy, insolvency, jurisdiction and one-ship companies presented difficult to insurmountable recovery challenges. Such issues cried out for statutory solutions.
The catalyst for a made in Canada solution occurred in 1970 when the tanker Arrow grounded on Cerberus Rock in Chedabucto Bay, Nova Scotia. After the Arrow incident, major amendments were made to the Canada Shipping Act (CSA). The new oil spill legislation in Part XX of the CSA became part of Canadian Law on June 30, 1971. Predating the entry into force of the international 1969 Civil Liability Convention by more than four years, and the international 1971 IOPC Fund Convention by more than seven years, the new Part XX was one of the first national comprehensive regimes for oil spill liability in the western world. The principal elements of Part XX were:
- Establishing the strict liability of shipowners to be responsible for costs and damages for a discharge of oil.
- Allowing the shipowner, in certain circumstances, to limit his liability.
- Creating a new fund, the Maritime Pollution Claims Fund (MPCF), to be available for claims in excess of the shipowner's limit of liability.
- Giving the Minister of Transport the power to move or to dispose of any ship and cargo discharging or likely to discharge oil.
This regime was in place between 1971 and 1989, thus Canadian authorities were ready when the British tanker Kurdistan broke in two in the Cabot Strait in 1979 en route from Nova Scotia to Quebec with a heated cargo of Bunker C oil.
In 1989 Canada decided to increase its oil tanker spill cover by becoming a Contracting State in the international regime, while modifying and continuing its domestic regime. The SOPF came into force on April 24, 1989, by amendments to the CSA and succeeded the MPCF.
The SOPF is intended to pay claims regarding oil spills from all classes of ships at any place in Canada, or in Canadian waters including the exclusive economic zone. Thus, the SOPF is not limited to oil tankers or to persistent oil, as is the international regime.
The current statutory claims regime is found in the Marine Liability Act (MLA), Statutes of Canada, 2009, Chapter 21.