Canada’s oil pollution liability and compensation program is based on the “polluter pays” principle and is set out in the Marine Liability Act. This Act determines the financial and legal responsibilities and incorporate international compensation conventions in Canadian law. It governs the entire system, be it pollution caused by an oil tanker’s petroleum product cargo or the fuels used for bessel propulsion, regardless of the ship type. Polluters are liable for paying for spills from their vessels.

Oil spill-related compensation

The following are the three (3) compensation levels:

  • The ship operator’s insurance

    Shipowners are primarily liable for oil pollution damage caused by their ships up to a limit of liability based on the tonnage of the ship. If damages exceed the liability, international and Canadian funds (IOPC Funds) provide more compensation.

  • International Oil Pollution Compensation Funds (IOPC Funds)

    The IOPC Funds are two intergovernmental organisations (the 1992 Fund and the Supplementary Fund) which provide compensation for oil pollution damage resulting from spills of persistent oil from tankers. These funds are made from levies collected from the oil cargo companies. Combined with the shipowner’s liability coverage, these funds provide about $1.3 billion in compensation for a tanker spill of persistent oil.

  • The Ship-Source Oil Pollution Fund (SOPF)

    The SOPF is a Canadian fund created from levies collected from oil cargo companies.
    It provides compensation for damages caused by spills of any type of oil from any type of ship. It also applies to mystery spills in which the identity of the ship causing the leak cannot be established. Any person in Canada, including private corporations or the Crown, may file a claim for losses or expenses caused by oil spills from ships.

Since the Parliament of Canada passed Bill C-86, on December 13, 2018, there is no longer a compensation maximum per event.

Sources: Transport Canada
The International Oil Pollution Compensation Funds