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Wednesday, 20 November, 2002, 19:41 GMT
The hunt for oil-spill compensation
Cleaning the coastline
The costs of the clean up will be huge
The BBC's Keith Somerville

As efforts continue to limit or clean up the mess caused by oil from the sunken tanker Prestige, the question of who will pay is coming to the fore.

The Spanish region of Galicia, bearing the brunt of the oil pollution, relies almost exclusively on fishing and tourism - both of which will be severely disrupted.

The Spanish Government has already promised some financial help to the region and will ask the European Union to pay fishermen 30 euros ($30) a day while they are unable to work.

The total cost of coping with the disaster is likely to run into tens of millions of dollars, if not higher.

The sunken tanker
Salvage and compensation will add to the costs

Under current international agreements, a total of $176m can be paid through the International Oil Pollution Compensation (IOPC) Fund - an internationally managed scheme.

That comprises up to $115m from the ship owner's insurers, which would then be topped up by the international fund, the International Maritime Organisation told BBC News Online.

The IMO said that if costs or compensation claims exceed the maximum figure, then claimants would have to take legal action to recover the money.

Those suffering losses might also have their own insurance policies on which they could claim - in which case the insurers are likely to make their own claims against those responsible.

Who pays?

In the case of the Prestige, the first $25m in pollution compensation will be paid by the London Protection and Indemnity Club.

Indemnity clubs, of which there are 14 around the world, are mutual societies which receive their income from insurers.

Claims for further money up to the $176m limit will then be made to the IOPC Fund.

According to the IOPC, the compensation "is available to governments or other authorities which have incurred costs for clean-up operations or preventive measures and to private bodies who have suffered damage... as a result of pollution".

Under the fund's rules, the ability of a state signatory to the fund to claim compensation is not affected by the flag under which the ship was flying or the nationality of the owners of the ship or its cargo of oil.

According to the association of tanker owners, this compensation is sufficient to cover the costs of spills in 95% of cases.

The third source of compensation and cost recovery would be through legal action against the ship-owners, the Greek company that managed the vessel, or the Swiss-based Russian commodity traders who chartered it or whoever has provided them with insurance for their trading activities.

Determining compensation

The head of the international compensation fund, Mans Jacobsson, told BBC News Online that it was too early to know how much compensation would be needed.

But there will be the costs incurred by the salvage attempts, efforts to limit oil damage to the sea and to coastal areas of Portugal and Spain, the costs of cleaning the polluted coastline and then compensation for local people deprived of their income from fishing, tourism and related industries.

Clearing the beaches
Tourism and fishing will be seriously affected by the oil

The Exxon Valdez oil spill in Alaska in 1989 ended up costing $2.1bn in clean-up expenditure and compensation - the vast majority of it paid by the Exxon oil company after a series of court cases.

Maritime insurance and compensation experts believe this level of cost is not comparable to the Prestige case as compensation is determined in very different ways in Europe and America.

The Spanish Prime Minister, Jose Maria Aznar, has threatened to take legal action to recoup the cost of cleaning up the pollution.

The question for the Spanish Government will be against whom to pursue legal action and for what level of compensation.

Any claimants will also have to assess the costs of damage to fishing and tourism over a period of years, as the oil damage is unlikely to be limited to a few months immediately following the spill.

Spain's coast and maritime fauna are threatened by the oil spill from the break-up of the Prestige

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