Who Pays for an Oil Spill in a War Zone? The UAE Casualty and the Compensation Gap

On 23 October the United Arab Emirates said efforts were underway to contain oil leaking from a tanker offshore. By Saturday, Ras Al Khaimah had closed every beach in the emirate until further notice, following closures around Umm Al Quwain and at Al Hamriyah in Sharjah. Residents in Sharjah, Ajman, and Umm Al Quwain reported unusual odors, which the environment ministry said posed no health risk. Fishermen were told to stay clear.

UAE authorities have not officially identified the tanker or stated the cause. Reporting published on 26 October cites maritime experts identifying the Gem No. 2 as the apparent source, with shipping sources saying the vessel was struck by an unidentified projectile earlier in the month. That is expert assessment rather than official determination, and it settles nothing about how the casualty will eventually be characterized in law.

Which is the point.

The international compensation system for oil pollution does not ask only whether a vessel was deliberately attacked. It asks what kind of deliberate act it was, and the answer determines whether an entire layer of compensation survives. This is where an oil spill in a war zone gets complicated.

How the System Is Supposed to Work

There are two distinct routes, not one layered structure, and conflating them is the most common error in writing on this subject.

For persistent oil pollution from tankers, the 1992 Civil Liability Convention places strict liability on the registered shipowner for damage caused by the escape or discharge of persistent oil from the ship. Strict means liable without fault. For ships carrying more than 2,000 tonnes of oil as cargo in bulk, the owner must maintain insurance covering that liability, and claimants have a right of direct action against the insurer. Liability is limited by reference to tonnage.

Note what the CLC covers. Its definition of oil reaches any persistent hydrocarbon mineral oil, whether carried on board a ship as cargo or in the bunkers of such a ship. So persistent bunker oil escaping from a tanker within the CLC’s scope falls under the CLC, not the Bunkers Convention.

The CLC also channels claims. Claims under it may be made only against the registered owner, and the convention prohibits claims against the owner’s servants or agents, the crew, the pilot, the charterer including a bareboat charterer, the manager or operator, and anyone carrying out salvage or preventive measures, unless the damage resulted from that person’s personal act or omission committed with intent to cause the damage, or recklessly and with knowledge that such damage would probably result.

Above the CLC sits the 1992 Fund, which provides additional compensation where claimants do not obtain full compensation under the CLC. It is financed by oil receivers in member states rather than by shipowners. There are currently 124 States Parties to the 1992 Fund Convention, and 34 to the Supplementary Fund Protocol which adds a further tier.

Separately, the Bunkers Convention 2001 covers bunker oil pollution outside the CLC’s scope, with strict liability on a broader definition of shipowner that includes the registered owner, bareboat charterer, manager, and operator, plus direct action against the insurer. It has no corresponding international compensation fund, and its compulsory insurance requirement applies to ships above 1,000 gross tons. A bunker spill from a commercial bulk carrier therefore generally has a liable owner, a compulsory insurer who can be sued directly, and nothing above that.

Identifying the applicable regime requires knowing the vessel type, the nature of the oil, and the circumstances. It is not simply a question of cargo versus fuel.

The Exception, and the Distinction Inside It

Under Article III of the 1992 CLC, no liability attaches to the owner if he proves the damage resulted from an act of war, hostilities, civil war, insurrection, or a natural phenomenon of an exceptional, inevitable, and irresistible character. The owner is also exonerated where the damage was wholly caused by an act or omission done with intent to cause damage by a third party, or wholly caused by the negligence or other wrongful act of an authority responsible for navigational aids.

The Bunkers Convention carries the same act of war exception in Article 3.

Here is the part that matters, and it is where most commentary goes wrong. The Fund does not mirror every CLC exemption.

The IOPC Funds’ own guidance is explicit. The Fund pays additional compensation where the shipowner is not liable under the CLC because the damage was caused by a grave natural disaster, or wholly caused intentionally by a third party, or wholly caused by the negligence of public authorities in maintaining lights or other navigational aids.

But the Fund does not pay if the pollution damage resulted from an act of war, hostilities, civil war or insurrection, or was caused by a spill from a warship, in which case the shipowner is also not liable under the CLC. Nor does it pay where the claimant cannot prove the damage resulted from an incident involving a ship as defined in the conventions, meaning a laden, or in certain circumstances unladen, sea-going vessel constructed or adapted to carry oil in bulk as cargo.

So the legal characterization of a deliberate attack is decisive in a way that has nothing to do with the owner’s position.

If the attack is characterized as an intentional third-party act, the owner may escape liability, but the Fund may still compensate claimants.

If it is characterized as an act of war or hostilities, the owner escapes liability and the Fund is unavailable as well.

Same vessel, same oil, same beaches. Two completely different outcomes for every hotel, fishery, and terminal on that coast, turning on how a tribunal eventually describes the event.

The Proof Question

The exception is not self-executing, and the burden does not sit in one place.

Under the CLC, the shipowner must prove the damage resulted from an act of war or hostilities in order to escape liability. Under the Fund Convention, the exemption operates as a defense the Fund itself must invoke and establish in order to avoid paying. Those are separate determinations in separate proceedings, and they can in principle come out differently.

The IOPC Funds have been through this. The Zeinab had been arrested by multinational interception forces on suspicion of smuggling oil from Iraq before it sank. In June 2001 the 1992 Fund Executive Committee and the 1971 Fund Administrative Council held it premature to authorize settlement, given reservations about whether the Funds could be exonerated under Article 4.2(a). By October 2001 both had agreed that the interception could not be considered an act of war, hostilities, civil war or insurrection, that neither Fund should invoke the Article 4.2(a) defense, and that the Director should settle claims.

One further detail from that decision is worth knowing. The governing bodies noted that if further investigation showed the sinking had been a deliberate act, that might support a recourse action by the Funds. So the Fund paying is not the end of the matter. It compensates the coast and then pursues whoever was responsible, which is a materially better outcome for claimants than a war characterization that stops everything.

In the Gulf at present the evidential difficulty is acute, for a reason we covered in the piece on UKMTO’s reporting of unreported attacks. Where incident data is incomplete, where responsibility is claimed and denied, and where a flag state, a coastal state, and a belligerent each describe the same event differently, establishing cause to an evidential standard is genuinely hard.

For an owner, that cuts in an unexpected direction. Proving the war exception may defeat the pollution claim while establishing the trigger for a war risk claim on the hull. For a coastal claimant, the opposite is true, and the claimant’s interest lies in the attack being characterized as an intentional third-party act rather than as hostilities.

What an Owner Should Check

Confirm which conventions apply to your trade. Convention status differs by state, and the applicable regime depends on where the damage occurs and where the claim is brought.

Membership is published by state and should be checked for the specific trade rather than assumed.

Know whether your pollution exposure sits in P&I or in war risks. Club pollution cover is subject to the war exclusion in the club rules. Where the casualty is war-related, the question moves to the war risk policy, and the two are not written to the same terms or limits.

Understand the scope of your War P&I. Conventional military attacks, including those involving missiles, drones, or mines, are the paradigm perils that war risk cover exists to insure. State involvement in an attack does not of itself create an exclusion. The genuine gaps are more specific: exclusions for particular weapon classes including certain chemical, biological, electromagnetic, and computer-related weapons; geographic restrictions; cancellation provisions; limits; and the attachment point of excess arrangements. Excess War P&I does not drop down to become ground-up cover where primary cover is absent. Verify the actual terms and limits before entering the region rather than after.

Check your certificates. CLC and Bunkers Convention certification is compulsory for qualifying vessels, and port state control will ask. A certificate does not answer the war exception question, but its absence creates a separate problem on arrival.

Consider the preventive measures position. The conventions treat the costs of preventive measures as pollution damage. An owner incurring substantial clean-up costs needs to know which policy answers before the invoices arrive.

Document the casualty from the first hour. Whether the war exception is made out turns on evidence of what happened, and that material is gathered in the first days or not at all.

What a Shoreside Business Should Check

The claimants in a spill of this kind are rarely shipping companies. They are hotels, marinas, fisheries, desalination plants, terminals, and tour operators.

Do not assume a convention claim is straightforward. A successful war exemption may remove compensation under the applicable convention regime entirely, leaving affected parties to investigate other legal remedies, their own insurance, and recovery against other responsible parties.

Look hard at your own first-party cover. As we argued in the pieces on business interruption and on cargo insurance, a policy that responds to your loss is worth more than a right of recovery against someone else. Property damage, business interruption, and any pollution clean-up extension in your own program may provide a route to recovery, subject to the triggers, exclusions, and limits in the wording. Marine pollution and war exclusions can restrict that recovery substantially, which is why the wording matters more here than in an ordinary year.

Check whether your BI cover has a physical damage trigger. A beach closure that keeps customers away without touching your property is the classic case where business interruption does not respond. Civil authority and ingress-egress extensions exist precisely for this, with their own waiting periods and distance limits, and most policies carry them only if somebody asked.

Check your pollution exclusions. Standard property and liability wordings exclude pollution broadly. If oil arrives on your premises, the question is whether anything in your program answers for the clean-up.

The Bottom Line

The UAE has not said what caused this spill, and the first duty of anyone writing about it is not to guess.

What can be said is structural, and it is sharper than the usual framing. The international oil pollution compensation regime was built to make recovery straightforward after a commercial casualty. It has strict liability, compulsory insurance, direct action, and a fund behind it. The act of war exception runs through all of it, including the Fund.

But a deliberate attack is not automatically an act of war. Where the damage is wholly caused intentionally by a third party, the owner may be exonerated while the Fund still pays, and the Fund may then pursue whoever was responsible. Where it resulted from hostilities, both disappear together and nobody pursues anyone.

That distinction will be argued on contested facts, and the burden moves depending on who is being asked to pay. The shipowner must prove the war exemption to escape liability under the CLC. The Fund must establish it to avoid compensating. One casualty can therefore produce two separate disputes with entire coastal economies on the other side of the answer.

For an owner, the lesson is to know which policy carries your pollution exposure in a war zone and what its actual exclusions are, because the common assumptions about war risk cover are mostly wrong in both directions. For a business on the coast, it is that your own insurance may be the only thing that pays.