Managing the Risk of Offshore Oil and Gas Accidents
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Managing the Risk of Offshore Oil and Gas Accidents

The International Legal Dimension

Edited by Günther Handl and Kristoffer Svendsen

This book addresses the international legal dimension of the management of the risk of accidents associated with offshore oil and gas activities. It focuses on the prevention and minimization of harm as well as the post-accident management of loss through liability and compensation arrangements and the processing of mass claims for compensation. Government officials of countries with offshore industries, international civil servants and academics in related fields will find the book a valuable resource.
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Chapter 7: Damage compensable

Vernon Valentine Palmer, Kristoffer Svendsen and Peter Wetterstein

Abstract

In this chapter we present a new understanding of the recoverability of pure economic loss under the Oil Pollution Act of 1990. Our ‘unified test of causation’ expands the recovery of pure economic loss beyond the limits of proximate cause analysis, while maintaining a cutoff point derived from the Act’s language and structure. The test combines the use of factual causation, with the ‘scope and purpose’ of the statute functioning as its limiting principle. The question in every case should be whether the discharged oil was a ‘but for’ reason for the plaintiff’s economic loss and whether compensation for that loss falls within the intended scope and purpose of the statute. This chapter deals with the issue of compensating damage to the environment. Its focus is on ‘pure environmental damage,’ that is, damage inflicted on the common goods of nature. Com_pensating pure environmental damage raises many issues, such as its conceptual distinction from the more ‘traditional’ types of compensable damage, namely personal injury, property damage and economic loss; the legal prerequisites of a right to claim compensation for pure environmental damage; the legal remedies available to the claimant(s) – whether a claim for restoration of the damaged environment or a claim for monetary compensation or a combination of both; and, finally, the assessement of damages for loss or destruction of natural resources. To answer these questions, the chapter looks at applicable international legislation (basi_cally conventions), EU law and some national rules and solutions. After clarifying the legal framework, the chapter offers an evaluation and discusses possible improvements to the status quo.

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