Extends strict liability for oil pollution damage to all ships carrying persistent oil whether as fuel or cargo. In the event of discharge or release the shipowner is strictly liable for: damage outside the ship by contamination; the cost of preventative measures; and damage caused by the preventative measures. The right of shipowners to limit their liability is not affected. The Act recommends liability insurance but, unlike CLC, does not make it compulsory.

A consolidating Act dealing with, inter alia, liability for oil pollution, compulsory insurance, the International Oil Pollution Compensation Fund and the liability of shipowners and others. The Act embodies the 1976 Convention on the Limitation of Liability for Maritime Claims. It also enables the government to act when a shipping casualty threatens large scale oil pollution in UK waters. Government-caused damage to vessels is covered under the International Hull Clauses.

Section 16 adds to s.192 of the Merchant Shipping Act 1995 a provision enabling the Secretary of State to regulate compulsory third party liability insurance for all British merchant ships and foreign ships visiting British ports.