Decision ID: 003661

In October 2009 the 1992 Fund Executive Committee considered the method to be used for the assessment of small-scale non-fishery claims. The Committee noted that, on the basis of the advice from the Fund’s experts, the Fund Secretariat believed that many small-scale businesses, most of them being owner-occupied buildings with rooms let to guests on demand (so called minbaks), located in the areas affected by the contamination caused by the incident had suffered losses as a result of the pollution but were unable to prove their losses . It was noted that in the Republic of Korea small businesses generating less than KRW 24 million per annum were not required to file any return for VAT purposes or to keep accounts and that, as a result, most kept either very limited or no records of revenues and/or costs. It was noted that the review of the claims in the tourism sector had allowed the experts to create a pool of claims with reliable information, which included 274 accommodation claims, that the pool contained information gathered from the analysis of individual, verifiable business log books, that the information included 241 minbak rooms and that the pool would continue to be expanded as further claims were reviewed. The Committee noted that the Fund’s experts had developed a methodology to assess non-fishery claims from small-scale businesses based on individual interviews with each claimant, to review the facilities offered and the trading pattern of the business. It was noted that a number of factors that affected the performance of an accommodation operation would be considered when assessing these claims, namely location, external appearance, product quality, price and capacity, and that the information obtained would be compared with the average level of revenue per minbak in the affected area, as calculated on the basis of the data obtained from a pool of quality data. It was also noted that in the Director’s view, because of the underlying uncertainties still inherent in the methodology, in particular in relation to the dimension of the data pool used as reference, such an approach could only be used on a case-by-case basis and only after direct contact with the claimant and survey of the business, to ensure that genuine claims were compensated in a fair and equitable manner. The Committee noted that the Director intended to apply this methodology on a trial basis, in order to gain experience and further develop the pool of reliable data, and that after that would determine whether the methodology could be considered a sufficiently reliable method for assessing losses suffered by similar small-scale business where little or no supporting information was available. The Executive Committee endorsed the Director’s intention to assess claims from small-scale businesses based on the proposed methodology and to apply this methodology on a trial basis. The Committee decided to give the Secretariat sufficient time to conduct the trial assessment of claims and instructed the Director to report its outcome to the Committee.

Date: 30.09.2009
Category: Pure economic loss (tourism)
Subjects: Assessment of quantum, Tourism claims unsupported by documentary evidence of losses