This paper discusses the ability of compensation mechanisms to provide adequate incentives for deterring oil spills. We analyze the process of compensation of damages that followed several major European and give evidence that efficiency in the implementation at the polluter pays principe in the context of oil pollution. Firstly, damage assesment presents empirical difficulties which enhance strategic behavior and controversy. is limitted by several factors. Secondly, the compensation framework that applies in Europe excludes several categories of oil pollution damage from compensation in practice. Lastly, claim's settlement leads to procedural and litigation difficulties, wich deter claimants deter from pursuing compensation.